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
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 it may create a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance specifications, 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, water and subsurface; solid, and hazardous waste and materials management, including transportation; community and occupational health and safety; energy use and efficiency; community engagement; and land acquisition. All aspects of MTI’s activities in providing EPC services are reviewed through government led environmental and social impact assessments (ESIA), and for the project under consideration for IFC financing, the following IFC Performance Standards were found to be not applicable.

PS5: Land Acquisition and Involuntary Resettlement is not applicable since the company does not own any assets, and operates facilities only during commissioning and startup periods for its clients.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable as no negative impacts on conservation or biodiversity influence have been identified at the projects undertaken by MTI.
PS7: Indigenous Peoples is not applicable. No Indigenous People are known to have been in the area or affected by the project.
PS8: Cultural Heritage is not applicable. The projects being considered for IFC financing are not located in areas of known historical or cultural significance.

Because IFC’s proposed corporate investment in MTI may be used to support future but, as yet, undefined projects in addition to the existing project, the principal Performance Standards to be applied to this investment are those listed above. A condition of IFC’s investment going forward will be that the Company shall adopt IFC Performance Standards as part of the applicable legal and other requirements in all of its operations, and consider the issues identified in PS1 through PS8 when it is assessing any new business opportunities, acquisitions or mergers, or business models.

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.

Key environmental and social issues associated with MTI’s business in composting, sludge treatment and odor control operations, and EPC services are summarized below. Environmental, social and health and safety issues that require ameliorative measures are included in the Environmental and Social Action Plan (ESAP) and will be addressed by the company as agreed in IFC’s investment documents and any associated agreements.



Local governments select sites for locating sludge processing plants, and obtain documented approval from the impacted communities for location of the facility. Consistent with the PRC laws and requirements, ESIAs are prepared by the government for all projects. The government ensures that potential impacts of the project are identified and addressed during the project planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures that are implemented during the operational phase of the project. MTI''s obligation in the contracts is to comply with the requirements set forth in contract documents. The company’s environmental management team has overall responsibility for assisting the clients to obtain appropriate permits and approvals from various government agencies, and ensuring all operations are in compliance with the terms of the EPC contract. Moving forward, MTI will ensure that compliance with IFC requirements is included through the project life cycle, from project screening to operations and maintenance for the duration of the O&M contract, even if only for short durations such as during commissioning and startup activities. As agreed in the ESAP, the Company will prioritize, review and implement any ameliorative actions at existing sites where site development or construction is already underway.



MTI has a corporate management system which provides limited oversight of environmental, social, health and safety (ESHS) issues. The company’s management program includes operational policies and procedures that are implemented at the facility level by supervisors who report to management on an as needed basis. Policies and procedures comply with applicable local regulatory requirements for operation of these facilities including those for human resources and labor, occupational health and safety, and environmental compliance. As part of the agreed Environmental and Social Action Plan (ESAP), MTI will augment its existing management system to provide consistent oversight of environmental, social and health and safety for all its activities from construction management to operation of facilities, as well as screening of new opportunities in expanding its business. MTI will either hire or designate an individual on the board of the Company to ensure compliance with group policies, procedures and regulatory requirements, and ensure consistency with good international industry practice for ESHS performance, including IFC Performance Standards and applicable guidelines
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Human resources are managed at corporate level with oversight of MTI facilities and operations. Training of staff is done on a routine basis in compliance with local workplace regulations. The department of human resources is responsible to ensure that all employees are adequately trained to perform their work safely. Supervisors monitor that standards are met and any reportable incidents are reported and follow up action taken when required. Training, monitoring and reporting framework is consistent with PRC requirements, and is expected to be consistent with IFC requirements after implementation of improvements identified to enhance the existing management system of the company.

MTI currently employs 50 staff, including their offices in USA. MTI has a Human Resources policy that complies with local regulatory requirements, and is applied consistently to all employees, and where applicable to subcontractors. As required by law, the policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. As is common practice in China, although not explicitly stated, employment relationships recognize the principals of non-discrimination and equal opportunity. Although there is no union at MTI, under PRC law, employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have.



The minimum employment age at MTI is 18 years. MTI has procedures that ensure child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Working hours on site can vary by nature of activity and phase of project, with most labor intensive phases being at the construction phase during which there are continuous operations. Construction activity is largely subcontracted for which semi-skilled and unskilled labor is procured locally. Wages are paid by subcontractors to labor on a monthly basis and calculated on the basis of hours worked, inclusive of overtime. Terms of employment for sub-contractors are as per local laws and the company relies on regulatory agencies for ensuring that sub-contractors comply with applicable labor laws. The company will review its existing practice on working and living conditions for construction labor to ensure that conditions provided at labor camps will be consistent with good international industry practice at all times.



Occupational health and safety of employees at MTI is managed by the Human Resources department. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited annually, and construction sites inspected by regulatory agencies to monitor compliance with labor regulations. The Company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history. Labor and working conditions are in compliance with IFC Performance Standards and applicable World Bank Group EHS guidelines for the sector.

MTI is strictly an EPC company and does not own or operate any facility. Scope of operations is limited to post-construction commissioning activities, which may include providing operational assistance for a limited period of time prior to hand over to their clients. Emissions, use of water and electricity by the company are limited to those associated with construction and commissioning activities. MTI also generates waste streams that are typical of construction activity such as debris, packaging materials, spoils from land clearing etc. These wastes are managed in compliance with PRC/local regulatory requirements. Under terms of the EPC contracts, MTI is responsible for compliance with applicable regulatory requirements for emissions during the startup and commissioning phases. Compliance requirements vary depending on site location, and issues identified during the impact assessment period. In general requirements for emission control and standards for discharge are consistent with those described in applicable World Bank Group EHS guidelines for the sector.

Engineering controls and staff training is provided to mitigate community health and safety risks during the project construction (EPC phase), as well as follow-on activities during the startup and commissioning phases. During the construction phase, there are procedures that consider movement of vehicles to and from construction site; operation of construction equipment; containment of dust, noise and other nuisance factors; control of public access to construction sites; appropriate material movement planning; provision of signage, traffic control, site barricading, reflectors, and other measures to mitigate the risk of accidents for general public during construction. During the startup and commissioning phase, the use and storage of hazardous chemicals are subject to stringent safety standards as required under PRC laws. Risks to the community include those arising from day-to-day operation of these facilities, as well as those from the transportation and handling of municipal solid waste and other hazardous materials. MTI is required to have emergency prevention and control plans which specify responsibilities, ensure appropriate response equipment and materials are in place, and detail a set of procedures to be followed to minimize the harm of any potential accident. Moving forward, MTI will review its scope of emergency response and update procedures, including the need for drills to test procedural effectiveness. MTI will also add a community involvement component that addresses appropriate behavior and safety measures to be implemented in the event of a hazardous chemical release beyond the plant boundaries, including during transportation of such materials.



MTI uses unarmed security guards/staffed check posts at major civil works sites, along access roads and at labor camps to ensure both the security of the work sites as well as that of the surrounding communities.

Although no local communities have been significantly affected by MTI’s ongoing EPC activities and startup and commissioning operations, seasonal and occasional noise and odor issues are anticipated, which may lead to negative community perception of projects. MTI has a continual program to review its operations and has instituted engineering controls to minimize odor issues at its facilities. In China, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessments occurs through procedures established by PRC regulations. As a result, no formal information dissemination activities have been undertaken by the Company so far. As part of its environmental and social management program, MTI will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. Specific procedures will be developed to incorporate community engagement, including a clear procedure on disclosure and consultation with potentially affected communities.

For more information contact:
Lang Bo
MTI Environment Group Ltd.
1st Floor, Building C Danlong Mansion
No. 3 Changwa Road, Haidian District
Beijing
China 100089
Phone: +86-10-88517000
E-Mail: mailto:langbo@mti.cn

A Chinese-language copy of the Environmental and Social Review Summary (ESRS) and associated Environmental and Social Action Plan (ESAP) will be made available at the corporate office as we all as the main entrance of all project sites.

Corporate office
MTI Environment Group Ltd.
1st Floor, Building C Danlong Mansion
No. 3 Changwa Road, Haidian District
Beijing
China 100089

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
ESHS Position at Corporate Level - Create position and advertise with Terns of Reference	07/31/2014
ESHS Position at Corporate Level - Employed/In post	10/30/2014
Adoption of IFC Performance Standards as part of MTI’s legal requirements	07/31/2014
Integrated Environmental and Social Management System (ESMS)	07/31/2015