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
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 limited potential adverse environmental and social impacts, and those that do exist are being site-specific and can be resolved through the application of good international industry practices. As a result this project has been categorized as B. The Company’s operations are located in the industrial zone; therefore, no issues have been identified in relation with PS5, Land Acquisition and Involuntary Resettlement, as the facility is already operating on the land owned by the company and there is no need for additional land for implementation of the Project. Furthermore, PS6, Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable to the Project since no additional resources will be used and no impacts on biodiversity are expected. No indigenous peoples are living in the area and no significant cultural values are of concern and thus PS7 – Indigenous Peoples and PS8 – Cultural Heritage are also not applicable for this Project.

As this is a corporate-level investment, The key environmental and social risks for this project include: (i) quality, environmental and safety management systems; (ii) labor transparency and HR policy/ implementations in line with PS2; (iii) food safety programs and certification at processing and commercialization; (iv) occupational health and safety during operations and construction safety; (v) organic and packaging waste; (vi) water availability/water use efficiency and waste water treatment; (vii) energy efficiency and air emissions; (viii) land acquisition; and (ix) life, fire and traffic safety.

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.

Tetri Qudi, established in June 2010, is a leading mushroom producing company in Georgia that entered the mushroom growing and production market in January 2011. The Company currently produces Champignon (Agaricus) and Oyster (Pleurotus Ostreatus) type of mushrooms. . Tetri Qudi has recently been rehabilitating the old mushroom growing rooms and constructing new ones. Growing rooms are equipped with high quality climate units, aluminum shelving and other necessary equipment for effective mushroom production. The Company also rehabilitated an old compost yard using modern machinery for pleurotus compost production. In 2012, Tetri Qudi acquired 5.5 ha of a former greenhouse construction located on 7 ha plot adjacent to the mushroom farm. Currently, the Company is in the process of rehabilitating/refurbishing the former greenhouse to start seasonal production of Pleurotus and a vermicultural (worm farming) project on that land. The main facility of Tetri Qudi is the mushroom growing plant located in Rustavi Industrial Zone, including administrative and operational areas. Rustavi is an industrial city in the southeast of Georgia, situated 25 km southeast of the capital Tbilisi.



Environmental and Social Assessment and Management System:

The development of an Environmental Impact Assessment (EIA) study for the proposed project is not required by Georgian authorities because the area has been used as an Industrial Zone since Soviet Union times. Nevertheless, Tetri Qudi will perform an Environmental, Health and Safety (EHS) assessment on the proposed new growing rooms and rehabilitation of the greenhouse before refurbishment/construction and will implement industry good practice to the working places and equipment purchased in accordance with PSs and WBG EHS Guidelines.



Currently, the Company has no formal and documented Environmental and Occupational Health and Safety (EHS) Management System. The Company will implement a systematic EHS management system that covers its existing operations and planned and future expansions in line with IFC Performance Standard 1 and consistent with ISO14001 and OHSAS18001 management systems. The Company will also establish a EHS policy in accordance with the scale of its operations and in line with WBG EHS Guidelines. On a voluntary basis, Tetri Qudi will implement ISO22000/HACCP food safety management system for future planned canned/ marinated mushroom lines as well as Global GAP systems for agricultural operation for safe and effective management, in a timely manner as indicated in the Environmental and Social Action Plan (ESAP).



Organizational Capacity and Competence

The Chief Operations Officer is responsible for QEHS and Human Resources (HR) subjects in addition to his main responsibility of production. Although the plant and process is simple, the separation of QEHS and HR responsibilities is required. Therefore, the Company will nominate or appoint an Environment, Health and Safety (EHS) Coordinat
or and a Human Resources Manager and will ensure these personnel have adequate expertise/training to oversee the implementation of the management system and human resources practices as per attached ESAP.



Training

Job specific induction training is provided to workers prior to starting work. However, production workers need to be fully trained in the safe operation and care of all the equipment and machinery that they use in filling, casing and emptying the rooms. The Company will establish a formal environmental and occupational health and safety training program for its employees and document all training material and records that will also be provided to IFC in the Annual Monitoring Report (AMR) as per attached ESAP.



Emergency Preparedness and Response.

Fire extinguishers and fire hoses are available in the project sites. Because the moisture level of mushroom production areas is higher than 80%, there is a low risk of fire. Nevertheless, a fire detection and alarm system will be installed at necessary places and fire drills will be performed in the minimum frequency specified by the local fire code. Emergency signage, evacuation routes and lighting will be installed in accordance with the risk assessment. Although Tetri Qudi has several procedures to put into effect in case of emergency, the Company needs to establish a documented emergency preparedness and response plan applicable to the project sites and offices which extensively covers fire, earthquake, flood, heavy rain and wind, personal injuries and first aid, civil disturbance, suspicious devices etc.



Monitoring and Review.

Tetri Qudi currently monitors consumption of water, natural gas, electricity and fuel. As part of the corporate EHS management system described above, the Company will establish an extensive EHS monitoring program including but not limited to the monitoring of air emissions, solid wastes, effluents and occupational accidents, diseases, trainings, effectiveness of the management program, as well as compliance with any relevant legal and/or contractual obligations and regulatory requirements as per the attached ESAP.



Reporting

Tetri Qudi has no reporting requirement from local authorities Monitoring results are reported to top management.

Tetri Qudi reported that all employment relationships, contracts and hiring processes are in compliance with Georgian legislation. As of May 2013, the Company employs approximately 70 workers in their compost and mushroom production operations, 70% of which are women. The total number of employees is 120 including administration, maintenance and sales staff. Employee minimum age, 18, is in line with Georgia Labor Law. The Company does not have documented human resources (HR) Policy, thus will prepare a specific Human Resources (HR) Policy to the satisfaction of IFC as required by the ESAP which outlines commitments relating to the workforce, including training, grievance mechanisms and reporting and monitoring as well as the key requirements of IFC Performance Standard 2 on labor and working conditions. Tetra Qudi will make these documents available to their workforce. This proposed HR Policy will also recognize freedom of association, focus on occupational health and safety and provide a fair grievance resolution mechanism and non-discriminatory and equal opportunity. Construction contract workers and any contract workers are subject to those as well; this is defined as requirement in the ESAP.



The Company hires employees mainly from the nearby city of Rustavi. Upon employment, each staff member is provided with a labor contract signed by the General Manager.

The Company reported that salaries at all levels are above the defined country minimum wage which is approximately 90 GEL ($54) per month for private sector workers as of 2012. A performance based system is applied to salary increases or providing bonuses. Overtime payments are made in line with local legislation.



Workers’ Organizations

There is presently no active trade union at Tetri Qudi facilities, although the Company has indicated that it does not prohibit the establishment of workers’ associations at any of its facilities. The Company will include a clear statement supporting the right to freedom of association and collective bargaining in its HR Policy.



Contracted Workers

The Company will ensure that the contractor (responsible for refurbishment of greenhouses and installation of the new equipment) complies with the requirements of IFC Performance Standard 2. Contractor’s HR documentation will also be submitted to IFC to confirm alignment prior to commencing construction.



Non-Discrimination and Equal Opportunity

The Company complies with the national labor law requirements for non-discrimination. Nevertheless, it will be explicitly stated in the HR policy that the Company is an equal opportunity employer, and does not make employment decisions on the basis of personal characteristics unrelated to inherent job requirements.



Grievance Mechanism

The Company adopts an open door policy and an informal employees’ grievance mechanism exists. However, Tetri Qudi will develop a formal employees’ grievance mechanism and ensure workers’ representatives are elected by
the workers through a voting system (in the absence of a Union) as required in the ESAP. The Company will also install suggestion/complaints boxes at the facility, systematically review and record the actions.



Retrenchment:

The Company does not currently have any retrenchment plans. Employment conditions are managed in accordance with the Labor Code of the Georgia. Job applications are sent directly to Tetri Qudi, rather than through an intermediary agency or company.



Occupational Health and Safety.

Tetri Qudi does not have an established health and safety management system, nor is certified to an internationally recognizable system, such as OHSAS 18001. The Company’s safety record shows that they have not encountered any lost time injuries during the last year for an average of 120 workers. The Company will implement an OHS management system as part of the integrated management system and develop detailed OHS policies and procedures for its facilities including but not limited to the usage of PPE, prevention of physical, chemical and biological hazards pertaining to the farm operations. The Company also will keep readily retrievable records of all lost time accidents and will follow up and implement preventive and corrective measures.



Most of the equipment is electrically powered and, because of the moist production environment and the cables around compost shelving units, there is a greater likelihood of electrocution than in other types of agro-industries. Tetri Qudi will perform a risk assessment for all workplaces and will consider this risk whenever it makes changes to the production process or improvements to buildings or when purchasing new equipment or machinery. A timely action plan should be prepared to reduce the risks (slip and trip risks; work at height hazards, lifting and repetitive work, electrical risks, hand rotating and moving machinery parts, etc.) and warning notices of any likely dangers will be prominently displayed in close proximity to specific hazards. The Company will also develop a preventive maintenance program applicable to all machines and equipment used in the workplace and will ensure high risk equipments such as pressurized vessels (boiler, autoclave) are periodically checked and certified by external authorized agencies to confirm their safe operation.



Although basic personal protective equipment (PPE) is provided to the employees, clean clothes and the proper water proof foot wear is also needed as there can be wet slippery surfaces and foot mats or dips that have insecticide on them. Also more sophisticated equipment such as compost masks or air stream helmets should be provided to everyone handling new batches of compost or emptying old cropped rooms as high volumes of airborne micro-organisms (actinomycetes) are released during compost handling and the appropriate protection should be used to protect workers from ‘mushroom growers lung, a respiratory illness seen among mushroom processo
rs. Mushroom pickers may be similarly affected, although this is less likely than with workers in processing areas. Nonetheless, personnel with asthmatic disorders should be provided with necessary protective equipment. Because oyster mushrooms have a far greater amount of spore release, the Company will perform regular respiratory checks on employees engaged in harvesting this type of mushrooms. Mushroom harvesters also need training for picking the crop and using the growing rooms or pack house. Growing rooms during the pre-cropping stages often have high levels of Carbon Dioxide at about 2% or more to facilitate the growth; however it is dangerous for workers exposed to this level of concentration, therefore the Company should also ensure controlled entry to these rooms to avoid negative health impacts. Picking mushrooms can also bring on repetitive strain injury and for that reason the Company will monitor the number of hours pickers need to stand in order whilst harvesting the crop. Harvesting off the picking platforms that run alongside the shelves make it possible for the picker to comfortably reach the crop; to enable this, the Company will install safety rails fitted to the platforms to prevent the risk of falling from height for workers using the platforms.



Aside from production units, improvements are also needed in employees’ social areas. The Company will ensure that physical and hygienic conditions of dining room and toilets are improved and a hand disinfection station is added. All above mentioned preventive measures will be completed in a timely manner as per attached ESAP

Resource Efficiency.

The company will continue to monitor energy and water consumption and benchmark with internationally recognized industry benchmark values. Tetri Qudi will accordingly identify opportunities to save energy and water if necessary.



Water Use and Wastewater Generation:

Water is used in the composting and mushroom growing process and for domestic use and is supplied from artesian wells on site. The Company will ensure that all wells are properly locked and licensed by local authorities; also a hydro- geological evaluation will be commissioned to ensure that the reserves of groundwater sources allow for a sustainable use as per attached ESAP.



Water is pre-treated by filter systems before usage. The Company measures water consumption with a meter before wells. The annual consumption is measured about 3600 m3/year in 2012. Specific water consumption is approximately 2.5 m3 per ton mushroom production (no sector average is available). No industrial wastewater is generated by this process except for floor cleaning water. The facility generates domestic wastewater which is discharged to the Rustavi Municipality sewerage system.

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



Energy Use:

Types of energy sources used in the facility are electricity and natural gas for production and fuel-oil for the vehicles. Electricity is obtained from the city network. The specific electricity and natural gas consumption calculated per ton product are approximately 35 kWh and 21 m3 respectively.



The current green house gas emissions value is calculated to be approximately 780 tonnes CO2 equivalent/yr.



Pollution Prevention.

Air Emissions: There are three natural gas boilers with a total installed capacity of 30 tones of steam per hour. Air emission measurements were not required by authorities until recently. Nevertheless, the Company will measure pollution parameters and will comply with local legislation and WBG’s EHS Guidelines as reflected in the ESAP.



Solid and Hazardous Waste



The main solid waste of the facility is spent compost substrate. Two different kinds of compost are used for champignon and oyster mushroom growth. Oyster compost is prepared in the project site in Rustavi whereas compost for champignon is processed by Aroghjsunk LLC in Armenia. After used for growing purpose, compost is disposed to a land adjacent to the greenhouses. The disposal amount is approximately 50 tons per week. Having rich nutrient content, it’s collected by farmers including the landowner to be used for agricultural purposes. The Company will have a written agreement with the landowner to dispose compost in that designated area.



Hazardous waste generated at Tetri Qudi facilities mainly includes limited amount of chemi
cal (commercially named as Dimidin) containers and limited amounts of waste hydraulic oil. The Company will ensure that the insecticide (Dimidin) containers are properly stored and returned to the product company and waste oil is collected by licensed companies for processing and re-use. Plastic materials for holding compost cannot be recycled as mycelium sticks to plastics. Together with other non-hazardous wastes, they are disposed of via a public company to a designated area.



The Company will perform an inventory check for CFCs (R22 etc) used for air-conditioning and other purposes in the plants and prepare a phase out plan in line with national legislation. Going forward, non-ozone depleting substances will be selected as cooling agent for all equipment and vehicles.

The Company’s facilities are located in the Rustavi Industrial Zone. There are no immediate households or neighbors in the vicinity of the facilities. Environmental noise is not significant, given the nature of Tetri Qudi’s activities.



Harvested products are delivered via ten minivans and a truck. The Company will ensure that adequate internal controls are in place to ensure that vehicles are in good condition, traffic rules and maintenance requirements are strictly followed and drivers receive proper trainings.



Tetri Qudi employs eight unarmed security personnel and they are regularly trained and certified as per the local regulatory requirements.

Tetri Qudi started operations in 2011. Since then the Company has helped improve the livelihoods of communities where they operate by generating employment in the area. Manpower resources for all operations are hired locally where poverty and unemployment rates are high.

Given the limited potential for adverse social and environmental impacts arising from the project, community engagement is not required by the Georgian authorities for a facility like Tetri Qudi’s. Publication of this ESRS and associated Environmental and Social Action Plan (ESAP) constitutes the client’s first community engagement related to its project plans. The information about the Project will be shared with the community through publishing this Environmental and Social Review Summary (ESRS) and the relevant E&S action plan in local language.

Tetri Qudi will establish communication procedures to openly share information with third parties and to address community concerns about possible adverse impacts of their operations and control measures in place to mitigate these as per attached ESAP.

Mr. Ivane Ioseliani, General Director,Tel: +995 599 191711Email: mailto:tetriqudi@yahoo.comAdress: Rustavi highway 17, Gardabani District, Georgia

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
Implement a formal Environmental and Occupational Health and Safety Management System consistent with IFC Performance Standard PS 1, and consistent with ISO 14001 and OHSAS 18001 requirements	6/30/2015	In Progress	In Progress
Establish EHS policy in accordance with the scale of operations and in line with PS requirements and WBG EHS Guidelines	06/30/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Nominate or appoint an Environment, Health and Safety (EHS) Coordinator and a Human Resources Manager ensure he/she has adequate expertise/training to oversee the implementation of the management system and human resources practices respectively	08/15/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Implement a system in line with Global GAP standard requirements for agricultural operations - Submit a schedule to IFC for implementation plan	12/31/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Implement a system in line with Global GAP standard requirements for agricultural operations - Submit adequate evidence to IFC that GAP system implementation is in line with the plan	6/30/2015	In Progress	In Progress
Implement a system in line with Global GAP standard requirements for agricultural operations - Provide adequate evidence to IFC that all corrective actions are completed in accordance with the schedule and system is capable of certification (certification is not mandatory)	12/31/2015	In Progress	In Progress
Develop an extensive EHS monitoring program including monitoring of air emissions, solid wastes, effluents and occupational accidents, diseases, trainings, effectiveness of the management program, as well as compliance with any relevant legal and/or contractual obligations and regulatory requirements	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Establish a documented emergency preparedness and response plan applicable to the project sites and offices which covers fire, earthquake, flood, heavy rain and wind, personal injuries and first aid, civil disturbance, suspicious devices etc.	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Develop a Human Resources policy applicable to both in-house and contractor employees to include all of the key requirements of IFC Performance Standard 2 on labor and working conditions (e.g. Non-discrimination, freedom of association and collective bargaining, child labor and forced labor)	08/15/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Develop a formal employees’ grievance mechanism and ensure workers’ representatives are elected by the workers through a voting system (in the absence of a Union)	03/31/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Install suggestion/complaints boxes at the facility, systematically review and record the actions	12/31/2013 12:00:00 AM	Completed	Completed	12/20/2013 12:00:00 AM
OHS Improvements (i) Ensure that physical and hygienic conditions of dining room and toilets are improved and a hand disinfection station is added (ii) Perform risk assessment for all workplaces and prepare a timely action plan to reduce the risks (slip and trip risks; work at height hazards; lifting and repetitive work; electrical risks; and rotating and moving machinery parts etc) (iii) Keep readily retrievable records of all lost time accidents and will follow up and implement preventive and corrective measures. (iv) Perform regular respiratory checks on employees engaged in harvesting Oyster mushrooms (v) Install handrails in upper part of sliding platforms for mushroom pickers (vi) Develop a preventive maintenance program applicable to all machines and equipment used in the workplace and ensure Periodical maintenance of high risk equipments such as pressurized vessels (boiler, auto clave) and have them checked and certified by external authorized agencies to confirm their safe operation (vii) Install fire detection and alarm system according to risk assessment and improve emergency lightening and signage. Conduct evacuation drills in the necessary frequency (viii) Provide personal protective equipment to relevant workers (including safety shoes and clothes, masks and chemical resistant glove for especially workers exposed to Dimidin), -specific masks for mushroom growers and asthamatic disordered pickers- and conduct periodic checks of use in accordance with the local regulations. (ix) Provide compost masks or air stream helmets should be to everyone handling new batches of compost or emptying old cropped rooms (x) Keep readily retrievable records of all lost time accidents and will follow up and implement preventive and corrective measures. (xi) Establish a formal environmental and occupational health and safety training program for its employees and document all training material and records	12/31/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Ensure that all wells are properly locked and licensed by local authorities Commission an hydro-geological evaluation to ensure that the reserves of groundwater sources allow for a sustainable use	06/30/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Install an oil- water separator prior to the point of storm water discharge to network.	06/30/2014 12:00:00 AM	In Progress	Under discussion with IFC client
-Ensure that the insecticide (Dimidin) containers are properly stored and returned to the product company and waste oil is collected by licensed companies for processing and re-use. -Perform an inventory check for CFCs (R22 etc) used for air-conditioning and other purposes in the plants and prepare a phase out plan in line with national legislation -Select non-ozone depleting substances as cooling agent for the new equipment and vehicles (ONGOING)	12/31/2013 12:00:00 AM	Completed	Completed	12/15/2013 12:00:00 AM
Monitor energy and water consumption of the company and benchmark with internationally recognized industry benchmark values. Identify opportunities to save energy and water if necessary (WITH AMR SUBMISSION)	03/31/2014 12:00:00 AM	In Progress	Under discussion with IFC client
Measure pollution parameters for three natural gas boilers and ensure compliance with local legislation and WBG’s EHS Guidelines	06/30/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Obtain a written agreement for spent compost disposing at land for farmer’s use	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client
Establish communication procedures to openly share information with third parties and to address community concerns about possible adverse impacts of their operations and control measures in place to mitigate against these.	12/31/2013 12:00:00 AM	In Progress	Under discussion with IFC client