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 5 – Land Acquisition and Involuntary Resettlement
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

The project has been classified as category B according to IFC’s 2012 Environmental and Social Review Procedure. Category B projects are defined as those which have business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.

Continuous assessment of potential, additional Performance Standard requirements will be part of the company’s responsibilities through PS1 and where identified, IFC must be promptly informed and appropriate mitigation agreed. The applicability of PS1, 2, 3 and 5 has been determined through the appraisal process. The remaining PS were determined as not applicable for the following reasons:

- PS4. The project is located on an industrial park, where access control and security are provided by the Developer. There are no communities within the park, nor are there communities adjacent to the park that could be directly affected by Essilao''s operations; 
- PS6. Clearance and development of the 234ha of SavanPark commenced in 2008 (when the Developer signed an agreement with SEZA for such). Prior to this, the land was uncultivated and comprised scrub and degraded secondary forest, with a small portion used as an informal waste dump. Similar habitats still exist on parts of SavanPark yet to be cleared and on its perimeter: they not appear to represent high conservation value, an observation supported by a review of a database of protected and high conservation value areas and the initial environmental impact assessment (EIA) of the SEZ undertaken in 2005. While this focused on Zones A and B, there is some continuity between Zone A and C and the EIA summary made available to IFC cites loss of forest area, but concludes that overall environmental impact is low.

- PS7. The Essilao site and the SavanPark on which it is situated are located in a peri-urban area, with no evidence of indigenous peoples living in the area in a manner that would trigger the requirements of PS7. Indigenous peoples are not referenced in the SIA summary;

- PS8. There are no known cultural property related to the Essilao site or the broader SavanPark development on which it is situated.

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.

Policy

At a corporate level, Essilor has well established human resources HR policies and procedures, underpinned by Essilor Principles, which address a comprehensive range of environmental, social, human resource, governance, transparency and accountability aspects of Essilor operations.



The global environmental, health and safety (EHS) policy is overseen by the Global EHS Department based in Paris and contains five focus areas: (1) anticipating, managing and monitoring EHS aspects; (2) preventing work related injuries and occupational illnesses; (3) reducing environmental impacts; (4) protecting Essilor properties and assets and (5); compliance with legal requirements.



As for all Essilor operating companies, Essilao will need to implement such corporate policies and demonstrate such through regular monitoring and reporting back to the Global EHS Department.



Essilor International has signed the UN Global Compact in 2003 and is included in six major social responsibility indices: ASPI Eurozone®, ECPI® Ethical EMU Equity, ECPI® Ethical Europe Equity, FTSE4Good, Ethibel Excellence and STOXX® Global ESG Leaders Indices.



Identification of Risks and Impacts

At the time of this disclosure, Essilao continues to liaise with relevant authorities in order to determine the environmental assessment process required in order to receive an Environmental Compliance Certificate (ECC). The ECC is required before the start of operations.



Through a 2011 regulation, SEZA has delegated authority to issue ECCs for industries designated as Category 1 under the Lao PDR Decree on Environmental Impact Assessment. These are defined as ‘investment projects which are small or create less impact on environment and society, but require initial environmental examination’. Essilao has proposed that the examination comprise (1) relevant sections of the EIA undertaken for the SEZ (see next paragraph) and (2), the emissions profiling sections from an EIA undertaken for an almost identical specification plant in the USA. SEZA is currently assessing this proposal (using technical advice from the Ministry of Natural Resources and Environment). If it declines this approach, Essilao will commission new work to fulfill the initial environmental examination requirements. An approved ECC is a condition of IFC’s financing.



The broader impacts from the development of the SAVAN-Seno Special Economic Zone were addressed in a 2005 Social Impact Assessment and Initial Environmental Impact Assessment, undertaken on behalf of SEZA. The conclusions from this are discussed further under PS5 and in the E&S Categorization and Rationale sections of this document.



Management Programs

At the corporate level, Essilor sets out a number of drivers for EHS management programs at operating companies. The 2012 Registration Document states the following:

‘Continuous improvement in managing and preventing risks is achieved through various quality, environmental and occupation
al health and safety management systems. A European Foundation for Quality Management (EFQM) process model is implemented within Worldwide Operations. A Health, Safety and Environment Charter and Guide have been applied to all projects since 2002. The eco-design, eco-efficiency process has been implemented since 2004’.



The Global EHS Department has implemented an software named 3E on-line to globally manage all Material Safety Data Sheets (MSDS) of all chemicals used the different sites and ensure that these sites are following the Global Harmonized System (GHS) and Essilor Group is compliant with Chemical regulations like REACH. A Management of Change (MoC) tool is in place to ensure the site will take into account all EHS impacts of a change (e.g. new or modified process, layout modification, introduction of a new product).



As described under Policy, operating companies such as Essilao are required to demonstrate their implementation strategy to fulfill the management program expectations of Essilao corporate, including regular monitoring and reporting back to the Global EHS Department by using Essilor Group EHS Reporting software Gensuite. The Occupational Health and Safety Section of PS2 describes Essilao’s plan for certification to OHSAS 18001 certification: the facility also plans to be certified to ISO 14001 for environmental management within three years of full operation. The E&S Manager for Essilao (see below) will be expected to develop the EHS management program framework and implementation strategy before the facility enters production.



A review of EHS management programs at EMTC demonstrated effective implementation and enforcement. Indicators included excellent housekeeping within production areas; appropriate signage throughout the facility (e.g. for hazards); procedural information available at point of use; appropriate segregation of waste streams; EHS performance data available to all staff through noticeboards; equipment selection to reduce EHS impacts; no observed violations of EHS procedures and monitoring data available for review. The Occupational Health and Safety Section of PS2 provides further additional analysis.



Organizational Capacity and Competency

Essilor’s 2012 Registration Document outlines the company’s approach:

‘In line with Essilor''s decentralized management policy, which focuses on empowering local front-line managers, the individual entities have their own health, safety and environment experts’.



For Essilao, the Maintenance Manager has been assigned responsibility for EHS. As further recruitment and training takes place, he will start to assemble a team to support the implementation of the EHS management program. Exposure to EHS management techniques will also be an integral part of the curriculum at the Essilao training center and via work experience and skills development at EMTC (for all Essilao recruits).



Emergency Preparedness and Response

The mechanical and electrical
design brief for the Essilao facility specifies NFPA fire extinguishing codes for fire main pumps, wet chemicals, dry chemicals and cleaning agents.



As a single story, low rise building, an earthquake design standard has not been included in the civil design brief. As Savannakhet is in the lowest (Degree I-IV) risk of the Mercalli Scale for earthquake intensity, this is considered appropriate.



The design brief for chemical storage area specifies three segregated rooms (acids, flammables, other) each with 110% retainment capacity.



A site specific emergency preparedness and response system will be developed as one of the management system components for Essilao operations. This will be undertaken in consultation and coordination with the Developer of SavanPark. As there are no communities within or adjacent to the park that could be directly affected by its operations, Essilao''s emergency preparedness and response plans do not need to consider affected communities.



At EMTC, it was observed that emergency response plan and related procedures were posted in operational areas for ease of reference. Periodic test drills are undertaken.





Monitoring and Review

Essilor policy commitments, GRI disclosure commitments and expectations around management program drive the need for monitoring and review as a routine part of operations. Such systems will be established as part of the management programs that will be established for Essilao.



Stakeholder Engagement

There are no directly affected communities for the Essilao project, although some aspects of site clearance for the development of SavanPark require further review (see PS5).



External Communications and Grievance Mechanism

A procedure for external communications will be developed as one of the management system components for Essilao operations.



Essilor is a signatory to the Global Reporting Initiative (GRI) and Chapter 4 of the company''s 2012 Registration Document reports out (at corporate level) against each GRI performance area.

Working Conditions and Management of Worker Relationship

Human Resource Policies and Procedures

At a corporate level, Essilor has well established HR policies and procedures, underpinned by Essilor Principles (see PS1) and detailed in the relevant sections of Essilor''s GRI reporting (excerpts of which are referenced below). As for all Essilor operating companies, Essilao will need to implement corporate policies and demonstrate such through regular monitoring and reporting back to the Global EHS Department.



As the project is at an early (construction stage) and an HR Manager is yet to be appointed, there are no formalized, Essilao-specific HR policies or procedures at this time.



Communication of Conditions and Rights

Essilao has commenced the recruitment and training for management positions, skilled engineers, technicians and supervisors. For those applying for jobs in the latter three categories, Essilao invites applicants to join an initial training and assessment at the Essilao training center that has been established at Xaysombath Technology College. No employment contract is offered during this initial phase, but a daily stipend provided. Trainees who successfully graduate the program are then offered employment contracts and a period of work experience at the EMTC plant in Bangkok. Through this initiative, Essilao is aiming to have 20-30 such skilled staff in place for the commencement of operations in October 2013.



Recruitment for production staff is yet to commence, although an advertising billboard in Savannankhet has been erected to start promotion of future job opportunities and explain the process for application. Initially 90 production staff will be required, moving up to 250 within 12-18 months. All will be direct employees of Essilao. In collaboration with SEZA, Essilao will also have recruitment drives in a number of outlining villages, with a focus on those hosting families that were resettled as a result of the designation and development of the SEZ. The training center will provide candidates from these communities with the necessary skills development to be viable employment prospects. Essilao is aiming for a close to 100% Lao workforce, recruited locally, nationally and from Lao nationals currently working abroad. Only one expatriate manager is proposed in the current staffing plan.



A number of support services e.g. food preparation and landscaping will be contracted out. Essilao estimates this will generate a further 20-40 employment opportunities.



Working Conditions and Terms of Employment

All workers will be provided with copies of employment contracts that meet the requirements of national law and PS2. As the majority of the workforce is yet to be recruited, the degree of union membership or likelihood a collective bargaining agreement is unknown, but Essilor has clear corporate policies that encourage dialogue between management and employees, whether or not the employees are covere
d by a collective bargaining agreement. There will be equivalent employment terms for local hire and migrant hire, although migrant employees will be given priority for accommodation.



Essilao has benchmarked against other employers in the region and provides a competitive employment package, compensating significantly above minimum wage. Essilao will also pay the national health insurance contributions and provide additional medical insurance coverage. Other benefits include access to subsidized canteens and worker accommodation. The target is to keep (production) staff turnover below 6% per annum (i.e. at or below the national average for the manufacturing sector).



A local developer will be constructing a dormitory complex that will service a number of private companies establishing facilities in Savannaket. The ground floor of the complex will be reserved for retail and leisure outlets for the resident population. As the first corporate tenant, Essilao will specify appropriate life and fire safety standards to the developer as a pre-condition of lease. Essilao will initially take 20 rooms x 4 beds for production workers, plus 3 rooms x 2 beds for supervisors. Rooms will be equipped with wifi and bathroom/shower facilities, with common living and cooking areas.



As the first Essilor plant worldwide where worker accommodation is being provided, there is no established corporate procedure for selection of applicants, but preference will be given to women and those living the greatest distance away. Essilao has also committed to develop and disclose formal criteria for worker accommodation which uphold the principles of non-discrimination and equal opportunity, as prescribed in PS2. Accommodation demand will be monitored and if necessary, additional rooms will be leased.



Workers Organizations

As reported in its GRI submission (Indicators HR5 and LA4), Essilor expects its operating companies to be in full compliance with ILO Conventions covering union freedom; the protection of union rights, the

right to organize and collective bargaining. The 2012 Registration Document states that no activity has been identified as presenting a compliance risk in this area.



In Lao PDR, all workers organizations must be affiliated to the Lao Federation of Trade Unions. ILO Conventions on freedom of association and collective bargaining have not be ratified to date. Essilao will therefore ensure that Essilor corporate policy will be implemented to the fullest extent permissible under Lao PDR law.



Non-Discrimination and Equal Opportunity

Based on prior experience at EMTC and the skills required, Essilao estimates that up to 80% of production staff will be female. Hiring will be based on merit, qualifications and individual ability however: Essilor does not engage in any discrimination based on a person''s gender in respect of employment, the job itself or promotion opportunities. All employees will benefit from skills develop
ment at the training center.



In line with other operating companies in Essilor, Essilao will introduce measures to promote the employment and integration of people with disabilities and vulnerable women. Initial discussions have been held with local support groups and associations to this end.



Grievance Mechanism

Grievance mechanisms will be provided, which will follow the practices implemented in EMTC and other Essilor operating companies, including the ability to submit anonymous complaints. Detailed procedures for promoting, managing and responding to grievances will be established once an HR Manager has taken up post.



Child Labor and Forced Labor

Essilor has clear corporate policies that prohibit such employment practices.



Occupational Health and Safety

As part of its GRI reporting, Essilor states that vast majority of reported occupational illnesses at operating companies relate to musculoskeletal disorders (MSDs). To respond to this, an ergonomics position has been created within the Global EHS Department to initiate and monitor programs set up to reduce the existing number of cases and prevent the occurrence of new ones. The Global EHS Department also collates and analyses accident and near miss data from all operating companies.



Injection moulding of polycarbonate lenses presents a low OHS hazard for the majority of production workers. Key risks relate to electrical safety, especially during machine maintenance and change over (e.g. effective lock out, tag out); repetitive strain (e.g. from trimming plastic sprues away from the lenses); foot or other crush injuries from dropping moulds or moving mould pre-heat ovens to point of use and chemical handling in the coating zone of a the production line (although the first phase of production at Essilao will not include coating). The EMTC plant demonstrated a comprehensive approach to OHS, with clear signage on personal protective equipment requirements for each production area, standard operating procedures available at the point of use with OHS information included; material safety data sheets available where chemicals are being handled and effective local exhaust ventilation systems to maintain good workplace air quality. All of Essilor’s production plants have received OHSAS 18001 certification (for occupational health and safety management systems) and as with ISO 14001 (see PS1), the expectation is that Essilao will be certified within three years of full operation.



Workers Engaged by Third Parties

For the construction of the Essilao facility, the contracted architect and support to project management on site is a French/Vietnamese company based in HCM City and Hanoi. Two Vietnamese contractors have successfully tendered for the construction: one for civil works and monitoring and evaluation, the other for the steel structure. The project manager (and architects) produces Daily Safety Inspection Reports to ensure appropriate OHS practices are being uphel
d at all times (with penalties incurred by the contractor for violations). Essilor specifies other terms and conditions in contractor agreements to ensure that its expectations for appropriate labor and working conditions are understood and agreed to.



Supply Chain

The primary supplier for Essilao is the manufacturer of the polycarbonate granular feedstock. The supplier is based in the Middle East and supplies numerous Essilor plants worldwide. As such, expectations on primary supplier performance in labor and safety is handled at the corporate level.

Resource Efficiency

Essilor’s Global EHS Department provides a policy framework for operating companies that includes resource efficiency through all aspects of the life cycle, including building design, equipment selection, equipment operation and product life cycle (e.g. raw material conversion rates, water and energy used per good lens). These performance metrics are collected and analyzed through the GRI framework and the Company’s Balanced Scorecard. The policy framework is incremental in approach for operational EHS performance, setting a minimum requirement (host country law) at start up, but facilities are expected to seek continual improvement in their EHS performance, moving up to or beyond best practices within Essilor. Operating companies must set annual EHS objectives to define, monitor and demonstrate continuous improvement.



The design brief for the Essilao facility include international codes for energy standards (ASHRAE) and environmental design (CIBSE).



Essilao is installing eleven electrical (motor) injection moulding machines in the first phase of the facility. The electrical units provide consume approximately 30% less power than the (more traditional) hydraulic machines and in addition, have improved safety (no hot oil) and less maintenance demand. In terms of avoided GHG emissions, the total power saving corresponds to approximately 600 mtpa CO2e at full production. 

Greenhouse Gas Emissions

Based on the estimated electricity consumption of 16 million kW(h) at full production, Essilao’s estimated GHG emissions would be approximately 5,000mtpa CO2e, which is below the threshold where annual quantification is required (25,000mtpa).



Water Use

Water will be supplied to Essilao through the municipal system (which is operated by a private company through a concession let by the Savannakhet District Government). Essilao estimates that it will require approximately 200m3/day at full production, of which 75% will be for production (primarily cooling water). The municipal supply is drawn from the Mekong: no incidents of inadequate water resource are known to date.



Pollution Prevention

Essilao will produce wastewater (sanitary, canteen, contact process water from cleaning baths and non-contact cooling water) and solid waste (polycarbonate ‘sprues‘ (skeletons) from lens injection moulding, packaging, canteen operations).



WWTP

For process wastewater, Essilao is constructing a basic unit (for pH neutralization) to serve production discharge, which is limited to small volumes of contact cooling water (<1m3 per hour at full production). The plant will be constructed to a internationally recognized standard (BSI) and will have continuous pH monitoring before discharge to the SavanPark industrial sewer system. As Essilao is one of the pioneer tenants, the SavanPark developer has yet to build a WWTP to serve all tenants, although this is a confirmed item in the park’s overall construction plan. Presently
all the wastewater entering the SavanPark system discharges to an evaporation lagoon location on Phase 3 of the site (i.e. yet to be developed).



Essilao is also in discussions with a French manufacturer of ‘drop in’ WWTP units (L''eau Pure) which could have the potential to make Essilao a ‘zero discharge’ facility. Much of the estimated 7m3/hour that Essilao will consume will be lost as evaporation from the cooling towers.



Sanitary and canteen wastewaters will be discharged to septic tanks, of which several will be constructed to ensure coverage across areas of the site (i.e. each toilet/washroom will have a dedicated septic tank). Total estimated maximum volume is 5m3/day.



The storm water drainage constructed to serve the facility will be connected to the existing municipal discharge system for such (which discharges to the Mekong). Both the planning and development guidelines for SavanPark and Essilor’s own design principles specify appropriate protection for the surface water drainage system.



As no recycling option has yet been identified in Laos for the polycarbonate sprues, these will be shipped back to the EMTC plant in Bangkok, where a contract with a waste recycler in already in place. (Due to the quality requirements of polycarbonate lenses, sprues cannot be reground and recycled into Essilor/Essilao’s own production process). Other solid waste produced at Essilao (including septic tank sludge) will be disposed of locally through contracts with licensed waste management companies.



The chiller plant (serving the air conditioning units and for cooled water for the production process) will use HFC refrigerant (either R-407C or 134a).

As one of the pioneer tenants of SavanPark, Essilao’s profile in the community is high. Essilao has responded to this by putting significant resources into its community consultation, development and outreach, with the most notable outcome being the establishment of the Essilao training center at Xaysombath Technology College. The support to a local technical training center (900 students currently enrolled) combined with the provision of high quality technical training linked to potential employment (first graduating class of Essilao trainees was April 2013) has been positively received in the Savannakhet area.

Essilor’s 2012 Registration Document 2012 states that: ‘the Group has established numerous initiatives with its stakeholders. Besides its customers, employees, shareholders, suppliers and the communities where its employees live and work, the Group has relations with numerous non-governmental organizations (NGOs) such as Helen Keller International, Lions Clubs International and Special Olympics. The Group naturally works closely with NGOs operating in the visual health sector. Essilor has invested in the company “Investisseur et Partenaire pour le Développement,” an entity with two main activities, one dedicated to financing microfinance institutions and the other dedicated to the assistance and financing of local entrepreneurs in French-speaking West Africa’.

As the Essilao operation becomes established, consideration will be given to Lao PDR or Savannakhet specific opportunities for NGO and other stakeholder collaborations that can bring positive social outcomes.

Gérard Malledant
No. 027, Unit 04
Ratsavongseuk RD
Thahae Village, Kaisone Phomvihan District
Savannakhet Province, Lao PDR
Tel: +856 41 252 620

Broad Community Support is not applicable for this project

Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required.