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
The upgradation of the hotel including construction of additional buildings will be undertaken within the existing premises of the hotel. 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) do not apply.

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 associated with this project include: development and implementation of environment, health and safety management systems for upgradation and operation of the hotel; engagement with local communities in accordance with local requirements and IFC’s Performance Standards; assurance of fair, safe and healthy working conditions in compliance with local regulatory requirements and relevant Performance Standards during upgradation and operation of the hotel; life and fire safety (L&FS) management of the hotel in accordance with World Bank Group (WBG) EHS guidelines; resource efficiency (water and energy efficiency); and impacts of construction, skilled construction workers from India and transport on nearby communities.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental and Social Impact Assessment (ESIA): The hotel construction and upgradation project does not require an ESIA study. Though no specific environmental permits are required, the company will obtain permits from other authorities as required before operation of the upgraded hotel.



Policy, Management Systems and Programs: The hotel has an environmental policy. Under the policy, the hotel has initiated programs on waste management, water conservation and energy efficiency. The hotel will implement an additional monitoring and reporting framework as discussed below.



Organization: The E&S responsibilities of the hotel are divided among a number of department heads. The

Housekeeping Manager is responsible for various sustainability initiatives/activities and waste management. The Front Office Manager is responsible for monitoring energy consumption and energy efficiency activities. Similarly, the Maintenance Head is responsible for operation of various utilities including the sewage treatment plant (STP) and provision and maintenance of fire extinguishers. The construction and upgradation project will be managed by the Project Manager and the team which has been involved in group’s real estate project.



Monitoring and Reporting: As discussed under PS3 below, the hotel monitors energy, water consumption and waste generation of the hotel. Also, the hotel has conducted effluent testing. However, the hotel does not conduct any other environmental testing (e.g. for the diesel generator sets emissions or drinking water). As per the ESAP, the hotel will develop an EHS monitoring procedure which will specify minimum key performance indicators (KPIs) on energy and water efficiency, environmental parameters to be monitored, monitoring frequencies and type and the definition of thresholds that signal the need for corrective actions. The EHS monitoring procedure shall be aligned with World Bank Group (WBG) EHS guidelines. The monitoring results will be reported to IFC as part of the Annual Monitoring Report (AMR).



Emergency Preparedness and Response: The L&FS systems of the hotel are discussed under PS4. Currently the hotel has not documented an emergency preparedness and response plan. Also, during the site visit, it was noted that the hotel has not provided any emergency evacuation signages nor identified any assembly points. Further, no emergency response drills have been conducted by the hotel. All these areas will be reviewed as part of the L&FS risk assessment discussed under PS4 and the hotel will implement the required corrective actions.

The hotel employs 113 employees (62 males and 51 females). Post upgradation, no additional employees will be hired and the same workforce will be reorganized to manage the operations.



HR Policy, Working Conditions and Terms of Employment: The hotel has documented service rules which describes employment terms and conditions, work conduct and disciplinary procedures (including grievance mechanism), policies and procedures on appointments, promotions, transfer, retrenchment, resignation, performance appraisal, wages, leaves, benefits, salary and allowance. The service rules are approved by the Department of Labor, Ministry of Labor and Human Resources. All new employees are provided an introduction on and a hard copy of the service rules.



Also, labor laws of Bhutan include requirements of freedom of association and non-discrimination. Therefore, through compliance with the legal requirements and implementation of the service rules, the hotel is expected to meet the PS2 requirements.



Child labor and forced labor: Service rules of the hotel specify hiring employees above 18 years of age. Also, age proof documentation is collected at the time of hiring of new employees. No forced labor practices were observed.



Grievance Mechanism: The hotel’s service rules describe the grievance procedure and policy on prevention of harassment at work. As per the procedure, the employees can raise their grievances to the immediate superior with information to HR department. In case the grievance is against the supervisor, it can be reported to HR directly and escalated to GM of the hotel.

Occupational health and safety (OHS) and third party workers: The hotel does not employ any third party workers. The only third party workers are expected to be hired during the construction period.

The construction and upgradation project will be managed by the Project Manager (who is part of the group) and the project management team (which has been involved in group’s real estate project). The construction will involve about 120 skilled construction workers from India, hired by the contractors. The workers will live in a construction camp on a leased land close to the hotel. The hotel will apply and obtain the legal permissions required for employing such migrant workers and ensure their compensation is per the legal requirements. All migrant workers will undergo the required medical checks as per the immigration requirements which includes checking for communicable diseases like malaria. As set forth in the ESAP, the hotel will develop a documented OHS manual for construction to ensure contractors’ compliance with EHS requirements and legal requirements on working conditions, labor camp facilities, and labor law requirements. Also, the company will document guidelines for these workers based on local cultural norms. The workers will be provided with awareness sessions on the procedures and guidelines before starting their work and also refresher sessions. The
procedures will include training requirements, monitoring procedure, check-list and other documentation of OHS performance on-site by the company.

Resource Efficiency: The hotel monitors water consumption through water meters in every cottage. Also, low consumption shower heads and dual flush toilets are being used. The hotel has awareness programs for its employees and hotel guests on water and energy conservation. Further, the following resource efficiency features have been included in the upgradation plans:



Solar water heating for the proposed swimming pool

Solar heating for the green house of the hotel

Replacing current 50w halogen lights with 7w LED lighting in the main building

Replacing the lighting in the cottages with LED lighting

Recycling laundry water to target 100% reuse

Harvesting the warm air from the dryers to reuse

Double glazing and insulation of all doors and windows in the main building to reduce the heat loss from the building



The hotel monitors the data on energy (electricity and fuel) and water consumption. Based on the data available for 2014, the hotel consumed 1.5 million units of electricity and 1,246 liters of diesel for the back-up diesel generator (DG) set. Post upgradation, the hotel is expected to consume 1.9 million units of electricity. No significant change is expected in the diesel consumption (considering the power scenario).



Water and energy supply: Water for the hotel is sourced from a river stream. The raw water is further treated through sedimentation, filtration (sand and micro filtration) and ultra-violet (UV) treatment. Drinking water samples are tested by National Food Testing Lab under Bhutan Agriculture and Food Regulatory Authority (BAFRA).



The electricity for the hotel is sourced from the grid. However, the hotel has a back-up DG set of 180 kVA. Post construction of new conference center and additional rooms, the hotel will install additional DG sets (expected capacities of 180 kVA and 90 kVA).



Pollution Prevention: The hotel has a sewage treatment plant (STP) on-site to ensure treatment of the wastewater before part of it is used for gardening and remaining is discharged in the nearby stream. As per available test reports for treated sewage (for Bio-chemical Oxygen Demand (BOD) and Suspended Solids), the effluent meets the WBG EHS Guidelines. As the expansion is not significant (just addition of 8 new rooms), the STP is expected to treat the increased sewage volume as well. The stormwater is discharged in the same stream.



As regards waste management, the main waste streams generated from the hotel include recyclable waste (e.g. paper, plastic, metallic cans, bottles), bio-degradable waste (e.g. food waste, dry leaves, flowers, egg shells) and other waste (e.g. used oil and batteries). The sewage treatment plant sludge is used as manure for landscaping. All recyclable waste is sold to an external agency. Food waste is given to local piggeries whereas other bio-degradable waste is composted on-site. Used oil and batteries are taken by the vendor who services the DG set. Dedicated storage area has been provided
for the waste and the hotel maintains a record of all types of waste generated and disposed of at the hotel.



Emissions are expected primarily from backup diesel generator (DG) as kitchens (wherever provided) use LPG as fuel and the boilers used for hot water and heating are electrical. The DG set emissions and treated sewage quality will be tested to ensure their compliance with the WBG EHS Guidelines for and the drinking water will be tested against World Health Organization (WHO) standards and the reports will be shared with IFC. Regular reporting will be managed as part of the monitoring framework discussed under PS1.



GHG emissions: Based on the available information on fuel and electricity consumption, the GHG emissions for the project are estimated to be 8 tons CO2 equivalent/year.

Regarding Life and Fire Safety (L&FS), currently the hotel is equipped with portable fire extinguishers at various locations. The hotel has included provision of fire hydrant, centralized fire detection and alarm systems in the upgradation plans. To ensure compliance with the World Bank Group (WBG) Guidelines on L&FS, the hotel will conduct an L&FS review of existing hotel facilities and upgradation plans by a qualified professional acceptable to IFC. Based on this review, if found necessary, the company will agree on a plan of enhancing L&FS systems and implement the same within the timeframe agreed with IFC.



The new buildings will meet the WBG EHS guideline requirements of compliance with an internationally accepted L&FS code. The additional architectural and L&FS system requirements for these buildings will be identified as part of the L&FS review and provision of these systems will be included in the enhancement plan mentioned above.



Potable water for all domestic needs such as drinking, food preparation and personal hygiene (washing or bathing) is supplied through onsite water treatment plant which treats the raw water to meet the local standards.



The hotel employs unarmed private security guards. Also, it has adequate parking spaces. Considering that the hotel upgradation involves limited new construction and other activities within the existing buildings, no significant construction related impacts are expected on the neighboring community.



As set forth in the ESAP, the hotel will develop and implement a community grievance mechanism which will support the process of receiving and responding to community grievances.

As part of the CSR activities, the hotel supports cleaning campaigns in the local community. Also, the hotel provides support to maintain Stupas and Monastery in and around Paro valley. As discussed above, the hotel will implement a community grievance mechanism.

The hotel will disclose this ESRS and ESAP at the following address.

Zhiwa Ling Hotel
Satsam Chorten
Paro, Bhutan.
Tel: +975-8-271277
Fax: +975-8-271456

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

Mr. Karma Lotey
Chief Executive Officer
Yangphel Private Limited
Chorten Lam Street, P.O. Box 236,
Thimphu, Bhutan.
Tell: +975-2323293, 2323294
Fax: +975-2322897

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Develop an environment, health and safety (EHS) monitoring procedure specifying key performance indicators (KPIs) on energy and water efficiency, environmental parameters on to be monitored, monitoring frequencies and type and the definition of thresholds that signal the need for corrective actions. The EHS monitoring procedure shall be aligned with the requirements of the approved EIA, legal requirements and World Bank Group (WBG) EHS guidelines.	12/31/2015
Conduct testing of the DG set emissions and effluent quality as per parameters defined in the World Bank Group (WBG) Environment Health and Safety (EHS) Guidelines and for drinking water against World Health Organization (WHO) standards and share the reports with IFC. In case any corrective actions are required based on the test reports, agree with IFC on a corrective action plan.	11/30/2015
Develop an occupational health and safety (OHS) manual for construction to ensure contractors’ compliance with EHS requirements and legal requirements on working conditions, labor camp facilities, and labor law requirements. The procedures will include monitoring procedure, check-list and other documentation of OHS performance on-site by the company. Document guidelines for these workers based on local cultural norms.	08/31/2015
Conduct a life and fire safety (L&FS) risk assessment through a qualified professional (acceptable to IFC) which will adequately cover - fire prevention, means of egress, detection and alarm systems, fire suppression and control, emergency response plan, operation and maintenance and training requirements. Based on the risk assessment, develop a plan of enhancing its L&FS systems (to be implemented within the timeframe agreed with IFC). The L&FS risk assessment to identify additional L&FS system requirements for the new buildings WBG EHS guideline requirements of compliance with an internationally accepted L&FS code and include the same in the enhancement plan mentioned above.	07/31/2015
Develop and implement a community grievance mechanism describing the process of receiving and responding to their grievances.	09/30/2015