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

PS: 5 “Land Acquisition and Involuntary Resettlement”; PS: 6 “Biodiversity Conservation and Sustainable Management of Living Natural Resources”; PS: 7 “Indigenous Peoples”; and PS: 8 “Cultural Heritage” are not expected to be applicable to this project. There is no land acquisition involved given that the expansion of operations will occur at the existing plant site. In addition, there are no anticipated impacts on biodiversity or identified impacts to Indigenous Peoples, and cultural heritage sites.

This is a category B project according to the IFC’s Policy on Environmental, and Social Sustainability 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.

Key environmental and social risks include: emissions to the environment, possible excess energy use or its inefficient use, a failure to engage with the potentially affected community, occupational health and safety (OHS) aspects, as well as issues related to the supply chain, food quality and safety and product traceability.

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



AFISA demonstrates a strong commitment for environmental and social performance, as evidenced by the environmental policy and set of programs and procedures that have been established at the company level. The scope of the policy includes: (i) compliance with applicable laws and regulations; (ii) efficient use of resources; (iii) and implementation of sustainable practices in the company operations. The policy has been communicated to all levels of the company and it is also posted at the company premises.



Identification of Risks and Impacts





AFISA adheres to local regulatory requirements for the necessary operating permits and licenses. The company has conducted the required environmental assessments for the original whey and permeate processing plant. An environmental impact assessment was submitted to the Environmental Secretariat of the Córdoba Province back in 2000 in support of the first whey protein concentrate (WPC) plant. Subsequently in 2008, for the first permeate plant, AFISA submitted the required environmental impact assessment to the Environmental Secretariat. Except for the ice water plant, most of the utility systems (e.g., electricity supply, boilers, waste water plant, compressed air, and wells ) have been already upgraded to accommodate the demands of the future permeate tower.



The expansion project is still under analysis and the final suppliers and civil works are still under discussion. The expansion project will be subject to a project feasibility study and an environmental assessment that will be submitted to Córdoba’s Environmental Secretariat. The environmental assessment will include a description of the project components including equipment and design criteria, plant processes, resource consumption, pollution standards, and mitigation measures. As set forth in the ESAP, AFISA will submit a copy of the Environmental Assessment and additional documents related to environmental and social aspects of the expansion plan to the IFC.



Management Programs



The company has developed programs and procedures that have been designed to comply with the applicable local and national regulatory requirements for labor and working conditions, occupational health and safety, emergency management, human resources, whey supply chain and general company suppliers. AFISA has implemented and had certified a quality management system ( using ISO 9001) and a food safety management system (using ISO 22000.) ISO 22000 integrates the principles of the Hazard Analysis and Critical Control Point (HACCP) system and application steps developed by the Codex Alimentarius Comission. In addition, the company also follows Arla’s Foods’ Code of Conduct, which sets out the corporate principles for ethical, social and environmental responsibility in harmony with the UN Global Compact. The Global Compact, is a United Nations initiative that encourages businesses worldwide to adopt sustainable and socially responsible policies, an
d to report on their implementation. For whey suppliers, AFISA has developed a prescriptive code of conduct and a handbook with technical specifications detailing technical requirements for processing and delivering whey (e.g. technical specifications, quality demands, key points, whey processing, pasteurization, storage conditions and holding time, transportation, cleaning agents and procedures to clean the lines, tanks and equipment, microbiological controls, supplier performance expectations, food safety and quality management systems, contamination controls and traceability).



Organizational Capacity and Competency



AFISA has a well defined organizational chart with explicit functions listed for matters of administration, food safety and quality management, health and safety, logistics, maintenance and utilities supervision. The human resources function is shared between the administrative office and the quality system coordinator given that the recruitment policy, disciplinary manuals and procedures related to company employees are part of the quality system. The environmental manager reports directly to the plant general manager; his tasks include verification of plant compliance with environmental aspects and being responsible for the waste water plant and plant waste management. The food safety and quality system coordinator, is responsible for the certified management systems (ISO 9001 and ISO 22000), supply chain and food safety aspects. The health and safety facility coordinator is responsible for overall equipment preventive maintenance, management of occupational health and safety aspects including occupational training, life and fire safety and for implementing corrective actions. The senior managers and mid-level staff whom the IFC met are all well trained and competent to carry the functions needed at the plant. The company has defined and described roles for each job; new employees are paired with a mentor for a year to ensure they are up to the task for which they are hired.





Emergency Preparedness and Response



AFISA has developed emergency preparedness and response programs. Main emergency scenarios include fire, ammonia leaks and explosions. The plant has integrated an ammonia monitoring software program as part of its management and emergency preparedness procedures. For life and fire safety, the plant has been certified under the National Fire Protection Association standard 600. In addition, the company conducts preventive analysis of dust emissions and has installed infrared alarms in packing areas and storage warehouse for the detection of potential explosive atmospheres that can happen as a result of high levels of food particles (dried whey particles).



The plant is registered with the Chemical Emergency Information Center “Centro de Informacion Quimica para Emergencias” (CIQUIME); as per CIQUIME requirements, company emergency procedures need to be reviewed and updated on a yearly basis.



Additiona
l emergency scenarios could include inhalation of ammonia, spillage of chemicals used for plant cleaning purposes (e.g. phosphoric, nitric and hydrochloric acid) and accidents involving whey tankers.



Specific training and procedures have been developed to manage emergency risks, fire equipment and plant operational equipment is inspected on a regular basis. The company has established a fire and emergency brigade. In 2014, the company conducted the following trainings to address potential emergency situations: (i) chemical risk, (ii) manual handling of loads, (iii) working on high environments and fall prevention, (iv) personal protective equipment use, (v) role of fire brigade, (vi) safe driving of forklifts, (viii) use of fire extinguishers, (ix) drill and rescue, moving injured people, (x) ammonia emergency, (xi) leadership during emergency, (xii) emergency procedures, (xiii) first aid procedures. As set forth in the ESAP, the company is going to install ammonia detection alarms and is going to conduct a gap analysis against the International Institute of Ammonia Refrigeration (http://www.iiar.org) practices; if gaps are identified, the plant will be required to address the gaps with the suggested corrective actions.





Monitoring and Review



The company has programs in place to track environmental and social aspects of its operations. Work areas have been subjected to hazard assessments, and AFISA has undertaken risk assessment (e.g., risk of fire and explosions, particulate matter concentrations PPM10 in the packaging and warehouse areas, ammonia and ethyl ether concentrations in the laboratory).

Monitoring frequencies are defined by local and ARLA’s reporting requirements. The company continually tracks occupational statistics describing lost time accidents and incident rates and accident free days; see below for frequency rates. The company tracks boiler emission parameters in line with the Environmental, Health and Safety Guidelines for Air Emissions and Ambient Air Quality; see below for sample results. This includes NOx, SO2 and PM.



The company also tracks and monitors waste generation for solid and hazardous waste. As part of its corporate requirements AFISA also promotes resource efficiency aspects within its operations (e.g., equipment tender requests include minimum requirements for efficiency; for example, pasteurizers are required to be supplied with a heat recovery index of 93% minimum). The plant is constantly audited; for example, audits against the quality management system (ISO 9001) and the food safety management system (ISO 22000 standards) and those conducted by clients regularly occur (e.g. last year Nestle conducted an audit on responsible sourcing and also an audit on HACCP took place). A total of 18 audits where conducted in 2014





Stakeholder Engagement



Stakeholders have been identified and engaged in several events. The company has an open door policy and good working relations with the prov
ince of Córdoba regulators, fire department, police department, local schools, and the community in general. As set forth in the ESAP, AFISA is going to develop a community grievance procedure to ensure that grievances from affected communities and external communications from other stakeholders are responded to and managed appropriately.



External Communications and Grievance Mechanism



AFISA operations do not pose direct adverse risks to the surrounding communities. Regardless, the company has to date addressed grievances on a case by case basis. As part of the expansion plan, AFISA is going to implement and maintain a more robust procedure for external communications that includes methods to: (i) receive and register external communications from the public; (ii) screen and assess the issues raised and determine how do address them; (iii) provide, track, and document responses, if any; and (iv) adjust the management program, as appropriate.

As of January 2015, a total of 122 employees make up AFISA’s workforce; this number includes 12 contracted staff. AFISA has implemented human resource procedures based on national laws. The company has implemented a recruitment policy, a disciplinary manual, code of conduct. Conditions and terms of employment are communicated to employees at the time of hiring and are reported to the Argentina’s Federal Administration of Public Income (AFIP) as required by local legislation. All plant workers have obtained a manual describing the employment relationship with the company “Manual de Ingreso”, the manual include information about: payment dates, vacations, working hours, uniform and equipment policy, code of conduct for employees and company obligations, security at the plant. Minimum wage is above union rate plus additional surplus.





Workers Organization



While workers are allowed to join a worker’s organization, currently only 3 workers belong to the Sindicato de Trabajo de Industria Alimenticia (STIA) union. The company has signed a collective bargaining agreement N2224/94 which covers key labor aspects such as: working hours, salaries, benefits, rights and responsibilities, no incidents with the union have been reported by the company. AFISA’s working conditions are above the union requirement (e.g. uniform cleaning services, medical services, lunch). In addition, while legal working hours in Argentina are 48 hours per week, the total plant’s working hours are 44.





Non-discrimination and equal opportunity



Non-discrimination is prohibited and equal opportunity is included as part of the company’s Code of Conduct. The company has developed job descriptions for each post. Hiring decisions are based on clearly communicated competence and experience.



Retrenchment



No retrenchment is anticipated as part of the expansion project. For the expansion plan, the company is planning to hire approximately 17 workers.



Protecting the workforce



The prohibition of child labor is included in company procedures, with the minimum employment age set at 18 years. AFISA checks the national document of identification (“DNI”) to verify the prospective employee’s age. For additional verification, it also requests the employees’ official worker number identified in Argetina as the Código Único de Identification Laboral (“CUIL” number).



Grievance Mechanism



The company conducts an official annual meeting in which employees can raise their grievances. There are also open channels for workers to express their grievances; however, the current grievance procedure does not meet the requirements of PS 2. As set forth in the ESAP, the company will develop an employee grievance mechanism consistent with the requirements of PS 2.



Occupational health and safety



Occupational health and safety procedures, controls and personal protective equipment were observed at the plant during appraisal.



OHS statistics provided indicate no fataliti
es either to employees or contractors; a total of 94 hours of lost time out of 229,549 were recorded in 2014. The lost time injury frequency rate was 13.4 which is slightly higher than the industry standard of 9; most of the injuries reported were to the hands. As set forth in the ESAP, the company will conduct hand injury protection training.



OHS training in 2014 included the following programs: chemical risk training, manual handling of loads, maintenance and use of PPE, fire brigade drill, forklift operation, management of ammonia leeks and emergencies, several trainings related to life and fire safety, first aid, and noise management. The industrial fire brigade has been certified according to the National Fire Protection Association (NFPA) 600. The standards of NFPA, includes requirements for organizing, operating, training and equipping industrial fire brigades. It also includes requirements for the occupational safety and health of industrial fire brigade members. Plant site safety organization focuses on the promotion of safety measures and preventive practices. 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.



Supply Chain



As part of the appraisal, three whey supplier plants were visited. AFISA has developed a prescriptive code of conduct and a handbook with technical specifications for its suppliers, detailing technical requirements for processing and delivering whey (e.g. technical specifications, quality demands, key points, whey processing, pasteurization, storage conditions and holding time, transportation, cleaning agents and procedures to clean the lines, tanks and equipment, microbiological controls, supplier performance expectations, food safety and quality management systems, contamination controls and traceability, to name a few). AFISA has four specialists dedicated to providing support and guidance to whey providers. Guidance is provided any time there is a problem with equipment and/or product quality or specifications. Suppliers are audited by AFISA twice a year or more as needed. The dairy plants visited appeared to be well run. Some of the plants are ISO 9001 and HACCP certified. Child and forced labor are not an issue in the AFISA supply chain, given that AFISA sources directly from dairy plants. Dairy plants have their own set of requirements and inspectors, and they conduct their own audits for their primary suppliers.

Resource efficiency



The main sources of emissions come from the electricity sourced from the grid (29,325, 480 kWh in (2014) and from fuel oil (7,219,000 l) used to fire the boilers. Total energy consumption per ton of processed whey is 9,092 MJ which is below the IPPC BREF BAT range of 11008 MJ/t of processed whey. For the expansion project the company is procuring energy efficient equipment that will result in a reduction of total energy use; the company benchmark for the expansion is 7,912MJ/t of processed whey.



Net greenhouse gas (GHG) emissions attributable to the company’s annual operations are estimated to be 32,482 tons of carbon dioxide equivalent. The company will continue to explore opportunities for energy efficiency in its operations to reduce operational costs and its carbon foot print. AFISA will be required to re-quantify GHG emissions after the permeate plant has been commissioned as the elimination of permeate from the waste stream will reduce GHG emissions from the project



Water



Water is used at the plant mostly for cleaning, sanitation and cooling. Raw water is supplied from the town of Porteña and also from the plant’s seven wells. Incoming water to the plant is treated with a reverse osmosis system. Water extracted from the wells is used only for industrial purposes. Additional water comes from the filtration of whey processing. Total water consumption per liter of processed whey is 0.15liter which is significantly below the industry benchmarks (0.8-1.7 liter) as referenced in the Environmental, Health, and Safety Guidelines for Dairy Processing.



Pollution Prevention



According to the emissions report provided by AFISA, boiler emissions for PM (40,97 mg/NM3) and SO2 (621 mg/NM3) are below the limits found in the WBG/IFC General EH&S Guidelines for Small Combustion Facilities. NOx,(499,37 mg/NM3) is slightly above the reference guide (460 mg/NM3). The company will be required to report boiler emissions as part of the annual report.



Waste water



Current plant use requires approximately 60% of the WWTP’s treatment capacity, equating to approximately 1.500m3 /day of effluents which generates approximately 500 kg of sludge. Consistent with Argentinian regulation N 415/1999, the company periodically tests effluents; waste water parameters are in line with local pretreatment requirements. Plant capacity is expected to handle additional loads from the expansion plan, this will be confirmed once the environmental assessment is conducted. Should plant capacity fall short of project needs, AFISA will be required to adjust the capacity. Treatment includes screening, equalization, sedimentation, biological treatment, sludge digestion and disposal. Residual water from cleaning operations (e.g., tanks, ultrafiltration membranes, reverse osmosis, evaporators) and domestic water are treated. The final receptor of the plant effluents is the sewer of the municipality of Porteña where it is subject to further tre
atment. The principal solid waste generated by the plant is sludge, which is currently disposed of by certified third party companies in permitted landfills/ “land farming sites”. 



In addition, as set forth in the ESAP, AFISA will be required to contract and execute a clean production audit to eliminate all clean water flows (e.g. rainwater, refrigeration condensate, running hoses) to reduce facility effluent generation.



There are approximately 400 m3 of liquid permeate per day during peak season that AFISA has no capacity to dry. The excess permeate is sold to SanCor for animal feed and/or is sent to final disposal at certified land fields “landfarming”. In 2014, 234 m3/day of permeate were disposed of, 85% went for animal feed and 15% to landfarming. Permeate is high in biochemical oxygen demand, when used as a fertilizer it acts as a non-point pollutant, its disposal represents a high cost to the dairy industry. This waste stream is going to be eliminated once the new permeate plant is in operation.





Hazardous Materials Management



Hazardous materials used in AFISA include paints, oils, ammonia, cleaning agents such as nitric acid, hydrochloric acid and sodium hydroxide. The plant has automated operations such as cleaning-in-place (CIP) to reduce employee contact with the cleaning materials. Hazardous waste is collected by specialized companies that have the required permits for proper disposal. On-site waste storage conditions were found to be adequate; the company keeps records for the disposal of these waste streams. In addition, during the plant visit it was observed that waste is separated according to risk.



Pesticide use and Management



The use of pesticides is limited to the use of rodent traps which are found throughout the plant. The pest management program is provided by a certified and licensed third party provider.

Whey processing plants do not generally pose a serious risk on the health, safety and security of the surrounding communities. AFISA’s plant is located in former agriculture land and in front of the main road. As such potential adverse impacts from its operations include mostly traffic generated by the whey and permeate tankers. Plant-related traffic has the potential to impact local communities; however, the population is sensitized to the influx of tankers as this is a major dairy region with several dairy companies operating there and affected community roads have implemented strategies to manage truck related incidents such as speed limits. As part of its overall community grievance mechanism AFISA will have a channel to manage potential claims or complaints related to traffic issues. The company has certified systems for product quality assurance and for food safety, including traceability and recall systems as indicated under PS 1.



Emergency Preparedness and Response



AFISA has developed emergency preparedness and response programs, main emergency scenarios include fire, ammonia leaks and explosions. The company reviews periodically its emergency response equipment, including fire extinguishers, hydrants and water pumps. On a yearly basis emergency procedures are reviewed and updated following Centro de Información Química para Emergencias (CIQUIME) recommendations.





Security Personnel Requirements



The company does not employ armed guards. Company security is monitored with the use of cameras. There are gate keepers at the plant entrance, their function is mostly administrative, consisting of reviewing truck entrance documents and directing visitors and clients to the main office.

Arla Foods Ingredients S.A.Ruta Prov. No. 1, km. 37, C.C. No. 19X2415AAF Portena, Pcia. de CordobaArgentinaTel.: +54 3564 451 200Fax.: +54 3564 451 336

Broad Community Support is not applicable for this project

Arla AFISA(35983) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
AFISA will submit a copy of the Environmental Impact Assessment for the expansion plan to the IFC.	31-May-2016	Cancelled	Changed project circumstances mandated cancellation of this task
AFISAA will implement an external grievance mechanism to receive and facilitate resolution of affected communities' concerns and grievances. The procedure will allow for receiving, addressing, and recording/documenting complaints and communications from stakeholders.	31-May-2016	Cancelled	Changed project circumstances mandated cancellation of this task
AFISA will develop a structured grievance mechanism for workers to raise workplace concerns. The company will inform the workers of the grievance mechanism at the time of recruitment and make it easily accessible to them. The mechanism should involve an appropriate level of management to address concerns promptly, using an understandable and transparent process that provides timely feedback to those concerned, without any retribution. The mechanism should also allow for anonymous complaints to be raised and addressed. The mechanism should not impede access to other judicial or administrative remedies.	31-Dec-2015	Cancelled	Changed project circumstances mandated cancellation of this task
AFISA will conduct a hand injury prevention training.	31-Oct-2015	Completed	Completed	10/31/2018
Contract and execute a clean production audit to eliminate all clean water flows (e.g., rainwater, refrigeration condensate, running hoses, other) to reduce facility effluent generation.	30-Nov-2016	Cancelled	Changed project circumstances mandated cancellation of this task
Install ammonia detection alarms. Conduct a gap analysis against the International Institute of Ammonia Refrigeration (www.iiar.org) practices, if gaps are found the plant will address these in a timely manner.	31-Oct-2015	Completed	Completed	10/31/2018