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
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

The key environmental and social issues for this project are: (i) TNS’s environmental, health and safety (EHS) management systems, including coffee cherries wet processing and agronomy best practices, and capacity and oversight to have same implemented consistently at all the selected cooperatives; (ii) labor and working conditions during construction and operation of the wet mills, including that related to occupational health and safety (OHS); and (iii) management of process effluent, including lagoon security to prevent inadvertent access by both humans and animals, and management of organic solid waste (coffee hull).

The proposed intensification of coffee yields on existing lands of cooperatives members and the installation of the wet mills and related ancillary structures will have limited impacts on the biophysical and social environment. The screening process established by TNS for site selection and the planning of and technology selection for wet mills also identifies and assesses the potential environmental and social impacts during the construction and operation phases of the project. Mitigation measures for these impacts are continuously being incorporated into the project design.

The impacts are generally site-specific and temporary and none are regarded to be significant. Those impacts can be avoided or mitigated by adhering to generally recognized performance standards, procedures, guidelines, technology selection and design criteria. Thus, this is a Category B project according to IFC’s Environmental and Social Sustainability Policy.

All lands in Ethiopia are under government ownership. The agricultural lands on which the wet mills are situated are either directly leased from the Government of Ethiopia or from a Cooperative member. In the latter case, the affected Cooperative member is compensated by the District (Woreda) authorities with land of comparable size and value. A Letter of Support from the District’s Agricultural Office is required to authorize the installation of the wet mill. As such, PS 5: Land Acquisition and Involuntary Resettlement does not apply since site selection criteria for the wet mill ensure that there is no physical and /or economic resettlement issue prior to final site decision. There is no presence of Indigenous Peoples (PS 7) in the project areas, and no cultural heritage (PS: 8) issues have been identified during site visits.

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.

Identification of risks and impacts: TNS adopted, in November 2009, its Sustainability Guidelines, which outline its sustainability objectives for coffee production and processing. These objectives encompass (i) the promotion of agronomic best practices; (ii) responsible social coffee production, including no forced and/or harmful child labor in its supported Cooperatives and its members, compliance of national labor and occupational health and safety (OHS) acts and regulations, especially as it relates to minimum wage, working hours, safety conditions and improvement of sustainable livelihoods; (iii) use of ecology friendly technology in relation to wet mills, especially as it relates to protection of surface and ground water, energy efficiency, wastewater treatment, organic waste management (coffee pulp and raw mucilage), soil erosion, re-vegetation of riparian areas, (iv) social aspects related to wet processing (freedom of association and collective bargaining, no forced and/or child labor, equality of treatment, non-discrimination and minimum wage, working hours, employee relationships and written contracts and OHS conditions).



TNS’s Sustainability Guidelines, which are fully integrated within its activities, are being implemented consistently across all targeted cooperatives. The Sustainability Guidelines have since been updated to include a gender policy; modifying the standard for smallholder enterprises and smallholder farmers; an agronomy program to promote biodiversity and forest conservation and quantitative indicators measuring impacts of the agronomy program, including biodiversity protection; and a detailed training curriculum.



Site selection for the installation of wet mills is based on a number of criteria, which include the size needed (from 0.5 to 1.5ha depending on the processing capacity of the wet mills), accessibility for trucks and cooperative members, moderate slope (between 10-15°), availability of gravity-fed water, and existence of a buffer zone of 30 meters to protect surface water streams and/or wetlands. Once three potential sites are identified that meet the above criteria, a site survey is undertaken by an independent local civil engineer and a water specialist to finalize site selection and site planning. As part of their due diligence, the two specialists are guided by TNS’s Sustainability Guidelines and its wet mill construction manual. A Wet Mill Environmental and Social Compliance (WMESC) Report is prepared for any new wet mill installed.



Management Program and Organization: The Ethiopia Coffee Initiative has continuously consolidated its organization capacity to effectively implement its EHS policies and mitigation measures in targeted cooperatives. There is a Sustainability Manager who is supported by a staff of nine Business Advisors (BAs). The manager’s responsibilities include the development and implementation of the Sustainability Guidelines and related manuals. The operational translation o
f these requirements is further documented by the preparation of a WMESC Report and the preparation of an Environmental and Social Management Plan (ESMP) for each wet mill. The manager is also responsible for training the BAs and Cooperatives on OHS related issues and the implementation of the ESMP. The BAs support the Cooperatives on a regular basis to implement the Sustainability Guidelines. TNS maintains an E&S scorecard prepared for each cooperative and reports compliance on the following schedule: directly after the start of the harvest season; midway through harvest; just before the end of the harvest; and thereafter for the duration of TNS support to the client. This ensures that every cooperative continuously revisit its respective ESMP to assess implementation effectiveness and, if needed, to develop and implement corrective actions as appropriate.



Training: TNS has a comprehensive training curriculum with a clearly defined schedule on environmental management, agronomy best practice and OHS issues at wet mills. The agronomy training program promotes agronomy best practices for cooperative farmers and ensures the effective on-the-ground implementation of TNS’s Sustainability Guidelines and related manuals. The agronomy training covers topics, such as pruning and rejuvenation, composting, erosion control, Integrated Pest Management (IPM), mulching, coffee shade management, etc. The training curriculum also addresses site planning and the establishment of buffer zones with ecological sensitive ecosystems (surface water, wetlands), the promotion of efficient water and energy consumption, wastewater treatment, solid waste management, etc. for the installation of wet mills.



Monitoring and Reporting: TNS monitors and reviews the effectiveness of its Sustainability Guidelines, including management procedures and annual EHS programs, continuously in response to changing circumstances as well as internal good practices and on-going supervision. This includes regular internal audits; regular management operational review meetings; incident and accident reporting; screening (WMESC report), implementation (Wet Mill Site Approval Report) and monitoring of mitigation measures at each wet mill; and agronomy scorecard which captures farmers’ attendance and measures adoption of each identified best practice against a predefined score. In 2013 TNS published The Coffee Initiative, Phase One Final Report, 2008 to 2011. This report contains good aggregate coverage of key EHS information and indicators for TNS activities. TNS also submitted Annual Environmental and Social Monitoring Reports (AMR) to IFC during the implementation of the initial facility. The AMR tracked progress on implementation of the ESAP agreed upon for this facility, which was successfully completed.



Stakeholder Engagement, External Communications and Grievance Mechanisms: Since January 2011, Ethiopia Coffee Initiative has a Stakeholder Manager whose responsibilities include mai
ntaining positive relations with key Ethiopian stakeholders (e.g., government authorities) and facilitating major events. The Stakeholder Manager also facilitates stakeholder meetings involving cooperatives and government where topics such program activities and results, with a focus on sustainability and agronomy training are covered. Specifically, and in accordance with its due diligence process, TNS is working in cooperation with the Woreda (District) Agricultural Office, including its Natural Resources officers, the Woreda Cooperative Office and the Woreda Administration to ensure that all authorities are well informed on the project implementation status and supportive through its Field Extension Officers. In addition to this, downstream communities with a potential to be impacted by water abstraction are also consulted during the WMESC preparation process.



TNS has in place an official grievance mechanism in order to manage any complaints that may arise during the activities of the cooperatives, including potential complaints from downstream communities (within a distance of 500 m downstream), especially as it relates to water availability and quality. TNS has provided the grievance mechanism guidelines and training program to BAs and cooperatives for its implementation. The cooperatives maintain complaint registers. No significant grievances were reported during the implementation of IFC’s initial facility.



Supply chain risk assessment and management: Under the Ethiopian Coffee Initiative, the coffee produced is primarily sourced from farmers registered at selected Cooperatives. As the initiative expands and the processing capacity at each wet mill increases, it is expected that farmers will seek to join Cooperative members, based on TNS’s technical assistance in increasing high quality Arabica yields through the agronomy best practices, easy access to sell their production, added-value through the wet mill processing (wet vs. existing dry process), and improved revenues from facilitating sale of specialty coffee to responsible buyers. As such, TNS will seek to expand the adoption of its Sustainability Guidelines to these new members.



As TNS has not yet established an out grower scheme under its direct control, including establishment of sourcing agreement with no cooperative smallholder enterprises and smallholder coffee farmers – Performance Standards related supply chain requirements do not apply for this investment. However, in the event that such an out grower scheme is established, in order to prevent any PS related supply chain risks, particularly the incidence of harmful child labor and significant conversion of natural and/or critical habitats, TNS will develop and implement a management procedure for its supply chain, which will include the development and implementation of a Supplier’s Code of Conduct which will be mainstreamed into its contractual agreement with smallholder enterprises and smallholder cooperatives. Th
e Code of Conduct will: identify where the supply is coming from and the socio-economic and bio-physical (habitat type) status of this area; provide for an ongoing review of the client’s primary supply chains, including harmful child and forced labor; and limit procurement to those suppliers that can demonstrate that they are not contributing to significant conversion of natural and/or critical habitats (this may be demonstrated by delivery of certified product, or progress towards verification or certification under a credible scheme in certain commodities and/or locations).

Human Resource Policy and Management: TNS currently has a staff compliment of 340 professionals working for the CI in Ethiopia. Of these employees, about 37% (125) are females.



TNS has a Human Resource Policy. This Policy outlines in its Employee Handbook, TNS’s mission, company values (e.g. non-discrimination and equal treatment – note: a sexual harassment training course is provided to all new recruits), personal code of conduct and procedures for selection, hiring, training, promotion, resignation, retrenchment and firing. It specifies the terms of employment for different categories of appointments and employee’s working conditions (e.g., working hours, training, and salary scale) and benefits (communication, transportation and living allowances, medical and life insurance, pension, leave). TNS assesses and reports on individual employee performance bi-annually. All policies, procedures and guidelines are made available to employees and comply with Ethiopian labor laws.



TNS’s Human Resources Manager manages the policy’s implementation and all HR related activities. TNS promotes staff recruitment based on merit without regard to gender, ethnicity, and religion. Since all employees are recruited on an annual contract basis, there is presently no elected union at TNS, nor a labor welfare committee. However, there is no restriction on freedom of association and there is a specific provision in the HR Policy for dispute settlement procedure. TNS continuously review its salary scale based on a wide-ranging salary survey among NGOs and Ethiopian institutions. Remuneration level always exceeds the minimum wages, and the general employment conditions are well above Ethiopia’s standards.



CI’s selected cooperatives have 200 to 1,000 members. On average, there are five cooperative members who are recruited for the operation of the wet mill (manager, accountant, machine operator, warehouse storekeeper, and guard). During the harvesting season (September to December), more than 40 casual laborers are recruited and paid on a daily basis, in accordance with the minimum salary as stipulated in the Ethiopian Labor Act. There is no reference to the recruitment process for these casual laborers in the cooperative by-laws. However, the TNS’s BAs assigned to wet mills ensure that the recruitment process is transparent. Training for Cooperative’s Executive Committee members is provided on this matter.



There is no forced and/or harmful child labor that is involved in the coffee production and/or in the wet mill processing under the CI. There are specific provisions in TNS’s Sustainability Guidelines to this effect. In order to ensure effective implementation of these guidelines, all BAs assigned at each wet mill are training the Cooperatives members and undertaking field monitoring among registered farmers.



Occupational Health and Safety (OHS): As outlined in its Sustainability Guidelines, TNS ensures that its workers and/or cooperative members a
re adequately trained with respect to OHS issues. Training on OHS, particularly safety checklist, accident report format, general working conditions etc. was successfully provided to TNS’s CI professionals assigned to wet mills and Cooperatives during the initial facility. As standard practice, all Cooperatives maintain a first aid kit, accident register, fire response plan which includes a fire extinguisher and a bucket with sand, potable water and sanitation facilities. The wet mills are maintained during the offseason by the wet mill’s machine operator with support from an in-country representative of the mill supplier, such as Penagos. No significant OHS events were registered during the implementation of the initial facility save for minor vehicle accidents involving TNS’s vehicles.



TNS has adopted a HIV/AIDS Policy which foster a spirit of understanding and compassion for HIV-infected and affected staff, raise awareness on prevention by providing staff adequate educational and informational materials, does not require pre-employment HIV/AIDS testing as a condition of employment, and treats all medical information, including individual’s HIV status, with utmost confidentiality.

Resource efficiency and pollution prevention: As stipulated in its Sustainability Guidelines, TNS is aiming to promote best agronomy practices in coffee production and the use of best available technology in coffee processing.



Agronomy Best Practices: Since 2010, TNS has been successfully implementing an agronomy program which promotes best practices in the coffee plantations of its selected cooperatives. This program includes rejuvenation and pruning, nutrition and soil resources management (addition of lime where required, provision of organic fertilizer such as compost and composted manure, soil erosion and moistures techniques such as mulching), integrated pest/disease management and promotion of coffee varieties resistant to the main coffee tree diseases, integrated weed management, conservation of primary forests and related biodiversity through maintenance of shade system, environmental conservation and biodiversity. To support the implementation of this agronomy program, TNS cooperates with the Jimma’s Agricultural Research Center. Coffee certification is not directly promoted by TNS. The aim is to bring all coffee growers up to the minimum requirements of all certification programs to ease certification process, if it happens.



Technology selection: TNS is promoting the Compact Ecological Wet Processing Unit in its selected cooperatives. This is the latest technological initiative for the wet process, based on the principle of reducing the water used during pulping and mechanizing the washing process through a mechanical remover called “DELVA”, consuming barely 1 liter of water per kilogram of dry parchment coffee. This technology reduces water use by 90% compared to traditional “ferment-and-wash method”. Another advantage of this process is the separation of pulp and mucilage, byproducts otherwise considered as waste, generating an immense opportunity for the coffee grower to use as organic fertilizer and for mulch.



Construction phase: Potential pollution issues for the construction phase of the wet mills are those typically associated with construction sites and include, amongst others, increased water and soil erosion, landscape modification, discharge of contaminated (high silt loads/oil and grease) storm water, diesel and oil spills, and worker’s safety and health risks. In addition, there is the potential for nuisance impacts (e.g., noise and dust) in the surroundings. These impacts are effectively being managed with the implementation of TNS’s Sustainability Guidelines, specifically those stipulated in the Wet-Mill Construction Manual. The manual specifies consideration for site selection and layout (e.g. water source and proximity to rivers and streams, size of area, slope etc.) and steps and requirements for construction (e.g. water storage and piping, machine house, fermentation tanks, waste water system, pulp waste system, etc.).



Operational phase: The primary waste streams from the wet mills are process effluen
ts from two sources, namely the pulping water and the soaking cum wash water. These effluents are characterized by high Biological Oxygen Demand (BOD), high total suspended solids and acidity, especially in the context of the low water usage from the wet mill. The wastewaters are being channeled into stabilization cum evaporation ponds/lagoons of 3x3x2m size. An overflow lagoon is also provided. Inoculation with effective microorganisms (known as “effective microbe” technique) is stimulating the breakdown rate and gets rid of the rotting smells. This is supported by bio-filtration with grasses (Vetiver and giant bamboo) which are available in project areas. Growing Vetiver around the ponds also act as natural barriers to prevent people and animals falling into the ponds. The remaining organic wastes in the ponds are cleaned up after harvest and can be used as a soil fertilizer. Organic waste (coffee pulp accounts for 40% of the coffee cherry) is contained by earth bunds and Vetiver hedges to prevent seeping of acidic liquid into surrounding aquatic ecosystems. The resulting compost is being used by coffee growers as an organic fertilizer. Domestic sewage, generated from the latrines, is captured into a soak pit. There is no hazardous waste generated at the wet mill, aside from the small volume of used oils, which are being used for termite treatment on the eucalyptus poles used for the drying tables. No fumigation is required at the warehouses.



Water is being sourced from neighboring surface streams and/or springs. Energy is being provided by energy efficient petrol or diesel engines of 12 or 20 hp built into the wet mill. The diesel drums next to the mills are provided with adequate secondary containment structures for spill prevention. The diesel generators are maintained on a regular schedule, particularly during the offseason, to ensure operation according to manufacturer’s specifications.

During the operational phase, the key identified risk is fire, and all cooperatives under TNS are required to implement a fire response plan which includes the purchase and installation of at least one extinguisher. A fire response plan was prepared by TNS’s Environmental Manager and training provided to the TNS’s BAs, mill manager, machine operators and warehouse keeper. All cooperatives have implemented the fire response plan and no fire incidents have been reported at TNS’s cooperatives during the implementation of the initial IFC facility.



TNS has developed and is continuously implementing a transportation fleet safety management procedure for its own fleet and sub-contractors of cooperatives. The procedure includes a record of total mileage covered with or without incidents and number of incidents related to parchment transfer. As part of this procedure, cooperatives have a comprehensive logbook in which each movement of transport is recorded under a signed contract between the transporter and the cooperative. No significant incidents have been recorded during parchment transfer and a significant reduction in the number of incidents per km driven was achieved for TNS fleet within two years of implementing the procedure. As noted under PS2 - OHS section above incidents related to TNS vehicles were all minor.



Armed security personnel are assigned at each wet mill to prevent theft of parchment, equipment and materials. Security personnel are trained in the use of force for defensive purposes. A letter of recommendation is provided by the Local Administration (Department of Security and Local Police) for each guard. Theft risks for cooperatives exist since most of the purchase activities at multiple collection points are on cash-only basis. However, the amounts are judged minimal (max. $300 US). No incidents of armed robbery, either at cooperatives warehouses or at collection points have been registered during the initial facility.

TNS is successfully implementing its agronomy program through the Coffee Farm College; a two year intensive agronomy training program, which delivers monthly coffee agronomy and business skills training. The training course takes in the field of an elected Focal Farmer, which over the months becomes the demonstration plot. The training has an activity based participatory approach. The Farm College training curriculum, which was developed in 2009 and continually updated, covers the following specific topics: tree canopy management – pruning and rejuvenation; nutrition; compost; soil erosion control; integrated pest and disease management; mulching; weed control; shade systems; planting; harvesting; sustainability standards; and business skills. These specific topics are also identified as Best Practices (BP) and TNS maintains a scorecard which captures farmers’ attendance and measures adoption of each BP against a predefined score.



TNS has identified two key BPs that will increase yield at this stage, and these are rejuvenation and weed control. These will become its focus for measurement. Rejuvenation of the farm requires stumping and this puts the coffee out of production for 1-2 years, as such the rejuvenation process is slow, farmers would typically rejuvenate a small area in the first year to try it out. TNS currently recommends rejuvenation on 20%-25% of the farm per year. This process is expected to take a minimum of 5-6 years to complete rejuvenation of a farm. To speed up the adoption of rejuvenation TNS made a video of adopting farmers from its 2012 cohort who are now seeing the benefits of rejuvenating some of their trees, with their first harvest from these trees in 2013. This peer to peer encouragement video will be shown to all farmers towards the end of the 2014 harvest, just before rejuvenation time, and will help to give farmers the confidence that rejuvenation is key to increased production



Whilst coffee certification is not directly promoted by TNS, currently, 49 out of the 62 cooperatives have received the Starbucks CAFÉ Practices Standard; and 18 have been certified Organic; and 10 received the Fair Trade certification.

Since January 2011, Ethiopia Coffee Initiative has a Stakeholder Manager whose responsibilities include maintaining positive relations with key Ethiopian stakeholders (e.g., government ministers) and facilitating major events. The Stakeholder Manager also facilitates stakeholder meetings involving cooperatives and government where topics such program activities and results, with a focus on sustainability and agronomy trainings are covered. Specifically, and in accordance with its due diligence process, TNS is working in cooperation with the Woreda (District) Agricultural Office, including its Natural Resources officers, the Woreda Cooperative Office and the Woreda Administration to ensure that all authorities are well informed on the project implementation status and supportive through its Field Extension Officers. In addition, downstream communities with a potential to be impacted by water abstraction are also consulted during the WMESC preparation process.

The ESRS is being made available via the World Bank Group’s InfoShop. Stakeholders may also request the documentation at the TNS’s office in Addis Ababa and Jimma, details of which are provided below.

Ms Mefthe Tadesse
Country Director
Ethiopia Coffee Initiative
PO Box 100598
Addis Ababa, Ethiopia
Tel: +251 16 63 00 17
E-mail: mailto:mtadesse@tns.org

Mr. Babur Damte
Program Manager
Ethiopia Coffee Initiative
PO Box 438
Jimma, Ethiopia
Mobile: +251 932 44 78 65/+251 911 05 04 49
E-mail: mailto:bdamte@tns.org

Broad Community Support is not applicable for this project