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 IFC's 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

All the storage facilities are located in industrial areas. There are no communities adjacent to the warehouses. Moreover, all the planned new warehouses are either renovated from the old warehouses in the existing industrial areas or constructed in the existing industrial areas. There is no manufacturing process involved within the scope of this project. Utilities, including water and electricity, are supplied by the industry parks or municipal governments. There are no point air emissions. All the sanitary wastewater is discharged to the municipal sewage system for treatment.

The key E&S risks and issues include the following:

- Occupational health/safety for the employees and contractors.
- Energy efficiency for cold storage facilities and transportation.
- Minimization of leakage of refrigerants.
- Fire prevention and emergency response.
- Road transportation and community safety.

Mitigation measures for the potential E&S impacts have been identified and are incorporated into an ESAP. The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project in accordance with IFC’s Policy on Environmental and Social Sustainability.

All the new warehouses are within existing industrial parks. No land will be acquired outside of industrial parks. No natural protected areas or protected species are identified at, or near, the project sites and thus Performance Standard (PS) 5: Land Acquisition and Involuntary Resettlement and PS 6: Biodiversity Conservation and Sustainable Management of Living Resources are not applicable. Indigenous Peoples were not identified in the project area and no issues related to cultural heritage were equally identified in the project area; thus PS7: Indigenous Peoples and PS8: Cultural Heritage are not applicable.

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.

Warehouse Land: All the existing and planned refrigerated warehouses are located inside existing industrial parks and there are no residential communities adjacent to these warehouses. The majority of the existing and planned warehouses are renovated from existing warehouses in the industrial zones. In case of new warehouses, Zhengming only purchases land slots within existing industrial parks without disputed land ownerships and compensations. Zhengming has its internal land acquisition policy not to purchase farmland or land lot from new industrial parks.



Corporate Environmental and Social Policy: Zhengming is presently developing its corporate environmental and social (E&S) policy in order to promote business with prestigious clients, demonstrate its social responsibility, and achieve a sustainable growth. In accordance with the ESAP, Zhengming will develop an E&S policy as part of its corporate E&S management specifying performance based outcome against Chinese regulations and IFC’s PS and WBG’s EHS Guidelines. The new corporate E&S policy will also be disclosed during the new employee orientation and induction program.



Identification of Risks and Impacts: Zhengming contracted external experts to conduct environmental impact assessments (EIAs) and fire safety assessments (FSAs) for all its existing and proposed warehouses according to local regulatory requirements. Based on the EIAs and FSAs, the project will meet all local regulatory requirements upon successfully implementation of the proposed mitigation methods which are described in the EIAs and FSAs. Zhengming is committed to ensure its operations after the expansion meet both local regulatory and IFC’s PS requirements though proper engineering design, safe operations, energy efficiency improvement, and implementation of the attached ESAP.



Corporate Environmental and Social Management and Organization: There are EHS management programs and implementation procedures for each operation process, including trucking maintenance, safe driving programs, warehouse equipment operation safety procedures, fire prevention, emergency response, etc. EHS training is included in the new employee training program and annual refreshers. The EHS training hours vary according to positions and workplace risk assessment. At each trucking team, there is a fulltime or part-time safety coordinator. A part-time EHS coordinator is assigned to each warehouse. Transportation safety at corporate level is managed by Truck Rental Department. There is no corporate EHS management for warehouse operations. In accordance with the ESAP, Zhengming will set up corporate EHS database for both transportation and warehouse operations and appoint a corporate EHS officer to coordinate EHS management systems across the whole Company.



Emergency Preparedness and Response: Fire hazard is the main operational risk at Zhengming and the Company has strict management procedures to control fire hazard. There are smoke detect
ors and automatic sprinkler systems at all high risk areas of warehouses. All trucks are equipped with fire extinguishers. Firefighting equipment is routinely inspected by the safety coordinators. Each trucking team holds annual fire prevention/emergency drills. Each warehouse holds monthly fire drills. The EHS coordinators and key staffs join annual fire drills held jointly by the industrial park and local fire department.



Monitoring and Review: The safety coordinator at each trucking team reports monthly to the corporate Trucking Rental Department about the operation safety. Each subsidiary’s transportation management team conducts monthly inspections for the truck conditions and transportation safety. The corporate management team holds similar biannual inspections. All the trucks are equipped with GPS system and the central control room of trucking rental department can track the movement of each truck and enforce the safe driving rules, including speed and driving hour restriction.



The warehouse EHS management is handled by each subsidiary. The warehouse EHS coordinator reports daily to warehouse manager about the EHS operation. EHS issues are discussed at weekly subsidiary management meetings. As part of the project, Zhengming will define a comprehensive set of Key Performance Indicators (KPIs) in order to monitor on a monthly/annual basis the following EHS parameters: a) Safety – recordable incident rates (cases/million hours); b) Sustainability – energy consumption for -18°C cold storage (kw/ m3) and fuel consumption for trucking (liter/100 km); c) Staff - retention and training days. All the EHS issues at warehouse and trucking teams will also be reported to the corporate EHS officer and recorded at the corporate EHS database.

Corporate Human Resources Policy and Management: Zhengming has a corporate human resources (HR) policy that specifies the terms of employment and working conditions. These include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, vacation, other leave, and retirement. The company has HR policy training that is part of the new employee induction, and all employees have access to this policy. The HR issues are handled at each subsidiary and centrally managed by corporate HR department.



Working Conditions: All workers on Zhengming’s payroll are term employees and there is no temporary labor. Under the employment terms that strictly follow the Chinese labor law, workers are employed on fixed term contracts which are renewable subject to satisfactory performance and availability of work. Overtime work is uncommon and is usually only associated with emergencies. Staffs receive time-off or cash compensation in lieu of any overtime work at rates regulated by the labor authority. Overtime work during holidays is compensated on the basis of 2 – 3 times of base salary. The average salary at Zhengming is higher than the average salary of similar industries in the regions. All employees have access to the insurance and pension funds as required by labor law.



Workers’ Organization: There is a worker union at Zhengming, as required by the All-China Federation of Trade Unions (ACFTU). Zhengming management is committed to keeping the union independent from management and allows collective bargaining.



Non-Discrimination and Equal Opportunity: The HR policy specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All the hiring and promotion are merit-based. When candidates have equal qualifications, preferences of hiring are given to local residents and females. Currently approximately 30% employees are female. Zhengming plans to recruit more female employees through this project and increase the percentage of female employees.



Retrenchment: Currently there are approximately 1,000 employees at Zhengming. Retrenchment is not expected for this project. The company will hire approximately 500 new employees for the expansion in next two years.



Grievance Mechanism: Grievance mechanism is part of the HR manual and also introduced during the new employee induction. The employees can report their grievances to either HR managers or union labor leaders. All the grievances and the mitigations are recorded. The HR managers/union leaders shall report to the senior management if they could not solve the grievance. HR email address and suggestion box are available for anonymous grievances.



Protecting the Work Force Zhengming complies with national law and does not hire workers below the age of 18 years. HR checks birth and school certificates during the hiring process. No forced labor p
ractices are used by Zhengming.



Occupational Health and Safety (OHS): Zhengming has routine OHS training, including new employee training and annual refreshers. There have been no fatal or serious accidents in the past ten years. There is sufficient personal protective equipment (PPE) at each position and employees all wear proper PPE. The Company has comprehensive OHS procedures including PPE rules and that related to heavy lifting, cold protection, confined spaces, etc. OHS training is part of new employee induction and annual refreshers. All employees have to pass exams at inductions and annual refreshers to be able to work in Zhengming. As part of the ESAP, Zhengming will record all accidents and manage the OHS risks by statistical incidences. In line with the ESAP, Zhengming will monitor the workplace air quality and noise levels at applicable warehouses to ensure the working conditions meet good international industry practices (GIIP).

Raw Materials and Resource Efficiency: There is no manufacturing process for Zhengming project. The water consumption is only for sanitary purpose. Electricity is from national grid and used for warehouse lighting and refrigeration; gasoline/diesel are used for truck transportation; and refrigerants are used for cold storage warehouses and refrigerated trucks. At current stage, Zhengming annually consumes approximately 6,088.5 MWh electricity, 2,550 ton gasoline/diesel, 0.14 ton R22 refrigerant, 0.22 ton R134A refrigerant, and1.43 ton R404A refrigerant. After expansion, Zhengming will annually consume approximately 44,000 MWh electricity, 3,570 ton gasoline/diesel, 0.9 ton R22 refrigerant, 0.3 ton R134A refrigerant, and 2.5 ton R404A refrigerant.



Zhengming has a comprehensive fuel efficiency monitoring program for its trucking fleets. Each type of truck is assigned a fuel efficiency target (liters fuel per 100 km), which is slightly stricter than the manufacturer’s suggested efficiency parameters. As part of this project, Zhengming will also develop electricity saving programs for all cold storage warehouses through efficient compressors, better insulation, automatic door controls, automatic lighting controls, etc.



Pollution Preventions and Compliances: All the sanitary and cleaning wastewater is discharged to municipal sewage system for treatment at municipal WWT plants. All solid wastes are collected by municipal contractors for recycles or disposals. The trucking emissions are tested by municipal transportation departments periodically for licenses of operations.



Greenhouse Gases (GHG): At current stage, Zhengming generates 21,700 tonnes of CO2-equivalent annually. After this project is implemented, Zhengming will generate approximately 60,500 tonnes of CO2-equivalent annually. The GHG is mainly generated from electricity purchase, vehicle fuel consumption, and refrigerant consumption.



For all the cold storage warehouses, the engineers conduct daily inspections for the refrigerant leaks and cooling systems daily. The truck drivers are also required to inspect refrigerant leaks besides safety checks. As indicated in the ESAP, Zhengming will develop a refrigerant reduction program with progressive targets through leak prevention, compression efficiency increase, better insulations, and alternative refrigerants with smaller global warming potentials.

Community Health, safety and Security: There is no community adjacent to any warehouses and there is no manufacturing process for this project. The normal operations have few impacts to the communities nearby. Zhengming has strict driving safety management programs and detailed implementation procedures, which are also periodically reviewed for improvements. All drivers, including all contractors’ drivers have to participate in three levels of safe and defensive driving trainings every year, which are conducted by local transportation regulatory agencies, Zhengming corporate Truck Rental Department, and each subsidiary’s safety officers, respectively. All drivers are required to pass annual physical check, including vision checks. All the traffic accidents are required to report to corporate Truck Rental Department immediately for follow-up, analysis, and preparation of preventive actions, if necessary. As part of this project, Zhengming will also include communicable diseases in the drivers’ trainings.



Emergency Preparedness and Response: Zhengming has ER plans available for its own and contractors’ trucking fleets, and the drivers conduct routine drills for fire prevention and firefighting. For any new trucking contractors, Zhengming will only contract transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods.



Security Personnel: Zhengming hires professional security contractors for warehouse security that conduct routine ID check at the gates and security monitoring. Zhengming has security management plan to manage the security contractors. The security contractors bear no fire weapons and report to the local police stations for any serious security issues.

All the warehouse projects are disclosed at local government website as part of the stakeholder engagement program. There is no direct community engagement at individual warehouse. The community engagement is mainly managed through industrial park management. The industry park has its own grievance mechanism and engages with the nearby communities routinely. There are disclosure bulletin boards outside of each warehouse and the communities can also complaint to Zhengming directly. Zhengming has its own Love Fund with funds from employee donations and management commitments. The Love Fund is mainly used for education support of children from disadvantaged families.

Zhengming will disclose this document in Chinese at its website. For inquiries or concerns about the environmental and social impacts of this project please contact:

NAME: XU LILI
ADDRESS: 19/20 Floor No.3 Lane 433, Changshou Rd. Pu Tuo District, Shanghai
Phone: +86-21-62277668
Fax: +86- 021-62771923

Broad Community Support is not applicable for this project

Zhengming (34169) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
Develop an environmental and social (E&S) policy and management system to improve its corporate E&S management.	31-Mar-2015	Completed	Completed	7/7/2015
Set up corporate EHS database for both transportation and warehouse operations and appoint a corporate EHS officer to coordinate EHS managements across the whole Company	30-Jun-2015	Completed	Completed	7/7/2015
Record all recordable accidents and manage the occupational health/safety risks by statistical incidences	31-Dec-2015	Completed	Completed	12/27/2016
Monitor the workplace air quality and noise levels at applicable warehouses to ensure the working conditions meet good international industry practices	30-Jun-2015	Completed	Completed	12/27/2016
Develop a refrigerant reduction program with progressive targets through leak prevention, compression efficiency increase, better insulations, and alternative refrigerants with smaller global warming potentials	30-Jun-2015	Completed	Completed	7/7/2015