While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This investment has limited potential adverse environmental and social impacts and those that do exist are site-specific and can be managed via effective implementation of the action items in the attached Environmental and Social Action Plan (ESAP). The latter integrates IFC’s Performance Standards (PS) requirements and good international industry practices as defined in World Bank Group (WBG)’s General and applicable sector-specific (Metal, Plastic and Rubber Products Manufacturing) Environmental, Health and Safety (EHS) Guidelines into the Project. This investment is therefore a Category B project according to IFC’s Policy on Environmental and Social Sustainability.

Specific key environmental and social issues include; (i) establishment of a formal Environmental and OHS Management System; (ii) assessment of OHS and environmental risks, and an emergency plan; (iii) workplace health and safety including potential exposure to volatile organic compounds (VOC) and chemical substances, machine guarding, noise, use of personal protective equipment (PPE); (iv) ensuring discharge of treated domestic wastewater and storm water; (v) development of a human resources (HR) policy and a grievance mechanism; and (vi) implementation of fire detection and alarm system.

The information about how these potential impacts and risks will be managed is summarized in the following sections.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental and Social Assessment: Submission of a formal Environmental and Social Impact Assessment (ESIA) study for the Project is not required by the local authorities in BiH. The Company has an operational license as well as a permit from relevant local authorities for the construction of the new buildings. In 2010 an environmental permit valid for 5 years was obtained from the Ministry of Urban Planning and Environmental Protection. The last annual inspection for purposes of the environmental permit was conducted by the relevant authority at the end of 2012. An environmental action plan, a waste management plan and a report on the assessment of impacts of manufacturing are attached to the environmental permit. In the scope of the action plan noise, air emissions, water and energy consumption, waste generation data as well as some general information such as the plant capacity, location, applied rules and regulations, equipment used etc., have been studied. According to the results, the Company is in line with the local laws and regulations in terms of equipment used for production and pollutants released in the production process. In accordance with the action plan, the Company is responsible for measuring flue gas emissions twice a year for the three boilers operated in the plant.



Management Systems and Assessment: Bekto currently has a quality management system certified against ISO 9001. Quality management covers 15 procedures including management of complaints from customers, suppliers etc., and those procedures are updated periodically. In accordance with the management review, decisions are made on annual plans, amendments, internal audits etc.



In addition to ISO 9001, the Company is in the process of obtaining certification against ISO 16949, an Automotive Quality Management System that provides for continual improvement, emphasizing defect prevention and the reduction of variations and waste in the supply chain; certification is expected in the first quarter of 2014. In addition, the Company is also subject to audits from clients which cover the quality of incoming products, manufacturing workstations, packaging, basic environment and safety as well as quality, logistics and supply-chain issues.



The Company has some environmental and OHS procedures, though further enhancement of these is required. However, the Company has commenced with development and implementation of a formal management system consistent with ISO 14001 and OHSAS 18001. A consulting company, Proving d.o.o., is assisting with implementation of these systems and is providing training for the Company employees. The Company reported that the new systems will be integrated with ISO9001; this is also defined as requirement in the project ESAP.



Organization: Bekto has a dedicated Quality Manager and HR Manager (responsible for labour issues and OHS). In addition, the Company has formed a team inclusive of these individuals, and the Head of Production
Planning and the Key Account Manager, who are responsible for environmental and life and fire safety issues. An EHS Manager is also to be appointed and this is defined as a requirement in the ESAP.



Training: The HR Manager is responsible for training. Employees are obliged to participate in training on their rights and labor law before commencing work at Bekto. Other subjects covered in training include production, quality, fire protection and health and safety at work. Environmental awareness training will be also convened in due course in accordance with the ISO 14001 system requirements.



Training on fire protection and health and safety at work is convened every three years. An external company provides training on fire protection and health and safety at work. In addition, production and quality training is implemented whenever considered necessary.



Monitoring: Bekto Precisa regularly monitors air emissions, noise levels, solid and hazardous waste generation, energy and water consumption, lost time accidents, customer complaints, and labour data. Some of above mentioned data is monitored in accordance with the environmental permit requirements. Going forward, information on wastewater quality, VOC emissions in the printing section of the building and OHS data on contractors will be collected and monitored as well as per attached ESAP.



Reporting: The Company has no legal obligation to report periodically to local authorities. Results and findings of the internal reporting are reported periodically in management review meetings as part of ISO 9001. In accordance with the requirements of ISO 14001, OHSAS 18001 and the ESAP, Bekto will define procedures for monitoring and reporting on a comprehensive set of Key Performance Indicators (KPIs) associated with environmental and OHS issues.

Human Resources Policy and Management: Bekto has a HR policy and related procedures in line with national law. The issues covered under the HR policy include training, working conditions, general rules governing the rights, obligations and responsibilities arising from employment, performance evaluation, non-discrimination principles, social benefits, disciplinary actions, dismissal and country based labor legislation. There are though still requirements for improvement in the area of job descriptions which is currently in progress and will be completed by mid 2013.



The Company hires employees mainly from the nearby town of Gorazde. There is an internet based application system and forms can be downloaded from Company’s web page.



Upon employment, each staff member is provided with their labor contracts signed by the General Manager and a comprehensive rulebook which defines the working conditions and procedures. As noted, every employee is obliged to undergo training on their rights and labor law before starting work.

The Company reported that salaries at all levels are above the country sector average and the defined minimum wage. A performance based system is applied to salary increases or providing bonuses. A best employee is selected every month and an additional bonus provided based on performance. A SAP system is used to measure the performance of the workers. Some of the performance indicators are responsibility towards work, attitude towards other employees and managers and efficiency. Overtime payments are made in line with local legislation.



The current pension program is in line with national law. For retirement, the minimum age is 65 years with a minimum 20 years of working service, or 40 years of working service regardless of age. As long as the minimum conditions are satisfied, the employer and employee may agree on further opportunities for employment.



The number of employees has increased from 270 in 2010 to 356 in 2012. The Company plans to increase employee numbers when production increases in 2014. The highest number of employees is in the age range of 25-29, and the ratio of female and male employees is almost 50/50. The education level of employees varies depending on job requirements. In this respect, university and secondary school degrees are common for qualified and unqualified workers alike. Most of the workers have permanent contracts while the number of term contracts is currently 16.



Workers’ Organizations: The Company is a member of the Employee Association at a Federal level, which is a legal obligation. There is a Council of Employees consisting of five members including a chairperson. The members are generally reputable persons in their respective departments and are selected based on proposals from each department and elected for three years. The Council conducts regular meetings twice a year and additional meetings are convened as need be, for example when the dismissal of an employee is bei
ng considered. The current members of the council equally represents the company’s units and are composed of two assembly workers, a maintenance worker, a sales officer, and a technician from quality management department



None of the workers of the company are members of an industry specific union, though the Company does not prevent them. Going forward, the Company will explicitly allow for freedom of association in its HR Policy in line with PS2.



Collective bargaining and concluding a collective agreement is done by the Government of Federation of BiH on behalf of the employers; the company strictly follows the collective agreement which regulates pay, remuneration and working time and numerous other issues, such as safety in the workplace, obligations to pay contributions, rewarding and stimulating employees, food allowances, holiday pay, and severance pay in case of dismissal.



Contracted Workers: Contracted workers are limited mainly to transport and market survey services. There is no OHS and life and fire safety training provided to contract workers, there are no incident records and contract workers are not considered in any of HR Policy or Procedures. Thus the Company will amend its HR policy and procedures such that contract workers are subject to these as well; this is defined as requirement in the ESAP.



The Company will also ensure the contractor responsible for construction of the new buildings and installation of new machinery comply with the requirements of PS2 and their associated HR documentation will be submitted to IFC to confirm alignment prior to construction commencing.



Non-Discrimination and Equal Opportunity: Employee salaries and performance rewards depends on the required qualifications and complexity of their job, necessary competencies for fulfilling tasks, results, and the state of the market. It is not influenced by gender, race or any other personal characteristic. Most of the workers are local hires, while 4-5 Serbian engineers and 11 foreigners from Montenegro and other surrounding countries are also employed. The HR policy of the Company includes statements regarding non-discrimination and equal opportunity. The Company reported that no cases have been filed against them for discrimination based on gender, race, age, nationality, political or religious beliefs, physical handicaps or any other type of discrimination.



Grievance Mechanism: The Company adopts an open door policy for any grievances or suggestions, though there is no formal employee grievance mechanism. Employees can directly communicate their concerns to their superiors, and superiors to the Council of Employees. Thus Bekto will develop and implement a formal grievance mechanism and inform workers thereof; this is defined in the ESAP.



Retrenchment: There are no current plans for retrenchment in the Company, however if it required, a retrenchment plan will be implemented in accordance with PS2 and in consultation with the
Council or Employees and selected worker’s representatives.



Occupational Health and Safety: Currently OHS training has been subcontracted to an external company which includes training on fire protection and health and safety at work. In addition to conducting training activities in cooperation with HR and other relevant departments, the external party is also providing assistance to the Company on implementation of ISO 14001 and OHSAS 18001. Development of the OHS management system has been initiated two months previously with certification planned for the first quarter of 2014.



Records are maintained on work safety (number of accidents, lost days, accident reports, statistical data for root causes) and regular training of employees in the area of work safety are organized. According to the statistics, LTIFRs (Lost Time Injury Frequency Rate) per million hours worked are 8.3, 6.9, 14 in 2012, 2011 and 2010, respectively. The LTIFR for 2012 is slightly above industry average of 6.5-7 (based on 2010 USA data) .Accidents are mainly observed in the tool shops and the Company has committed to decrease the accidents continuously as evidenced by the numbers above.



For purposes of construction the contractor documentation for the associated work will require development and implementation of a detailed OHS plan; upon selection of the contractor, the associated OHS plan will be submitted to IFC to ensure alignment with internationally accepted practices for such.



Currently there is no formal fire alarm system. Efforts for establishing a fire detection system has been initiated and cameras have been purchased. Evacuation and fire drills are though performed annually in accordance with the existing emergency plan.



Employee health is regularly (once in three years) monitored and findings are recorded. Medical certificates are available for every worker. However, additional monitoring for specific working environments such as those associated with VOC emissions is to be implemented as defined in the ESAP.



Workplace noise measurements were undertaken in 2012 and levels at the plastic grinding mill exceed allowable limits in accordance with national law and those defined in the WBG General EHS Guidelines. Thus PPE has been provided to workers associated with these areas. However, it was observed during the site visit that PPE is not always provided to all of the workers. Utilization of PPE will though be enhanced as a result of implementing OHSAS 18001.



The Company has a detailed maintenance plan for equipment such as forklifts, boilers etc., and the preventive/ corrective maintenance activities are regularly tracked. Machine licenses are renewed every three years.

Water Use and Wastewater Generation: Water is used in the manufacturing process and for domestic use and is supplied by the city. In the toolshops the CNC milling machines and other cutting machines require water for operations and result in wastewater generation. The wastewater originating from these operations is filtered and re-circulated back to the machines for further use. Therefore, all the wastewater is recycled in the plant.



There is no water consumption in injection molding and consequently no industrial wastewater is generated by this process. The facility only generates domestic wastewater which is discharged to the Gorazde Municipality sewerage system which eventually discharges into the Drina River without any treatment. Thus the Company will install a treatment plant for domestic waste which complies with the discharge requirements of the WBG EHS Guidelines; this is identified as requirement in the project ESAP.



The site has a formal storm water system and storm water is discharged to the Drina River. To manage the quality of storm water, the Company will install an oil water separator prior to the point of storm water discharge to river.



The Company measures water consumption at a facility level via the SAP system with annual water consumption having decreased from 3326 m3 to 2493 m3 between 2010 and 2012. Taking production into consideration, the water consumption was 2.14 m3/ton of product in 2010, and 1.21 m3/ton of product in 2012, respectively.



Energy Use: Types of energy sources used in the facility are electricity, fuel-oil and hi-calorie pellet wood burnt in boilers for heating. Electricity is obtained from the city network. The specific electricity consumption calculated per ton product was 2.87 MW/h in 2012, an improvement from 3.03 MW/h in 2010. The Company has continuous efforts to reduce the energy consumption. On the other hand, fuel oil consumption of 52 tones/ yr in 2010 increased to 123 tones/yr in 2011 and decreased back to 93 tones/yr in 2012. Average pellet consumption is 100 tons per year for the heating system of the buildings.



The current green house gas emissions are approximately 5038 tones CO2 equivalent/yr and it’s expected this will increase to 6545 tones CO2 equivalent/yr with the proposed expansion.



Emergency Preparedness and Response: The Company will integrate spillage risks in to its existing emergency action plan and relevant drills to prevent any accidental spillage to the Drina River.



Pollution Prevention:



Air Emissions: There are three boilers used for heating purposes in the facility. Each of the boilers has an installed capacity of 160 kW. Previously fuel oil was used though wood is currently the fuel source. In the scope of inspection conducted by the local authority an air emissions report has been prepared by the Institute of Tuzla city which is an environment protection and education centre. According to the report results, the Company is in line with the
requirements of national legislation.



Solid and Hazardous Waste Management: A waste management plan has been prepared by the Company and submitted to the local authorities. Wastes are collected separately according to type and disposed of via relevant companies. Types of solid and hazardous wastes generated on site are scrap metal, plastic and steel, toners from printers, emulsions from the electro-erosion process, cardboard and papers, waste oils, packaging materials, waste electrical and electronic equipment and municipal domestic waste. Hazardous wastes are collected separately on site and then provided to Janjina d.o.o or Trgosirovina d.o.o., licensed companies for recycling and waste management. Non-hazardous wastes are disposed of via a public company.



Emulsions used in some of the machinery are classified as liquid hazardous waste and they are replaced approximately every 6 months. The quantities are limited and collected by the company that supplies the emulsion as per the Company’s Waste Management Plan. Filtered metal particles are collected and disposed of by a licensed company.



Waste generation data has been recorded in SAP system and in 2012 quantities were as follows: 3,000 kg of domestic waste 2,000 kg of cardboard and 22,400 kg of metal wastes. For other waste types, (i.e. used emulsions) a follow up system will be established and all waste types will be recorded annually in line with ISO 14001.

The Company’s facilities are located in the Gorazde Industrial Zone so there are no immediate households or neighbors in the vicinity of the facilities. Environmental noise is not an issue at Bekto’s activities and transport is undertaken by customers.



Bekto employs unarmed private security personnel and they are regularly trained and certified as per the local regulatory requirements.

The Company is one of the main employers for Gorazde town which was seriously impacted upon during the war and supports the community with various activities such as providing equipment for the town sport centre and schools.

As part of Client’s community engagement the ESRS and the ESAP will be translated into local language and local disclosure of the information will be at a publicly accessible place and at the Company premises and will be published on the Company website.

The ESRS and the attached ESAP will be made available via the World Bank Group’s InfoShop. In addition, the documentation is available for review at the following locations:

Bekto Precisa d.o.o.
I. Popovića bb.
73000 Gorazde,
Bosnia and Herzegovina
Ms. Emina Karahasan
Tel: +387 38/24 14 23
Fax: +387 38/24 14 20
E-Mail: mailto:emina@bekto.com
Website: http://www.precisa.ba


Local access of project documentation
Bekto Precisa d.o.o.
I. Popovica bb.
73000 Gorazde,
Bosnia and Herzegovina

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
Develop and implement an Environmental Management System in line with PS:1 and ISO14001, and an Occupational Health and Safety (OHS) management System in line with OHSAS18001 and PS1; integrate these systems into the existing Quality Management System.	07/31/2014 12:00:00 AM	Completed	Completed	05/29/2014 12:00:00 AM
Appoint a full time experienced Environment, Health and Safety Manager.	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Development and implement a grievance mechanisms aligned with PS:2 and communicate this to workers.	10/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Amend HR documentation so as to confirm freedom of association is allowed for.	10/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Undertake monitoring of VOC’s on the printing floors and waste water treatment and based on the findings thereof, agree with IFC on mitigation measures if required.	10/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Amend the emergency response plan to include chemical/oil spillages allied to the provision of MSDS’s for all hazardous materials to be available at the places of storage and usage. Provide evidence of worker training on the amended emergency response plan including the availability of the MSDS’s as defined above.	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Amend the existing incident recording procedures to include contractors.	10/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Amend the HR policy and procedures so as to include the requirement for such to be similarly applied to permanent workers and contractors alike, inclusive of requirements associated with the environmental and OHS system requirements. Explicitly mention “ freedom of association” right for employees in HR Policy.	10/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Include the requirement in contract documentation for the construction / expansion component for contractors to align with the associated PS:2 requirements inclusive of an OHS plan compliant with industry good practice. Following appointment of the preferred contractors, submit their HR plan inclusive of the OHS plan documentation to IFC confirming alignment with PS2.	03/31/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Install a waste water treatment plant (WWTP) for domestic waste water that will ensure compliance with the WBG EHS Guidelines in respect of discharge quality and install oil/water separators for surface water prior to discharge to the river.	06/30/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Install fire detection system at the processing and administration units	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client