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

While all Performance Standards (“PS”) 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 PS 1-4. IFC’s due diligence did not identify project issues related to matters covered by PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous People and PS8: Cultural Heritage. Project-related land acquisition was and will only be undertaken via willing seller/ willing buyer negotiations. Therefore, this is a Category B project according to IFC’s Environmental and Social Sustainability Policy. In the event that issues anticipated by PS 5-8 arise, the Company will engage with IFC to ensure these are adequately addressed.

Key E&S risks and impacts associated with the Project include: i) the capacity of the corporate E&S management system to identify, assess and manage risks and impacts; ii) labor and working conditions including occupational health and safety (“OHS”); iii) air emissions; iv) waste and wastewater management; and v) social impacts on nearby communities. The Company has presented plans to address E&S risks and impacts to ensure that the Project will comply with the environmental and social requirements of host countries’ laws and regulations, IFC’s Performance Standards, and the World Bank Group EHS Guidelines. The information about how these impacts and risks are addressed by the Project is summarized in the paragraphs that follow.

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 Assessment, Identification of Risks and Impacts.

Borets is implementing new technologies to be applied at the Russian manufacturing facilities and these include manufacturing permanent magnet motors, wear resistant pumps, linear motors and new foundry technology.



Russian laws and regulations include the obligatory requirement for development of the mitigation measures based on an environmental impact assessment (EIA) for the new construction and upgrading/ modernization of facilities resulting in significant structural alterations. Currently of the new projects only that relating to foundry technology requires an EIA and this involves construction of a new plant in Russia near the town of Stariy Oskol. Commissioning of the plant is scheduled for 2014 and it will produce pump sections. Two induction furnaces of 500 kg capacity each will be installed at the foundry workshop and phenol formaldehyde resin will be used as chemical binder of sand moulds.



The E&S mitigation measures recommended in the design documentation are general and based on the practice of the machinery-building and foundry industry in CIS. In particular, a wet scrubber system with recirculated water treated in a biochemical unit was recommended for air emissions treatment. Sludge cake produced from the waste water treatment requires disposal. As such, Borets has agreed to review the E&S mitigation measures against good international practice, in particular, the WBG EHS Guidelines for Foundries, the Reference Document on Best Available Techniques in the Smitheries and Foundries Industry) and develop a site specific and detailed E&S Management Plan before plant commissioning, defining how the foundry activities will align with requirements defined; this action is included in the Project ESAP.



Borets has in place procedures for regular identification of impacts and risks developed in the framework of the E&S management system which is aligned with ISO 14001 and OHSAS 18001, certifiable environmental and OHS management systems respectively. The certification covers the existing Russian facilities which are also certified against ISO 9001, a quality management system.



To enhance control over E&S performance at the international facilities Borets has agreed to conduct independent EHS audits of selected operations against a defined schedule; this action is prescribed in the project ESAP. Facilities to be subject to an audit will be determined on the basis of an E&S desktop screening exercise undertaken by the corporate Quality and HSE Director. This screening will focus on determining those facilities with potential significant E&S risks and thus the subject of the audits. Based on the audit findings, Corrective Action Plans will be developed and implemented in line with an agreed timeframe. The E&S performance of the remaining Russian and international facilities which are not associated with considerable impacts and risks to environment, empl
oyees and nearby communities will be controlled over via regular reporting and management programs.



Policy and Management Programs

Borets has developed and implements an EHS policy and the Company’s EHS commitments which are disclosed on its website on http://www.borets.com/hse.php Management programs based on policy commitments and long term aims are developed annually. Key performance indicators relate to zero incidents of Borets and contractors’ employees, pollution prevention and compliance with local regulations.



Currently the policy, commitments and management programs are applied to Borets operations in Russia. The Company will extend the policy and practice of developing management programs to include the international operations via amendments of the existing manual and procedures, as indicated in the Project ESAP.



Organizational capacity and competency

EHS matters at each individual facility in Russia are coordinated by the respective EHS departments/services and plant-level managers as part of their direct responsibilities. Overall responsibility for the corporate EHS matters is delegated to the QHSE Director who reports to Borets senior management. The EHS Manual establishes a framework to identify resources, responsibilities and authorities throughout the Company’s facilities and functions; monitor E&S performance and develop adequate corrective and prevention measures; regular review of the management system senior management. Professional training, staff selection procedures and support of talented students facilitate retention of competent personnel and continuous professional development.



EHS management of international facilities acquired from Weatherford in 2008 were reviewed as part of the previous investment. Weatherford’s robust integrated management system, the Enterprise Excellence Program (EEP) comprise quality, environment and occupational health and safety procedures in line with ISO 9001, ISO 14001 and OHSAS 18001 standards and comply with good international practices and maintain or exceed national legislated standards.



Training

Borets has established a training system that is well planned and structured at the Russian facilities. Corporate procedures developed in the framework of the QHSE management system determine training as a continuous process to ensure up-to-date skills needed for specific work responsibilities. Regular training programs including E&S topics and contribute to increasing staff knowledge in E&S impacts and occupational risks associated with their work. Training includes internal corporate and external training courses delivered by reliable training providers. Specific OHS training required by local regulations is systematically delivered. The approach to training to be applied at the international facilities will be determined as part of the E&S screening and audits.



Emergency Preparedness and Response

Borets has conducted fire hardware and Life and Fire Safety (L&FS)
review of manufacturing facilities in Russia; improvement actions were developed in 2010 and completed in 2011. Manufacturing facilities maintain emergency response plans which, apart from response actions, include hazard identification and risk assessment, predictable emergency cases, availability of proper response means, and communication with authorities, population and municipal rescue services.



Servicing centres, including the visited facilities outside of Russia, had developed fire evacuation plans; workshops are equipped with extinguishers and fire alarm systems. Functionality of fire fighting equipment and alarm systems are checked regularly by authorized contractors. Personnel are trained and this includes practical exercises to ensure necessary skills to respond to emergencies.



Monitoring and reporting

The external reporting is carried out in accordance with local legal EHS requirements. Internal reporting about EHS issues is provided to the Company management on a regular basis. Reporting to IFC on continuous improvement of E&S performance and the EHS management system will be provided within the context of the Annual Monitoring Reports (AMR).

Human resources policies and procedures, terms of employment, non-discrimination and equal opportunity.

Borets employs 8722 staff worldwide of which 7879 are in Russia. The corporate personnel department controls human resources related aspects at its facilities worldwide. Generally the human resources (HR) practices implemented by Borets are consistent with this Performance Standard and host country labor laws. The Company enforces the implementation of regulations based on equal opportunities, non-discrimination principles, and worker rights to participate in professional associations and trade unions. A formal human resources policy has not been developed however and thus the Company will develop a formal HR policy commensurate with good international practices and this PS; this is defined as an action in the ESAP.



Retrenchment

Two plants in Russia were acquired by other owners in 2012. Retrenched employees of one plant were informed 2 months in advance and received compensation in accordance with Russian legislation. There were no labor related disputes or environmental liability claims associated with selling the plants.



The Company will develop and implement a retrenchment plan consistent with PS2 so as to reduce risks of potential lawsuits related to workers dismissal. The retrenchment plan will be based on the principles of non-discrimination and reflect consultation with workers and trade unions, if appropriate, and comply with collective bargaining agreements and contractual requirements. In addition, the plan will include timely notification of dismissal and severance payments mandated by host country law and collective agreements. This is defined in the project ESAP.



Working conditions

Terms of employment including salary, working time, leave on maternity, illness and vacation, overtime and nighttime payment, safe working conditions, promotion and bonuses are outlined in either the contract with employees or the internal regulations at the all Borets facilities worldwide. Collective agreements and regulations of individual operations define terms of employment through stipulation of employee and management rights and responsibilities. Upon appointment, personnel are provided initial induction training that facilitates employee’s familiarization and awareness of responsibilities, disciplinary requirements and rights, conditions of work and further OHS training.



Protecting the Work Force

Facilities worldwide enforce the implementation of labor laws consistent with host country labor laws.Individuals below the age of 18 years are not employed and no forced labor is used. Corporate personnel departments at the HQ and individual facilities are responsible to review data provided by potential candidates during the staff selection process.



Workers’ Organizations

Russian laws stipulate employee rights to form and join trade unions/ professional associations and guidance for maintaining a collective agreement between sele
cted worker’s representatives and administration. There are trade unions or workers’ councils at five out of the ten individual facilities in Russia. Collective bargaining agreements between the administration and workers provide for detailed and, in some cases, additional terms and benefits for employees and their families. Concerning international facilities, three employees are members of the trade union at ZTS-KABEL manufacturing facility in Slovakia. Other facilities do not have trade unions. Nonetheless, individual companies have developed and maintain procedures, policies or internal regulations establishing responsibilities and commitments of management and staff. Further, the commitment of the Company to allow all employees to join unions will be defined the corporate HR policy to be developed.



Grievance Mechanism

A corporate grievance mechanism procedure was developed and implemented in 2010 globally. This formal grievance process provides alternatives for employees to raise concerns other than to immediate supervisors and allows grievances to be presented without the risk of oppression in line with IFC’s Performance Standard 2.Additionally, responsible managers of individual facilities practice “open door” hours for personal consultations with employees.



Occupational Health and Safety (OHS)

The integrated management system developed at the Russian facilities is certified in conformance with OHSAS 18001. Responsibilities for day-to-day coordination of OHS matters are delegated to OHS specialists or contracted consultants. The Company and individual facilities maintain safety induction and on-going training for fire safety and OHS of all workers. In addition, the Company arranges job specific training. OHS risks are identified and updated regularly at the Russian facilities. Lost time injuries are registered, investigated and reported to the corporate and facility’s management as well as relevant authorities.



There are monitoring programs of workplace conditions including air quality, noise, vibration, particulate matter, and concentrations of chemicals, where applicable, at the Russian and visited international facilities. Protective measures implemented on the basis of workplace categorization by hazards include personal protection equipment and may also include additional allowance to the basic wage rate, additional vacation days etc.The Company undertakes employee medical examinations at the time of employment and, after that, repeats the health examinations according to a regular schedule based on the specific working conditions under which employees operate.



Safety statistics on Russian entities employing 90% of Borets worldwide staff over last three years include zero fatalities in 2011 and 2013 and three fatalities in 2012. All the latter cases have been thoroughly investigated with actions defined to prevent reoccurrence.



According to Russian regulations facilities register only lost time injuries; incident
s not connected with lost workdays are not reported. Therefore, Lost Time Injury Frequency Rate (“LTIFR”) per worked million man-hours (MMH) was 1.37 in 2010; 1.22 in 2011 and 0.91 in 2012 respectively. LTIFR calculations show a stable tendency for reduction of lost time injuries per MMH. The Average Severity Rate Per Injury dropped from 52.08 lost days per injury in 2010 to 18.2 in 2012.



Safety statistics on Borets international facilities will be provided to IFC in the context of the Annual Monitoring Reports.

Resource and Energy Efficiency

Borets has implemented technically and financially feasible measures for improving efficiency in consumption of energy as well as material inputs. Manufacturing facilities in Russia develop and apply the efficiency programs. Actions taken by LysvaNeftemash in 2010-2012 resulted in a reduction of electricity consumption by 0.5%. According to Russian legislation, plants have to undertake independent energy audits and develop energy efficiency plans; the manufacturing facility in Lysva completed the audit in 2013. Improvement actions will be developed and implemented by Russian operations upon completion of the audits.



As mentioned above, Borets will undertake independent EHS audits of select international manufacturing and servicing facilities and this will include an evaluation of resource efficiency, pollution prevention and control techniques including overall EHS performance. In doing so, the relevant WBG EHS Guidelines will be referenced along with the Performance Standards and internationally recognised sources such as the EU Reference Documents on Best Available Techniques for such operations.



Greenhouse gas emissions

The IFC investment will support implementation of new technology projects including Wide Range Wear Resistant (WRWR) pumps, permanent magnets (PMMs) and linear motors which are more efficient than currently available alternatives. It is anticipated that expanding production will result in greenhouse gas savings for pump users. Greenhouse gas emissions from Borets own facilities estimated at the time of the first investment were 55,000 tonnes of CO2 equivalent and it is considered that there has been little or no change in this since then. Borets will quantify direct and indirect emissions from facilities globally on an annual basis in accordance with internationally recognized methodologies.



Air Emissions

Significant air emissions at the Borets’ facilities are associated with the foundry operations, metal shaping, thermal treatment, surface preparation; metal and plastic coating, and painting operations. Typical abatement equipment installed includes bag filters, cyclones, wet scrubbers.



Borets developed and applied monitoring of air emissions from point sources at the Russian manufacturing facilities, identified sources that do not meet the WBG EHS Guidelines and implemented mitigation measures in accordance with the ESAP agreed with IFC in 2009. Key improvement actions related to the Lysva and Lebedyan facilities: where new cyclones were installed in the mechanical workshop; a paint shop was relocated to a special designated area separated from the general production area; the paint shop was equipped with aspiration and gas cleaning systems; the impregnation and drying workshop was upgraded and VOC (volatile organic compounds) exhaust collection and gas cleaning system were installed at the Lysva plant. The Lebedyan facility has improved maintenance of ventilation and gas clea
ning equipment and, as of now, VOC emissions meet the WBG Guideline threshold of 75 mg/m3.



According to 2012 monitoring data air emissions from the Russian facilities are in accordance with the WBG EHS Guidelines for volatile organic compounds, particulate matter and nitrous oxides. Data on air emissions emanated from the international facilities will be reported to IFC in the context of the AMR. In case air emissions do not comply with the WBG EHS Guidelines Borets will develop corrective action plans in agreement with IFC.



Wastewater treatment and waste management

None of the Borets’ manufacturing facilities in Russia are water usage intensive, except for the foundry operations, though these will use closed loop cooling systems to reduce the water usage. Water is therefore in general based on the public water supply systems in the city where the facilities are located. A few facilities have additional private water wells.



Typically wastewater from the Russian manufacturing facilities is treated at internal wastewater treatment plants and recycled as process water. Sanitary water is delivered to the municipal waste water treatment systems, sometimes together with treated storm water and the limited industrial waste water from the production. Borets undertakes monitoring of its waste water before it is delivered to the municipal treatment facilities to ensure it is within the norms these facilities can accept for treatment. Discharge limits for treated waste water in Russia are significantly more stringent than those associated with the WBG EHS Guidelines. Sanitary water is discharged to the municipal waste water treatment systems, sometimes together with treated storm water and the limited industrial waste.



Industrial waste streams are recycled or disposed at landfills. Solid waste streams generated by the manufacturing facilities may include up to 60 types of waste for which there are inventories according to the national regulations. Key wastes include metal scrap uncontaminated or contaminated by oils; metal chips; wood chips; used emulsion for metal grinding; grit blasting wastes; waste motor and mineral oils; used molding sand; rubber dust. Hazardous waste streams including inorganic acids, solvents, used accumulators and mercury lamps which are managed by licensed contractors for further recycling and/ or neutralization.



Servicing facilities have limited or no processing wastewater streams and, if required, are typically discharged to the municipal mains for further treatment.



The status of waste and wastewater management implemented at the facilities outside Russia will be identified upon accomplishment of the E&S screening and audits discussed earlier. In case issues are identified the Company will develop corrective action plans. Implementation of the plans will be supervised by IFC via site visits and annual monitoring reports to be provided by Borets on an annual basis.

In compliance with the Russian regulatory requirements Borets has established buffer zones around its plants to ensure compliance with ambient air quality requirements. Russian regulations prohibit permanent and/or long-term residence of people within the buffer zones to avoid risks to their health due the potential for exposure to substandard ambient air quality. Reportedly, there are no permanent or seasonal residents within the existing buffer zones of any Borets plants.



In the event that independent audits described in the PS1 identify impacts from international facilities on community health and safety, adequate measures will be implemented and reported to IFC in the context of the AMRs.



Security Personnel. The Company employs either contracted from private companies or its own security personnel. In both cases security guards are unarmed, trained and certified as per the local regulatory requirements.

The corporate community engagement plan including mechanisms for communicating environmental and social aspects of current operations to local communities and procedures for receiving, documenting and responding to concerns from any external interested parties was developed and implemented. Borets facilities receive and address inquiries of any interested parties through communication procedures incorporated within the integrated QHSE management system. Grievance mechanisms for communities consider various ways for receiving concerns and grievances from stakeholders and communities including a website link and direct communications with responsible managers of the individual facilities. Borets reports that no concerns have been raised in respect of EHS performance in Russia. The stakeholder engagement plan will be extended and applied to Borets international facilities within a year. Outcomes of the plan implementation will be reported to IFC via the AMRs.

E&S information on new developments is available for communities for consultations as part of the EIA undertaken for such projects.

For more information, inquiries and comment about the Project please contact:
Mr. Stanislav Parshinov, QHSE Director,
Tel: +7 495 6602190, ext. 5109
Email: mailto:Parshinov_SA@borets.ru
Address: 5/1, Moldavskaya str., Moscow, 121467, Russia
Web page: http://www.boretscompany.ru

Broad Community Support is not applicable for this project

Borets II(34065) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
Review recommended E&S mitigation measures for the new plant in Stariy Oskol against good international practice, the World Bank Group Environmental, Health and Safety Guidelines, Available Techniques in the Smitheries and Foundries Industry. Subsequently agree with IFC on a management plan prior to Project Commissioning that will include measurable events, responsibility, timeframe for implementation, financial and human resources to meet local regulations, good international practice and the WBG EHS Guidelines for foundries.	28-Feb-2014	Completed	Completed	2/28/2014
Revise the existing EHS manual and procedures and based on these develop and implement appropriate management programs at the international facilities and include the requirement for reporting on these to the corporate QHSE department	30-Jun-2014	Completed	Completed
Conduct independent environmental, health and safety audits of selected international operations within one year schedule. Facilities being subject for audit will be determined on the basis on the E&S desktop screening undertaken by the corporate QHSE department currently to determine those with the highest potential risk. Based on the audit findings, develop corrective action plans in agreement with IFC to address any deficiencies’ identified	30-Apr-2014	Completed	Completed
Develop a formal human resources policy commensurate with good international practices and PS2	31-Mar-2014	Completed	Completed
Develop a retrenchment plan and submit to IFC for agreement prior to implementation. The retrenchment plan must be consistent with PS2	31-Mar-2014	Completed	Completed
Borets shall quantify direct and indirect greenhouse gas emissions from facilities on an annual basis in accordance with internationally recognized methodologies	31-Mar-2014	Completed	Completed