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

The project is categorized A according to IFC’s Environmental and Social categorization process as its consists of an equity investment in a company focused on the development of small hydroelectric power, biomass thermal power as well as wind power projects. Although in the development process, the company screens potential project locations for numerous criteria to minimize E&S risks, which include avoidance of legally protected areas and indigenous peoples’ lands, some individual projects from existing portfolio or future developments can have impacts consistent with a category A project.

This is an investment in a corporate entity to support expansion into operating future, as yet undefined, power-related infrastructure. Power projects being developed by CPFLR will result in impacts that will have to be managed in a manner consistent with PS 1, PS 2 and one or more of the following Performance Standards:
PS 3: Pollution Prevention and Abatement
PS 4: Community Health, Safety and Security
PS 5: Land Acquisition and Involuntary Resettlement
PS 6: Biodiversity Conservation and Sustainable Natural Resource Management
PS 8: Cultural Heritage

As CPFLR conducts a screening process early in the project identification and development stage with the objective of avoiding indigenous lands, legally protected Indigenous Peoples (IP) areas and other adverse impacts on IPs, PS 7: Indigenous Peoples is not considered to be applicable to this investment..

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.

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Working Conditions and Management of Worker Relationship

CPFLR has developed and implemented a human resources policy that is based on solid procedures and is aligned with Brazilian labor laws. Brazil is a signatory to numerous international conventions and treaties. Those relevant to labor rights include: the International Labor Organization (ILO) Convention 87 on Freedom of Association and Protection of the Right to Organize; the International Covenant on Civil and Political Rights; the American Convention on Human Rights; and the International Covenant on Economic, Social and Cultural Rights.

The terms of employment, such as wages and benefits, hours of work, overtime arrangements and overtime compensation, annual and sick leave, maternity leave, vacation and holiday, are established by national labor regulations. Although Brazilian workers are generally familiar with the national terms of employment, during the recruiting phase, the Company also informs candidates and newly hired workers about the specific terms of their job positions. Additional Workers’ benefits include medical and dental assistance, social security, meal and transportation vouchers, among others. The program for career development includes assistance for education (undergraduate and graduate school as well as incentive for a second language).

CPFLR’s Code of Conduct, which is provided to all workers and is also available at CFPLR’s website (http://www.cpflrenovaveis.com.br/show.aspx?idCanal=lnozIhi0Q5ZkqLXQd8v1EQ==), defines some of the workers and employer’s rights and responsibilities. The Code of Conduct also presents information regarding equal opportunities, non-discrimination, support for education, grievance mechanism, the right to free association, alcohol and drugs, harassment at the workplace, etc.

Grievance Mechanisms – CPFLR’s has a Corporate Code of Conduct Committee that is responsible for receiving and examining all comments and complaints that are received from known or anonymous sources. Means of grievance mechanisms include toll-free number (0800 77 02050), e-mail (mailto:etica@cpfl.com.br), written correspondence (Caixa Postal No 1408, CEP 13088-900) and information available at the Company’s website. (http://www.cpflrenovaveis.com.br/fale_conosco.aspx).

Workers’ Organizations - CPFLR’s employees belong to one of four regional chapters of the Sindicato dos Eletrocitários (SINDIELETRO, Unions of Electrical Sector Workers). Although this is a national union, CPFLR signs agreements with regional chapters in each state the Company operates (i.e., Rio Grande do Norte, Rio Grande do Sul, Minas Gerais, and São Paulo). These agreements provide specific provisions for minimal salary, percentage of annual rates, work hours, etc. Employees may also voice their grievances through these syndicates.

Protecting the Work Force – Child labor and forced labor are strictly prohibited under Brazilian laws and the Company verifies the age of job applicants by requi
rement proof of age. However, in compliance with Law Nº10.097/00 that requires training opportunities for teenagers (“Formação Menor Aprendiz”), CPFLR offers trainee opportunities that allows for professional development of teens and their participation in the work market. The Brazilian government has determined that teenagers as young as 14 can participate in the “Menor Aprendiz” Program. However, PCFLR has established a minimal age of 16 for teenagers to participate in the program offered through the Company. To engage in full-time employment, workers must be 18 years old. Employment contracts and the Company’s employment rules do not allow for circumstances that could be construed as forced labor.

Occupational Health and Safety – CPFLR has a workforce of 330 employees, of which 92 are dedicated to operations of facilities and the remaining 238 are dedicated to various administrative, corporate and supporting duties. CFPLR reports zero fatalities and accidents with lost time for its operations and a lost time incident rate (LTIR) of 1.5 for activities related to construction of new facilities, which is considered low when compared to the LTIR for the civil construction sector in USA.

CPFLR developed an integrated management system that is based on ISO 9001, ISO 14001 and OHSAS 18001. Key performance indicators have been established and results are compared to these indicators to assess the overall effectiveness of plans and procedures.

During the construction phase of the project, according to Brazilian legal requirements, contractors responsible for civil construction will prepare and implement a series of occupational health and safety (OHS) management plans, including:

Medical Surveillance Program (PCMSO, Programa de Controle Médico e Saúde Ocupacional);

Internal Commission for Prevention of Accidents (CIPA, Comissão Interna de Prevenção de Acidentes);

Personal Protective Equipment (PPE) Program; and

Environmental Risk Prevention Program (PPRA, Programa de Prevenção de Riscos Ambientais).

This and other plans are prepared in accordance with the requirements of the Ministry of Labor and Employment’s regulatory norms (NRs in Portuguese). For verification of compliance with these occupational health and safety (OHS) requirements, CPFLR has secured the services of Prevent Work, a Brazilian consultancy dedicated to OHS compliance services. Prevent Work also provides training and drills for the various types of emergency situations associated with the nature of the Company’s operations. Prevent Work conducts monthly audits at all facilities and maintains OGH managers and technicians at the constructions sites. The results of the audits lead to the development of corrective actions plans, whose implementation are supervised and verified by Prevent Work.

For the operations of existing facilities, CPFLR’s OHS Management System contains a comprehensive set of plans and procedures covering such aspects as:

- Identification and assessme
nt of potential OHS risks;

OHS operational procedures including: work in confined spaces; machine safety; potential exposures to radioactive energy sources; work in heights; electrical safety and lock-out-tag-out procedures; maintenance of boilers, fire prevention systems, permit-required activities; handling of chemical substances etc.; and

Training, drills and training effectiveness reviews.

All ECP contractor workers are trained in the basic EHS elements of construction phase during a induction program that includes company’s Safety Policy as well as Brazilian labor law and Regulatory Norms and covers the following aspects: use of Personal Protective Equipment (PPE); electrical safety; machine safety; unhealthy and hazardous activities and operations; ergonomics; civil works services; fire safety; sanitary and welfare conditions at work; unsafe practices; implications of personal safety factors in accident / incident rates; safe work permits; housekeeping practices; safety signage; work in heights and use of personal fall protection; use of lifting equipment; and emergency planning (including first aid and rescue operations). Contractors are required to maintain registries of the training courses recording attendance and topics covered.

CPFLR also conducts annually an OHS retreat called SIPAT (Semana Interna de Prevensão de Acidentes do Trabalho), in which accident prevention practices are discussed and stressed with workers of all sites.

High-Voltage Power Lines – CPFLR is responsible for the O&M of transmission lines that connect their power generation facilities to substations that are operated by state transmission and distribution companies, which are connected to the national grid. Field observations confirm that CPFLR uses qualified contractors that have written procedures to conduct maintenance and repairs of high-voltage lines. Moving forward, CPFLR will develop and implement its own procedures for conducting work on high-voltage lines and include these procedures in the ESMS.



Workers Engaged by Third Parties - CPFLR has established policies and procedures to manage and monitor the performance of contracted workers and uses terms and conditions included in contractual agreements to ensure compliance with in-country requirements. Moving forward, CPFLR will implement procedures to inspect housing conditions of workers engaged by contractors who are housed at rented properties in the nearby communities or at workers’ accommodations built for the construction of CPFLR’s projects. The objective of such inspections is to verify that housing conditions are aligned with Brazilian regulatory norms, NR 18 and NR 24

Brazilian environmental licensing requirements include a comprehensive public consultation process beginning with the publication of a summary of the environmental and social impact studies in the local government offices, such as municipal offices, for a period of public review, together with an announcement soliciting comments from the public. This publication and announcement are followed by dissemination of project information to residents of potentially affected communities and invitation for a public audience held before the environmental regulatory agency responsible for the issue of environmental license. Records of the consultation and permitting processes are kept by the relevant regulatory agency and are available to public inquiries. CPFLR further includes in its Environmental and Social Management programs a social communication and environmental education component designed as outreach activities to communicate construction and operational risks of the projects. Communication programs are also intended to ensure that local residents are aware of the project point of contact to communicate concerns and grievances. The company prepares educational materials for distribution in project affected areas including environmental education guides for teachers, simple ecological education materials for school children, and project-specific information guides or news releases providing updates on the implementation of environmental and social programs, descriptions of the environmental licensing process, information on reforestation and watershed conservation programs, and about safety issues along the reservoirs.
As part of CPFLR’s corporate policies, the Company develops social programs that are required by Brazilian standards such as Social Communication, environmental education, among others. However, the Company strengthens its relations with local communities through many social program initiatives. CPFLR demonstrates evidence of successful management of community grievances. During the implementation of construction activities, the company provides various means for members of the community to place inquiries or communicate concerns. The company develops a Social Communication Program for each project, whose target is to reach the land owners affected, the communities where the plant is inserted and the representatives and associations of the municipalities where the plant will be implemented. For the projects located in Minas Gerais state, the company also has a Social Assistance Program that consists of the implementation of a Social Assistance Center (Posto de Atendimento Social - PAS) to the community, where a social assistant, a lawyer and a psychologist are available to assist and advise the population. Community activities, such as Awareness Raising, Environmental Education, Health and Leisure Activities, are also conducted as part of PAS activities. The PAS is also where the community inquires about jobs opportunities during the construction phase and where any member of the community can ask questions, solve doubts and register grievances or complaints. For each project under implementation, CPFLR has already implemented the respective PAS. In order to ensure that the above-described approach is consistently applied across all projects, CPFLR develop two specific procedures (Control of external grievances and communication with stakeholders consistent with IFC PS1 requirements and includes process that records grievances received and responses provided (such as the name of the individual or organization; the date and nature of the complaint; any follow up actions taken; the final decision on the complaint; how and when relevant project decision was communicated to the complainant; and whether management action has been taken to avoid recurrence of community concerns in the future), and reported back to the affected communities periodically. For each project, CPFLR designates a point of contact who is trained in the company’s grievance procedure, and to whom project-related views and concerns of the affected community can be addressed.Besides, the company implemented the Environmental and Patrimonial Education Program, whose objective is to pass on to the community information and knowledge about the main social and environmental themes of the region including the importance of preservation of the natural heritage. Educational events with the community are carried out with the distribution of environmental education books, talks on themes about the local environment and participation in the community schools for awareness raising and education of students. The most frequent themes include: recycling, soil conservation, forest preservation, silting-up of rivers, water use and conservation, and biodiversity

Mr. Marcelo Souza / Ms. Maria Carolina
Address:
Av. Dr Cardoso de Melo, 1184 – 7o andar
Vila Olimpia – São Paulo – SP
CEP 04545-042
PS.: AV = Avenue; Andar = Floor; CEP = ZIP
Email: ri@cpflrenovaveis.com.br
Phone: +55 11 3157-9305
Website: http://www.cpflrenovaveis.com.br/ri

Broad Community Support is not applicable for this project

#	Action	Dead Line
1	i) Prior to new Biomass project development, the Company shall conduct air dispersion models based on US EPA’s AERMOD package, to predict future air quality impacts.	January 31st, 2014
	(ii) In the event that there are no ambient air quality data in the area of a future cogeneration facility, a monitoring program should be implemented to acquire the baseline air quality data necessary for the impact analyses.
2	For new Biomass project developments, the Company shall implement air emissions’ means of control consistent with World Bank Group’s EHS Guidelines for Thermal Power air emissions factors.	January 31st, 2014
3	During the design and sitting of future wind farms, the Company shall use commercially available modeling software to identify a zone of flicker and to prevent/minimize such impacts, in alignment with the World Bank Groups’ EHS Guidelines for Wind Energy.	December 31st, 2013
4	The Company shall hire a consultant to develop an avifauna monitoring procedure for wind projects aligned with international best practices.	December 31st, 2013
5	The Company shall revise the current waste management practices for organic wastes at construction sites in Rio Grande do Norte and implement procedures to ensure organic wastes are properly disposed in accordance with Brazilian requirements.	December 31st, 2013
6	The Company shall include in its policy the commitment to follow IFC Performance Standards.	December 31st, 2013
7	The Company shall develop and implement its own procedures for conducting work on high-voltage lines and include these procedures in the ESMS.	December 31st, 2013
8	The Company shall develop a Resettlement and livelihood restoration framework procedure in alignment with IFC’s Performance Standard 5 and local requirements to help ensure a consistent approach to these processes in all projects.	December 31st, 2013
9	The Company shall formalize procedures for chance finds during the construction of new facilities.	December 31st, 2013
10	The Company shall implement procedures to inspect housing conditions of workers at construction sites.	December 31st, 2013