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

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Key E&S risks and issues related to this Project include: adequate social and environmental assessment of the impacts of the Project; the company’s capacity and systems to manage its social, environmental, health and safety aspects of its operations in compliance with legal requirements as well as IFC Performance Standards and World Bank Group (WBG) EHS guidelines; engagement with local communities in accordance with local requirements and IFC Performance Standards; assurance of fair, safe and healthy working conditions during construction and operation phase; pollution prevention including management of wastes (particularly biomedical and hazardous waste), emissions and effluents; and life and fire safety (L&FS) management for all public use buildings in accordance with national and locally applicable L&FS requirements as well as IFC requirements as specified in the WBG EHS guidelines; resource efficiency (raw material, water and energy efficiency) and impacts of land acquisition where applicable.

As regards land acquisition for the project, the proposed expansion of Weigao’s blood purification consumable manufacturing capacities will be undertaken within the existing facility and thus no additional land is required. For the dialysis centers, company will lease or purchase land through willing buyer-seller transactions. No person or economic activity is expected to be displaced/or was previously displaced as a result of these transactions and therefore, Performance Standard (PS) 5 (Land Acquisition and Involuntary Resettlement) is not applicable.

Similarly, the type of risks and impacts envisaged in PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), 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.

Environmental & Social Assessment: As per the applicable legal requirements, Weigao completes an Environmental Impact Assessment (EIA) for any new facilities including any new dialysis centers. The company will complete a similar assessment for the proposed expansion. The manufacturing facilities are inspected regularly by the Environmental Protection Bureau whereas the dialysis centers are inspected by the provincial Ministry of Health. As per the most recent inspection reports, it is noted to be in compliance with the applicable requirements.



Policy and Management Systems: Weigao’s manufacturing facilities have quality management systems (QMS) certified as per ISO 9001 standards. The visited dialysis center is also certified as per ISO 9001 standards. Additionally, Weigao Blood has received product compliance certificates from European regulators for quality and safety in the production of medical device products as well as China Certifications.



Weigao has implemented a Safety Management System at all its subsidiaries including Weigao Blood. All the subsidiaries have a documented safety manual which covers various areas including roles and responsibilities of various departments, organization, training, inspection systems, management of special equipment, work permit system, management of fire safety equipment, management of hazardous materials, emergency plans and accident investigation. One of the sections of the manual also covers environment protection and energy management. The company has also developed monitoring guidelines which are implemented at each subsidiary level. As the system is relatively new, Weigao Blood has recently started monitoring as per the monitoring guidelines.

Building upon the existing corporate-level EHS principles, the company will document its E&S objectives and principles in a form of an overarching EHS / Sustainability policy. The policy will articulate the company’s commitment to comply with the applicable laws and regulations as well as compliance with IFC Performance Standards.



At the dialysis centers, the risks and impacts are limited and managed through the specific procedures to meet the legal requirements.



Organization: At each subsidiary level, General Manager and Vice General Manager have responsibility of safety in their specific business. Each subsidiary like Weigao Blood has a Safety, Energy and Resources Department which is headed by a Lead reporting to the Vice General Manager. All workshops under the subsidiary e.g. Weigao Blood have a safety supervisor. The safety department of the subsidiary reports to Weigao’s safety management committee headed by one of the Executive Directors of the company. The head of departments and each of the workshops are responsible for implementation of safety management requirements as per direction of the Safety Energy and Resources Department.



At the dialysis centers, the focus is mainly on legal compliance and thus a legal affairs representative
is identified for each of the dialysis centers. However going forward, considering the number of dialysis centers, as part of the ESAP, the company shall appoint/identify a safety and environment lead for all dialysis centers who shall be responsible in coordinating the safety and environmental activities at each of the centers with respect to legal requirements and IFC PSs.



Emergency Preparedness and Response: The required fire safety systems are provided at manufacturing facilities in compliance with the legal requirements including fire hydrant systems, fire extinguishers and fire alarm system. Additionally, smoke detectors and sprinklers are provided based on the special needs in certain areas. Weigao Blood facilities were noted to be having these systems. The fire safety systems are inspected on a regular basis (monthly, quarterly and annual based on equipment). Life and Fire safety systems for dialysis centers are discussed below under PS4.



Further as part of the safety management system, Weigao Blood has a documented emergency response plan. Required training is provided on fire safety and emergency response including mock drills. However, the Weigao Blood has not completed such drills in the night shifts. As part of the ESAP, Weigao shall create a procedure to have regular drills covering all emergencies (as envisaged in the emergency response plan) and all shifts.



It was noted that the emergency response plans have not been documented for the dialysis center. Also, though random fire drills are conducted by the local fire department, Weigao does not conduct regular fire and evacuation drills at the center. Therefore, as per the ESAP, the company shall develop and implement a procedure for emergency response, disaster management and patient evacuation across all its standalone dialysis centers. Also, a procedure for conducting regular drills at the dialysis centers shall be developed and implemented at all standalone centers.



Monitoring & Reporting: As part of the safety management system, safety inspections are carried out at workshop level and the findings are followed up to ensure completion. Also, as discussed above, the company has also developed monitoring guidelines which are implemented at each subsidiary level. As the system is relatively new, Weigao Blood has recently started monitoring as per the monitoring guidelines. The results of the monitoring as per the guidelines are then to be shared with the corporate safety committee. Weigao has specified safety goals for all its subsidiaries which include zero severe safety related events/significant injuries/fires/major equipment failures/work related illnesses as well as 98% correction of all safety issues as noted in the safety inspection reports. Weigao Blood conducts regular testing of the effluent quality before its discharge.

Weigao has a total workforce of 9000-10,000 employees. Weigao Blood (including both manufacturing and dialysis centers) employs 1000 people.



Human Resource (HR) Policy and Management: Weigao has a centralized HR Manual which describes policies and procedures applicable to staff and workers. The company signs a contract with all its employees at the time of employment. All the workers are paid on the basis of per piece or per hour rate at its manufacturing facilities whereas at the dialysis centers, the employees are paid fixed salaries. In addition, Weigao provides free food and transportation to all its workers. The company also has dormitories where the company provides free accommodation to its workers. The quality of the accommodation facilities was noted to be satisfactory.



Non-discrimination: As part of its Principle of Selection and Recruitment, Weigao has included non-discrimination and has mentioned about not providing different treatment to different employees based on their nationality, race, age, gender, marriage status and religious belief.



Freedom of Association: Weigao has a labor union. Though the labor union does not undertake collective bargaining, it represents on behalf of workers in case of their grievances (e.g. on wages, safety, women safety etc.). Additionally, the labor union organizes training and entertainment activities for workers.



Child Labor and Forced Labor: To prevent use of child labor, Weigao collects documentation confirming proof of age (e.g., National Identity Card,) at the time of recruitment of the worker. Regarding forced and bonded labor, no such practices were noted.



Grievance mechanism: The employees can raise their general grievances to HR which are then assigned by HR to respective departments for resolution. The serious grievances can be raised to the union or HR. Such grievances are handled in the employee mediation committee which has representatives of union, HR and security. Records of handling of these grievances were noted to be available. Additionally, Weigao conducts an annual documented survey among its workers for assessing the performance of its supervisors. Through the survey, the workers can raise their grievances/complaints against their supervisors directly to HR.



Occupational Health and Safety (OHS): As part of its safety management systems, Weigao Blood trains all workers at the time of induction about safe working practices on the machines. Centralized training, thematic seminars, internal training and education are conducted to train the employees. Relevant safe production activities are organized to enhance employees’ safety awareness. Safety instructions are displayed in the production areas. Employees working on special equipment are duly trained and certified through external agencies. Required personal protective equipment (PPE) are provided to workers and use of PPE was noted to be adequate. The site visit did not indicate any unmitigated
safety hazards.



At the visited dialysis center, training programs were noted to have been conducted for bio medical waste management and fire safety awareness.



For ensuring safety during construction of new centers, the company will develop and implement a formal safety plan defining responsibilities, OHS rules and monitoring of compliance during the construction of the centers.



Third party workers: At the manufacturing facilities, Weigao hires contract workers who work in security, canteen and production lines. The canteen and production line workers are directly paid by Weigao. These workers also have the similar access to union as well as grievance mechanism discussed above. Though the security workers (also at dialysis centers) are paid by the respective contractor, Weigao has included the labor law compliance requirements in the contract signed with the contractor.

Resource Efficiency: For its manufacturing facilities, Weigao Holding Company Limited signs “Energy Efficiency Target Responsibility Letter” with the Weihai city authorities through which the company makes a documented commitment to reduction in energy consumption of its operations. The commitment which covers Weigao is made in terms of reducing the energy after conversion into tons of coal used to produce the energy used by Weigao. For fulfilling its commitment, the company undertakes energy efficiency projects. For example, company has conducted a pilot of implementing a smart control system for one of its workshops. Such system will be implemented for Weigao Blood by end of 2015 and is expected to reduce the electricity consumption by 20%.



As regards the dialysis centers, Weigao plans to develop the new dialysis centers as “green hospitals” which will include use of environment friendly materials, energy savings, recycling and other aspects. In terms of energy, new centers will use energy efficient products to reduce the electricity use. The Chinese government has already regulated the capacitance, electric quantity, and voltage of dialysis equipment, new dialysis centers will also comply with these national standards.



Greenhouse Gases (GHG) Emission: Based on the data available from Weigao, the estimated GHG emissions from its current operations are 66,424 tonnes CO2 eq/annum.



Air Emissions: Electricity is sourced from the public grid. No other fuels are used on-site (in manufacturing or at the dialysis centers) except the liquid natural gas (LNG) used for cooking. Therefore, there are no air emissions from any processes on-site.



Water and Wastewater: Water at the manufacturing facilities is sourced from the local public water supply. The water is treated to adequate quality standards. Reverse Osmosis (RO) treated water is used in the process. The wastewater generation from the process is very limited and is treated through solvent recovery facilities. Most of wastewater is recycled for manufacturing use and limited wastewater is mixed with domestic wastewater and treated in the on-site sewage treatment plant. The treated wastewater is then discharged in the public sewage system. At the dialysis center, the wastewater is first treated on-site with Chlorine Dioxide and discharged in the public sewage system. The treated wastewater quality is regularly monitored by the company as well as regulatory agencies and the results confirm compliance with the legal limits.



Bio Medical Waste (BMW) and Hazardous Waste Management: At the dialysis centers, all bio medical waste is segregated at source in color coded bins. The waste are collected in different bags and disposed of through the responsible government agency. At the manufacturing facilities, non-hazardous and domestic waste are segregated which are then collected and disposed of by the responsible government agency.



Hazardous materials management: The manufacturing f
acilities of Weigao Blood use solvents (e.g. Dimethyl Acetate) in the process, mainly for melting of the polymer. The solvent was noted to be stored in separate secured areas with secondary containment. Also, Ethylene Oxide (EO) is used for sterilization of some of the manufactured products. EO is stored in an independent secured area with require safety provisions including detection and alarm systems. Weigao Blood has documented safety instructions for storage, handling and use of these hazardous materials as part of its Safety Management System.

Life and Fire Safety (L&FS) Systems at Dialysis centers: The visited dialysis center complies with national and locally applicable L&FS requirements. Weigao obtains Fire certificate from the local fire authority. The L&FS infrastructure at the center includes fire extinguishers, fire hydrant pumping system, smoke detectors, wet risers, fire alarm with manual call points, emergency exits, signage and emergency stairways. Similar L&FS infrastructure will be provided for all future dialysis centers.



For future dialysis centers, the company will prepare L&FS master plan and standard design specifications meeting national and locally applicable L&FS requirements as well as IFC requirements as specified in the WBG EHS guidelines. The company will submit certification, by a qualified professional acceptable to IFC, that master plan (and/or standard design specifications) meet L&FS requirements as specified in the WBG EHS guidelines. The L&FS systems at all new centers will be provided as per the agreed master plan and specifications.



For the first five dialysis centers, following construction, the company will get the newly constructed buildings inspected and submit a certification (both by a qualified professional acceptable to IFC) that each facility is constructed in full compliance with previously approved design specifications and master plan, and that all L&FS systems are installed and tested in accordance with national and locally applicable L&FS requirements as well as IFC requirements.



Infection Control: As per applicable Chinese health regulations, all patients who would like to receive treatment in the dialysis centers of Weigao Group have to undergo infection screening conducted by dialysis center staff before they can get treated in the dialysis centers. Prior to confirmation that the patients free from infectious diseases, the new patients stay in an assigned and controllable area for dialysis treatment which is separated from the old patients. The infection testing is conducted after 3 months to ensure that patients have not received any new infections. After the confirmation, patients free from infectious diseases are transferred to the regular treatment area. Even after transfer to the regular treatment area, the patients undergo infection testing semiannually. The staff working in dialysis centers are also enforced pre-job and regular infection testing and emergency treatment for strict infection control in the dialysis centers.



Security Personnel: The company employs private security guards at its manufacturing facilities and dialysis centers. Before the security guards are hired, their personal data is censored through official website of Chinese Public Security Ministry to ensure that the guard candidates do not have criminal records. All the guards are provided pre-job training, which includes managing daily tasks and behaving politely. Each guard has a probation period of half a month, during which Weigao can ask
the Security company to replace the guard in case Weigao believes current candidate is not suitable for the job. At the manufacturing facilities, there are weekly meetings among security guards, quarterly meetings among guard leaders, and semiannual meetings among all security guards conducting mock drills on fire safety skills and on-site emergency response plans. Security guards are equipped with patrol motorcycles, electric motorcycles, and interphones. Also, cameras are installed which help security guards monitor the security conditions.



Transport: Weigao runs about 91 buses for transporting its employees to its manufacturing facilities. The buses are rented from Public Transport Groups of Weihai. The bus drivers take pre-job training provided by their respective companies. All buses are required not to exceed 70 kilometers per hour on regular roads and 60 kilometers per hour on special road sections. The public transport companies hold weekly meetings to emphasize safe driving and other relevant knowledge. In addition, Weigao Logistics Department sets up occasional safe driving meetings for drivers or call the public transport companies to emphasize safe driving in case of rains or snow.

Weigao donates products for used at medical facilities where the patients cannot afford to pay for high quality products. Weigao also carries out active hiring campaigns both within Weihai City and in the surrounding provinces. The hiring practices include active employment policies for disabled people. Weigao Jierui, a subsidiary engaged in the PVC blending and machining of needles has pioneered this initiative, and now employs a significant workforce who are disabled.
As set forth in the ESAP, Weigao will develop a community grievance mechanism to receive and respond to grievances from the local communities.

Weigao will disclose this ESRS and the ESAP locally at the following addresses:

18 Xingshan Road
Weihai Torch Hi-tech Science Park
Weihai, Shandong Province
People’s Republic of China

Any queries and/or comments about the project may be directed to:

Phyllis Chan
Head of Business Development and Investor Relations
Suite 801, 8th Floor, Chinachem Century Tower
178 Gloucester Road, Wanchai
Hong Kong SAR, People’s Republic of China
Tel: +852 2838 1868
Fax: +852 2838 1870
http://www.weigaogroup.com

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Building upon the existing corporate-level EHS principles, document environmental and social objectives and principles in a form of an overarching environment, health and safety (EHS)/Sustainability policy. The policy shall articulate the company’s commitment to comply with the applicable laws and regulations as well as compliance with IFC Performance Standards.	02/28/2015
Appoint/identify a person dedicated as environment and safety lead for all dialysis centers in order to coordinate the safety and environmental activities at each of the centers with respect to legal requirements and IFC Performance Standards (PSs).	05/31/2015
Develop and implement a procedure to have regular fire and evacuation drills covering all emergencies (as envisaged in the emergency response plan) and all shifts for Weigao Blood manufacturing facilities.	02/28/2015
Develop and implement procedures for: (a) Emergency response, disaster management and patient evacuation across all standalone dialysis centers (existing and future). (b) Conducting regular drills at the dialysis centers.	05/31/2015
Develop and implement a formal occupational health and safety (OHS) plan for construction of new dialysis centers defining responsibilities, OHS rules and monitoring of compliance.	03/31/2015
(a) Submit certification by a qualified professional acceptable to IFC on a L&FS master plan and/or standard design specifications meeting national and locally applicable L&FS requirements as well as IFC requirements as specified in the WBG EHS guidelines. (b) For the first five dialysis centers, following construction, the get the newly constructed buildings inspected and submit a certification to IFC (both by a qualified professional acceptable to IFC) that each facility is constructed in full compliance with previously approved design specifications and master plan, and that all L&FS systems are installed and tested in accordance with national and locally applicable L&FS requirements as well as IFC requirements. [Expected timeline: As the first five centers approach this stage and prior to operation of the centers]	12/31/2014
Develop and implement a community grievance mechanism which describes the process of receiving and responding to community grievances.	03/31/2015