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 8 – Cultural Heritage
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific and reversible environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key environmental, health and safety, human resources and social issues that were reviewed included the following: environmental and social management system; emissions to the environment – air and water; hazardous waste and materials management; life and fire safety and emergency preparedness and response; community and occupational health and safety; water and energy use and efficiency; cultural heritage preservation, and community engagement.

THYN and SLRY sites are owned by Government Ministries. The Sponsor leased both sites from those Government counterparts in the early to mid-1990’s. IFC’s review, including interviews with local residents near the sites, does not find material PS5 issues. The construction workforce consists mainly of the mainstream Burmese ethnic group while some workers are from the Karen ethnic minority group. THYN also employ a number of ethnic minority staff. IFC’s review has not identified any adverse impacts of the Project on ethnic minority workers. Project activities, all within the central area of urban Yangon, are not expected to impact on local biodiversity. PS5, PS6 and PS7 are therefore not triggered.

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:

The Sponsor’s corporate-level environmental and social (“E&S”) related policy/mission statements and principles can be found at its website under the Corporate Social Responsibility (CSR), Supplier Code of Conduct, and Safety and Security sections (at http://www.shangri-la.com/corporate/about-us/corporate-social-responsibility/sustainability/ and at home page). The CSR section includes the five focus areas of environment, sustainability, health and safety, employees, supply chain, and stakeholder relations. The Supplier Code of Conduct describes 17 areas in which suppliers - including contractors and sub-contractors who provide construction/refurbishment and other services to Shangri-La - are expected to fulfill the Sponsor’s requirements. The Safety and Security section refers to Life and Fire Safety (L&FS) and emergency preparedness and response among other principles.



Identification of Risks and Impacts:

The draft Myanmar Environmental Conservation Law, expected to include requirements for undertaking Environmental and Social Impact Assessments (ESIA), is in the process of being approved by the national parliament. The Foreign Investment Law (Union Parliament Law No. 21, November 2012), the related Foreign Investment Rules and the Myanmar Investment Commission Notification issued in 2013, contains ESIA requirements for projects in a number of sectors which do not include hotel and hospitality, and residential/commercial real estate sectors. Given evolving national requirements, the Project has not undertaken an ESIA.



The Sponsor’s internal risk, impact, and opportunity identification process focuses on Life & Fire Safety, safety and security, and resource efficiency. IFC’s review finds that the Sponsor’s system of E&S risk identification is broadly commensurate with the types and levels of risks associated with the Project.



At the SLRY site, stronger oversight will be needed on how sub-contractors and sub-sub-contractor operations are consistent with Sponsor sustainability policies (refer to other PS sections for details). In relation to this, the Sponsor will update its Corporate Supplier Code of Conduct to explicitly reference contractors and sub-contractors as part of the scope, adjust the Code content as needed, and communicate these changes to all Project Management entities and staff involved in construction project management. It will also update relevant management programs and corporate monitoring procedures to ensure consistent implementation at all construction/refurbishment sites.



Management Programs, Organizational Capacity and Monitoring and Review:

All Green Properties Limited, a Singapore-based entity affiliated with the Sponsor, is the PM of SLRY. The PM has assigned two staff members stationed in Yangon to oversee day to day construction/refurbishment related activities at the SLRY site. A company from Singapore has been engaged by the PM as the main sub-contractor for SLRY. The main sub-contractor use
s a number of sub-sub-contractors. The PM is responsible for ensuring that Sponsor corporate requirements are followed during construction.



The Sponsor has commissioned a local contractor entity and two contractors from Thailand to undertake the THYN refurbishment/expansion work, and a Shangri-La International Hotel Management Limited (“SLIM”, responsible for L&FS auditing and oversight of all Sponsor properties) in-house staff member has been appointed as the PM overseeing the work of these contractors.



At THYN, the General Manager (GM) receives regular operational reports from the Chief Engineer who monitors environmental performance weekly through regular inspections and test results (e.g. water quality; energy/water consumption levels against targets). An L&FS manager who reports to the GM is responsible for ongoing monitoring of L&FS compliance against Shangri-La Corporate Fire Life Safety Standard requirements, while every three weeks the GM conducts an overall site inspection. Weekly meetings are held to discuss overall operational aspects (including E&S) and any issues identified for follow-up. Monthly reports are compiled by the GM and submitted to the Sponsor’s corporate headquarters in Hong Kong.



Each individual staff member with E&S responsibilities have relevant individual KPIs linked to the hotel-level scorecard performance evaluation system. The KPI system in combination with regular internal and external audits is the key means by which performance is tracked. The Sponsor plans to certify THYN against OHSAS18001 occupational health and safety requirements in 2015.



Emergency Preparedness and Response (EPR):

THYN has an EPR plan in place which is a Sponsor corporate requirement. Managers of THYN form a corporate management response team, and at least one executive member must always be available on site to respond to emergencies. Twice a year an engineer from another Shangri-La hotel audits EPR aspects of THYN and an external security audit (which included EPR aspects) was conducted in 2012. Based on audit results, THYN develops and updates different emergency scenarios and response actions within its EPR together with a chain of command to execute the response should a scenario materialize. The main contractor at SLRY has an emergency response team on site.



External Communications and Grievance Mechanisms:

The Traders Hotel front desk and security offices at the SLRY construction site are the key public interfaces locally to receive external communications including grievances from the public.

At the SLRY site, the main contractor employs a staff of 30 and about 1,000 construction workers (from 43 sub-contractors) on site including 75 security personnel.



Working Conditions and Terms of Employment:

The Sponsor’s corporate human resource policies and procedures are applied to all its operations including THYN. Terms of employment as well as rights and responsibilities of employees are formalized into employment contracts and an employee manual. Hiring and employment practices recognize the principles of non-discrimination and equal opportunity.



Monthly working hour records for each construction site worker are recorded and the most updated data shows an average of about 207 hours per worker at the SLRY site.



The Sponsor’s Supplier Code of Conduct states that suppliers who provide residential facilities to their workers must provide safe, hygienic, healthy and proper sanitary facilities.



All construction workers at the SLRY site are local Yangon persons hence no living quarters need to be provided; the exception being the 75 security personnel, who split into two groups and take shifts to ensure there are security guards on site 24/7. For the off-shift group, the main sub-contractor has built a temporary shed for them on site to rest for several hours as they wait for their shift. The shed appears to be very basic and the canvas rooftop leaks during rainy days according to workers. The Sponsor and the PM will work with the main sub-contractor to improve the conditions of the shed (refer to Environmental and Social Action Plan (“ESAP”) for details).



Workers’ Organizations and Grievance Mechanism:

The Myanmar Labor Organization Law (The Pyidaungsu Hluttaw Law No. 7 / 2011) which came into effect in March 2012 specifies provisions for workers to establish and join a labor union. At present, no THYN or sub-contractor workers are members of any labor organization. The Sponsor’s Supplier Code of Conduct states freedom of association as a principle, and will ensure the rights of its own workers and of contractor/sub-contractor workers in this regard should they wish to form or join a labor union.



Various staff communication channels and grievance mechanisms are in place at THYN including: weekly and monthly one-on-one and group staff meetings; the GM conducting focus group meetings with staff; staff dinners providing an informal setting during which employees could express views and concerns; and annual employee surveys. At the SLRY construction site, regular worker safety meetings and direct communications with sub-contractor heads are the key means of worker communications.



Protecting the Work Force:

IFC’s review found no evidence of forced/indentured labor practices at construction sites (as stipulated in the Supplier Code of Conduct). At the SLRY site, each new worker who enters the site in the morning is asked at the security porch to produce his national identity card which displays age information. If upon visua
l inspection security personnel suspect that a newcomer may be under age, s/he is further asked for the age verification document signed and provided by the police station from the worker’s home town, and also his/her birth certificate.



Occupational Health and Safety (OHS):

The Sponsor confirms that there have been no Lost Time Accidents or fatalities at THYN and SLRY since operation or construction started. THYN staff is regularly trained and evaluated on topics such as fire safety management to ensure they are operationally competent and follow safety requirements. Workers at the SLRY construction site attend regular work safety training sessions. The SLRY sub-contractor has written safety rules and procedures in place (e.g. ELTG general site and construction safety rules), and use ongoing safety and tool box meetings to ensure that workers follow their procedures (e.g. use of Personal Protective Equipment and proper tools for different tasks). Sub-contractor agreements between the PM and the main sub-contractor include environmental and safety clauses.



During its review, IFC found two instances of workers operating at height (a temporary rooftop structure) without safety harnesses. At two locations there are some exposed nails on the ground, a number of workers are wearing flip-flops or are bare footed, and there are loose electrical wires. There is a large water pool where workers wash themselves and also their tools. The Sponsor and PM recognize these issues and have been working to rectify them (e.g. with a focus on programs to raise worker safety awareness on site); they will continue to work with the main sub-contractor to review site safety against its requirements and address any safety gaps on site.

Pollution Prevention:

Waste water generated at THYN is processed by the on-site treatment facility which consists of three stages: solid separation septic tanks, aerated bacterial/biological treatment, and sedimentation / sludge collection tanks. Treated waste water goes into the municipal sewage system which is discharged to surface water (Yangon River). Sludge is collected and disposed of by a Government-licensed local sanitary waste collection company. The latest discharge results provided by THYN show compliance with Yangon City Development Council limits and World Bank Group (WBG) Environmental Health and Safety (EHS) General Guidelines.



The SLRY project has installed an aerobic biofilm system with a capacity to fully treat sanitary waste water at full occupancy. The system comprises a solid separation septic tank, fixed film aeration tank and sedimentation clarifier tank.



Two 5MWth boilers using diesel as fuel are in operation at THYN. Wet scrubbing is the method of treatment cited by the Sponsor and the latest emission results is 90mg/m3 for particulate matter while NOX and SO2 results are not available. The measured PM level exceeds the WBG General EHS Guideline level of 50mg/m3. The Sponsor will commission tests for emission levels (NOX / SO2) and include results in the Annual Monitoring Reports submitted to IFC; and propose corrective actions to bring emissions levels within WBG Guideline values. No boilers will be installed at SLRY which will obtain its hot water supply from electric heaters.



Resource Efficiency and Greenhouse Gas Emissions:

Together, the two components of the Project are expected to annually consume 44,000MWh of grid electricity. All three properties abstract or will abstract water supply from local groundwater and are all located in relative proximity to a major local river (the Yangon River). Based on data provided by THYN, in 2012, THYN’s calculated average water consumption index value (total facility water consumption (m3)/guest per night) is 2.7 - above the “Excessive” benchmark value of 1.4 (for luxury serviced hotels in a tropical climate) as defined in the WBG EHS Guidelines for Tourism and Hospitality Development. Laundry was a major user of water taking up 40% of total water consumption. The 2012 total energy consumption of 458 kWh/m2 serviced area of THYN is above the ”Excessive” benchmark value of 370.



THYN’s regularly tracks total water (through main and sub-meters in major usage areas) and energy usage against internally established benchmarks, and has an ongoing awareness program requiring staff to adopt energy saving habits e.g. turning off A/C units when not in use. The Hotel has set a target for 2013 to reduce water usage by 10% and electricity consumption by 15% and these are included in the KPI system. As part of its commitment to resource efficiency, the Sponsor will: (i) commission a qualified engineer to undertake water and energy efficiency audits at THYN; (ii) based on audit re
sults and recommendations, develop and implement a technically and financially feasible water and energy saving action plan (e.g. this may include actions such as making structural retrofits to better block out sunlight to reduce A/C and chiller usage, changing to LED lights, water savings measures in the laundry, etc).



At SLRY, water flow regulators will be installed which are expected to reduce water use by 5%.



The annual total greenhouse gas (GHG) emissions for THYN and SLRY is estimated at 26,000 tonnes CO2-equivalent, attributable to consumption of grid electricity, fuels and the use of air conditioners and chillers. The client will quantify GHG emissions annually in accordance with an internationally recognized methodology and good practice.



Hazardous Materials Management:

THYN exercises stringent access control and inventory tracking of all hazardous materials. At the SLRY construction site, diesel and other hazardous materials are stored in access controlled sheds guarded by dedicated personnel. There are written procedures on site management of hazardous substances.

THYN has detailed life and fire safety (L&FS) policies and procedures in place at the hotel operation level including emergency preparedness and response procedures and these are based on the Sponsor’s Corporate Fire Life Safety Standard dated November 2010). Fire equipment is regularly checked by in-house engineers and once a year, an external L&FS auditor (a Thai-based firm in 2012) is brought in to audit the hotel’s compliance against corporate requirements; The Shangri-La International Hotel Management Limited (“SLIM”) director from Shangri-La headquarters has undertaken two audits and will undertake a third completion audit at the completion of refurbishment. The 2012 external and internal audit reports of THYN was shared with IFC. The latest internal audit, conducted by a SLIM Engineering auditor in September 2012, is based on a system which scores the inspected property by reviewing and scoring five facets of L&FS performance against a list of auditable criteria: (i) fire prevention; (ii) hazard elimination; (iii) system maintenance; (iv) management; and (v) L&FS managerial competency. Findings are grouped under the following headings: repeated findings, high risk issues, non-compliances, other recommendations on improvements, and capital expenditure recommendations.



The Sponsor will provide the L&FS Master Plans for THYN - prepared by qualified fire safety professionals - to identify major fire risks, applicable local and international fire codes, standards and regulations, and mitigation measures. The Master Plans will demonstrate that the construction design of THYN is consistent with requirements of the local fire code and one internationally accepted L&FS code (e.g. U.S. National Fire Protection Association Codes).



Within three months of construction completion, the Sponsor will undertake L&FS post-construction completion audits for SLRY (and post-refurbishment completion audit report for THYN), prepared by a qualified fire safety engineer/auditor, to verify that buildings have been constructed/refurbished in compliance with the Shangri-La Corporate Life Fire Safety Standard, the local fire code, and (applicable to THYN only) requirements of one internationally accepted L&FS code.



Swimming pool water quality at THYN is tested on a daily basis. THYN provides bottled water to guests and buys food ingredients from reputable local suppliers. There have been no past incidents of Legionella infections from the use of water systems (e.g. showers, spa baths), and THYN commissions legionella tests every 4-6 weeks as per Shangri-La corporate requirements. A diagram detailing HACCP (Hazard and Critical Control Point Food Safety system) procedures is also posted in the kitchen area and interviewed staff members describe how they follow these procedures in their day to day work.



The seismic designs of the three components of the Project are based upon the International Building Code requirements for the seismic conditions predicted in
Yangon.



In response to a recent security incident, THYN has implemented a number of measures to enhance security including limiting access to the hotel and parking lot, increasing screening, including X-ray detectors at the entrances that remain open, and staff training. THYN will continually review the security risks, and adapt these measures as required, and will report annually to IFC on measures taken.

Within the SLRY site stands a large Banyan tree (about 1.5m in diameter and 5-10 meters in height) whose age cannot be verified. Several local persons say it is an old tree and cite local beliefs that the tree embodies local spirits. There is a small shrine attached to the tree trunk.



There is another large Banyan tree at the THYN site but there is no indication of local spirits being ascribed to it by residents. The Sponsor indicates that it will ensure preservation of the two trees at THYN. To this end, the Sponsor will provide a brief report of preservation measures, taken in a respectful manner at the SLRY site, including where necessary, appropriate ceremonies in consultation with local communities, when construction completes.

The Sponsor is a global hotel group committed to corporate citizenship and sustainable development and to balancing the interests of diverse stakeholder groups. Its corporate social responsibility statements include stakeholder relations as a focus area. During construction this Project has generated a large number of local jobs and more such employment opportunities, directly or through supply chains, will be created during the operational phase. As part of the Sponsor’s global CSR program, THYN undertakes activities such as providing support to a local monastery near the Yangon airport. At the SLRY site, IFC’s review does not find concerns by local residents regarding the project.

For more details on the project, please contact:

Mr. Phillip Couvaras
Traders Hotel, Yangon
Tel: +95 1 242 828
Fax: +95 1 242 808
http://www.shangri-la.com/yangon/traders

Shangri-La will place a bilingual English and Burmese language advertisement in a major local newspaper in Yangon to alert the public that results from IFC’s E&S due diligence is available for access. It will also post the English and Burmese language ESRS and ESAP at conspicuous locations outside the main entrance of Traders Hotel in Yangon and at the SLRY construction site; and the same on its corporate website or provide a web-link to IFC’s disclosed ESRS and ESAP.

Broad Community Support is not applicable for this project

No. and PS	Task Title/Description	Completion Date
1/PS1	The Sponsor will update its Corporate Supplier Code of Conduct to explicitly reference contractors and sub-contractors as part of the scope, and adjust the Code content as needed. Completion Indicator: Code of Conduct on Sponsor website updated	2013-12-15
2/PS2	Improve the conditions of the on-site resting shed for security personnel at SLRY construction site related to the following aspects: (i) ensuring minimum space per person; (ii) adequate supply of water; (iii) adequate means of sewage and garbage disposal; (iv) protection against heat, cold, rain, damp, noise, fire and mosquitos; and (v) adequate sanitary facilities, ventilation, storage facilities, and lighting. Completion Indicator: Photos of shed confirm improved conditions	2013-12-15
3/PS2	Review SLRY site occupational health & safety against Sponsor requirements and address any safety gaps on site. Completion Indicator: Review and corrective action implemention report available	2013-11-30
4/PS3	The Sponsor will: (i) commission a qualified engineer to undertake water and energy efficiency audits at Traders Hotel Yangon (THYN); and (ii) based on audit results and recommendations, develop and implement a technically and financially feasible water and energy saving implementation plan. Completion Indicators: (i) Audit report available (ii) Implementation plan and design specifications available; (iii) Implementation completion report available	(i) 2014-1-31 (ii) 2014-4-30 (iii) 2014-12-31
5/PS3	Quantify GHG emissions of the Project annually in accordance with an internationally recognized methodology and good practice. Completion Indicators: Results and methodology attached to AMR submitted to IFC.	Annually
6/PS4	Provide the Life & Fire Safety (L&FS) Master Plans for each of THYN - prepared by qualified fire safety professionals - to identify major fire risks, applicable local and international fire codes, standards and regulations, and mitigation measures. The Master Plans will demonstrate that the construction design of THYN are consistent with requirements of the local fire code and one internationally accepted L&FS code (e.g. U.S. NFPA). Note: The Master Plan is an engineering design consisting of drawings, specifications, and an architect''''s brief which together address the following L&FS elements: fire prevention; means of egress; detection and alarm systems; compartmentation; fire suppression and control; emergency and response plan; operation and maintenance. Undertake L&FS post-construction/refurbishment completion audits at SLRY and THYN, prepared by a qualified fire safety engineer/auditor, to verify that buildings have been constructed/refurbished in compliance with the Shangri-la Corporate Life Fire Safety Standard, the local fire code, and requirements of one internationally accepted L&FS code. Completion Indicators: (i) Master Plans for THYN available (ii) Audit reports available confirming compliance	(i) 2013-12-31 (ii) Within 3 months of construction/refurbishment completion
7/PS4	The Sponsor will provide security screening reports to IFC which will briefly describe threats and external risk factors detected if any, as well as the implementation status of ongoing measures to secure THYN and the other Sponsor properties in Yangon. Completion Indicator: Security screening report available.	First report available by 2013-11-30; thereafter as part of AMR