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
Issues related to PS5: Land Acquisition and Involuntary Resettlement, PS7: Indigenous Peoples (IP) and PS8: Cultural Heritage are not expected with this investment for the following reasons: no land will be required to be obtained (processing operations are already established); IPs are not impacted by the company’s operations; nor are matters of cultural heritage as processing plants are located in existing industrial areas and farmers supplying to the company have existing properties/fields and any development would be limited to replanting with higher producing coffee or cocoa plants.

This investment is classified as a Category A project in accordance with IFC’s Policy on Environment and Social Sustainability. Considering the inherent environmental and social risks related to the cocoa sector in West Africa and the cotton sector in Brazil the proposed project has potential significant adverse environmental and social risks that are diverse, irreversible or unprecedented. These risks and impacts include potential exposure to harmful child or forced labor in the supply chain, and adverse impacts on conversion of natural/critical habitats leading to biodiversity loss. Prior investments with ECOM have also highlighted labor risks associated with the cotton supply chain in Central Asia. Since those investments, ECOM’s business has changed, reducing the already small amounts of cotton that were procured from that region (being replaced by increases from the US and Brazil) and also eliminating the ginning operation that was being run in Tajikistan.

Operations outside of the above regions are exposed to EHS risks and impacts of a lessor nature. These “inside the fence line” risks and impacts include occupational health and safety risks to workers involved in processing, and impacts to surface waters from improperly treated and discharged industrial effluents.

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 Policies: Appropriate EHS policies, originated at the corporate level, and adapted at country operations so as to reflect local operational realities, are in place and are used to transmit the companys intent with regards to matters of environmental protection, occupational health and safety (OHS), community and farmer engagement. The corporate environmental policy includes a commitment to compliance with all local regulatory guidelines and requirements, references the need for operations to maintain emergency response plans suited to the business and for new projects to incorporate all local environmental impact issues in planning. Further commitments for ECOM to be efficient in the use of natural resources, including the responsible use of water and energy resources and maintenance of air quality, the proper recycling or disposal of waste, promotion of the effective use of resources through ongoing monitoring and training, supporting producers to manage their farms environmentally and productively, working with producers to improve practices to limit problems related to pesticides and deforestation are also defined.

More specifically, ECOM states it will avoid the release of pollutants or, when avoidance is not feasible, minimize or control the intensity or load of their release to within acceptable standards (i.e. the more stringent of national law and WBG EH&S Guidelines), will avoid or minimize the generation of hazardous and non-hazardous waste materials as far as practicable and will recover and reuse waste where possible, will treat, destroy, and dispose of wastes in an environmentally sound manner and will avoid using or handling these materials whenever possible. Where chemicals are on global lists for prohibition or phase out, ECOM will comply with such programs.

The corporate social policy is built on respect for people and references key stakeholder groups (employees and shareholders, the financial community, local communities and governments, producers, suppliers, customers, donor and development partners). It further speaks to the need to be an attractive and responsible employer, by providing the best conditions in terms of trust, team spirit, mutual respect, and personal and professional development, fair remuneration, equitable reward schemes, continuous learning, and good benefits. The policy also states the company values diversity and promotes equal opportunities, references employee training as a high priority and recognizes that in the event of restructuring operations to remain competitive, they will maintain open communication and help former employees by a variety of support mechanisms that comply with national laws. Lastly, the policies speak to long term engagement with primary suppliers ("to spread good practice beyond our own production processes and to be a catalyst for environmentally and socially responsible behavior) and that the company will make all best efforts for community engagement in development of projects so as to build and maintain a constructive relationship, to make communities aware of project risks and if subjected to adverse effects, ECOM will provide a means for communities (associated with these mid-stream and sourcing operations) to express their concerns (using ECOMs community grievance policy.)

Identification of Risks and Impacts: ECOMs EHS management system is underpinned by compliance with a combination of external (country laws and regulations and associated compliance audits), internal (facility survey reports, assurance tests and audits) and customer requirements. These are used to ensure the risks and impacts from the company operations, and within the supply chain, are known and understood and that actions to address those of significance are prioritized and implemented. The type and nature of risks and impacts varies according to the activities; with regards to its midstream operations "within the fence line, some are simply cleaning, sorting, grading and stacking commodities to make them ready for export (wet coffee processing having been undertaken by the farmers themselves, as is customary in say, Nicaragua). Other processing operations involve wet processing within ECOM facilities, e.g. large scale industrial processing in Central America and small scale artisanal milling in East Africa. As such, the risks and impacts vary from simple to more complex and the staff, procedures and resources required to deal with them likewise vary. For example, the cocoa processing plant (Agroarriba, on the outskirts of Guayaquil, Ecuador) only processes previously fermented cocoa. As such, this is a dry process and the risks are primarily related to OHS, and are associated with the movement of heavy loads, working in hot conditions, noise, dust impacts upon ambient air quality in the warehouse, etc. The operation in Pichincha, Ecuador involves not only the receipt of pre-fermented cocoa, its drying and bagging, but also the fermentation of some cocoa at the plant. Fermenting this ˜wet cocoa involves draining some of the mucus/liquid while the beans are stacked in crates which creates a minor volume of effluent. This volume, is collected in a small tank and periodically removed by a contractor for appropriate disposal.

Supply chain risks are identified based on the principles found in the companys over-arching supplier codes of conduct implemented by competent extension agents working for ECOMs SMS program and production staff and country management, and supplemented by those criteria found within the variety of certification programs that ECOM complies with and is audited against. More details on supply chain assessment and management are included below.

As noted above, the company has in place several means to review risks at its operations. Facility assessments (that describe baseline EHS risks and impacts at the operational level) have been undertaken at all operations; these are being repeated on a yearly basis so as to track any changes that may have occurred and to verify effectiveness of mitigation measures proposed to minimize any risks and/or impacts. These surveys are a reasonable baseline and do cross-reference the relevant IFC PSs and WBG EHS Guidelines. ECOM will, however, work to fine tune them to fully capture the breadth and depth of EHS issues in its operations so as to maintain tangible EHS improvements already seen on the ground. Annual updates of these assessments for each mid-stream facility will be summarized in the annual monitoring report submitted to IFC. High level EHS risk assessments have been completed for each country (so as to prioritize subsequent actions to avoid, manage or mitigate risk) but these have not yet been undertaken in detail for each facility. Before finalizing these detailed risk assessments, the company will review the schedule governing their completion, taking into account the high level risk review to better determine priorities and decide whether all facilities need to be assessed in detail. For example, the large number of warehouse facilities in Ghana (recently acquired as part of the Armajaro deal), effectively doubled the number of ECOM facilities worldwide. However, these facilities are just small simple warehouses scattered throughout the cocoa growing region, used to store cocoa for short periods of time before it is transported to the port for export. Clearly the risk profile of these operations is greatly different to that of a wet coffee mill and the company will take such into consideration so as to most efficiently use its EHS personnel and resources.

Management Programs: EHS Management programs, as required to address identified significant environmental aspects and occupational hazards are developed both at the corporate level and the operational, or plant, level and reflect specifics found within the commodity business lines. Issues such as improving effluent treatment and avoiding degrading surface waters throughout ECOM operations worldwide, which require the allocation of financial and technical commitment of corporate senior management are now being supported via provision of the necessary capital and operational expenditure in specific business lines. Specific OHS hazards are identified and addressed by those facing them on a daily basis, e.g. production managers within these facilities. See below for example initiatives taken in Ecuador to eliminate several workplace hazards.

During IFCs long association with ECOM, the interface between corporate and country operations has been an ever evolving one. Country sourcing operations that were once solely focused on their primary suppliers have been broadened, now reflecting how such procurement fits within the overall company policy commitment towards sustainable sourcing (as spelt out in its Supplier Code of Conduct). This has expanded upon, and added to, elements of customer certification requirements. The surveys and self-assessments and audits, and the newly designated EHS personnel within operations (discussed below) have all contributed to this improved awareness and comprehension. It is a work in progress, but operations are seeing the benefit and continuum, between IFCs requirements, host nation regulations and those of the certification schemes demanded by ECOMs customers. IFC will continue to monitor progress, and ensure that this integration fully addresses the significant issues within the companys operations, and that programs (be they driven by corporate, plant level or business line) are designed, developed and implemented, and supported by necessary resources. Sharing initiatives between and among operations is one area that the company can improve upon. Setting up global, regional, or sub-regional working groups of EHS personnel is the next step in the evolution of the companys EHS management system, and one that will promote the exchange of ideas among similar operations in similar geographies in the most efficient manner.

The company has long had a comprehensive Human Resources management system, complete with requisite programs, to comply with the requirements of the host nations in which it operates. These requirements are aligned with the intent of the ECOM corporate policy. See below for more details.

Organizational Capacity and Competency: The company has recently enhanced the organizational structure that allows it to better identify, and subsequently manage, risks and impacts associated with EHS matters, including security. At the corporate level, the EHS Lead is responsible for the overall program, ensuring the principles and objectives contained within the policy are translated into directives, subsequently implemented by those in the country operations. Those responsible for EHS at the country level then report back to corporate on their compliance with such requirements. Documents and records attesting to compliance are maintained in a central database by the Lead. A cadre of personnel (27 in all) act in the role of country EHS coordinator. Recently appointed, these individuals represent a variety of backgrounds; some are directly involved in SMS, whereas others have a processing background. All have received training in both the general aspects of EHS management and specific practices of EHS risk assessment and management pertinent and related to ECOM operations. This orientation and capacity building has been provided by a suitably qualified third party. The curriculum reviewed by IFC was seen to be based on the Deming cycle (Plan-Do-Check-Act). It includes a description of the organizational structure, roles and responsibilities of key members of the entire EHS structure, management of programs, and the need for, and required content of, reporting and performance reviews. The curriculum is judged to be of a good quality and commensurate to the kinds of risks and impacts the day-to-day operations face. As part of its 2016 EHS program enhancements, the company will work to further develop the in-depth understanding of EHS requirements (be they the PS or specific ESAP items from prior investments that remain outstanding) The company recognizes that the creation of the coordinator role is still only a recent event; as such, they will continually review the efficacy of its training (as part of the assurance process, for example) so to ensure competent staff can be relied upon in all locations and report on this in the annual monitoring report as submitted to IFC.

Training: Beyond the training for the EHS country coordinators, ECOM provides training to those individuals within midstream operations whose jobs involve specific hazards. Examples include those working at heights, driving forklift trucks, stacking commodities, etc. The need for such training is identified through a combination of regulatory requirements and the results of facility self-assessments. For example, the SART program in Ecuador requires the assessment of workplace activities and the development of specific programs to avoid, or minimize the risks to workers undertaking these jobs. Areas of focus include management of dangerous substances, safety in elevated equipment, working in heat (i.e. hot climates), waste management, emergency preparedness and induction of visitors. Competency is tested at individual plants before such individuals are allowed to undertake such work. Other skilled jobs, such as wastewater treatment plant operator, are only conducted by those with relevant skills, experience and/or background. These latter specialized roles are also supported by a third party consulting company, retained to support global operations, who supplement locally-based staff and develop corrective programs to upgrade improvement when performance is seen to be lacking (i.e. through monitoring effluent quality). IFC interviewed the principle of this consulting company and deemed the entity to be sufficiently experienced. See discussion under PS 3 for more details.

Emergency Preparedness and Response is addressed through both host nation regulations and/or company-required facility surveys and risk assessments. Suitable arrangements, commensurate to the risks at the facilities (such as those related to fires, spills, earthquakes, etc.) were seen in Guatemala, Nicaragua, Ecuador and India. Training and mock-drills are undertaken to ensure readiness is maintained. No non-routine events have been reported in recent years.

Monitoring and Reporting: An internal audit team has been created at the corporate level and that team has reviewed some operations, starting in Central America, India and West Africa, conducting assurance tests since 2014 against ECOMs own EH&S criteria (which references IFCs requirements, host nation regulation, etc.). This is part of the on-going work to enable the company to assess its EHS performance against their EHS requirements; based upon results, and when needed, the company then mobilizes financial and technical resources on needed mitigation measures. Due to recent personnel changes, the company is currently re-assessing how to manage the audit function (i.e. whether to keep it in house or contract it out). Regardless of how it is implemented, this is a vital function, one that drives quality and accountability against the commitment outlined in the Company EHS policies, and helps cement the relationships between corporate and operations.

Example results from assurance tests, undertaken in Nicaragua and Peru, determined that a stronger EHS management structure was needed and that training and education on EHS policies and best practices was required. As noted above, these issues have been addressed by the corporate and country-level EHS coordinator appointments and an initial round of training. Observations (of operations assessed in 2015 in Ghana and India) concluded that at some of those locations EHS management and staffs awareness is beginning to develop, but that it still needs to mature. These audits found many areas that can be improved immediately with relatively minor effort, for example, improvements in accident investigation, review of fire safety, and basic chemical management. IFCs visit to the dry coffee mill operation in India concluded the same regarding EHS awareness. Thus, the company has targeted these items for action in 2016 (as noted above); this is a positive indication that the overall management system, and particularly the monitoring and review elements, is driving continuous improvements. Continuation, and maturation, of these above management elements, developed and implemented in response to action plans associated with prior IFC investments, will be required as part of this investment and is addressed in investment agreement documents.

In addition and as agreed upon by the company, a more robust approach to review by senior management of the management system development and implementation will be established. Such a review will be central to better decision making and setting new EHS priorities for the upcoming years. This will be addressed by the company as part of the ESAP.

Supply Chain: The company has a variety of means and mechanisms to identify and address risks and impacts within the supply chains to be supported by this investment. Country managers conduct supply chain risk assessments for the commodities that they source from primary suppliers. These high-level sector / commodity reviews are supplemented by the interactions that company agronomists/extension agents undertake as they work with suppliers/farmers. Information obtained from these numerous interactions (including supplier database and GIS mapping of individual fields and plantations) is captured in the SMS Integrity platform, ECOMs farmer sustainability program. Criteria from the many certifications (e.g. Fairtrade, Rainforest Alliance, Starbucks, etc.), that include, often overlap, and sometimes surpass IFCs supply chain requirements, are another way in which the company assesses suppliers, and gains assurance that upstream suppliers are adequately managing the types of EHS risks that concern IFC, customers and end-users. These certifications are audited by credible, third party organizations.

ECOMs CEO refers to the company not as a trader, but as a supply chain manager, using that term to describe ECOMs supply chain risk management activities in cotton, coffee and cocoa procurement in the countries in which they operate. To make good on this concept, ECOM plays a wide variety of roles in the business of small holder farming. Training and services are provided directly to farmers (both agronomy and related to financial management). Better knowledge and better quality of planting materials can, and do, lead to increases in yields (and hence can remove pressure on the need for farmers to expand their footprints as the only means to increasing the amounts of commodities they can grow). Helping small farmers better understand the business of farming, and the advantages of embracing traceable, and/or certified commodities provides access to higher paying, premium markets. Throughout the supply chain, from seeds and other inputs, to in-field technical assistance, to fair market pricing, to initial raw material processing to preparing products for export, the company works to ensure all aspects of the supply chain, and the inherent risks therein, are addressed. See the discussion on PS 2 (for specifics on labor risks in the supply chain) and PS 6 for those related to impacts upon biodiversity.

Human Resources (HR) Policies and Procedures, Working Conditions and Terms of Employment: The company has a comprehensive set of policies and procedures applicable to all direct employees that reflects host nation employment law and regulation. These practices cover the following provisions: (i) recruitment and hiring; (ii) compensation (including wages and benefits); (iii) hours of work; (iv) overtime arrangements; (v) leave; (vi) benefits, including health insurance, pension schemes; (v) conditions of work; (vi) termination procedures and rights; (vii) communication procedures; (viii) training; and (ix) other requirements according to national law.



The company has a Code of Conduct, abides by all legal prohibitions against under-age employment and forced labor within its operations. The minimum age of employment in ECOM is 18 years old. ECOM observes ILO Conventions 138 on Minimum Age and 182 on Worst Forms of Child Labor.



During the appraisal IFC verified the company’s commitment to implement good labor standards, consistent with its corporate HR policy, in accordance with national norms and regulations and the requirements of this Performance Standard.



Workers Engaged by Third Parties: ECOM does outsource some services, such as cleaning activities, employee cafeteria and security guard services to third parties. In addition, those involved in unloading trucks (as at Agua Santa in Guatemala, for example) are temporary or day workers. These workers are often part of teams, with the arrangements (hours, pay, etc.) being made with a team leader. In order to ensure that all of these workers, in all global operations, are always treated fairly and in accordance with the objectives of this Performance Standard, the company will continue extending its own grievance mechanism to all of these types of workers and responding to their complaints, if any. The company will report on the extension of this practice (as currently managed through the supply chain assessments and the broader SEMS) in the annual monitoring report as submitted to IFC.



Occupational Health and Safety: IFC’s E&S due diligence reviewed operational level OHS activities in Nicaragua, Ecuador, Guatemala and India. Structural improvements were in evidence in these plants (people, procedures and practices) compared with previously observed practices. Risk assessments had been carried out, and responsible and competent personnel are in place to avoid, manage or mitigate those hazards that had been identified. Records and documents are being properly maintained and controlled. Corporate reporting has improved; all OHS accidents are investigated by the responsible OHS team members at the operational/plant level and subsequently reported to the corporate office. Taking a specific example, the plant near Guayaquil offers some good illustrations of improved practices. Activities at this plant include receiving, drying, bagging and storing. Whereas the process was for a long tim
e characterized by manual labor, with a lot of lifting and moving of 50 kg bags, several recent improvements have been realized. Applying the risk hierarchy, with an emphasis on hazard avoidance, much of the movement of the cocoa is now by mechanized conveyance, including use of hoppers, belts, forklifts, etc. This improvement in OHS is systemic, the operation having completed its risk assessment (as per corporate requirements) and also that required by regulations (the SART program with its focus on injury prevention built upon 19 OHS program areas). The program is well developed; each program area is premised by a specific policy; the risks are further assessed by the on-site doctor (as required by regulation) in cooperation with the production manager. As well as avoidance of muscular strains, there has been a reduction in fatigue, coupled with an increased in worker productivity. Use of fall prevention measures (workers clip on when working at heights on the hopper); replacement of the original dryer (which measured >85db) with a next-generation model which is much quieter (with the louder models, still in use, now relocated to areas devoid of workers). Change has been incremental, based on improvement and observations; a demonstration of a continual improvement approach to risk elimination and process efficiency. Other examples include provision of UV protection for workers on the patio (UV-rated long sleeved uniforms). As for the India operations visited by IFC, the factory and the HQ were seen to have good management practices in place for labor/safety including fire safety and environmental management. The general housekeeping situation both at the factory and the HQ was found to be good.



Supply Chain: Interfacing with farmers, through SMS, ensuring company policies and customer requirements (i.e. those of IFC and buyers’ certification programs and third party certification schemes that include criteria related to the supply chain) is the primary means of addressing labor risks. Drilling down to the primary producer level directly exposes ECOM staff to supply chain practices, and allows first-hand information to be gathered and determinations made as to whether risks are inherent in a particular commodity sourced from a particular area. In short, agronomists are sighted on whether children are engaged in the worst forms of child labor or that forced labor is in evidence. If such is observed, the company works with suppliers to address the issue; if it cannot be addressed the company will avoid procuring from such suppliers. See PS 6 below for a more detailed overview of the supply chain and ECOM’s approach to assessing, avoiding or mitigating supply chain risk.

The most significant direct EHS risk for the company as contemplated by this Performance Standard is that regarding treatment and disposal of effluent from wet coffee processing operations to surface waters. This has recently become an area of renewed focus for the company. Whereas effluent quality from mills was traditionally in line with local competitors, it did not meet WBG EHS Guidelines requirements. After trying different approaches to tackle the issue, e.g., an off-the-shelf solution was first implemented, it became evident that treatment solutions need to be tailored specifically for each mill (especially the large scale industrial mills found in Central America) and as such required subject matter expertise (based on both engineering, management and operational changes) to improve performance to expected levels. Such change has been seen during the past few years, though more actions remain to be completed in order to demonstrate compliance with applicable IFC requirements at these large scale industrial mills. The handful of newly acquired small scale artisanal mills as owned and operated, or leased, in Tanzania and other countries in East Africa present a different level of risk. The integration, and management of effluents from these newly acquired operations, will also be required as part of this investment.



Specifically, from 2011 ECOM began to prioritize the issue of effluent management at industrial mills. An important step began with contracting a wastewater engineering consulting firm. Following guidance from this entity, throughout 2012/2013 capital investments were made in Costa Rica, Guatemala, Mexico, Uganda and Vietnam (operations in these latter two countries are of a good quality and are therefore not the focus of the following review). These improvements led to better performance but there was still a lack of universal compliance with applicable requirements. Recently, ECOM has become more sophisticated in its approach to quantifying the issue; for example, they have undertaken vulnerability studies of sensitive receptors in surface waters receiving the company’s effluent, in keeping with the intent of the WBG EHS Guidelines. This new holistic approach, which takes into consideration the water quality condition of the receiving waters both upstream and downstream of any company outfall, is underpinned by a policy of not degrading the waters beyond their current condition.



A comprehensive review of all wastewater management activities at industrial mills provided to IFC (as well as other development financial institutions that are co-lenders to ECOM) in mid-2015 provides shows that the issue of effluent management continues to be taken seriously by the company. The overall approach is now not only one of better treatment, but of using less water. Reducing the consumption of water, combined with targeted upgrades when existing infrastructure (which is often dated) is struggling to achieve required efficiencies of
pollutant removal, makes the most sense from an overall sustainability perspective.



As evidence of the pollution prevention approach, in 2013, ECOM circulated a water and wastewater best practices guide which gave guidance on expected consumption and wastewater treatment at these large-scale mills. Initially the water conservation target was 3.0 liters per kg of cherry (coffee) processed along with a stretch goal of 1.5 liters per kg of cherry processed. Since this guide was circulated operations in several countries exceeded the stretch goal. For example, last year the La Giorgia mill in Costa Rica reduced water consumption to 0.26 liters per kg of cherry processed. Similar initiatives are underway in Guatemala.



Furthering the more holistic approach to matters of water use and effluent treatment the company reviewed operations from a perspective of management, engineering and technical abilities and also looked at “softer’ skills and considerations. For example, they determined that dealing with cultural challenges is equally important when tackling the issue of water management. Whether it be autonomy (country operations are traditionally self-managing and inward looking), tradition (there had been concerns over impacts to coffee quality if switches from wet to dry transport within a plant were made), a lack of regulation, or at least its enforcement regarding effluents (thereby undermining the importance of the issue in the eyes of the country teams, combined with plants being located in already degraded areas) or the technical challenges themselves (very high organic loads, low pH, generated over short periods of time during harvest are difficult to manage period especially combined with low tech, passive, end-of-pipe treatment approaches) the issue required a concerted and inclusive approach from top to bottom within ECOM; without such, prior progress was only going to be slow and difficult to achieve all the while these fundamental issues remained unaddressed as a whole.



Dry transport of pulp and beans, better filtration to removal high BOD solids, water recirculation, increased capacity of sludge drainage and drying, better homogenization and stabilization, use of dissolved air flotation, better passive aeration in tertiary treatment stages, sealing pulp drainage areas to avoid non-point source discharges, updating of management procedures, training of, and monitoring, employees and the performance of equipment, design and testing of pilot programs (e.g., helicoidal filtration of honey water to reduce BOD), construction of new retention lagoons designed to capture all effluent for the season and eliminate discharges to surface waters altogether are some of the initiatives that have been put in place or are being considered in ECOM’s large-scale processing plants in different parts of the world.



For example wastewater management is now seen as a business-critical issue at the largest wet mills in Central America, Mexi
co, Vietnam and Uganda. There is a ‘critical mass’ of wastewater management expertise available to the company, with experience of a wide range of treatment technologies; the focus is now on continually seeking improvements, especially on source control. Threats remain: new large-scale mills must ensure that the above approach is used to inform new mill design, construction and commissioning; similarly, management at acquired mills must understand their potential wastewater exposures (and be prepared to manage them); current non-operating Central America and Mexico mills will be substantively upgraded when/if production resumes.



This latter point is relevant to the small scale artisanal wet mills (such that process up to 1 ton/hr. of coffee) and that are found in parts of East Africa. The company will review and assess these operations and how they manage their effluents. Upgrades, when determined necessary, will be completed. Again, taking a long term sustainable view is key to the success of managing these newly acquired small scale operations. For example, previous IFC investments in small, cooperative-based coffee growing and processing in Ethiopia (not related to ECOM) have been successful in managing effluents from small scale wet mills, using a combination of simple technology (reduction of water consumption by using drum-based processing, sedimentation and separation of solids from liquids within effluents and use of vegetative filters to prevent remaining effluents from impacting water courses) that is inexpensive and easily maintained over the long term.



Whist the company is continuing to address effluent management, for purposes of this investment IFC will require compliance with those requirements within the WBG Environmental, Health, and Safety Guidelines for Food and Beverage Processing as they relate to discharges to surface waters from industrial mills. Results from the 2016 harvest will be used to assess whether or not the company has met this condition. Review assessment and need for upgrades to artisanal mills will be required, but over a longer time period given their recent acquisition. Both these issues are addressed in the ESAP.



Energy use and Green House Gases: Despite the company being, on the whole, not a large energy user (e.g. many processing operations are of a dry nature, with minimal sorting and grading activities that consume relatively small amounts of electrical power) ECOM strives to lower energy consumption to minimize their carbon footprint while lowering operating expenses. For example, in many instances coffee husks are used as fuel to power dryers instead of traditional fossil fuel-based energy sources. Recently at coffee mills, new higher efficiency machinery (involved in transporting the coffee throughout the mill, for example) has also helped to reduce energy requirements and lower equivalent emissions. Data on consumption is recorded and provided to the corporate offices. The company will co
ntinue report summary data to IFC and demonstrate on-going efforts to reduce overall rates of consumption.



Hazardous materials: Fumigation is carried out at processing and warehouse operations. Application of fumigation chemicals is only carried out by trained in-house staff or licensed third parties. When required, backup generator sets, and the fuel they need to operate, are properly stored and equipment is properly bunded to prevent spills from escaping to the environment.



Waste Management: Processing operations do not generate large amounts of solid or hazardous wastes. Solid waste that are generated from coffee or cocoa processing activities include both organic and inorganic wastes. Organic material is typically reused as natural soil amendments; inorganic materials such as plastics; sacks etc. are either sold to vendors for reuse/recycling or disposed of in authorized landfills. The assessment of these risks, and their subsequent management, are dealt with through facility assessments and are subsequently audited to ensure suitable performance and/or compliance with company and applicable host nation regulation.

In general, ECOM’s processing plants are located in industrial areas, themselves located in small towns or cities proximal to the agricultural areas from where the commodities are sourced. As such, there is little interaction between such operations and the general public. The interface is limited to truck traffic and members of the security team that are contracted to protect company assets. Most of the vehicular traffic is neither owned nor operated by the company; farmers, or middle men, deliver the raw materials to the processing plants and then return to their homes in their vehicles. The company does not have any direct control or influence over how these trucks are operated.



Regarding security arrangements, the company has a security policy in place and local operations develop and implement policies and management practices based on this intent and in conjunction with local laws. Some operations employ armed guards; others are guarded by unarmed personnel. The company will review its use of third party services, ensuring that their actions are always guided by the principles of proportionality and good international practice regarding hiring, rules of conduct, training, equipping, and monitoring of such workers, and by applicable law. This is addressed in the ESAP.



Emergency Preparedness and Response: The company assesses the risks associated with non-routine events through the facility survey and self-assessment reports, as well as by complying with host nation law and regulation. As noted above, facilities are located in industrial zones, generally away from residential areas. Given the nature of the processing within the plants, there is typically a low risk of an emergency situation impacting communities. Regardless, the company does review its operations, equipment, and the readiness of personnel to deal with emergencies, and conducts drills and other events to ensure this is maintained as described in PS1 above.

Supply Chain management: ECOM has always been a physical merchant, with a limited portfolio of commodities. Concentrating their efforts within these few supply chains, especially in coffee and cocoa, has allowed the company to successfully develop programs that have reached a large number of farmers (approximately 300,000 farmers in 17 countries), programs that have inherent E&S risk assessment and mitigation elements built-in. In doing so, they have steadily increased the volumes of those commodities grown and managed using third party, recognized certification programs.



ECOM is one of the global leaders in coffee supply (#1 globally), both in conventional (non-certified but traceable) and certified volumes. Their cocoa supply chain (ranked #4 cocoa supplier and #4 processor globally) is developing similarly to coffee in regards to the increasing percentages purchased as certified/traceable. Regarding cotton (#3 globally), as noted above, ECOM has changed its role within this supply chain of late, moving away from ginning, with its associated ability to work more closely with primary producers, and back to a more traditional trading basis. As part of this, activities in Central Asia have decreased quite dramatically; ECOM is now sourcing the vast majority of its cotton from the US and Brazil.



It is those increases in market-driven certified/traceable percentages of the materials that they source (be they the Utz, Rainforest Alliance or Fairtrade programs or those of brands themselves, such as Starbuck’s Café Practices) that go a long way to acting as proxies regarding EHS risk mitigation, especially with respect to issues contemplated by this PS (impacts on biodiversity). Specifically, farms and plantations are regularly visited and as such confirmation that expansion into areas of high value biodiversity are not occurring. Further, primary production practices (and the need to avoid impacts upon biodiversity) are codified into those certification programs, which themselves are audited by credible third parties.



Given the relative volumes of certified commodities procured by ECOM, its performance in this upstream portion of the supply chain, can be thought of as at or above average when compared to overall rates of certified volumes within coffee and cocoa in general. The same can be said of overall traceability; whereas this may not involve assessment/management to the same level of EHS requirements as the above certifications, it does provide information key to understanding whether or not a commodity sourced from a particular area has the potential to be associated with EHS risks of concern to IFC (and, for that matter, customers of the commodity). ECOM’s bespoke origin-focused SMS Integrity platform is being populated with farmer’s information; 52,000 having been entered out of an estimated total of at least 300,000 farmers in the supply chain as of January 2015. (Note that whereas information about many farmers remains to be up
loaded to SMS, their practices as regards matters of EHS are still known; for example, thousands of farmers in Ghana have yet to be added to SMS, but information exists about them in Armajaro’s ERP which as of now does not “speak” to ECOM’s SMS platform.). Having long-time sensitized SMS field agents looking out for impacts upon biodiversity (as well as those related to labor), and educating farmers regarding this issue, is how the company applies best practice in this matter, putting into practice the intent of ECOM’s Supply Chain Policy.



Given ECOM’s strength in these 3 commodity supply chains i.e., cocoa, coffee and cotton, they are bound to comply with such demands (if they want to continue to work with world-class brands), Further, demonstration of such a commitment is manifested by a combination of country supply chain assessments, one for every commodity in every country having been completed, and, as noted above, the ever increasing numbers of SMS trained farmers and certified/traceable commodities. Whereas the country supply chain assessments can stand to evolve, as can the overall management of the vast amounts of data (so as to allow for more real time reporting and analysis of whether problems have been discovered) the knowledge that this provides to the company overall, is bolstered by the close involvement of a director for each commodity, who often visits origin areas and is fully versed in all aspects of the commodity; this capacity allows ECOM’s overall approach regarding the upstream portion of the supply chain to be judged in alignment with the principles and practices described in the IFC Good Practices Handbook on the Assessment and Management of EHS Risk in Agro-Commodity Supply Chains, which is the risk assessment and management methodology and approach that all traders in IFC’s agribusiness portfolio are expected to achieve.



Despite the history of the decentralized nature of ECOM’s operations, combined with a self-declared ‘verbal tradition’ underpinning the company’s culture, the full integration of SMS Integrity has begun. Completion of this, along with the criteria and requirements of the certification programs, will allow for full operationalization of field-based information as it pertains to EHS risks in the supply chain. Key elements already in place, which include a policy governing supply chain, supplier database and on-going mapping of the supply chain, using competent SMS workers, well versed in the key EHS issues to be looking out for when working with primary suppliers, and setting increasing targets for certified and/or traceable commodities where commercially appropriate, will be enhanced by this unified and integrated approach. When instances of exposure to EHS risk are seen, the company is expected to act in accordance with its stated overarching policy and in alignment with the objectives of the PS, and to use its structures as defined in the ESMS to effect appropriate actions. Given the greater
development that has occurred in the farmer-facing activities (e.g., SMS Integrity) this is the most appropriate vehicle to manage information and to be used to determine what kind of intervention or change in direction (such as avoidance of purchasing from sources now known to have inherent EHS risks) would be required. Managing that, and integrating it with the overall ECOM ESMS, to ensure all elements of the company’s management are sighted on the issue is paramount; as such it is included as an ESAP item.



Lastly, with respect to the specifics of best practice, as identified in the aforementioned IFC approach to engagement with traders that are leaders in industry, including partnering with stakeholders, such as those interested in driving commodity standards, and who have experience in, and commitment to, certifications and sustainability, ECOM can be seen to be active in this space. ECOM works with all such partners; for example they have been on the board of the Better Cotton Initiative (BCI) and they also work with Hivos, Solidaridad, COSA, SNV, 4C, Rainforest Alliance, UTZ Certified, Nespresso, Starbucks, Mars, Hershey, Nestle, IDH, Gates Foundation, Rabobank Foundation, other DFIs, including FMO, DEG, Proparco & EBRD, leading commercial banks (Rabobank, ABN AMRO, ING Bank) and developmental agencies such as SECO, GIZ and UNICEF.

ECOM has in place a community grievance mechanism to allow individuals or communities located near its operations to comment on the company’s EHS performance. This mechanism, in conjunction with ECOM’s origin integrated structure, facilitates an open-dialog with local stakeholders. Through the procurement lens, SMS employees engage directly with farmers so that they can produce more and better goods and allow access to higher value international markets. In general, historically grievances have been focused not on matters of EHS but on those related to business interactions; for example, prior grievances have included those related to commercial pricing differences. One raised in Vietnam concerned the use of dryers at a coffee facility and their impact upon a local community, which was subsequently resolved through engagement with the party that raised the issue. Practice is that the resolution on grievances is reached either locally or, if this cannot be achieved, when required it is escalated to the Group Grievance Officer to resolve conflict.

ECOM provides detailed information on its sustainability programs through its website, found at
http://www.ECOMtrading.com/en/introduction.html

Travis Walsh
Company Name: ECOM Trading
Address: 13760 Noel Road, Suite 500 Dallas, TX 75240
Email: mailto:twalsh@ecomtrading.com
Phone: 214.252.5373

Kate Cavallin –
Address: Ecuador, Km 4.5 Via DuranYaguachi,
Email: mailto:kcavallin@ecomtrading.com,
Phone: +593 4 280 6831

Rajeev Goel –
Address: Ghana, 134 Okomfo Anokye StreetKumasi MainKS14687,
Email: mailto:rajeev.goel@ecomtrading.com ,Phone: +233 32 20 37371

Marco Antonio Aluisio –
Address: Brazil, Av. Dr. Chucri Zaidan,
80 - 4to. andarSão Paulo, SP - Brazil - CEP 04583-110,
Email: mailto:maluisio@ecomtrading.com,
Phone: +55 11 5508 8400

Broad Community Support is not applicable for this project

Ecom Corp Loan (36815) Supervision Disclosure Snapshot – Version 4
Description	Anticipated Completion Date	Status	Comments	Completion Date
Senior Management Review of SEMS. ECOM will create a standing agenda to govern the Senior Management Review, and have the minutes of each Senior Management Review meeting signed by the ECOM CEO.	31-Mar-2016	Completed	Completed	6/6/2016
PS supply chain requirements to be integrated into the SMS integrity platform. Company will complete the integration of the current PS requirements regarding SC into the SMS Integrity platform.	30-Jan-2020	Completed	Completed	6/18/2019
Effluent Quality. The company will comply with the requirements regarding discharge of industrial effluents to surface waters as described in Environmental, Health, and Safety Guidelines for Food and Beverage Processin	30-Apr-2019	Completed	Completed	6/2/2020
Artisanal wet mill effluent Quality. The company will assess its owned/operated and leased artisanal wet mills (e.g. those located in East Africa, including newly aquired artisanal wet mills) and determine the need for upgrades (and where necessary complete such upgrades) so as to ensure they comply with the requirements regarding discharge of effluents to surface waters as described in Environmental, Health, and Safety Guidelines for Food and Beverage Processing.	30-Apr-2018	Completed	Completed	6/6/2016
Security review. The company will review its security arrangements, in all countries of operation, ensuring that their actions are always guided by the principles of proportionality and good international practice regarding hiring, rules of conduct, training, equipping, and monitoring of such workers, and by applicable law.	30-Jun-2019	Completed	Completed	7/30/2019