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

This investment is classified as a Category B project in accordance with IFC’s Policy on Environment and Social Sustainability. Based on information reviewed by IFC, this investment will have limited adverse E&S impacts that are few in number, are generally site specific, largely reversible and readily addressed through standard mitigation measures. The main E&S issues include the management of impacts during construction (particularly protecting the occupational health and safety of those engaged in building the stores); life safety of visitors and personnel during emergency situations, including fires; the management of human resources; and natural resources consumed in the operation of the stores.

Existing owned facilities are mainly to be found on previously undeveloped commercially demarcated land identified through a thorough due diligence process to avoid any issue associated with historical title disputes and obtained through willing buyer/willing seller arrangements (or leasing arrangements with municipalities who are often the land owners). No person or economic activity was previously displaced as a result of these transactions. Proposed new stores are to be located in areas advantageous to retail operations (i.e. in proximity to main roads and other transportation links) in large population areas. Hence, risks and issues relevant to Performance Standards 5,6,7 and 8 are not expected to arise with this project.

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.

Policy. Auchan Group’s stores are operating in a highly decentralized way, in line with the applicable laws and regulations of the jurisdictions in which they operate. However, in 2008 Groupe Auchan launched a program on international sustainable development synergy. The goal was to ensure that every country made progress on its sustainable development policies in a coordinated way, with the emphasis on initiatives that are seen as priorities for all. This synergy also enables countries to exchange good practices. Since the launch of the initiative, the primary focus has centered mainly on energy and waste management.



In 2011 Group Auchan signed up to the UN Global Compact’s environmental principles that are derived from the Rio Declaration on Environment and Development and now guide Auchan Group to achieve sound environmental and social performance:

Business should support a precautionary approach to environmental challenges;

Undertake initiatives to promote greater environmental responsibility; and

Encourage the development and diffusion of environmentally friendly technologies.

Identification of Risks and Impacts. Social and environmental impacts of the projects (site-specific pre-construction environmental investigations, the relationship with the surrounding community and other land users, the project layout and its relation to existing and proposed infrastructure and public services, and the construction and operation of the building itself) are identified through an established and documented E&S due diligence process.



Management Programs. Identified risks and impacts are managed by a straightforward application of standard EHS control measures during construction, and inclusion of specific EHS management measures into construction management plans and project designs (e.g. life and fire safety provisions, oil water separators to treat parking lot storm water runoff prior to discharge, etc.). A generic safety and security technical specification for Auchan Group’s stores in any country is a combination of local requirements, minimum corporate requirements and technical recommendations of insurance companies. The country construction project manager shall guarantee that the most restrictive ones are applied.



In addition, Auchan Group implements corporate programs on sustainability development in the area of energy efficiency; waste minimization; cooperation with local small and medium enterprisers (SMEs); and others.

Key sustainable development indicators include reduction of electricity consumption and volumes of packaging waste; reduction of free distribution of plastic bags; increase of waste volumes to be recycled; number of hypermarkets with ISO 14001 certification; number of Auchan-brand product to be produced by small and medium enterprisers; and others.

Organizational Capacity and Competency. To control EH&S performance of its portfolio, the parent company has established a corporate Audit and Safety Group,
based in France. Self-assessment and internal audit checklists have been developed in the areas of environmental protection, food, health and fire safety. Audits are conducted by the corporate and country-based teams. The Atak audit team consists of 5 people, who conduct about 60 internal audits annually (half of the existing portfolio). Based on the results of primary audits, recommendations are developed, implementation of which is controlled through a follow-up audit happening 6-8 months later. Safety conditions at a store is one of the evaluation criteria for a manager.

Based on the analysis of findings, an audit group develops a risk-map to tackle the more recurrent risks in future.

Implementation of a corporate Sustainability program is coordinated through a Committee on International Sustainable Development Synergy, based in France.

At a country level the EHS function is organized with both a Sustainable Development Manager and Technical Manager overseeing the programs as well individual project managers and others with specific roles (that have an E&S component) such as engineering, civil security and fire safety.



Existing stores have managers and staff in place whose remit includes ‘back office operations’ such as engineers that are responsible for managing equipment (including electrical and refrigeration, etc.). Waste management, including recycling, is contracted out and personnel from those companies operate full time in the store waste management areas.



The construction projects are being managed by a variety of professionals including architects and engineers, who prepare project documentation. The General Contractor is selected after a tendering process. Additional contractors for earthworks, structure, façade, roof covering, HVAC, Life and Fire Safety, electrical and plumbing and others for specialty items then become involved as the job dictates.

Emergency Preparedness and Response. Basic principles of emergency preparedness and response are provided in the corporate Auchan Group’s Fire Directive. Detailed evacuation plans and procedures are developed at a store level to also meet local regulations.

Monitoring and Review. The Auchan Group is subject to sustainability reporting obligations and certification by an independent third party, in accordance with French law. The parent company (in France) coordinates the collection of monitoring data from stores and aggregates and reports this data by country in an annual Sustainability Report. This report was initiated in 2010; the most recent one was reviewed for this appraisal and selected results are presented below. The report is intended for both internal and external audiences and provides details on a wide range of environmental issues and performance as is now the norm in the European retail sector. Sustainability reports are publicly available at the company’s website http://www.auchan.com

Human Resources Policy and Terms of Employment.

At present, the entire Group employs approximately 302,000 employees of whom 60% are women. More than 70% of the workforce are full time employees. The parent company abides by the 1948 Universal Declaration of Human Rights, the ILO 1998 Declaration on Fundamental Principles and Rights at Work and OECD guidelines. The Group is committed to its employee well-being and good working conditions.

Atak supermarkets in Russia employs 4,200 employees. The Russian corporate HR policies are cross-referenced with the national Labor Code, which guarantees core labor rights to employees, consistently with PS2 requirements.



Individual contracts provide staff with information on their terms and conditions and are presented to employees at the time of hire. In addition to core labor rights, Atak implements social support policy. This includes co-financing of healthcare packages that provide better coverage than the national healthcare system. This program is offered free of charge to children of employees, who work with Atak for more than 3 years. Employees are provided with comfortable lunch and break rooms.



Based on the annual evaluation process, Atak employees are eligible for salary increase and internal promotion. In future Atak will implement an employee shareholder scheme, which was set up by Auchan founder in 1977, giving employees the opportunity to benefit from the value they help create. This scheme is now available in nine of the Group’s countries - 11.9% of company shares are owned by employees.



Employee Organizations. Social dialogue is actively encouraged in the Group through the various exchanges with employee representative bodies, which lead to collective agreements signed each year. 101 were signed in 2012 by the various Group entities.

Despite being allowed under Russian law, there are no unions at present in Atak operations. However, HR group is currently working on creation of committee made up of a representative sample of staff that will review work-related issues with management on a periodic basis.



Non Discrimination and Equal Opportunity. The Group is committed to non-discrimination and equal opportunity principles. Auchan Group managers receive training in discrimination free-recruitment processes.

By organizing preparatory job training courses for a broad spectrum of professions, the Group provides career opportunities at all levels that are accessible to men and women from all backgrounds. Training hours provided to employees throughout the Group’s are reported on a corporate level as one of the sustainability development indicators.

The Group operates a proactive policy for the integration of people with disabilities into the workforce - 6,940 positions are held by people with disabilities in the Group.

Increasing gender equality and promoting women to management positions is another shared objective throughout the Group. In Russia, Atak has a majority of wo
men in management positions (>60%), salary scales being identical to those of men.

All stores managers and regional directors in Atak Russia were hired locally, many of them started their career in front-line jobs.



Grievance procedure. The Group uses a variety of mechanisms to provide employees with the opportunities to voice concerns. For example, a corporate wide survey (which allows for anonymous submissions) is used (in all 11 countries where Auchan operates) and in addition most of countries have a committee (made up of a representative sample of staff) that reviews issues with management on a monthly basis.

In Atak Russia, work-related concerns are reviewed and followed up by the Director of each store or HR managers. However, no formal grievance mechanism that would meet PS2 requirements is currently introduced. The company will develop a grievance mechanism in line with PS2 requirements and will make it available to its own and third party employees.



Occupational Health and Safety (OHS).

The Group’s entities assess risk factors for each jobs and train employees in mitigation of health risks at work. A corporate OHS checklist has been developed and stores are subject to country-level and corporate internal audits. The safety condition at a store is included in the list of criteria, which Directors of the stores are evaluated upon. Records of absenteeism caused by accidents amongst staff (in effect measuring lost time incidents) are collated and published in the Sustainability Report.





There is a designated safety engineer hired at Atak Russia corporate level, who oversees health and safety conditions at stores. Periodic internal audits, including surprise ones, are being conducted. Recommendations specified in the internal audit reports are budgeted and implemented.



Since the opening of first Atak in 2005, there were 9 lost time accidents, which demonstrate a satisfactory OHS performance.



The requirement to contractors to manage occupational health and safety of employees involved in building the new projects is included in contractual documents; these requirements make reference to applicable local laws and regulations.



The combination of the above policies, procedures and actions demonstrates compliance with PS 2.

Pollution Prevention, Resource Conservation and Energy Efficiency.

Stores are located in established residential areas and are connected to electricity, central heating (except for some stores that are equipped with gas-fired boilers for water and space heating), municipal water supply and sewage utilities.

To minimize electricity consumption, Atak Russia has implemented a number of energy efficiency measures in its stores, such as LED lighting, recuperation of the heat from the cold storage chambers to defrost the refrigerated display cabinets and to heat the hot water needed in the store; night curtains and double air curtain in the display cabinets, advanced system of HVAC controls, use of voltage balancer to extend the life of fridges, commercial, and operational equipment, and others.



Data pertaining to consumption of natural resources is summarized in the Corporate Annual Sustainability report. Electrical consumption (presented as kWh/m2 of shop floor) for Russia was 838,8 (in 2011) and 578,3 (in 2012); this represents 31% reduction. Group-wide the average consumption rates were 576 (2009), 557 (2010) and 538 (2011). These results are in line with published data (such as that from EnergyStar (http://www.energystar.com) which reports average values of electrical consumption in US supermarkets of 544 kWh/m2).



Partner stores (the aforementioned boutiques found in the supermarket galleries) are known to consume 20% to 30% of the overall energy consumption within a supermarket. Going forward, Atak will consider an inclusion of an environmental clause in its business leases with partner stores in an effort to drive reductions in overall energy consumption. These environmentally-related clauses have been in force in France since 2010.



Water consumption (expressed as liters/m2 of shop floor) is reported as being 878,5 (2011) and 809,3 (2012) for Russian operations; this represents 7,8% reduction; By comparison, Group-wide results for 2011 were 1,762 l/m2.



Wastes and hazardous materials. The international sustainable development synergy, which was launched in 2008, established waste sorting and recycling as one of its three priorities.

Recycling rates vary depending on the country, mainly whether waste management channels are already in place. For instance, anaerobic degradation of fermentable waste to produce biogas is running at 80 Auchan France supermarkets. The Russian waste management market is not yet well developed. The stores’ recycling effort is limited to separate collection of cardboard packaging and plastic. Waste recovery rates (measured as the ratio of tons of waste recycled/tons wastes generated) for Russia as a whole are reported at 15,25% (2011) and 10,87% (2012), while a Group-wide results for 2012 were 62%.



Hazardous materials (e.g. fluorescent lamps, oils) are collected separately and collected and disposed of by licensed contractors. The company uses R404 refrigerants within its stores; these operation
s are managed by experienced engineers to minimize refrigerant leaks.



Greenhouse Gas Emissions. Total annual emissions after completion of the expansion have been estimated by IFC as 99,000 tonnes of CO2 eq.

Life and Fire Safety. Life and fire safety provisions at Auchan Group’s commercial sites, both owned and leased, are regulated by (i) specific local regulations, (ii) Auchan Group’s Fire Directive, which contains minimum requirements in life and fire safety to be taken into account during project design, and (iii) technical recommendations of insurance companies.

In finding the balance between those requirements, the construction operations’ project manager shall guarantee that the most restrictive ones are applied.

The Fire Directive adequately covers all points as specified in the Life and Fire Safety section of the IFC/WBG’s EHS Guidelines. Its key requirements have been translated into technical prescription specifications for an Atak supermarket store, which has been provided to IFC’s appraisal team.



During site visits to Atak supermarkets, it was confirmed that exit routes are kept clean; emergency doors are not locked; an anti-panic system has been installed on all new stores’ emergency exit doors and older stores are programmed for replacement; evacuation signage is visible; all stores are equipped with an automatic fire detection and alarm, powder fire extinguishers and fire hoses; and are totally sprinkled. The control panel is installed in the premises supervised by safety personnel. However, a few systematic shortcomings were observed during these visits: compartmentalization between sales and storage areas is not secured with fire rated doors; in leased stores, where Atak fully depends on L&FS infrastructure (fire pumps, central detection panel, etc.) provided by the building owners, no verification of the status of systems/readiness of building operator staff is available to Atak.



To confirm full compliance with Auchan corporate L&FS principles, the Group will conduct a review of Atak stores and develop a risk-based upgrade program to further minimize L&FS risks at Atak stores, both owned and rented.



Managers of the stores are legally liable for compliance with regulations.. Each store has hazard and evacuation management procedures in place. An intervention team is formed from employees; they are trained and are taking part in periodical evacuation exercise. A plan of presence per activity zone is posted for these teams.



Internal control checklists related to fire prevention and safety equipment have been developed on a corporate level and are being used at Atak stores. Periodic internal audits are being conducted and reports are at the disposal of the company’s internal departments (technical department, safety department, audit department, insurance department and others). Recommendations specified in the internal audit reports are budgeted and implemented.



Sanitary Safety. Strict health controls are performed to ensure maximum product safety at every level. To comply with local regulations, Atak has developed a comprehensive system of internal control, including 10 key criteria of sanitary safety (e.g go
ods’ expiration date, temperature regime, external appearance, technical condition of fridges and storage areas, medical checks of personnel, and others); checklists for self-assessment; periodic internal and external audits. Managers of the stores are the guarantors for compliance with sanitary rules and regulations.



Security. Store premises are protected using contracted security. These individuals work inside the store (to prevent shoplifting) and also outside to protect assets including incoming supplies and are hired from licensed firms using trained individuals. Security personnel are trained to assist Atak in evacuation of people in case of emergency.



Consultation and Grievance Mechanism. Risks and impacts associated with company operations are limited due to the nature of the operation. However, since some stores are immediately adjacent to residential communities, Atak is paying close attention to keep the communication line with local residents and customers open. Grievancies may be raised through a complaint book available at each store and a feedback page on Atak websites http://www.ataksupermarket.ru. All complaints are investigated and acted upon

Atak is considering local families as its primary customers and its whole concept is based on offering essential products for families at discount rates. Atak introduces various forms of community engagement under the slogan “Close to home, close to heart”, including creation of green areas and playgrounds for children around its stores, promotion of healthy eating by awareness raising and promotion actions (e.g promotion of fresh dairy products for children), interaction with local non-governmental organizations, and others.

Atak will make the E&S information related to the project available in Russian at their corporate website: http://www.ataksupermarket.ru.

Additional information could be obtained from:

Name: Morin-Bouan Sylvine
Address:
Burevestnik office
3rd Ribinskaya street, building 18, entrance 22
107113 ?oscow
Tel: +7 (495) 660-98-70
Email: mailto:smorin@ataksupermarket.ru


Similarly to Russia, for all future subprojects AuchanSuper will disclose E&S information locally through local Auchan websites, when proposed projects are well defined.

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
1. Institutionalize Employee Grievance Mechanism. Prepare and promulgate a grievance mechanism for workers to raise workplace concerns in line with IFC’s Performance Standard 2. Inform workers of the grievance mechanism at the time of recruitment and make it easily accessible to all employees, including workers engaged by third parties. Mechanism shall involve an appropriate level of management and address concerns promptly using an understandable and transparent process that provides timely feedback to those concerned, without any retribution. Mechanism shall allow anonymous complaints to be raised and addressed; shall not impede access to other judicial or administrative remedies that might be available under the law or through existing arbitration procedures.	09/30/2014
Review Atak stores’ compliance with Auchan corporate Life and Fire Safety (L&FS) principles. The Group will conduct an internal review of Atak stores and develop a risk-based upgrade program to further minimize L&FS risks at Atak stores, both owned and rented.	09/30/2014