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

There are no impacts of concern associated with the following Performance Standards: PS5: Land Acquisition and Involuntary Resettlement – Hankore assets being acquired are located on government land and proposed expansions are within the footprint of existing treatment facilities. For future projects, where land acquisition may be needed, the company will ensure compliance with IFC PS5 requirements; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources – All aspects of concessions including those related to biodiversity and conservation are reviewed through government led impact assessments, and for the concessions/projects under consideration for IFC financing, no negative impacts on conservation or biodiversity within the projects’ area of influence have been identified; PS7: Indigenous People – No indigenous people are known to have been in areas or affected by projects being considered for IFC financing; PS8: Cultural Heritage – The project being considered for IFC financing is not located in areas of known historical or cultural significance.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it will create a limited number of specific environmental and social impacts that can be minimized, avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Water supply and wastewater treatment projects undertaken by the company (existing and in the future) typically will likely have a limited footprint, and help in providing access to clean potable water for water treatment projects, and reduce pollution from discharge of effluents for wastewater treatment projects.

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.

Key environmental and social issues include: environmental and social management system; quality and sustainability of water resources; emissions to the environment –water and subsurface; community and occupational health and safety; energy use and efficiency; community engagement; and land acquisition.



Performance of the company’s existing environmental and social management system is consistent with IFC PS requirements in providing adequate oversight, comprehensive risk assessment, monitoring, reporting and training. As the company grows its portfolio of water and wastewater assets, including the acquisition of the Hankore assets, CEWL will continue to manage its environmental and social performance per IFC PS and applicable World Bank Group EHS guidelines, and implement specific mitigation, monitoring and management measures outlined in the respective ESIAs for each site, and IFC PS requirements.



Local governments select locations for project sites, and obtain documented approval from the impacted communities for location of such facilities. Consistent with the PRC laws and requirements, ESIAs are prepared by the company for projects and approved by the government. The impact assessment process includes detailed assessment of potential environmental and social impacts, as well as extensive consultation on various aspects of the project – from site selection, land acquisition through conditions for project operation, monitoring and reporting. Through the impact assessment process the government ensures that potential impacts of the project are identified and addressed during the project planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures. The company's obligation in the concessions is to comply with the requirements set forth in concession documents. The company’s environmental management team has overall responsibility for obtaining appropriate permits and approvals from various government agencies, and ensuring all operations are consistent with the terms of the concession agreement. The ESIA process undertaken by the company is consistent with IFC PS1 requirements.



CEWL has a robust corporate management system which provides some oversight of environmental, social, health and safety (ESHS) issues. Among other things, this ensures the operations comply with all applicable laws and regulations. The existing management system includes a series of procedures, work instructions, and reference documents which, when combined with the findings of the project-specific assessments, comprise a program of mitigation and performance improvement measures and actions necessary to effectively manage the E&S risks and impacts of its projects. For new projects, assessments are periodically aggregated and summarized for senior management review. And through management meetings and written documents, project and site managers periodically report on environmental, health and safety pe
rformance, as well as accidents and incidents on existing projects.



The company’s management program includes operational policies and procedures that are implemented at the facility level by supervisors who report to management on an as needed basis. Policies and procedures comply with applicable local regulatory requirements for operation of these facilities including those for human resources and labor, occupational health and safety, and environmental compliance. The Vice President, Human Resources has responsibility for overseeing matters related to labor, working conditions and health and safety. The company provides professional training to key personnel to ensure they have relevant skills and adequate training to perform their work. Assisted by qualified personnel, project managers for each project company are responsible for day-to-day implementation of project-level programs and plans. In accordance with the project-specific work plans, project or site managers are responsible for providing environmental and health and safety training to employees, including contractor personnel.



The company monitors environment, health and safety performance for each project according to the procedures established in their existing management system. In addition to standard procedures detailed in the existing management system, project specific procedures are developed to comply with provisions contained in E&S impact assessments and concession agreements with local governments. For example certain identified major environmental, health and safety risks and impacts, measurable targets are established as compliance benchmarks. If monitoring results indicate nonconformance with standards or deviations from established benchmarks, appropriate corrective or preventive actions are initiated. A similar approach is adopted for unplanned events such as accidents where the events are investigated, and corrective or preventive actions initiated to prevent recurrence.



As the company continues to grow, it will augment its management capacity by assigning additional staff and resources to provide oversight of its environmental and social performance. Responsibility for the management of environment, health, safety and social performance is currently assigned to a senior level staff within the water arm reporting to its CEO. The individual has overall responsibility for strategies, policies, standards, compliance, and management initiatives related to environmental and social matters, and for ensuring adequate resources are made available. The ESMS will explicitly make reference to the IFC Performance Standards (PS), and include a series of procedures, work instructions, and reference documents which, when combined with the findings of the EIAs, comprise a program of mitigation and performance improvement measures and actions necessary to effectively manage the E&S risks and impacts of its projects consistent with the PS. Covering construction and op
eration, procedures will describe how relevant activities are managed, controlled and documented, and assign responsibility to job functions.

Currently the company employs about 1,000 persons directly, while the number of sub-contracted employees can vary significantly depending on construction activities at any given time. The company has a Human Resources policy that complies with local and PRC regulatory requirements, and is applied consistently to all direct employees across all its business lines and (subsidiary) project companies. As required by law, the policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. As is common practice in China, although not explicitly stated, employment relationships recognize the principals of non-discrimination and equal opportunity. Although there is no union at the company, under PRC law, employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have.



The minimum employment age at the company is 18 years. The company ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Working hours on site can vary by nature of activity and phase of project, with most labor intensive phases being at the construction phase during which there are continuous operations. Construction activity is largely subcontracted for which unskilled labor is procured locally. Regulatory requirements in PRC do not require the company to provide direct oversight of wages, working or living conditions of subcontracted labor. Wages are paid by subcontractors to labor on a monthly basis and calculated with basis on the hours worked, inclusive of overtime. Terms of employment for sub-contractors are as per PRC laws and the company relies on regulatory agencies for ensuring that sub-contractors comply with applicable labor laws. Moving forward, the company will review its human resources policy to ensure consistency with IFC Performance Standard 2 on labor, working and living conditions for any labor employed by the company, either directly or through sub-contractors.



Human resources are managed at corporate level with oversight of the company facilities and operations. Training of staff is done on a routine basis in compliance with local workplace regulations. The department of human resources is responsible to ensure that all employees are adequately trained to perform their work safely. Supervisors monitor that standards are met and any reportable incidents are reported and follow up action taken when required. Training, monitoring and reporting framework is consistent with PRC requirements, and is expected to be consistent with IFC requirements after implementation of the ESMS program.



Occupational health and safety of employees at the company is managed by the Human Resources and Administration. There is a plan for accident prevention and
worker safety consistent with local regulatory requirements. All employees in the company have to undergo a training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. The company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history. Although the company has been in compliance with applicable regulatory requirements, there is variance between compliance requirements under regulatory obligations when compared to IFC Performance Standard 2 and Guidelines on Occupational Health and Safety (OHS). The company will develop an implementation plan to achieve internationally acceptable monitoring and reporting standards for OHS for its employees and sub-contractors.

CEWL uses conventional treatment technology for treatment of potable water and for municipal wastewater treatment in all the BOT projects under consideration for IFC financing. The technologies in use are widely used globally and proven to provide reasonable assurance of meeting discharge standards when operated with adequate training. Treatment plant designs are typically developed by the client for EPC contracts, or specified in most concession agreements. The technology used is fairly basic, both for water (solids removal through chemical coagulation, flocculation, filtration and disinfection using nongaseous chlorine); and wastewater treatment (screening, primary sedimentation, secondary biological treatment with nutrient removal and secondary sedimentation, and optional UV disinfection). Effluent discharged from wastewater treatment facilities operated by the company under the concession agreements either comply with or for those under construction are designed to comply with local regulatory requirements. Discharge standards are established by the government and vary by project location and receiving water quality standards, and are consistent with IFC guidelines for the discharge of treated municipal wastewater to surface water. However, limited effectiveness of industrial source control programs can result in industrial pollutants to be discharged to wastewater treatment plants (operated by CEWL) that are not equipped to treat such pollutants, resulting in a potential pass through to receiving bodies of water and contamination of treatment plant residuals. Concession agreements do not require monitoring of industrial chemicals in the influent or effluent. Currently, the company’s monitoring and reporting requirements are limited to its obligations set forth in individual concessions. The company will review industrial sources of wastewater at each of its operations to implement a monitoring and reporting program for contaminants relevant to the sources of discharge.



Air emissions from facilities operated by the company; primarily include nuisance odors which are typical to wastewater treatment operations. The facilities are located away from local communities and odor is not anticipated to be a nuisance. Through its community engagement program, the company will continually monitor the acceptance level for odors and ensure appropriate provisioning of odor control technology if needed. Emissions of VOCs and other aerosols from wastewater treatment activities are not currently monitored by the company. For protecting worker health and safety at the wastewater treatment plants, as part of the ongoing OHS review, the company will assess the risk posed and take any remedial measures if needed.



Significant quantities of solid waste are generated as part of secondary wastewater treatment operations, mainly from primary and secondary clarifiers. Annual production of sludge from the projects under consideration for financing by IFC is estima
ted to be in excess of 475,000 tons per year. As per terms of the concession agreements, the company is required to deliver sludge at acceptable water content with no additional requirements on chemical or microbiological characteristics. All wastewater treatment plants operated by the company are equipped with sludge dewatering facilities. Dewatered sludge is disposed only in municipal sanitary landfills at no cost to the company. CEWL will continue to ensure that sludge is disposed solely to sanitary landfills, and not incinerated or reused to mitigate risk from any potential contamination of sludge from uncontrolled/unknown industrial discharges.



Principal energy usage includes electricity procured from the grid is estimated to be about 179,000,000 kwH annually. Net greenhouse gas (GHG) emissions attributable to the company’s annual consumption of electricity are estimated to be 136,000 metric tons of carbon dioxide equivalents per year. Net GHG emissions associated with secondary sludge is estimated to be about 237,000 tons of carbon dioxide equivalents per year. The company’s GHG emission across its portfolio of BOT projects exceeds 25,000 tons of carbon dioxide equivalents per year. The company will continue to explore opportunities for energy efficiency in its operations to reduce operational cost and its carbon foot print. The company will also monitor and report on an annual basis its net GHG emissions using internationally acceptable methodologies for quantifying such emissions.

Engineering controls and staff training are provided to mitigate risks and issues associated with the company's operation of water and wastewater facilities. The use and storage of hazardous chemicals are subject to stringent safety standards as required under PRC laws. The company is required to have emergency prevention, control and response plans which specifies responsibilities, ensures appropriate response equipment and materials are in place, and detail a set of procedures to be followed to minimize the harm of any potential accident. Moving forward, the company will review its scope of emergency response and update procedures as needed, including drills to test the effectiveness. The company will also add a community involvement component that addresses appropriate behavior and safety measures to be implemented in the event of an unplanned release beyond the plant boundaries due to either irregular plant operations or an accident at the facility, or during transportation of material destined for the facility.

The company works with the local government at various project locations in making available relevant E&S information. In China, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessment occurs through procedures established by PRC regulations. As a result, information dissemination activities have included those undertaken by the local government, which includes community consultation during project development and operational phases. As part of its environmental and social management program, the company will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. The company will monitor / review the government’s activities in this regard to ensure that any necessary follow-up with the community is handled properly. Specific procedures will be developed to incorporate community engagement, including clear procedure on disclosure and consultation with potentially affected communities.

For more information see the company’s website athttp://www.ebchinaintl.com/en/global/home.phpor contact:

Grace Lee
Environment Management & Investor Relations
China Everbright Water Limited
Room 2703, Floor 27
Far East Finance Centre
16 Harcourt Road
Hong Kong
Email: mailto:gracelee@ebchinaintl.com
Tel: +852-2804-1886
Fax: +852-2528-4228

Relevant environmental and social review documents will be made available at the corporate offices as we all as the main entrance of the offices listed below.

China Everbright Water Limited
Room 2703, Floor 27
Far East Finance Centre
16 Harcourt Road
Hong Kong

China Everbright Water Limited
#20-02,9 Battery Road,
Straits Trading Building
Singpaore 049910

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Adoption of IFC Performance Standards as part of CEWL’s legal requirements.	03/31/2015
Undertake a comprehensive review of compliance with IFC Performance Standards requirements for all Hankore assets, and close any gaps in a timely manner.	09/30/2015
Screening of business opportunities and service models against IFC Performance Standards (PS 1 through PS 8) and relevant EHS Guidelines.	09/30/2015
Oversight of construction activities (including subcontractors) – labor and OHS issues	09/30/2015
Procurement procedures to provide oversight and contractually require that its suppliers and subcontractors comply with national regulatory requirements and CEWL's ESHS policies.	09/30/2015
Integrated OHS functions – training, monitoring, and reporting.	09/30/2015
Procedures for communicating environmental and social aspects to external interested parties, including clear procedures for receiving, documenting and responding to concerns from any external interested parties related to the project.	09/30/2015