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
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources

Issues related to PS5: Land Acquisition and Involuntary Resettlement, PS7: Indigenous Peoples and PS8: Cultural Heritage are not expected with this investment for the following reasons: this equity investment does not involve any green field operations as all PAN’s targeted subsidiaries under this investment are established facilities, and many of these facilities are located within industrial zones (e.g. Lafooco’s processing plant). None of PAN’s current or anticipated future operations has or will trigger involuntary resettlement and/or economic displacement. There is no presence of Indigenous Peoples or known cultural artifacts within the company’s operational footprint. In the event that issues anticipated by these PSs arise, PAN will promptly inform IFC. Screening and assessment of these issues against PSs requirements will be done through the Company’s E&S management system (ESMS).

This proposed investment is expected to have limited environmental and social impacts which are expected to be site-specific and none is expected 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. The project is designed to avoid, minimize and manage E&S risks and impacts in compliance with Vietnamese legal and regulatory requirements, IFC’s Performance Standards (PSs) and applicable World Bank Group (WBG) General and sector-specific (Annual Crop Production, Aquaculture, Fish Processing, Food and Beverage Processing) Environmental, Health and Safety (EHS) Guidelines.

Key E&S issues associated with this investment are: (i) provision of safe and fair working conditions, compliant with Vietnamese labor law and Performance Standard 2, for permanent employees, contractors and supply chain labor; (ii) water and energy efficiency and consumption; (iii) solid and liquid waste treatment and disposal; (iv) emissions to air or combustion products (including GHGs) and odor; (v) food safety; (vi) sustainable aquaculture; and (vii) management systems to provide systematic management of all these issues and where appropriate external certification of such.

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. PAN is committed, through its existing Environmental, Social and Governance Responsible Investment Policy to the promotion of sustainable investment. It seeks to optimize ESG attributes within the scope of its investments through resource efficiency, environmental stewardship and certification of management practices defined in Vietnamese legal and regulatory requirements and voluntary agro-commodities standards. This commitment to meeting these performance-based requirements has been validated during appraisal. Existing environmental, OHS, Food Safety and Social related policies at the level of the subsidiaries encompass a mix of internal (e.g. Staff Handbook and Occupational Health and Safety) and external (sector standard related, e.g. HACCP or ISO22001 and ACS/Global GAP) policies. Going forward, as set forth in the ESAP, PAN will develop, approve and implement its own set of corporate EHS policies which will include; i) reference to performance-based requirements based on Vietnamese?s laws and regulations, IFC?s Performance Standards, applicable WBG EHS Guidelines, ISO22001 or HACCP (food/fish processing) and ASC / Global GAP / MSC (aquaculture?s primary production and sourcing operations) requirements. These corporate policies will be applicable to all PAN?s existing and future subsidiaries; ii) assigning a corporate and full-time E&S coordinator at the holding level as well as defining an accountability framework (Board of Director?s Sustainability/ESG Sub-Committee) in its organogram for effective implementation of PAN?s corporate EHS policies at subsidiary level; iii) officially assigning a E&S coordinator in each of its subsidiaries; iv) ensuring an EHS communication strategy to all direct employees, subsidiaries? other workers, primary suppliers, contractors and partners, including an explicit reference of sustainability initiatives on its website; and, v) ensuring corporate-level internal audit mechanism for assessing performance level of all its subsidiaries, including meeting quantifiable EHS performance targets and key performance indicators.

Environmental and Social Assessment. PAN has demonstrated systematic risk identification and impact assessment of its subsidiaries? operations. Specifically, in accordance with Vietnam?s 2005 Law on Environmental Protection and its Decree N?29/2011/ND, SSC, ABT and Lafooco have conducted Environmental Impact Assessment (EIA) Studies or made Environmental Protection Commitments, including the definition of structured ESMP or stand-alone mitigation measures at their respective operations. The scope of these risk assessments has also encompassed P&C requirements of voluntary agro-commodity standards. These studies were available for review at all sites. Terms and conditions of environmental certificates, as issued by the Provincial Department of MONRE, included requirements for: (i) effective implementation of the ESMPs during operational phase; (ii) preparation of quarterly and semestrial report on EHS performance, including compliance with Vietnamese?s effluents, air emissions, noise; (iii) notifying authorities about occurrences of unforeseen events; and, (iv) undertaking and reporting internal/external environmental audits on a quarterly/semestrial basis. Fulfillment of these provisions at all subsidiaries appraised has been validated. In addition to the environmental licenses, all subsidiaries have successfully complied with other regulatory requirements (e.g. fire certificate, Workplace OHS Committee, quality control certification for seed, certificate of compliance with food safety regulation on fishery business operation from National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD). Going forward, as set forth in the ESAP, PAN will establish a process to review and update legal and regulatory compliance status for all its existing and any future subsidiaries and will report updates annually to IFC.

EHS Management System and Programs. PAN has not yet established an integrated corporate environmental and social management system for all its subsidiaries. This being said, building blocks for such corporate system already exist at subsidiary level. Significant progress has been noted at all subsidiaries in term of defining management systems commensurate with E&S risks and impacts. Specifically, SSC (for Cuchi seed station) obtained ISO 9001 certification of its quality assurance management system. Environmental procedures and management programs associated with SCC?s operations encompass solid waste management, including hazardous waste (e.g. chemical containers) disposal, integrated pest management, air emissions and wastewater monitoring, emergency preparedness and response, and energy efficiency. PAN?s operations do have quality assurance management systems certified compliant with ISO 9001, while ABT also observes Control Points and Compliance Criteria for Integrated Farm Assurance and ASC Pangasius certification and Chain of Custody (CoC) certificate (for its white clam sourcing). Lafooco has HACCP and Good Manufacturing Practices (GMP) certification. Sample of follow-up audits and CAPs were provided. Main regulatory management plans, aside from standards? audit, CAPs and follow-up audits, encompass food safety, provision of safe working conditions to workers, including establishment of OHS Committees, use of Protective Personnel Equipment (PPEs), solid and hazardous waste management, efficient use of water & energy resources, collection and treatment of liquid effluents from on-site WWT plant, emergency preparedness plan, including life and fire safety, air emissions monitoring from boilers, and biodiversity management plan at aquaculture farms.

IFC?s appraisal found that these management systems at subsidiary level: 1) aside from ABT, management systems are driven by external audits, especially in Lafooco and SSC. This risk assessment and management process needs to be further internalized in each subsidiary; 2) recognizing that the scope of management systems adopted is commensurate with EHS risks and impacts of each subsidiary operations, there is a need to further mainstream OHS and social issues into overall management systems as well as further mainstreaming specific IFCs PS-related requirements (e.g. contractor OHS oversight and E&S requirement applicable to primary suppliers). As set forth in the ESAP, PAN and its subsidiaries will strengthen the corporate and subsidiary-level EHS management framework through the development of its own set of EHS policies, as mentioned above, and finalize the development and implementation of subsidiary-based SOPs and annual EHS management plans - consistent with ISO 14001, OHSAS 18001, HACCP or ISO22001, and ACS/Global GAP/MSC requirements. Furthermore, this integrated management system will be in compliance with IFC?s PS1 requirements (especially as it relates to supply chain risk assessment and management) and compliant with applicable WBG General and Sector-specific EHS Guidelines, as technically and financially feasible for existing associated facilities (e.g. all on-site WWT plants).

Organizational structure and technical capacity. PAN has not yet assigned an EHS coordinator and/or EHS team to effectively manage its corporate EHS requirements. This being said, EHS responsibilities in all subsidiaries have been assigned to Director/Head of Operations. Specifically, for ABT, the Deputy General Director is the E&S coordinator. This responsibility is explicitly identified in his job description. For Lafooco, IFC?s appraisal team was informed of two officers in the Quality Assurance team who are responsible for EHS monitoring and standards compliance. As set forth in the ESAP, PAN and its subsidiaries (especially Lafooco and SSC) will assign/confirm a competent EHS coordinator for management oversight of EHS legal, regulatory and voluntary EHS obligations. PAN will also establish a Sustainability/ESG Sub-Committee of the Board of Director?s with representation from all PAN?s subsidiaries in its organogram for ensuring implementation of PAN?s corporate EHS policies.

Training. Training plans were provided for each subsidiary. Need assessment for the preparation of the training plan is aligned with each subsidiary?s legal and regulatory EHS requirements and licenses. Going forward, as set forth in the ESAP, upon completion of the integrated EHS Management System?s policies at the corporate level, PAN, in coordination with its subsidiaries, will define a comprehensive and multi-year training plan, for IFC review, including center of responsibilities and budgetary allocation for its staffs (permanent and seasonal) and contractors at the food processing plants (ABT, Lafooco), aquaculture (ABT) and farms (SSC) operations in order to support effective implementation of its integrated EHS management system? policies.

Monitoring and Reporting. PAN has not yet defined or implemented a comprehensive corporate EHS monitoring and reporting system procedure. This being said, PAN has started, with the support of an external consultancy firm, to prepare a consolidated Sustainability/ESG annual report, using Global Reporting Initiative (GRI) framework. This GRI report is tentatively scheduled to be disclosed in April 2015. It will be important for the proposed Sustainability/ESG Board Sub-Committee to have oversight over this reporting process and to inform PAN?s Board of Directors on EHS performance at corporate and subsidiary-level. In accordance with their environmental licenses, all subsidiaries prepare quarterly/semestrial monitoring reports to Provincial Environmental Authorities which cover analysis of parameters, such as air emissions, effluents, solid/hazardous waste characterization, volume and disposal, energy and water consumption and efficiency, noise levels, etc. IFC reviewed examples of these monitoring reports at all sites. The scope of these reports covers the majority of the required monitoring as included in the WBG EHS Guidelines; exceptions include lost-time accident statistics, estimation of GHG emissions, customers and community complaints, primary suppliers and contractors? EHS performance and corporate social responsibility (CSR) initiatives. Adoption of the GRI framework at corporate and subsidiary level will address these gaps.

PAN?s subsidiaries are subject to follow-up audit of voluntary standards in order to demonstrate continuous improvement in EHS performance, productivity and resource efficiency. Major customers also undertake third-party audits against industry standards. Ad-hoc inspections from various Vietnamese authorities (e.g. MONRE, NAFIQAD, fire safety, etc.) also take place. Based on information provided during appraisal, PAN and its subsidiaries did not incur over the last three years any material regulatory penalties, fines or sanctions for contraventions or non-compliance with statutory obligations, nor any reported fatalities at any of its processing plants/aquaculture/farm operations. Going forward, as set forth in the ESAP, PAN will define a set of Key Performance Indicators (KPIs) to meet the reporting gaps described above, in order to monitor on a monthly basis the following EHS parameters at each subsidiary: a) Safety ? Lost Time Incidence Frequency Rate (LTIFR), Accident Free Days; b) Sustainability ? total energy consumption usage and efficiency (kWh/ton), water usage consumption and efficiency (kiloliters/ton) at processing and aquaculture/farm operations, wastewater monitoring effluents, noise, air emissions parameters from boilers (if heat input capacity is more than 3MWth), use of Crop Protection Products (CPPs) and fertilizers; c) Staff ? Retention/turnover and training days.

Emergency Preparedness and Response. PAN?s processing plants and aquaculture/farming operations have risks associated with diesel storage and use and CCP spills. All subsidiaries have defined an Internal Operational Procedure (IOP) for emergency preparedness and response and have obtained fire certificates from Provincial Police Department. All subsidiaries perform annual fire drills as well as a first aid training session. During the site visit, newly installed fire prevention systems, including fire hydrants, hoses and extinguishers, were seen at all subsidiaries. OHS committees at processing plants and aquaculture/agriculture farms have been established and are responsible for fire prevention, response and training. Extinguishers are available at the SSC farm operations. Evacuation plan and fire accident meeting points are defined at ABT and Lafooco?s processing plants and employees are made aware of these plans. Going forwards, as set forth in the ESAP, PAN will provide IFC, for review, supporting evidence of: i) the IOP for all sites; ii) fire prevention procedure and certificate for all sites; and iii) OHS Committee role and responsibility in emergency response, including fire brigade composition at all sites and annual emergency/fire training.

Stakeholder Engagement Plan. As indicated above, the majority of PAN?s subsidiaries are located in industrial parks. As such, there is no requirement for these operations to develop a Stakeholder Engagement Plan (SEP) as there is no direct operational interface with any community. However, such a requirement does apply to ABT?s processing and aquaculture farms, Lafooco?s packaging plant as well as SSC farms which are located adjacent to residential areas. IFC appraisal findings did identify the existence of a community engagement mechanism with surrounding communities at ABT?s Conban farm as well as the existence of a community grievance mechanism which is distributed to community leaders. Minutes of the annual meetings with local residents to obtain their opinion on the effects of ABT?s aquaculture operations was made available. Such pro-active community consultation and stakeholder engagement has not yet been replicated at all applicable sites, especially at ABT?s processing plant, Lafooco?s packaging plant and SSC farm operations. This community engagement process needs to be strengthened and formalized to identify and manage the social risks and challenges. As set forth in the ESAP, PAN?s subsidiaries will prepare a combined Stakeholder Engagement Plan (SEP) and Community Relation Plan for all applicable sites, in accordance with IFC?s PS1, including identification of stakeholders, determination of their level of interest and influence in the project (by importance and relevance), establishment of appropriate methods for engaging each group, and identifying strategic and forward looking programs and activities to support and partner with affected communities. EHS coordinator at PAN?s subsidiaries level should be assigned as community liaison officer. The objective of the plan will be to strategically manage engagement and relations with project stakeholders and locally affected communities on a medium-long term basis.

Supply Chain Risk Assessment and Management. Based on subsidiaries? operations and associated agro-commodities sourcing practices, applicable scope of supply chain risk assessment encompass SSC?s contracted farmers for rice and corn seeds (sourced from smallholders over more than 2,000 ha), ABT?s contracted fingerling farm (23 ha), ABT?s sourcing of white clams in the Mekong Delta, and Lafooco?s raw cashew nut (RCN) sourcing in Africa and Vietnam. The Global Map for E&S risks associated with agro-commodity production (http://www.ifc.org/GMAP) and the US Department of Labor?s ?List of goods produced by child labor or forced labor? were reviewed to assess supply chain risks for these combinations. GMAP does not cover Vietnam / cashew, corn, rice and clam risk assessment combinations while US DoL didn?t report any social risks for these combinations.

In order to assess applicability of PS-related supply chain requirements, management control and leverage of PAN?s subsidiaries over its primary suppliers was assessed during appraisal. IFC was informed that SSC?s contracted farmers grow seeds on their own farms (typically less than 0.5 ha in size), using SSC?s comprehensive manual of procedures (including explicit condition of not using banned pesticides) and with monitoring oversight of SSC?s agronomic engineer and the Ministry of Agriculture. SSC undertakes due diligence of its suppliers using ISO 9001 standard framework against technical criteria, such as soil and weather conditions, water availability for irrigation, farmers? technical capacity and community assessment. ABT?s contracted fingerling farm closely follows ABT?s manual of procedures (being ASC or Global GAP certified) and is closely monitored by ABT?s technical staff. ABT?s white clam sourcing has been certified by MSC for CoC and compliance with MSC?s principles and criteria for sustainable harvesting of hand-gathered clam from Fishermen?s Co-operatives within Ben Tre Province since November 2009. In addition, more than 50% of the clam sourcing in the north (Thai Binh, Nam Dilh) and southern (Ho Chi Minh City, Cen Gio, Tien Giang) provinces is certified by NAFIQAD (as clams are being harvested by smallholders not organized into cooperative). Lafooco sources 15,000MT of Raw Cashew Nut (RCN), 50% in Africa (Guinea Bissau, Ghana, Indonesia, Ivory Coast, Tanzania, etc.) from traders (e.g. Olam) over which Lafooco has no leverage while 50% is being sourced within Vietnam through local traders. Lafooco has indicated that it does not have management control over these traders and confirmed that there is no direct relationship with cashew cooperatives. Lafooco includes technical/quality specification within its contractual agreement with local cashew traders but no specific E&S requirements are included. Going forward, as set forth in the ESAP, Pan Pacific will develop and implement, as best practice, for its subsidiaries, as applicable - especially for the cashew sourcing due to potential biodiversity risks, a management procedure for mapping and assessing biodiversity risk of its supply chain, which will include the development and implementation of a Suppliers? Code of Conduct. Implementation of this Code will be done through subsidiaries? EHS coordinator and/or sourcing team. Enforcement of Suppliers? Code of Conduct should be carried out by internal and external auditors.

Human Resource Policy and Management. PAN employs 15 employees while its subsidiaries employ almost 2,000 permanent and temporary employees. With PAN’s proposed expansion plan and additional corporate oversight, corporate and subsidiaries’ employment should expand over the next years. All PAN’s subsidiaries have been updating their Human Resources Policies and Procedures to reflect the new labor regulatory requirements (Labor Code) which took effect in May 2013. The scope of these policies is applicable to all permanent employees with indefinite term of contract. The intent is to extend application of these policies’ requirements to casual and contractual workers. Specifically, PAN and its subsidiaries have, or are in the process of, adopted a HR Policy Statement, a Staff Handbook and Human Resources’ Internal Labor Rules (ILRs) and standard operating procedures (SOPs) which outlines the following provisions: (i) wages, including deductions; (ii) hours of work; (iii) overtime arrangements; (iv) leave, (v) benefits, including public health insurance, pension schemes, (vi) right to organize and bargain collectively, (vii) disciplinary procedures, (viii) termination procedures and rights, (ix) conditions of work, (x) safety, hygiene, emergency aspects, (xi) promotion criteria, (xii) training, and (xiii) other requirements according to national law, e.g. labor outsourcing. In addition, disciplinary and worker/community grievances procedures, contacts and confirmation form of receipt of Staff Handbook are outlined in the Appendix of some subsidiaries. Non-discrimination and equal opportunity are fully recognized. Minimum age of employment is 18 years old in PAN and its subsidiaries. These sets of policies are communicated during job induction session, at meetings and posted on notice boards. Some subsidiaries (e.g. SSC) further verify if employees have effectively read the procedures through specific examination. PAN’s subsidiaries are at different levels of completion of ILRs’ procedures, with ABT having completed this process while Lafooco and SSC still being in the process. Going forward, as set forth in the ESAP, in order to ensure compliance of PAN and all its subsidiaries with Vietnam’s recently adopted Labor Code and IFC’s Performance Standard 2, PAN will provide to IFC all applicable ILRs and SOPs with demonstration of approval review from the Ministry of Labor. PAN will also establish an annual internal HR process to verify on-going compliance. External (e.g. Provincial Labor Inspection) HR audits are taking place on an annual basis.



Salary grids associated with job grades in PAN’s subsidiaries were reviewed during appraisal. Estimated minimum monthly payment for lowest job grade at different locations in Vietnam varies as being defined by Provincial authorities. On average, such monthly minimum salary is 2,700,000 Vietnamese Dong (VND) – equivalent to $US127 (which applies mostly to agricultural workers) while minimum monthly salary offer
ed at all subsidiaries varies from 3,500,000 VND (SSC) to 5,500,000 VND ($US164 to $US258), at least 20% over and above minimum wage. Annual salary increase is offered to labor (from 10% to 30-50%) in order to mitigate the 7% inflation rate in Vietnam. Performance-based bonuses are also available, provided in cash or in non-financial form such as training. Pension is paid by the Social Insurance in Vietnam. Medical coverage is covered through the public health system for all employees. Aside from ABT’s processing plant (where annual staff turnover can reach 29% per year due to challenging working conditions, especially odor), there is limited staff turnover at SSC and Lafooco operations (5-7% per year). Human Resources management in each subsidiary is under the responsibility of the HR Manager who is supported by operation-level HR officers. Changing rooms, toilets and shower facilities are available for workers at the ABT plant and aquaculture operations, and respect gender sensitivities. Canteen is provided at ABT’s processing plant. Due diligence of food service provider is carried out. SSC’s center had changing rooms for CCP sprayers, including showers.



Retrenchment Plan. Considering PAN expansion of its subsidiaries’ processing, aquaculture and farming operations, additional employment will apply. As such, there is no retrenchment plan envisioned in the next years.



Grievance Mechanism. All PAN’s subsidiaries are fully committed to establish a strong and consensual social dialogue with their workers to ensure stable and productive working conditions and performance. Some of PAN’s subsidiaries have established a formal and structured grievance mechanism procedure while it is in development at others (SSC and Lafooco). This procedure includes steps to be taken by workers to manifest any concerns, engage in a mediation process, contact responsible persons, and provide timely feedback. Employees are made aware of the grievance mechanism during each worker’s induction session. This mechanism for ABT met IFC’s PS2 requirements. As mentioned above, and as identified in the ESAP, SSC and Lafooco will finalize this procedure. This grievance mechanism is applicable to permanent, casual and contractual workers. Complainants may remain anonymous, as needed, and analysis of systemic issues are documented and addressed.



Workers organizations. All PAN’s subsidiaries fully support the principles of the freedom of association and collective bargaining in accordance with the Vietnam Labor Code, this being reflected in their respective HR policies and procedures. The labor union at each subsidiary level is under the Ministry of Agriculture’s labor union. Labor union representatives are elected every 5 years and participated in Labor and OHS Committee in each subsidiary. Key issues raised by union representatives related to salary increase, bonus distribution and specific training. The Collective Bargaining Agreement is renewed on a yearly basis. This
agreement provides for the performance review of employees against performance based benchmarks.



Occupational Health and Safety. All PAN’s subsidiaries are committed to ensure safe and healthy working conditions of all their workers. IFC’s E&S specialist was informed that each PAN subsidiary includes an Occupational Health and Safety Policy in the ILRs (to be completed by end 2014 in Lafooco and SSC) whose scope of application encompasses all employees (permanent, casual) and contractors and which seek to meet all legal OHS provisions defined in the Vietnam’s OSH regulations. Workplace risk assessment takes place at processing and primary production (aquaculture/farm) operations. The responsibilities for the effective implementation of the risk mitigation measures and training are delegated to the processing plant and farm managers, with oversight from the Labor and OHS Committee. Annual training plan reviewed during appraisal effectively covered OHS related training. Going forward, every worker will be required to sign an Occupational Health and Safety Staff Acknowledgement Form in order to confirm that he/she has received; read; and understood the OHS policy and procedures. It is understood that employees at critical control points are specifically trained on the job on application of the SOPs in order to ensure operations integrate the necessary elements to provide for food safety. Use of personal protective equipment (PPE) (boot, lab overall, ear plug, and mask) was observed during IFC’s site visits. Lafooco’s workers also wear plastic gloves due to cashew nut shell liquid (CNSL), a caustic oil aggressive to the skin. ABT ensures that all workers at aquaculture operations have a swimming qualification. Assigned OHS officers, supported by processing/farming managers and health clinic nurses (applicable at ABT and Lafooco), undertake regular OHS internal audits at all operations to verify compliance with SOPs. External OHS audits are also carried out by product-off takers and third-party standards. During appraisal, IFC appraisal team was informed that no significant workplace related incidents at SSC and Lafooco took place in 2014. ABT’s processing plant registered 24 minor injuries (for example, finger laceration during the filleting process) in 2013 over almost 1.6 million working hours though the number of lost workdays was not provided during appraisal. Supporting evidence of OHS requirements into contractors’ contract was provided for ABT. All PAN’s subsidiaries are required to provide a bi-annual report to the Provincial Public Health and Labor Authority on LTIFR. Going forward, as outlined in the ESAP, PAN’s subsidiaries will provide to IFC the workplace risk assessment for the processing and aquaculture/farming operations, set of SOPs applicable to OHS measures for the processing and farming (including extensions officers) operations, organizational structure, annual OHS training, including centers of responsibilities, budgetary
allocations and schedule of delivery, findings of external and internal OHS audits which have taken place, CAP, if required, and consolidated annual OHS performance reports. Medical health checks are conducted after recruitment. ABT and Lafooco conduct employee health checkups once a year for workers at Critical Control Points (CCP) in processing units, as per ISO22001 or HACCP requirements, while SSC’s pesticide sprayers are checked for cholinesterase level.



Supply chain. No harmful child or forced labor associated with cashew, pangasius/clam and seeds sourcing in Vietnam was identified through the risk assessment documented under Performance Standard 1.

Energy use and greenhouse gas emissions. Provision of electricity to all PAN’s subsidiaries’ processing and farming operations is provided by the national grid. In addition, back-up generators are found at every processing and aquaculture / farm units in case of power outage. The boiler at different processing plants runs on diesel or wood (Lafooco). Energy consumption is being monitored at all sites, and data on electricity and diesel consumption were available during appraisal, aside from SSC. A cleaner production audit was carried out to optimize energy efficiency at ABT. ABT uses contracted boats to move fish from its aquaculture operations to the processing plant. Lafooco rely on outsourced transport companies for product distribution.



Air emissions monitoring. Main source of air emissions are the gensets at all sites and boilers at the processing plants. Gensets are only used for emergency basis as power outage seldom happened. Boilers and gensets undergo semestrial maintenance inspection to optimize efficiency. All subsidiaries monitored boiler air emissions as per Vietnamese regulations. Data provided confirm that ABT and Lafooco’s stack air emissions from boilers are in compliance with local regulations as well as for WBG EHS Guidelines for point source emissions to air.



Noise. All processing sites comply with Vietnamese regulation for noise and WBG’s noise level guidelines.



Water use and efficiency. Water supply at ABT’s aquaculture operations is sourced from neighboring water systems (Mekong River tributaries) while water supply for ABT’s processing plant is sourced from underground water (450 meters depth). Lafooco’s cashew processing plant is sourcing its water supply from the industrial zone where it is located. ABT is by far the highest water consumer of all PAN’s subsidiaries. In order to reduce its water consumption at the processing plant, a cleaner production audit took place in 2012. Based on data shared during appraisal, water consumption has been reduced by 33% since 2012. With an estimated use of 6m³ of water per ton of pangasius, ABT stands at the lower side of the range of 5-11m³/ton as suggested by UNEP’s Cleaner Production guidelines for fish processing. Water use at Lafooco is limited (ref. dry process) while SSC relies on rain for its agriculture water use.



Wastewater Treatment. All PAN’s food/fish processing facilities have their own on-site Wastewater Treatment Plant (SCC’s research station, ABT, Lafooco). Data provided confirm ABT factory’s compliance with Vietnamese effluent standard. These are comparable to WBG’s indicative values for treatment of process water for water surface release. In the case of Lafooco’s cashew processing plant, additional wastewater treatment is being provided by the industrial zone. Lafooco’s WWT plant effluent parameters significantly exceed Vietnamese limits and the industrial zone effluents limits. IFC was informed during appraisal that a feasibility and technical des
ign study for upgrading existing WWT plant is presently underway. Commissioning of the upgraded WWT plant is scheduled in 2 months. As set forth in the ESAP, Lafooco will undertake effluent analysis within 6 month after upgraded WWT plant commissioning in order to demonstrate compliance with Vietnamese and industrial zone limits. ABT’s aquaculture operations flush pond water after each growing cycle into Mekong River’s tributaries in accordance with the terms of a permit from the provincial MONRE office. Disinfection of pond water in ABT’s aquaculture operations is done using chlorination (calcium or sodium hypochlorite) in earthen ponds to ensure the eradication of possible pathogenic organisms or disease before starting the subsequent production cycle. Residual chlorine concentration of 10 ppm for 24-48 hours is recommended for complete microbial sterilization. In order to avoid the negative toxicity of chlorination on receiving fish and water systems, neutralization through dechlorination is done by the exposure of sunlight treatment over 4-5 days. Aeration also significantly reduces this neutralization period.



Management of solid and hazardous wastes. Wastes from food/fish processing and aquaculture operations are characterized mostly by organic waste (e.g., dead fish from aquaculture, solid waste (cardboard, nylon, packaging, metal, plastic, etc.), and hazardous waste (light bulbs, used oil and clothes, oil tanks, chemical containers, batteries, dust from boilers, etc.). Organic wastes are converted into fish feeds, bio-fertilizers and fish meal and oil, while others wastes are collected and disposed by authorized service providers. Due diligence of these providers is undertaken by PAN’s subsidiaries. A neighboring company is presently processing ABT’s fish wastes. Contract is valid for the next two years. Cashew nut shell oil generated during the cashew processing is being sold to industrial users (paint and pest products). As for SCC’s plastic containers of CPP products, they are triple rinsed, punctured and buried in a well-defined pit location at SSC’s farm. Appropriate secondary containment structures consisting of walls capable of containing more than 110 percent of the tank volume (diesel) were been observed at ABT, though secondary containment of diesel and CNSL requires upgrading at Lafooco. Going forward, PAN’s subsidiaries, especially Lafooco, will ensure, as set forth in the ESAP, that appropriate secondary containment structures be installed at all sites.



Pest Management and Control. SSC’s crop protection product (CPP) used for its operations and/or distributed is based on approved CPPs by the Vietnamese Ministry of Agriculture (ref. Pesticides Control Board). Going forward, as indicated in the ESAP, this list shall be cross-referenced with any additional restriction, such as Global GAP’s Integrated Farm Assurance while use if any of WHO recommended classification of pesticides by hazard Class Ia and Ib shall be elimina
ted and the storage, handling and use of Class II pesticides shall be restricted to staff who have received proper training and systematic use of Personal Protective Equipment (PPE), as well as limited access to these personnel. SCC has adopted an Integrated Pest Management (IPM) policy and procedures. As set forth in the ESAP, SSC and NSC will provide to IFC its IPM strategy and plan as well as the final list of CPP used at its farms.

Community Health and Safety. PAN’s subsidiaries operations are relatively isolated from human settlements. A slight induced increase in road/water transport may be noticed due to increased activities at SSC farms, ABT aquaculture operations and ABT/Lafooco food/fish processing plants but this is small. Forklift drivers at the processing plant are recruited based on several years of training and experience. Certificates were available during appraisal. Food safety of PAN’s subsidiaries products is covered under HACCP certification requirements, including traceability. Antibiotics are used during the first three month of pangasius growing cycle (which last 7-8 months). Verification of no residues is done through internal testing ABT’s Quality Assurance Laboratory as well as independently at NAFIQAD.



Community Grievance Mechanism. As indicated in the Stakeholder Engagement Plan (PS1), PAN and its subsidiaries are committed to harmonious relationships with surrounding communities and response to any potential grievance. PAN and all its subsidiaries (especially SSC, ABT’s aquaculture operations and Lafooco’s packaging plant) will specifically formalize a structured mechanism to manage and response timely to community grievances. As set forth in the ESAP, these entities will adopt a community grievance mechanism to strengthen its consultation and responsiveness with any potential communities’ grievance on the E&S risks and impacts associated with their operations, including assignment of a community liaison officer.



Security Personnel. There is no significant level of security issues where PAN’s subsidiaries are located, especially the ones located within industrial zone. For the time being, own and/or contracted security personnel are assigned at each site. These are trained by police forces on security issues and defensive response. ABT has developed a procedure for security personnel in 2012. It was noted during site visit all food/fish processing plants are surrounded by a 3 meters high fence. A logbook for visitors is also kept at the entrance gate. These measures met PS4 requirements.

Sustainable Management of Living Natural Resources. SSC’s current farms and ABT’s aquaculture operations are located in modified habitat landscape, as confirmed by Vietnam’s Master Plan for farm and aquaculture development and ESIA studies. The MONRE has already provided its authorization for such plan and/or studies. Confirmation of modified habitats of ABT’s aquaculture operations has been also validated during ASC or Global GAP’s audits. NSC and SSC have obtained national standards for seed quality from the MARD, designed specifically for conventional rice, hybrid rice, corn, conventional vegetable seed and hybrid vegetable seeds. The farming management practices supporting seed production cannot be certified as these are specifically tailor-made based on soil and climate conditions as well as local practices and diversified seed types. In addition, in the event where ABT expands its aquaculture farms, the scope of the ESIA studies should integrate IFC PS6 and ASC performance based requirements.



Supply Chain. As indicated under PS1, SSC, ABT and Lafooco are respectively sourcing seeds, clams and cashew from primary suppliers. This sourcing does not represent any biodiversity related risks for the seeds as smallholders are producing on their existing (and small) agricultural plots while white/brown clam sourcing complies with MSC and NAFIQAD requirements whose principles fulfilled IFC’s PS6 related supply chain requirements. As for Lafooco, it is understood that local cashew sourcing is not triggered as Lafooco does not have direct contractual arrangements with smallholder cooperatives. As such, it does not have management control and/or leverage to influence E&S management practices. Going forward, as set forth in the ESAP, Pan Pacific will develop and implement, as best practice, for its subsidiaries, as applicable – especially for its cashew sourcing in Vietnam, a management procedure for mapping and assessing biodiversity related risks of its supply chain, which will include the development and implementation of a Suppliers’ Code of Conduct which will be mainstreamed into its contractual agreement with cashew traders. Implementation of this Code will be done through subsidiaries’ EHS coordinator and/or sourcing team. Enforcement of Suppliers’ Code of Conduct should be carried out by internal and external auditors.

PAN has not yet established a corporate Community Engagement and multi-year Strategic Investment Plan for its social initiatives. This being said, positive interventions have identified at subsidiary level. As an example, ABT contributes to improving rural traffic road system through its support to the national development program entitled “Rural Transformation” and supports Red Cross organizations in Ben Tre province. ABT also supports organizations focusing on poor children and orphan through the program “Compassionate Hearts” and affordable housing. Socio-economic (employment) and overall development impacts of PAN, especially subsidiaries in rural areas (SSC, ABT) especially at its farm/aquaculture operations, are significant. PAN’s Strategic Investment Plan should be aligned with supporting the Millennium Development Goals (MDGs) within surrounding subsidiaries communities.

The ESRS and the attached ESAP will be made available via the World Bank Group’s InfoShop. The company will also be requested to place an advertisement on its website (http://www.panpacific.vn) to inform the public from IFC’s environmental and social review (ESRS) findings and ESAP’s corrective action items.

Name and Address.
Mr. Nguyen Van Khai
Deputy Chief Operating Officer (CEO)
Pan Pacific Corporation
15th Floor, ICON4 Tower, 243A De La Thanh Street, Hanoi, Vietnam
Tel: (+84-4) 3760 6190

Broad Community Support is not applicable for this project

S.no	Description	Anticipated Completion Date	Status
1	PAN will develop and implement an overarching Environmental, Occupational Health and Safety, and Social (EHS) Policy defining the EHS objectives and principles that guide PAN (the “Company”) to achieve sound EHS performance. This policy will specify that all PAN’s business activities will comply with the applicable laws and regulations of Vietnam and be consistent with the principles of IFC’s Performance Standards, applicable World Bank Group’s EHS Guidelines, ISO 22001 or HACCP (for all food/fish processing plants) and Aquaculture Stewardship Council (ASC), Global GAP and Marine Stewardship Council (MSC) (for ABT aquaculture’s primary production and sourcing operations). This policy will indicate who, within the Company, will ensure conformance with the policy and be responsible for its implementation in all PAN’s subsidiaries. The Company will communicate the policy to all levels of PAN’s organization and in all its subsidiaries.	06/30/2015	Completed
2	PAN will establish and maintain a Sustainability/ESG Sub-Committee under PAN’s Board of Directors consisting of the Directors and EHS coordinators of each of PAN’s subsidiaries. The EHS Sub-Committee will have, at least, the following powers: a) oversee the implementation of this Action Plan; b) oversee the appointment of the EHS coordinators in each of the PAN’s subsidiaries (and/or confirm existing assignment); c) oversee the assignment of external consultants for ESIAs and biodiversity related assessment (aquaculture) for any new operations; d) examine EHS policies and procedures and their implementation, and make recommendations for their improvement to the Board; e) provide semestrial and annual reporting to PAN’s senior management and its Board on implementation of this Action Plan, including in each of PAN’s subsidiaries; f) report to the Board in advance of Board meeting; g) provide E&S recommendations for new operations where there is deemed to be of high risk on EHS issues; h) the right to appoint consultants to investigate breaches of EHS policies and procedures at PAN Group level and/or subsidiaries, and recommend remedies to management.	12/31/2015	Completed
3	PAN will establish a process for the maintenance of a legal compliance register for all its operations (SSC, NSC, ABT, Lafooco), including supporting evidence of meeting provisions of Terms and Conditions of licenses and permits delivered by MONRE, NAFIQAD, Ministry of Industry and Trade, etc., implementation of Environmental Management Plans as defined by ESIA studies and/or Corrective Action Plans from standard’s certification process (e.g. HACCP, ISO 22001, ASC, Global Gap, etc. at all PAN’s operations.	06/30/2015	Completed
4	In accordance with IFC’s Performance Standard 1 framework and its requirement, PAN and all its subsidiaries will update and finalize its Integrated Environmental and Social Management System (ESMS), which will be appropriate to the nature and scale of the Company’s operations and commensurate with the level of the environmental, OHS and social risks and impacts in each of PAN’s subsidiaries. This ESMS will be consistent with ISO 14001, OHSAS 18001, HACCP or ISO 22001, ASC / Global Gap / MSC. This ESMS will be applying to PAN’s existing and future operations. It will include the following aspects: policy; identification of risks and impacts; manual of procedures and work instructions related to the management of EHS issues; management programs, including relevant mitigation measures defined in ESIA Studies and/or voluntary standard’s CAP; organizational capacity and competency, responsibilities and approach to EHS management, inclusive of periodic monitoring and supervision of contractors; training requirements to facilitate the implementation of the ESMS; emergency preparedness and response; stakeholder engagement plan and community grievance mechanism; supply chain risk assessment and management.	06/30/2024	Completed
5	PAN will define a set of Key Performance Indicators (KPIs), based on permit’s Terms and Conditions, EMP, and WBG EHS Guidelines, in order to monitor on a monthly basis the following EHS parameters: a) Safety – Lost Time Incidence Frequency Rate (LTIFR), Accident Free Days; b) Sustainability – Carbon (kg/ton), Water Usage and efficiency (kiloliters/ton) at processing and farm/aquaculture operations, Energy Usage (kWh/ton), wastewater monitoring effluents at processing plant, occupational noise, air emissions parameters from boilers (if heat input capacity is more than 3MWth), ambient water quality at its aquaculture operations; c) Staff - Retention/turnover and training days. PAN will report its EHS performance using IFC’s Annual Monitoring Report (AMR) format or the GRI’s framework, whichever is more comprehensive. Annual EHS review will be under the oversight of the Sustainability/ESG sub-Committee and discussed during Board meeting, including PAN and its budgetary’ planning and management review.	12/31/2015	Completed
6	PAN will confirm the implementation of an Emergency Preparedness and Response Plan for all its subsidiaries operations and seek fire certificate for all sites.	03/31/2015	Completed
7	PAN and its subsidiaries will prepare and implement an EHS Management System Procedures Addressing Stakeholder Mapping, Stakeholder and Community Engagement, including a Community Grievance Mechanism complying with PS1.	09/30/2015	Completed
8	PAN and all its applicable subsidiaries (starting with a pilot with Lafooco) will adopt a management procedure as part of its overall ESMS, defining best efforts to assess PS related supply chain risks associated with commodities sourcing, including a Supplier Code of Conduct to be included into contractual agreement. Performance based requirements of the code should capture legal and regulatory issues of Vietnam and PS’s supply chain requirements.	12/31/2015	Completed
9	PAN and all its subsidiaries (especially Lafooco and SSC) will review and formally approved its Human Resources (HR) Policies, Internal Labor Rules (ILRs), and supporting procedures to ensure full compliance with Vietnamese’s new labor Code, and IFC Performance Standard 2 requirements. The Policy will be communicated to employees at all levels of PAN and/or subsidiaries level and be clearly displayed in visible and accessible areas at all sites.	06/30/2015	Completed
10	PAN and its subsidiaries will develop and implement a corporate / subsidiary level Employee Grievance Mechanism, including steps to be taken, mediation process, assigned responsible persons, publicizes the procedure, response time, record keeping, and how feedback will be given. The Employee Grievance Mechanism will be disseminated to employees as part of the induction process, will be accessible to seasonal and contractual workers, and will be posted on PAN and each subsidiary’ internal website.	09/30/2015	Completed
11	PAN and all its subsidiaries will provide to IFC, for review, workplace OHS risk assessment for processing and aquaculture/farming operations, set of SOPs applicable to OHS measures (including extensions officers and contractors), organizational structure, annual OHS training, including centers of responsibilities, budgetary allocations and schedule of delivery, findings of external and internal OHS audits which have taken place, including CAP, and consolidated annual OHS performance reports.	06/30/2015	Completed
12	Lafooco, upon completion of upgrading its on-site WWT plant, will monitor applicable Vietnamese and WBG’s effluents guidelines, especially for pH, BOD, COD, total suspended Solids, Grease, total nitrogen and total phosphorus, at its processing plant within six month of commissioning (scheduled for December 2014).	03/31/2015	Completed
13	PAN and all its subsidiaries will ensure that appropriate secondary containment structures are installed at all sites.	03/31/2015	Completed
14	SSC and NSC will provide to IFC for review, its Integrated Pest Management (IPM) Policy, Procedures, Strategy and Plan, in accordance with WBG’s EGH Guidelines for Annual Crop Production.	03/31/2015	Completed
15	PAN’s subsidiaries will:, in the event of an expansion of ABT’s aquaculture operations, including establishing its own fingerling farm, ESIA’s performance based requirements shall encompass Vietnamese legal and regulatory provisions, IFC’s Performance Standard 6 requirements, and Aquaculture Stewardship Council or Global GAP’s principles and criteria.	09/30/2016	Completed