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

The proposed investment is expected to have limited environmental and social impacts which are site-specific, temporary and none are regarded to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus, this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. This categorization is in accordance with other similar type of projects within this sub-sector. The project is designed to avoid, minimize and manage environmental and social risks and impacts of the Company’s operations in compliance with local legal and regulatory requirements, applicable IFC Performance Standards and World Bank Group (WBG) General and sector-specific (Poultry production) Environmental, Health and Safety (EHS) Guidelines. IFC’s Good Practice Note on Animal Welfare and its applications to HKY’s operations and sub-contractors has also been assessed during the appraisal.

Key E&S issues applicable to this investment are: (i) operational licenses of HKY’s facilities; (ii) environmental, including bio-security and disease prevention, OHS, and social management system and related procedures and effective implementation; (iii) adherence to Chinese labor law, terms of employment and working/living conditions for farm workers accommodations, including at contracted farms; (iv) Life and Fire Safety (L&FS) provisions and emergency preparedness and response procedures, including avian flu; (v) use of public utilities (water supply and energy), optimization of water and energy use through design and resource conservation measures, including greenhouse gas emissions; (vi) wastewater and solid waste management, air emissions from generators, boilers and heating (coal) systems, potable water quality, treatment and monitoring, hazardous material handling, management and control of pests and rodents; (vii) engagement with communities on E&S risks, as needed.

Identified applicable performance standards
While all Performance Standards are applicable to this investment, IFC’s 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:

PS1: Assessment and Management of Environmental and Social Risks and Impacts
PS2: Labor and Working Conditions
PS3: Resource Efficiency and Pollution Prevention
PS4: Community Health, Safety, and Security

PS 5: Land Acquisition and Involuntary Resettlement does not apply to the current investment as none of HKY farming and/or hatchery operations have and/or will trigger involuntary resettlement and/or economic displacement. Most of the land required for HKY operations is leased through a negotiation process with village’s farmer committee. Lease contract is signed by the Company, the village’s farmer committee and all participating farmers for a period averaging 10-20 years. Local land department at county level act as a witness throughout this process. Lease payment is paid annually to the village committee which then distributes it to individual farmers. PS6: Biodiversity Conservation and Sustainable Natural Resources Management does not apply because HKY’s operations are located within existing consolidated agricultural areas. As such, there is no conversion of natural/critical habitats. Presence of Indigenous People (PS7) and Cultural Heritage (PS8) has not been identified in the existing footprint of HKY operations. In the event that issues anticipated by these PSs arise, HKY will promptly inform IFC. Screening and assessment of these issues against Performance Standards requirements will be done through each operation’s existing environmental and social management system (ESMS).

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.

Environmental and Social Policies. HKY senior management has demonstrated sector leadership and commitment in the development and implementation of strict standard operating procedures (SOPs) to ensure that construction and operation of its facilities met local EHS regulatory requirements, including for bio-security, disease prevention, product quality and production efficiency. This leadership has been demonstrated by operating modern breeding and commercial growing farms, procurement of state-of-the-art equipment at hatcheries to ensure optimal resource efficiency (energy) against industry benchmarks, and assignment of competent professional management/oversight and technical team at each of the three business divisions and at operations level respectively. In particular, HKY has established internal research center for the research of new diseases and the development of procedures and products for the prevention of new diseases, as well as appointing a Board of Expert Committee which provides latest information on disease prevention. This forms the foundation of HKY’s codes of practice which is being systematically rolled out across its breeding and commercial growing operations. As set forth in the attached Environmental and Social Action Plan (ESAP), HKY will formalize its existing commitment towards EHS requirements through the development and adoption of an HKY’s EHS policies while making a direct reference to comply with IFC Performance Standards and WBG general and poultry production EHS Guidelines at existing and planned operations.



Environmental and Social Assessment. In accordance with local regulatory requirements, HKY is required to undertake an Environmental Impact Assessment (EIA) Study for any new investment. HKY is outsourcing the preparation of this study to local consultancy firms. HKY’s project manager responsible for the feasibility study, construction and operation is coordinating this EIA process. The draft study is shared with local government authorities who review and undertake a field inspection visit. Mitigation measures outlined in the ESIA’s Environmental Management Plan (EMP), such as resource efficiency, liquid and solid waste management, odor, noise and bio-security considerations, are mainstreamed, to the extent possible, into infrastructure technical design/lay-out, selection of equipment based on good industry technical specifications, and management procedures during the construction and/or operation phase, including contractor’ OHS Handbook. Completion of the EIA process is a requirement in order to finalize the land leasing procedure with the village committee. As per its proposed expansion for the construction of five additional duck breeding farms, HKY will apply EIA process for all new investments. HKY has indicated that it has successfully obtained all required environmental, labor, fire safety and husbandry permits/licenses for the construction and/or operation for its hatcheries, breeding and rear
ing/growing broiler farms. It will also ensure that all its operations under its direct control in leasing facilities have obtained their operational licenses. Copy of sample of EIA Study and environmental license for the Liaocheng Heyong Breeding Farm has been provided to IFC during appraisal. For wells deeper than the rock level, a permit is required from the Water Administrative Department. For wells above rock level, there is not requirement for a license.



Management Systems and Programs. HKY has adopted technical operational procedures (SOPs) for its duck production operations. The procedures cover, among others, bio-security protocol, disease prevention and vaccine plan, nutrition management plan, occupational health and safety for workers, water and waste management plan, including hazardous waste, pest control and management plan, etc. The procedures are prepared by HKY’s associated Research Institute and updated on a regular basis. The Manual of procedures has been reviewed during the appraisal. Effective implementation of these at all operations is critically monitored, considering the significant bio-security and disease risks at farms, on a daily basis by the farm heads while the three business managers and HKY’s senior management are undertaking random audits on a monthly basis. The head of the associated research institute is monitoring overall implementation and effectiveness of immunization program through weekly/monthly blood testing from farms. IFC confirmed effective implementation at HKY’s owned farms while significant improvement would be required at contracted farms to ensure compliance with SOPs. Going forward, as set forth in the attached Environmental and Social Action Plan (ESAP), HKY will develop and integrate the Environmental, Occupational Health and Safety (EHS) and social management system elements already develop into an Integrated Management System in compliance with IFC’s PS1 requirements and WBG General and poultry production EHS Guidelines.



Organization. HKY has established a corporate and farm-level EHS structure for the effective implementation of its EHS policies and management procedures. Under the overall responsibility of HKY’s Executive President and experienced Operational Directors at farm business operations, HKY has established the following structure: i) the establishment of a cooperation agreement with a research institute for strengthening its bio-security measures, disease prevention plan, including pro-active research on developing new disease prevention methods, and updating the operation’s SOPs, as needed, ii) the inclusion of SOPs requirements during the construction and operation of facilities into the job description of business line directors, project manager and assigned farm head and contractual agreement with third-party commercial growing farms. As set forth in the attached ESAP, HKY’s will assign an EHS coordinator, whose functions will encompass overall EHS responsibilities,
including the update of the EHS policies and the Integrated EHS management system as mentioned above, as well as ensuring consistency on EHS management across the entire HKY’s operations and sub-contractors, including the corporate training program and Key Performance Indicators (KPIs) monitoring and reporting. This coordinator will report to Mr. Wang Sheng, Executive President who will onward inform HKY’s Board of Directors on HKY’s overall EHS performance on a monthly/annual basis.



Training. HKY has adopted and implemented a comprehensive training procedure and associated annual plan to ensure continuous training at all levels in HKY’s farms and hatcheries in order to maintain strict enforcement of EHS’s procedures. The Human Resource (HR) Department is accountable for developing and implementing the training procedure. For senior HKY’s management, there is a specific annual training program, including Executive MBA program. For operational staff, the HR Department has established a team of 50 technical trainers specializing on specific issues, including bio-security, disease prevention, animal feed, water and waste management, life and fire prevention, first aid, workers’ good hygiene practices, etc. Technical training is centrally coordinated for new worker during induction session while there are on-going training sessions at farm level. External local experts are also invited every month on sector-based knowledge sharing. Farm heads are responsible to monitor effective application of learned skills by operational staff as this requirement is mainstreamed into their performance review’ KPIs.



Emergency preparedness and response plan. Potential EHS incidents that could potentially result in emergencies in HKY’s farming/breeding/hatchery operations include poultry disease break-out at farms, leakage and spillage of fuels at all sites, including fire, workplace accident, and traffic accident. These potential risks are all addressed in existing HKY’s SOPs. In addition, as mentioned under PS1, Environmental and Social Assessment, local safety regulatory body annually inspect HKY’s on fire prevention maintenance system (e.g. extinguishers). Farm heads, with the assistance of a specifically assigned staff, is also undertaking monthly inspection and scheduled regular training and drills. Evacuation plan has been observed at hatcheries during IFC’s appraisal visit.



Monitoring and Reporting. Recognizing the limited and site-specific environmental and social impacts from HKY’s operations, HKY has established a corporate and plant-level EHS monitoring and reporting system procedure, including monthly/annual consumption of water, coal and electricity. Such data has been provided for HKY’s breeding GP and PS farms as well as its broiler farms during IFC appraisal. Data on hatcheries’ resource efficiency have not been provided. Through its existing and planned EHS systems and procedures, internal EHS inspections are performed on a monthly basis.
Local environmental protection agency delivering the environmental licenses receive annual updates on HKY’s EHS performance as well as to undertake inspection visits in order to proceed with the renewal of their operational licenses. Based on information provided during appraisal, HKY did not incur over the last three years any material regulatory penalties, fines or sanctions for contraventions or non-compliance with statutory obligations, as well as not reported any fatalities on sites at any of its operations. The Department for Environmental Protection, Labor and Husbandry are undertaking annual random inspection at every farm. Going forwards, as set forth in the ESAP, and in order to support the effective implementation of its integrated EHS managements system mentioned above, HKY will adopt Key Performance Indicators (KPIs) in order to monitor on a monthly/annual basis the following EHS parameters: a) Safety – Lost Time Incidence Frequency Rate (LTIFR), Accident Free Days; b) Sustainability – Carbon (kg/ton), Water Usage (kiloliters/ton), Energy Usage (kWh/ton), wastewater monitoring effluents and air emissions parameters from boiler, genset, and on-site incinerator in line with WBG’s General EHS Guidelines; c) Staff - Retention and training days. In addition, the assigned EHS coordinator will define an integrated EHS report format and based on critical EHS key performance indicators (e.g., compliance with legal and regulatory requirements, EHS management system progress report, energy and water consumption and efficiency; air emissions (Nitrous and sulfur oxides (NOx, SOx), particulates), including GHG emissions; noise levels and management, solid and hazardous waste management and disposal, compliance with national OHS requirements, including accident rates (lost-time accidents); customers and community complaints, third-party contracted farmers and community engagement activities. The Company will also report annually to relevant Chinese authorities and IFC as part of the Annual Monitoring Report (AMR).



Stakeholder Engagement Plan. As mentioned above, HKY is leasing land for its operations through a negotiation process with village’s farmer committee. Local land department at county level act as a witness throughout this process. As such, there is a structured engagement with surrounding communities. As the HKY’s breeding operations are required to be isolated from rural communities for bio-security requirements (ref. minimum of 300 meters buffer zone), there is no expected affected communities from HKY’s breeding operations. In order to pro-actively and formalize receipt and management of any potential concerns, as set forth in the ESAP, HKY will develop a community grievance mechanism.

Human Resource Policy and Management. Through its three business lines, HKY presently employed 1,220 employees. With the proposed expansion of 5 new breeding farms, HKY estimated that there should be more than 2,500 employees within the next five years. Most of the staffs are assigned to the farming operations (90%). In term of gender breakdown, it is estimated that 60% are male while 40% are female. HKY has adopted an HR Policy for all its business segments. Provisions in this policy include recruitment and selection, job category, probation period, confidentiality provision, access to workplace, working hours, payment schedule, annual leave and special family circumstances, occupational health and safety measures and use of Personal Protective Equipment (PPE), access to grievance mechanism, disciplinary measures and cessation of employment, etc. Specifically, the recruitment process includes the verification of identity, citizen license, social insurance, C.V. and health check-up certificate. These provisions are operationally translated in procedures in order to ensure the effective implementation. Copy of the employee booklet for the duck breeding farm segment as well as its written instruction distributed to employee during induction was shared during appraisal. HKY indicated that it complies with the Chinese labor law, including on provision of health insurance and social benefits. As the booklet was only available in Chinese version during due diligence, HKY will be required, as set forth in the ESAP, to review this HR Policy to ensure full compliance with IFC’s PS 2 as well as to introduce pertinent sections in contracts, in order to ensure that all contracted growing farmers are in compliance with payment of workers’ legal benefits, timely payment of wages, OHS regulations, and ILO Convention 138 on Minimum Age. There is limited staff turnover in HKY (5% on a yearly basis) explained by the seriousness of HKY’s management in fully respecting the provisions of the Internal Regulations and the Company’s salary scale and benefits. In addition to the base salary payment (ref. the minimum salary wage is US$425 net for 44 hours/week for workers at its breeding operations – quite competitive compared to other rural manual work), other benefits provided by HKY include 13th month salary, Group’s private health coverage, rental subsidy, free housing and meal. Changing rooms, toilets and shower facilities are available for workers and respect gender sensitivities. The Human Resource Department is in charge of all HR issues, including the definition of the HKY vision, management structure, hiring process, performance review, remuneration system of the Group. There are 13 full-time assigned HR officers, 6 located at the Group’s HQ levels and 7 at the level of HKY’s subsidiaries. In addition, there is one HR person for each business line (ref. breeding ducks, breeding chicks, and commercial chicken).



Grievance mechanism. HKY is taking a pro-active s
trategy and steps to be taken for workers to manifest any concern, engage in a mediation process, contact responsible persons at each farm, and provide timely feedback, including: 1) daily meeting with workers at the farming operations to discuss work plan; 2) each farm has a suggestion box. There is a designated person at each farm to collect these suggestions on a daily basis. Monthly summary of all suggestions is prepared and responses published on a public board; 3) if employee has complaints to his/her boss, complaint is presented to HR officer for its management. These measures are outlined in the HR Policy and in the written instructions distributed to all employees, and the effective response to grievance is included within farm manager’s KPIs. For contractors, HKY’s construction department is managing all contracts and is responsible for managing any potential grievances, with the support of the HR department, as need be.



Workers Organizations. In accordance with Chinese Labor Law, HKY and all its subsidiaries explicitly support the freedom of association of its workers. This being said, there are no union yet in HKY’s operations. There is no history of recent labor strikes among HKY’s subsidiaries.



Occupational Health and Safety (OHS). HKY has adopted an OHS policy, plans and procedures which are included in HKY’s technical operational procedures. Workers are trained on OHS risks at breeding farms and required to use PPEs (overall, safety boot, and mask). Organization oversight over internal compliance with OHS policy and procedures is ensured through the establishment of farm-level’s Committee on Hygiene and Security while farm manager is accountable for its effectiveness as part of his/her performance review KPIs. Farm workers are required to undertake an annual medical visit. Daily record of OHS incidents at each farm is registered daily and sent to HQ for monthly summary. No fatality has been registered at any of the HKY’s breeding farm operations over the last three years. The Ministry of Labor is undertaking annual inspection.



Life and fire safety. HKY’s duck breeding operations are associated with fire and explosion risks. During the establishment of the breeding farm, fire/explosion hazard is addressed during the EIA process. Extinguishers are installed in every warehouse at farm level. Life and fire response teams are being established at all sites and training provided to all workers, including fire drills conducted twice a year, in coordination with local fire brigades. Contracts with specialized service providers have been established to ensure maintenance of extinguishers on an annual basis. Fire safety regulatory agency and local government undertake an annual inspection and certificate of conformity is provided. Farms heads ensures compliance.



Biosafety and avian influenza preparedness and response. China is subject to cases of avian flu (H7N9) in its growing ducks/broiler farms and yellow virus in duck P
arent Stock (PS) farms. Latest incidence of avian flu has been in the spring of 2013 which has adversely impacted the poultry industry. Although there has not been any occurrence of avian flu in HKY’s growing and breeding farms since 2009, the Company has put in place strict bio-safety and disease prevention disease protocol. In particular, it has set-up a research center in cooperation with local universities to systematically update its bio-security procedures. Personnel responsible for the care and management of the chickens are continuously trained to identify normal health and behavior of the chickens in their care so as to be able to recognize poor health and welfare. Chickens are inspected regularly, at least daily, and more frequently during period of significant risk to health and welfare. In addition, on-going bio-security procedures include geographical isolation of the farms, limited controlled site access and suitable infrastructures (e.g., high concrete fences); entrance gates with vehicle disinfection areas, cleaning and disinfection procedures for visitors, materials and tools (e.g., foot disinfection at the entrance of sites/houses), control of pathogen vectors (rodents, insects), and organic waste management. Workers’ clothes are kept clean, shoes are scrubbed with disinfectant, and hands are washed. As part of its bio-security procedures, any sick or dead bird is removed and reported to the veterinarian. These procedures apply to the Group’s own and affiliated farms. Due diligence has validated effective implementation of these procedures at HKY owned farms. This being said, these were not well implemented at contracted farms. Increased enforcement of the poultry farming operational guidelines by HKY’s technical staff in contracted farms would be highly recommended

HKY is dedicated to the improvement of the duck breeding operations. Effective implementation means increased supply of high quality day old ducklings and chicks which enhances the whole supply chain efficiency through better feed conversion ratio (FCR), lower mortality, less medicine. Lower vaccine/antibiotic requirements also match the broiler/duck product quality requirements of end-customers (KFC, McDonalds) who are increasingly concerned about the excessive use of these substances in poultry/duck rearing operations. In addition, HKY senior management leadership and strong commitment towards continuous EHS performance improvement is reflected through the design and commissioning of state-of-the art facilities and procurement of best available equipment/technology to ensure optimal resource efficiency against industry benchmark. The applicable requirements have been so far the Chinese’s parameters but HKY has demonstrated engagement to comply with the WBG EHS guidelines.



Energy use and green house gas emissions. Provision of energy to HKY’s farms is provided by the national grid. Emergency back-up generators are also used in case of power outage. Energy consumption is closely monitored at all farms. Supporting data has been provided during the appraisal. Heating source at the farms is generated through coal fired system (4 months / year). Energy saving measures implemented includes adoption of energy saving light bulbs (LEED) at hatcheries and farms and controlling the use of water pump. Energy consumption is not expected to increase significantly with the proposed expansion project. HKY does not have its own fleet for transport of eggs and Day-Old Chick/Ducklings as all trucks are leased through service providers. Worthwhile to underline that HKY’s hatcheries (2) have been equipped with the most energy efficient equipment based on industry benchmark.

Air emissions monitoring. Main sources of air emissions are coal heating system and large gensets that burn diesel to produce electricity, heat and hot water. Both heating system and generators undergo semestrial maintenance audits in accordance with regulatory requirements in order to optimize efficiency. Going forward, as set forth in the ESAP, HKY will monitor on an annual basis stack air emissions from its heating system and generators to ensure consistency with WBG EHS Guidelines for point source emissions to air (PM10: 50mg/Nm³; NOx: 460mg/Nm³; SO2: 2000mg/Nm³) and will report them in the IFC Annual Monitoring Report.



Water use and efficiency. Water is sourced from on-site farm well. Total water consumption is well monitored at all farms through installment of water meters. Consumption is reduced at farms through the installation of drip water feeding while HKY has installed hot water/steam at cleaning stage in hatcheries. Water fees are paid according to actual usage. Raw water from wells at farms is treated with chlorine, hydrogen peroxide and a softener to eliminate hardness. Wat
er used for cleaning and fire prevention come from wells and do not undergo any treatment. Water analysis at its farm operations is also conducted in accordance to legal requirements.



Wastewater Treatment. Aside from domestic wastewaters (showers, bathrooms, etc.) which are collected in septic tanks and emptied on a regular basis by licensed service providers, there is no process wastewater from the farms operations. Wastewater from the hatcheries (cleaning and disinfection) is channeled through a drainage system towards on-site (Ningyang) or municipal treatment unit (Feicheng).



Management of solid and hazardous wastes. Waste characterization of HKY’s farm operations is respectively composed of deep bedding materials (rice husks) and duck/chicken droppings which are given as soil fertilizers to surrounding farmers, located at a distance of at least 500 meters from the farms for bio-security reasons. Dead duck/chicken carcass are collected every morning and immediately disposed in concrete-built anaerobic pit respecting environmental guidelines. Broken eggs, chick/duck embryo and eggs shell from hatcheries are collected in bags and/or hermetic package, disinfected and disposed in a landfill through a service provider. Contract of this service provider has been shared with IFC during appraisal. Hazardous wastes, such as used oils, chemical solvent used for cleaning, are recovered and disposed by licensed services providers. The waste management procedure is found into the overall technical operational procedures of HKY.



Pest management and control. A legally registered company conducts rodent control in all HKY’s operations, including farming and hatchery operations. Activities include inspection and maintenance; and rodent and pest are controlled and monitored constantly. Going forward, as set forth in the ESAP, HKY will develop a management system procedure to implement pest and rodent management. The procedure will aim to eliminate the use of WHO Class 1a and 1b chemical formulation in their premises. HKY will then modify service contracts to require contractors for mandatory training to workers and ensure provision of adequate PPE based upon MSDS and /or ICSCs for the product used. This requirement will be added in employee’s OHS training programs.

Community Health and Safety. As HKY’s farm operations are isolated from human settlements for bio-security measures, traffic does not represent a significant risk for the local population. Transport sub-contractors are requested to produce a validated driver license, insurance and vehicle maintenance report. In relation to food safety, medicine is seldom used for HKY reared ducks (broilers). Prohibited drugs are never used. HKY farms and its contracted out-growers enter into operational and/or contractual undertaking not to use prohibited drugs and to strictly limit the medicine usage. The slaughterhouse that HKY worked with have never found antibiotic residues in their testing.



Community Grievance Mechanism. As mentioned under PS1, Stakeholder Engagement Plan, HKY will develop a community grievance mechanism in order to strengthen its consultation and responsiveness with any potential communities’ grievances on the E&S risks associated with its operations.



Security Personnel. Security personal at farm operations is part of HKY staff. The security officers are not armed and are trained for defensive measures. They are also trained on life and fire safety, including active involvement in regular fire drills, emergency preparedness and response, first aid, etc.

HKY has not yet established a structured Corporate Social Responsibility program. This being said, HKY, through its numerous farms in remote rural areas, is creating positive employment opportunities for neighboring communities

The ESRS and the attached ESAP will be made available via the World Bank Group’s InfoShop. HKY will be requested to place an advertisement in a local newspaper near the proposed duck breeding farms as well as on its website to inform of the results of IFC’s environmental and social review and ESAP’s corrective action items.
Name/Address: Mr. Wang Sheng, Executive President
Shandong Hekangyuan Poultry Breeding Company, Ltd.
Room 303 Building 11 Shuntai Square, Jinan High-Tech zone
Tel : +0531 665 90978; E-mail : mailto:wszqc@sohu.com
Web site : http://www.chinahky.com

Broad Community Support is not applicable for this project

	Action Item and Deliverable		Deadline
Performance Standard 1: Social and Environmental Assessment and Management Systems
1	HKY will define and implement corporate Quality, Environment, Occupational Health and Safety (QEHS) and Social Policies which will apply to all its existing and future operations. These policies will make direct reference and a commitment to comply with Chinese legal and regulatory requirements, IFC Performance Standards and relevant WBG’s EHS Guidelines.
	a) Submission of the draft corporate QEHS policies for IFC review and approval		a) June2014
	b) Adoption of the QEHS policies by HKY’s Executive Committee		b) August 2014
2	HKYwill design and implement an Environmental and Social Management System (ESMS)in accordance with IFC’s Performance Standard 1, defining roles and responsibilities, and other necessary elements (manual procedures) to enable it to comply with Chinese laws and regulations, IFC Performance Standards and applicable WBG’s Environmental, Health and Safety Guidelines. The ESMS will include mechanisms for the EHS officer to report monthly E&S monitoring results to HKY’s senior management who will need to sign off on the reports.
	a) ESMS design in place and approved by IFC		a) July 2014
	b) Evidence of complete implementation (e.g. draft documentation of the ESMS, plans, manual procedures and programs, e.g. training logs, monitoring records, minutes of progress reviews)		b) July 2015
			c) Report on implementation status, on an annual basis, in the Annual Monitoring Report
3	HKY will appoint a qualified EHS coordinator who will be responsible for implementing the ESMS and fulfilling the ESAP conditions. This coordinator will reportto HKY’s Executive President. This coordinator will also increase supervision and enforcement of the poultry farming operational guidelines in contracted farms, including establishment of a performance based bio-security scorecard.
	a) Provide the Terms of Reference, C.V. and contract of the EHS officer for IFC review		a) April 2014
4	HKY will review and expand its existing Key Performance Indicators (KPIs) to mainstream Environmental, Health and Safety parameters, including a) Safety – Lost Time Incidence Frequency Rate (LTIFR - Number of injuries per million of hours worked); Accident Free Days ( Number of Days since last Lost Time Incident); b) Sustainability – Carbon (kg/ton - CO2 emitted / tons produced); Water Usage (kiloliters/ton) and Efficiency - Consumed versus tons produced; Energy Usage (kWh/ton) - Energy consumed/tons produced; Wastewater monitoring effluents and air emissions parameters (including VOC); c) Staff - Retention - Number of full time equivalents leaving in the period /Avg. full time equivalents - and Training days - Number of training days provided to new and existing employees.
	Monthly and annual reports will be reviewed during each Company’s Monthly EHS Review and annually during the Company’s planning and budgetary management review.
	a) KPIs format		a) June 2014
			b) On an annual basis, in the AMR
5	HKY will formalize the development of its Stakeholder Engagement Plan, through the development and implementation a community engagement procedure to be included into the ESMS, including a mechanism for receiving, addressing and resolving community grievances and complaints during the operational phase at all facilities. The content of this procedure shall be guided by IFC’s Good Practice Note on Stakeholder Engagement.
	a) Submit copy of the procedure for IFC review and approval;		a) June 2014
	b) Provide evidence of dissemination of the procedure in relevant public communication at each facility.		b) Report on implementation, on an annual basis, in the AMR
Performance Standard 2: Labour and Working Conditions
6	HKY willreview and update its corporate and business line Human Resource Policy and labor contracting specifications in compliance with labor laws and regulations in China and all the requirements defined in IFC’s Performance Standard 2. Specifically, this policy will include references to freedom of association and collective bargaining, prohibition of child and forced labor in its direct operations and contracted farms, compliance of contractors with Chinese Labor Law, etc.
	a) Provide the revised Human Resource policy and labor contracting specifications for IFC review and approval.		a) June 2014
	b) Provide adequate evidence of HR policy and procedures incorporation into management systems, the disclosure process to employees and full implementation.		b) September 2014
7	HKY will present the preparedness plan and response for avian influenza, including a mitigation plan.		Jun-14
	HKY will develop and implement a management system procedure for the avian influenza preparedness and response, including a training plan to ensure that employees are knowledgeable of the preparedness plan for avian influenza and emergency contingency plans. The plan will include: (i) preparedness and prevention, (ii) outbreak response, and (iii) recovery
Performance Standard 3: Pollution Prevention and Abatement
8	HKY willestablish a comprehensive chemical, physical and micro-biological assessment of groundwater in all wells and establish a quality, consumptionand a resource efficiency baseline. If there is any water quality deterioration, HKY will take specific action to mitigate the situation.
	a) Provide to IFC the comprehensive physico-chemical & microbiological assessment of groundwater in all wells for its operations and associated farms and establish a baseline;		a) June 2014
	b) Report annual assessment of groundwater		b) Report annually in the AMR
9	HKY will conduct air emissions measurements for all its heating system, boilers and gensets (if above 3MWth), and compare parameters with WBG General EHS Guidelines for ambient air concentrations (particulate matter limit (PM10) of 50mg/Nm³; NOx of 460 mg/Nm³; SOX of 2000 mg/Nm³, and submit a report to IFC. If measurements exceed the WBG Guidelines, HKY will propose corrective measures, and a schedule to bring all emissions into compliance with WBG limits.
	a)Provide air measurements results;		a) May 2014
	b) If measurements exceed WBG limits, HKY will propose corrective measures and a schedule to bring all emissions into compliance with WBG air emissions limits, including timetable.		b) May 2014 and report annually in the AMR
10	HKY will develop and implement a Pest and Rodent management system procedure. The procedure will aim to eliminate the use of WHO Class 1a and 1b chemical formulations in its facilities. HKY will modify service contracts to require service providers mandatory training of its workers and adequate PPE based upon MSDS and/or ICSCs for the materials used.
	a) Provide copy of the procedure to IFC and adequate documentary evidence of incorporation into management system procedures manuals, including the training plan giving contractors’ employees		a) May 2014
			b) Report annually in the AMR
Performance Standard 4: Community Health, Safety and Security
11	HKY will conduct studies to confirm that drug residues in poultry products meet the maximum residue limits (MRLs) recommended by WHO and FAO; and will undertake corrective actions, if needed, to comply with MRLs.
	a) Report on compliance with MRLs, including corrective action plan		a) March 2014 and report annually therefore in the AMR