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
There are no impacts of concern associated with the following Performance Standards: PS5: Land Acquisition and Involuntary Resettlement is not applicable since all facilities are existing and located in facilities that are leased or have been acquired commercially through 'willing buyer-willing seller' arrangements. IFC is not aware of any disputes, outstanding legal challenges or legacy issues related to procurement of land; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable since the company’s activities do not impact biodiversity resources or negatively influence sustainable use of natural resources. RPDL sells limited quantities of fish and meat procured from reputable distributors locally, and some are imported. RPDL does not sell any products that are listed as threatened or endangered; Some Arpico retail outlets carry furniture which is made for Arpico from legally sourced wood, and does not have any impact on biodiversity related issues. PS7: Indigenous People – No indigenous people are known to have been in areas or affected by projects being considered for IFC financing; PS8: Cultural Heritage – 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 RPDL may be used to support future but, as yet, undefined projects in addition to the existing project, the principal Performance Standards (PS) 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.

This is a Category B project in accordance with IFC’s Policy on Social and Environmental Sustainability 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.

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.

The company's expansion of retail business will involve the opening of new stores in rented or leased premises in semi urban or urban commercial areas. No formal environmental and social impact assessment (ESIA) is required for setting up a retail business in Sri Lanka. However, appropriate risk identification and assessment is undertaken, and mitigation measures implemented prior to and during commercial operations per the local permitting process which includes requirements to obtain relevant trade licenses, a valid lease, possess certificates of structural completion, a No Objection Certificate (NOC) from the fire department etc. For life and fire safety, the local fire department gives recommendation on the design layout of the facility, which includes type and number of firefighting equipment, exit points, evacuation markings etc. Based on completion/ installation audit of these, the fire department issues a fire certificate.



RPDL's policies and procedures are adequate for the current scale of its operations, which include corporate-wide practices for various aspects of the company's retail business. Responsibility for implementation of company procedures, including those for occupational health and safety, and workforce related issues is assigned to managers of retail units. The company’s management program includes operational policies and procedures that are implemented at the facility level by supervisors who report to management on a reactive basis. RPDL currently does not yet have a formal management system to provide oversight of environmental and social performance of the company. The current system of assessing and documenting E&S risks and impacts is geared towards meeting the statutory requirements of various agencies, such as the municipal council, the environment agency, the fire department and labor department. 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), RPDL will implement an Environmental and Social Management System (ESMS) to provide consistent oversight of environmental, social and health and safety for all its operations, sub-contractors and supply chain, as well as screening of new opportunities in expanding its business. As agreed in the ESAP action item #1, RPDL will adopt IFC environmental and social Performance Standards as part of applicable requirements in its management system, and further as agreed in ESAP action item #2, RPDL will either hire or designate a qualified individual in the senior management of the company to ensure compliance with group policies and procedures, IFC and regulatory requirements and to ensure consistency with good international industry practice for ESHS performance. The individual will ensure there is a program of continuous improvement that in
cludes training, monitoring, and reporting, and equally, communicating environmental and social aspects to external interested parties relating to the project.



Due to the nature of the company operations, the key stakeholders are suppliers across various categories of commodities and these include local community - farmers and fishermen. Being a retail business and as the company is sourcing some products from auction mechanism, the engagement with these stakeholders is limited. The company has a supplier registration process, which ensures that it engages only with registered suppliers. As set forth in the ESAP action item # 3, the company will develop and implement a Supplier’s Code of Conduct. For existing contracts, these will be added as contracts are renewed. The company will also develop and implement supplier review checklist to ensure that the suppliers do not pose any labor issues such as child and forced labor, and are not engaged in prohibited activities.



The Human Resources department has responsibility for overseeing matters related to labor, working conditions and health and safety. The company provides training to all staff and sub-contractor personnel to ensure they have adequate training to perform their work. Training of staff is done on a routine basis in compliance with local workplace regulations. Supervisors monitor that standards are met and any reportable incidents are reported and follow up action taken when required. Outcomes of training, monitoring and reporting complies with applicable national regulations, and largely consistent with IFC PS1 requirements.

RPDL employs a total staff of approximately 1,750 people, which includes about 1,500 in the stores and distribution centers, and the rest in the corporate and related offices. Approximately half of the total number of employees is outsourced. For the opening of new stores operational staff excluding management is hired well in advance so as to receive proper training. Employees with sufficient experience are promoted to store management positions and they undergo a month’s training prior to the opening. The company has a human resources policy that is consistent with local labor laws, and this policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. Subcontractors, including housekeeping staff is required to comply with all RPDL labor requirements specified in contractual arrangements. The company is in the process of developing a formal human resources policy document and an employee handbook that includes terms of employment, rights and responsibilities of the employees, policies on grievance, non-discrimination, etc. The company is in compliance with national regulatory requirements, and has not been the subject of any violations of applicable labor laws, or labor strikes or disputes.



The minimum employment age at RPDL is 18 years. RPDL ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Hiring practices and employment relationships recognize the principals of non-discrimination and equal opportunity, freedom of association and grievance redress. Employees are aware of their right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have. Some employees of RPDL are part of the LKWSS union which is affiliated to a national trade union. All employees have the right to be part of the trade union, and may choose to do so at any time during their employment with RPDL. Wages paid by RPDL is above prevailing minimum wage requirements, and working conditions are considered to be similar to others in the retail business in Sri Lanka.



The retail stores present limited occupational health and safety risks for the employees, the most significant being those related to ergonomic impacts on labor from loading/unloading of some heavy material, and additional OHS risks from physical hazards such as slip/trip/falls, electrical shocks, cuts and wounds; and chemical and biological hazards on account of material handling such as meat products, fruits and vegetables. Adequate personal protective equipment (PPE) such as shoes and gloves are provided to the workers as needed. RPDL has an incident reporting system where incidents are reported up to management as they happen, and follow up corrective action undertaken after review. Occupational health and safety (OHS) is managed by designated health and safety staff at each retail center.
All employees in the company have to undergo a full training program at induction and subsequently on worker health and safety relevant to their job activity. Human Resources department maintains permanent records of participation to ensure compliance. No fatalities or serious injuries have been reported at any RPDL facilities. Facilities are subject to annual audits by regulatory agencies to monitor compliance with labor regulations. The company has been in compliance with regulatory requirements for occupational health and safety requirements and has recorded no significant lost time incidents or fatalities in its operational history. As agreed in ESAP Action # 4, RPDL will review and update its existing HR policies and procedures to ensure formal documentation of its policies and procedures to ensure operational consistency with IFC Performance Standard 2 on Labor and Working Conditions.

Effluent generated at RPDL’s retail stores include limited quantities of trade related wastewater from fresh produce, meats, fish and food preparation areas, cleaning activities, sanitary wastewater, and storm water. Commingled wastewater is discharged either to municipal sewer (where available), after pre-treatment in some locations to the receiving environment in a manner consistent with WBG/IFC EHS guidelines. Discharge of effluent from RPDL's retail stores and facilities is regulated by a permit, and the company is in compliance with local regulatory requirements at all its facilities.



Solid waste from RPDL facilities primarily comprise discarded packaging materials including cardboard, pallets, etc., and date expired products ranging from food to consumer goods. Expired and off specification materials is collected for disposal by government approved vendors, and in some cases by manufacturers of products. Minor maintenance and associated activity from routine operations produce limited quantities of hazardous waste which include used batteries, motor oils etc. These wastes are disposed by licensed waste disposal companies in a manner consistent with local regulatory requirements. Air emissions to the atmosphere from the RPDL primarily include emissions from diesel fueled generators that provide emergency backup power.



Water is obtained from the municipal water supply system and is mainly used for housekeeping and sanitary usage. Annual water usage by RPDL is estimated to be 120,000 m3. Water usage intensity at the retail facilities is estimated to be about 0.21 m3/sq. ft. /year. Principal energy usage includes electricity procured from the grid (estimated to be about 13,200 MWh per year). Net greenhouse gas (GHG) emissions attributable to RPDL’s annual consumption of electricity are estimated to exceed 6,250 metric tons of carbon dioxide equivalents per year. Energy usage intensity at the retail facilities is estimated to be about 23.36 kw/sq. ft. /year.



As agreed in ESAP action item # 5, the company will benchmark energy usage against good international industry practice, and achieve these standards within a reasonable time frame for its existing facilities, and as part of design and construction/retrofit of any future facilities prior to commissioning. The company will retain the services of a qualified and experienced consultant to optimize energy usage at its retail facilities. The consultant will advise the company on making operational and design modifications in areas such as cross dock operations, building insulation, equipment selection and process optimization, etc.

RPDL retail centers are typically leased premises within existing buildings located in a mixed use (commercial and residential) neighborhoods. Security personnel employed by RPDL are unarmed and no adverse interaction with members of the public is anticipated. All RPDL retail centers have fire safety provisions in compliance with local regulatory requirements, and have valid No Objection Certificates (NOC) or equivalent from local fire departments. Fire safety drills are conducted at least once a year across all facilities and all fire hydrants and extinguishers are checked monthly.



Life and fire safety (L&FS) systems at RPDL retail centers are designed and operated to meet local regulatory requirements. These standards may vary by location, and are not certified under any particular certification regime, making assessment against good international industry practice difficult. As agreed in ESAP action item # 6, in order to confirm that life and fire safety provisions are adequate across all its facilities, and in compliance with WBG’s EHS Guidelines, the company will commission an independent review of life and fire safety provisions by a qualified external expert. The scope of review will include existing facilities, and develop a set of minimum technical life and fire protection requirements to be imposed to owners of properties that RPDL will rent/lease from in future. Specifications for new facilities should be responsive to all national requirements and an internationally recognized fire and life safety code, as required by the life and fire safety section of the WBG EHS General Guidelines. The review should also focus on operational aspects of RPDL centers, including monitoring of L&FS infrastructure that is provided by building owners. Recommendations made in this respect together with standard specifications should form part of the standard operating procedure on life and fire safety for existing and new operations, and be the basis for closing any gaps that are identified in the review. Additionally, RPDL will adopt a disaster response plan for earthquakes, fires and other large scale emergency situations.



Food safety at Arpico stores are managed as part of it overall quality management system. Food safety standards at Arpico stores comply with applicable Sri Lankan requirements and are comparable to other leading food retailers in the country. Staff assigned to food handling and preparation areas are trained on food safety and regular inspections are undertaken to ensure that procedures are followed. The company has not had any incidents or consumer complaints related to food safety.

No local community have been significantly affected by environmental risks or impacts from RPDL’ ongoing operations, and has not been the subject of any public complaints or litigation with respect to its environmental, social or health and safety performance. In Sri Lanka, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessment occurs through procedures established by local authorities. Additionally, as the company's operations do not have any negative impacts on the surrounding community, no formal community engagement plan on RPDL' environmental and social performance has been undertaken by the company to date. As part of its environmental and social management program, as agreed in ESAP action item # 3, RPDL will establish methods for communicating environmental and social aspects to stakeholders and maintain procedures for receiving, documenting and responding to stakeholder concerns and grievances relating to their activities, in full collaboration with local authorities.

RPDL will disclose project documentation on its web site http://www.arpico.com and locally at its corporate office.

Shalinka Seresinhe
Financial Controller
Richard Pieris Distributors Limited
310 High Level Road,
Nawinna, Maharagama, Sri Lanka.
Tel: +94 011 431 0732
Fax: +94 011 430 4030
Email: mailto:shalinka.s@arpico.com

Broad Community Support is not applicable for this project

Arpico Retail(33883) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
Adoption of IFC Performance Standards and Management Endorsement	31-Jan-2016	Completed	Completed	12/2/2016
Creation of position at the corporate level and assignment of qualified individual for oversight of environmental, social and health and safety issues at the company.	31-Jan-2016	Completed	Completed	10/18/2016
Implement an integrated management system for oversight of environmental, social and health and safety issues at the company.	31-Jan-2017	In progress	Under discussion with IFC Client
Review and update HR policies and procedures to ensure operational consistency with IFC Performance Standard 2 on Labor and Working Conditions.	31-Jul-2016	In progress	Under discussion with IFC Client
Audit energy usage at its facilities, with an objective to achieve internationally accepted benchmarks established for best practice in the sector.	31-Jul-2016	In progress	Under discussion with IFC Client
Submit a life and fire safety (L&FS) review to IFC that identifies major fire risks, applicable codes, standards and regulations, and mitigation measures for all facilities (existing and new).	31-Jan-2017	In progress	Under discussion with IFC Client