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 IFC's 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

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific 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 and social (E&S) issues associated with this Project include: development and implementation of EHS management systems at corporate and company level, health and safety; assurance of fair, safe and healthy working conditions in compliance with local regulatory requirements and relevant Performance Standards; resource efficiency of the operations (mainly energy efficiency); and management of sustainability issues in the supply chain of products sold by the company.

Considering that the main activity of the company is internet retailing and delivery through its warehouse and offices, no significant impacts are expected related to the other Performance Standards.

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.

IFC’s assessment considered management of its EHS performance and compliance with national and local permit requirements at the corporate (BF) level as well as Dafiti’s level .



Policy, Management Systems and Organization: Dafiti havs a Code of Conduct that encompasses some E&S policy issues such as forced labor/child labor and other applicable legal requirements. Another RI company, Zalando, which operates in Western Europe and which has been established for longer than Dafiti, has developed and applies well-resourced supply chain sustainability assurance systems. These have functioned as models for BF companies, and are in the process of being adopted by Dafiti.



At Dafiti, E&S aspects are managed by the HR manager who is responsible for all permits, maintenance and security. Staff have been assigned at each operating unit to be responsible for workplace safety conditions.



Supply Chain: Dafiti’s main suppliers are located in the northeastern and southern Brazil and in the Sao Paulo Area. The company is in the process of implementing well-established processes to manage supply chain sustainability for private label goods in line with those adopted by Zalando. This system is based upon a supplier Code of Conduct which prohibits child and forced labor, has fire safety and occupational health and safety safety requirements, and insists upon regular payment of wages to suppliers’ employees, product safety specifications, checklists, and related suppliers guidelines, all backed by contractual obligations to suppliers to comply with these conditions. Zalando has built its own Sourcing and Social Compliance team including local representation in China. Suppliers are subject to unannounced inspection visits by RI staff, and social compliance auditing by a well-known auditing company in this field. In addition, the procurements team of Dafiti regularly visits its suppliers’ factories

Dafiti employs around 1,500 workers of which about 750 are warehouse staff and the rest are administrative staff members. The products are distributed through external logistics services providers.



Human Resource Policies and Procedures: Dafiti’s HR department has documented procedures including, hiring, selection, leave policy, disciplinary measures, transfer of employees, payment of benefits, among others.



Working conditions and terms of employment: Dafiti has standardized employment conditions, with written contracts of employment for each employee. These contracts describe the working conditions, terms of employment and benefits provided, including probation period, wage calculation, leaves etc. , meeting the legal requirements in the countries of operation.



Non-discrimination and Equal Opportunity: Dafiti has documented policies on non-discrimination and equal opportunity. No instances of discrimination were noted.



Freedom of Association: At Dafiti, a Collective Agreement has been negotiated between the company and the Union of Retail Trade Employees.



Protection of workforce: Dafiti has an ethics code applicable to all the employees, which includes statements regarding non-discrimination, equal opportunities and protection of the workforce. The minimum workers age is 14 years, but Dafiti does participate in a national part time training program in cooperation of technical schools (SENAI). These young trainees are not allowed to handle or work with hazardous materials or activities. Other than this training program, the minimum age is 18 years old.



Grievance mechanism: Dafiti is built on a values system and the fourth of the company´s values incentivizes employees to communicate honestly and efficiently. In this context, employee grievances can be reported in one of the following ways: (1) Through the human resources e-mail at mailto:genteegestao@dafiti.com.br an employee can report any problem perceived at the work environment or suggestion of improvement. (2) Directly to the employee´s supervisor, in the case that no intermediary is judged necessary. (3) Through a box of suggestions and complaints that is left at the administrative floor. All employee grievance reports are responded with follow-up one-on-one private conversations with a Human Resources representative. If necessary the issue is scaled up to the related parties always preserving confidentiality. Dafiti management is eager to create an environment where those cases can be raised and solved as part of the company´s growth process.



Occupational Health and Safety (OHS): Dafiti is in compliance with Brazilian laws which include requirements for monitoring the health and safety risks of employees by implementation of a Program for Medical Control of Occupational Health (PCMSO) including entry, exit and periodic health examinations for occupational diseases. The company is also implementing the required Environmental Risks Prevention Program (PPRA) to ide
ntify task-specific hazards and occupational exposures (i.e. exposures to noise, heat, cold, ergonomic, and biological hazards). The PPRA, as any preventive program, requires recognition, evaluation and control of the occurrence of environmental risks, involving actions under the responsibility of the company. They are implemented with maps of risk training for all employees. In addition, Dafiti has established an Ergonomic Program in compliance with Brazilian laws which include requirements to monitoring mainly for the area of Consumer Assistance (SAC) and the operations of the warehouse.



Dafiti has established the required procedures and instructions on OHS though the IFC visit did identify a number of areas in which OHS management should be improved, and the company has undertaken to implement these improvements. However, in the interim, and in parallel with this formal process, several areas for improvement will be addressed on a priority basis including: use of mechanical assistance in lifting materials, and requiring multi-person lifts if weights exceed thresholds.



Fire safety and emergency response: Dafiti has firefighting equipment in place; the company has trained fire response teams including at the logistics center. The facilities are designed in accordance with the recommendations of the local Fire Protection Regulations. All buildings also have fire prevention and fire fighting projects designs which are approved by the Fire Authority and have the required permits from the local office of the fire department. All buildings were noted to have emergency routes and exits, fire extinguishers, hydrants, smoke detectors, alarms and sprinklers, as appropriate. Sprinklers are designed according the building fire load, number of floors, number of people and existing emergency exits.

Resource Efficiency: Dafiti focuses on optimizing the use of the resources mainly electricity. In the offices, the departments ensure the lights are switched off when vacant and use energy efficient lighting solutions. The warehouse has incorporated the use of natural lighting to reduce the use of electricity.



Solid Waste Management: Waste generated in the facilities includes mainly domestic type of waste and office waste. Dafiti has initiated segregation and recycling of waste at its warehouse. Dafiti will expand the segregation and recycling program to the headquarters and will identify mechanisms to reduce the amount of waste generated, as well as focusing on reuse and recycle. The company has contracts with the municipality and with authorized companies for collection and disposal of waste.

Dafiti utilizes its media presence for various CSR activities society e.g. helping small Non-Governmental Organizations (NGOs) by using Dafiti media presence and traffic on the website to draw attention to their causes; donating fashion products which cannot be sold anymore (e.g. returns); using site and operations to sell pro-bono products for charities (e.g. selling bag from NGOs and revenues given to the NGOs).

Dafiti will disclose this ESRS at its websites: http://www.dafiti.com.br,.http://www.dafiti.com.mx, http://www.dafiti.com.co as well as locally at the following address:

Any queries and/or comments about the project may be directed to:

Name of the person: Mauro Piazza
Addresses: Rua Julio Gonzalez, 132, Sao Paulo
Email: mailto:mauro@dafiti.com.br

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.