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
PS 8 – Cultural Heritage

If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
The Puná Farm, where the proposed 500 ha expansion will occur, was purchased from a private owner in 2002. There are no inhabitants on or near the Puná Farm property, nor is the project area used by local inhabitants. Thus, the Project will not result in resettlement or economic displacement and IFC Performance Standard 5 is not applicable.

Puná Island was an important center of the Pre-Incan Huancavilca culture (500 – 1530 AD). Some proportion of Puná ’s populations are descendants from the Puná but 2010 census data indicates that less than 2% consider themselves “indigenous”. The interspersed populations across the Island have lost the linguistic and cultural elements that would characterize them as a distinct indigenous people. El Zapote, the closest community to the project area has a “communal” title over 2140 hectares but its inhabitants are not recognized as an indigenous group nor are they accorded any indigenous land or use rights or any particular legal standing. Moreover, cattle grazing, the primary land-use practiced on the communally owned property, is not an ancestral practice. Therefore PS-7 – Indigenous People – was not invoked.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of predictable environmental and social risks and impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, EHS General Guidelines and EHS Guidelines for Aquaculture, and application of various Best Aquaculture Practice and guidelines (e.g. Aquaculture Certification Council’s Best Aquiculture Practices, Aquaculture Stewardship Council – Shrimp Standards, GlobalGAP – All Farm Standard – Aquaculture etc.)

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 Assessment and Management System – OMARSA’s management objective is to be a global leader in sustainable shrimp farming. It has largely established the policies, procedures, employee training, internal control systems, and organizational capacity and competence to meet this objective. Quality, environmental and food safety controls and monitoring systems are applied across all segments of the Company’s operations and audited by internal and external teams. Based on IFC’s review of regulatory requirements, results of certification audits across its production and processing operations, and requirements of seven distinct certification audits described below, IFC concluded that there is a functioning ESMS with competent staff as required of an ESMS in PS1. However, managing production practices to meet multiple certification systems piecemeal is expensive and does not necessarily guarantee inclusion of all IFC PS1 requirements. Accordingly, IFC and OMARSA believe that the assorted systems and their constituent audit protocols can and should be consolidated and redesigned to meet global objectives of desired certifications. This streamlining will improve routine identification and elimination of identified EHS risks and impacts, which is a specific requirement of PS1, and satisfy selected certifications needs. The Company has agreed to conduct an expert review its many standards and certifications to identify redundancies, overlaps and omission and consolidate them into a single system with abridged Standard Operating Procedures (SOPs) and common document control systems (ESAP Item 1).

Environmental and Social Policies –The Company has established an overarching policy that defines its environmental and social objectives and provides a framework for the assessment and management of risks and impacts. Policies are clearly stated and available on its website (http://www.omarsa.com) and posted throughout its operations. Environmental and social policies are included in mandatory training across hatchery, farming and processing operations and included in supplier requirements. Environmental policies are largely prescribed through adherence to internationally recognized standards through credible certification systems, which are compliant with IFC’s Performance Standards (described below). Social and labor policies are established more explicitly through well-defined work code and appropriately communicated internal regulations designed to meet Ecuador’s legal requirements and international labor conventions.

Management Programs - Information obtained during appraisal indicates that the Company policy commitments to sustainability are matched through measurable actions. OMARSA was the first company in the world to achieve certification of its three farms to the rigorous Aquaculture Stewardship Council Shrimp standard in September 2014 (see attachment for audit report). All of its farms are also certified to the Global
Aquaculture Alliance’s Best Aquaculture Practices requirements (bap.gaalliance.org/bap-standards/) and GlobalGAP’ s Aquaculture Standard Shrimp Farm requirements (http://www.globalgap.org/uk_en/for-producers/aquaculture/). In addition, OMARSA’s Chongon Farm is certified to the European (Regulation 834/2007) and Naturland organic standards (ec.europa.eu/agriculture/organic/organic-farming/what-is-organic-farming/organic-certification/index_en.htm) by accredited certifying bodies. Processing operations meet the food safety requirements of the BRC Global Standards and BAP Seafood Processing Standard. The Company maintains a chain of custody system (COC) based on physical separation and batch processing with a unique lot numeration scheme which allows traceability of all shrimp processed back to the farm of origin, pond and date of harvest. The Company has established its COC to be able to label products and carry forward claims as to the use of the multiple voluntary standards it employs. For example, production areas for certified organic shrimp from Chongon Farm the company has implemented some measures to prevent cross contamination like separation in time and space, use of different materials, use of uniforms from different colors to identify when it’s produced without sulphite, presence of sulphite analysis in process water and release of process lines prior to the start of the production.

Identification of Risks and Impacts – In accordance with Ecuador’s general environment legislation and regulations, and new regulations required by the Normalization of Aquaculture Operations Law, in 2008 the Company conducted extensive Environmental and Social Impact Assessments (ESIAs) of each of its hatchery and farm operations. The ESIAs have been reviewed and approved by the competent authority. Permitting and operating Licensing requirements have been met and information from annual audits by government regulators indicate appropriate treatment of risks and routine correction of EHS gaps. In addition to regulatory requirements the Company subjects itself to annual surveillance audits of the aforementioned certification systems, which were reviewed during appraisal. These audits provide additional assurance that E&S risks as described in the IFC PS are being assessed and mitigated. To conform to ACS Shrimp certification each farm has undergone a separate Biodiversity and Environmental Impact Assessment (“B-EIA”) and a Participatory Social Assessment (“PSA”), which reviewed potential risks to communities and is the basis for a Community Relations Plan for each farm.

PS5 is not considered to be a significant risk or impact to the proposed investment. However, given historic challenges to land claims and ongoing illicit clearing of mangroves in other parts of South America, it is important to provide additional background. The planned Project would be developed on land privately held by OMARSA since 2002 and the new ponds will occupy approximatel
y 500 hectares of a total 5000 hectares owned by the company in Puná Island. The area has been privately held and titled for at least 40 years and satellite imagery from the early 1980’s indicate aquaculture farms and upland agriculture was established long ago. OMARSA has the required government licenses and permits to increase their shrimp-pond area in Puná Island from the current 900 hectares to 2000 hectares. The permits are issued by the Sub-Secretariat for Aquaculture under the Ministry of Agriculture, Livestock, Aquaculture and Fisheries, and the Ministry of Environment (MMA). The former assesses technical feasibility and the second social and environmental soundness. The previous owner owned and operated a shrimp farm in the same area where the Project will be implemented.

Because the land-tenure arrangements in Puná Island have been in place for several decades, local stakeholders accept and respect the current land tenure situation. This was established in a meeting with a delegation from the neighboring communities of Zapote and Puerto Zapote during appraisal. OMARSA’s land outside the shrimp farming areas is unfenced. Livestock from surrounding communities, primarily cattle and feral donkeys, graze them. The land is semi-arid and saline which limits the options for agricultural production.

OMARSA conducted a “Participatory Social Impact Assessment (“PSIA”) for all of its farms in preparation for the ASC certification which describe in detail the demographics and economic situation of communities that are directly and indirectly influenced by the project. In the case of Puná Island the closest community is El Zapote. Communication takes place on a regular basis between the community-appointed interlocutor and OMARSA’s Certification Coordination Unit. The parties hold community-level meetings once or twice per year as deemed necessary. The minutes of these meetings and list of participants are kept on file by OMARSA. The minutes list the commitments and agreements reached during the meetings. These procedures are in keeping with ASC’s Principle 3 which requires companies to “operate farms with consideration for surrounding communities.” According to community members the existing engagement mechanism and communications is effective. Generally speaking the communication revolves around community needs and ways in which OMARSA may be able to help. The impression from an unannounced visit to the community suggests that the relationship between community and OMARSA is devoid of major conflict. The planned project has no foreseeable negative impacts on communities.

Grievance Mechanism - Regular communication between the community and OMARSA as described above may be used to relay grievances and dissatisfaction. The community-appointed interlocutor and the head of the Certification Unit communicate freely as needed. Open community meetings are held as needed, usually once or twice per year. The community indicated their satisfaction wi
th the current arrangement. Grievances are usually over minor issues such as livestock entering the farm facilities and consuming shrimp rations.

Organizational Capacity and Competency - The Environmental Certifications Coordinator is responsible for a team of five that establish EHS management practices, working closely with the farm management staff to ensure implementation, and measure compliance with regulatory requirements and conformity to the international standards to which they prescribe (described below). The team covers all aspects of aquaculture production, processing and associated logistics. They are supported at the farm level through SOPs and close supervision by the Farm Managers. Interviews with staff and workers at all levels indicated appropriate levels of awareness and general treatment of EHS risks. The Quality Assurance Manager and his team ensure the application of food safety, product testing and supply chain traceability systems. The Human Resources Manager helps to align skills and labor practices in the farms and processing facility to meet these requirements. Interviews with each team indicated that they were like-minded, integrated and had the full support of senior management.

Emergency Preparedness and Response – As part of its occupational health and safety program the Company has developed a comprehensive general Emergency Preparedness and Response Plan which identifies and addresses through training events, drills and communications, potential threats to life and property. Catastrophic natural events including seismic, severe weather, floods and fire were well covered. Buildings at the processing plant and at the farm afforded proper egress and fire extinguishers were well distributed, of the proper kind, and all checked were pressurized. Training records, signs and observed practices indicated an appropriate level of preparedness for unexpected events. Each worker is required to have completed a module in Emergency Response which is also included in the “Reglamento Interno”. Two doctors rotate through the farms and mill on a regular basis and the location of first responders and medical facilities were identified. The Company maintains several speed boats and a helicopter for evacuation needs at the farms. Marine transport of workers and staff were on licensed boats equipped with radios, and personal floatation devices of proper size and number.

Monitoring and Review – The Company maintains multiple certifications and has an exhaustive internal and external audit system. Virtually all aspects of OMARSA’s operations are routinely reviewed. Review of water and energy records for hatchery, nursery, and grow-out farms provided substantial information about management of EHS risks and system performance. The recent ASC certification identified several areas for improvement in feed record keeping and monitoring of water quality. Keeping track and meeting the requirements of seven different certification
systems result in duplication of effort and distractions. There is room to consolidate the systems and reporting requirements into more manageable and less redundant M&E systems.

Stakeholder Engagement in Environmental Analysis – Regulatory and voluntary processes have resulted in various ESIAs and reports, which indicate an appropriate level of stakeholder engagement in most aspect of OMARSA’s operational risk definition and mitigation. The recent “Biodiversity and Environmental Impact Assessment” (B-EIA) conducted for ASC certification found the extent of stakeholder engagement to be appropriate. Population densities in areas around the farms are low and clustered in fishing communities. Interactions with El Zapote, the neighboring community take place regularly through a community-designated “interlocutor.” Most interaction occurs during the course of water and land transport of inputs, products and workers as described below under PS4. It is worth noting that all OMARSA employees are from the greater Guayaquil area and few, if any, are actually from neighboring communities.

Informed Consultation and Participation of Affected Communities – Interviews with one community (El Zapote) which could be the most immediately affected by the expansion of the farm under the proposed investment indicated that they were fully aware of the Company’s plans and had no concerns. Community Relations Plans seek to achieve an effective channel of communication. When necessary community-wide meetings are organized where members are encouraged can safely raise grievances.

External Communications and Grievance Mechanisms – The community closest to the project area is El Zapote. Communication takes place on a regular basis between the community-appointed interlocutor and OMARSA’s Certification Coordination Unit. The parties hold community-level meetings once or twice per year as deemed necessary. The minutes of these meetings and list of participants are kept on file by OMARSA and the community. Regular meetings between the community and OMARSA as described above are used to relay grievances and dissatisfaction. The community indicated their satisfaction with the current arrangement. Grievances are usually over minor issues such as livestock entering the farm facilities and consuming shrimp rations. The impression from an unannounced visit to the community suggests that the relationship between community and OMARSA is devoid of major conflict and seems to be constructive. Moreover, the company interacts regularly with government authorities, both local and line ministries, as required to ensure compliance and fluid communication.

Human Resources Policies and Procedures – The Human Resources Policies are clearly stated and made available to all employees during obligatory induction training and made available through guides, readily available handbooks and posted reminders. Review of training curricula and training records supported observations that there was a reasonable understanding of expectations and communication at the farms and processing plant. Employee handbooks (“Reglamento Interno de Seguridad Y Salud” en el Trabajo”) are readily available to all employees. Working Conditions and Terms of Employment – Working conditions on the OMARSA farms are difficult given the heat, humidity and work hours. Puná farm employs approximately 160 men who work 16 day on and six day off shifts. They are paid a competitive wage above the national standard, earn overtime, and have full benefits, health insurance and social security. The Company provides lodging and meals at no charge. The Company also maintains workers compensation for accidents which may occur during performance of work-related duties. The quality of lodging was variable and upgrading lodging has been identified by OMARSA as part of the proposed investment by IFC. Processing staff worked normal eight-hour shifts with access to overtime and productivity bonuses and live in communities around Duran where the plant is located. Terms of employment are made clear through required induction training, and provision in the Handbook. Grievance channels for workers on the shrimp farms include HR social workers located on each farm and access to team leaders. The Farm Managers are fully hands-on and accessible.

Workers’ Organizations – Ecuador’s labor law and code allows for worker’s organizations and protects labor leaders against discriminatory actions by employers. As established by the innumerable audits to which the company is routinely subjected, OMARSA is fully compliant with Ecuador’s labor laws. Moreover, it is established government practice to conduct unannounced audits of labor practices.

Non-Discrimination and Equal Opportunity – Ecuador has strong anti-discrimination laws and a vigorous affirmative action program that requires that at least 4% of the labor force be integrated by handicapped workers. As indicated above, OMARSA is in full compliance of the country’s labor laws. This was also substantiated during the ASC Certification Audit which reviews all aspects of labor provisions and compliance with the same ILO Conventions referred to in IFC’s PS-2.

Retrenchment – Shrimp farming is stable employment with very little change in effective numbers. In the processing plant labor demand can shift with specific orders and the amount of value-added products being produced. In case of retrenchment, the company has to comply with Ecuador’s labor laws, which require full indemnization and the payment of bonus or any outstanding wage. Given that the work load in the shrimp industry fluctuates, OMARSA has
put in place a system that allows it to shift workers among operations and therefore avoid costly and disruptive adjustments in the size of its work force.

Grievance Mechanism – The Company has a professionally staffed Department of Social Well-Being (DSWB). This department is responsible for receiving workers grievances. Each farm and the processing plant have a grievance committee that channel important grievance to the DSWB, which in turn notifies management of worker’s issues. There are also grievance boxes on each farm and at the plant for anonymous submissions. Review of grievance records indicated that the system is active and responsive to workers grievances.

Protecting the Work Force & Occupational Health and Safety - Appropriate use of Personal Protective Equipment (PPE) was observed at most stations on the farms and in the processing mill. There was good attention to appropriate signage and evidence of training throughout all operations. As a result of the ASC Certification Audit the Company has undertaken a review of its emergency response procedures and installed audible alarm systems and has completed a review of workstation hazards across most operations from which it has developed procedural remedies, equipment modifications and signage controls. The processing plant appeared to be largely well organized and industrial hygiene was on par with industry standards. A review of accident rates by various work station indicated normal types of accidents inherent to fish operations with data indicating a slow decline in the frequency and severity of accidents overall. Top management reviews accident reports and the HR Department works actively with the Certification and Farm Operations staff to identify remedial training needs to reduce accident levels. The Company is now converting to a new OHS tracking system, which will improve its capacity to identify and prevent accidents, and include near miss information across operations.

Some deficiencies were observed at the farms which are largely the result of poorly designed product flow in the feed storage and mixing areas, and boat landings where there were elevated levels of feet and ankle injuries which could be addressed to lower the injury rate. Other observations about the placement, type, or serviceability of fire control systems indicated some degree of variability. The Company will undertake an external OHS audit to identify those areas where accidents are abnormally high and compile an action plan where proceeds from IFC’s investment could be used to improve process flows, improve boat embarkation areas, and review areas where improved lighting could reduce minor injuries. (ESAP Item 2)

Supply Chain - Currently the company purchases up to 70% of its processing throughput from about 100 third-party shrimp farmers. A small number of these farms are responsible for 80% of their out-grower demand. OMARSA maintains a differentiated relationship with these farmers, as they pr
ovide important value added and processing services. This special relationship provides an opportunity to ensure that these other operators improve their practices and move towards ASC certification if some incentives and technical assistance from OMARSA’s team is available. Providing innovations in feeding practices and genetically improved and disease resistant fry would help improve their productivity and enhance competitiveness. OMARSA will conduct an internal gap assessment bewteen Omarsa's own farm management practices and certification requirements and those of its primary suppliers. Based on this it will develop an Action Plan to reduce those gaps for primary suppliers through training or material support to the extent practical in order to better line their common business interests and comply with market standards. (ESAP Item 3).

Resource Efficiency - Shrimp production and long-term profitability are determined by efficient resource use including avoidance or minimization of mortality in hatchery operations, careful control of efficient feeding during grow-out, and the logistics associated with transporting, and processing shrimp. The Company maintains elaborate systems to measure its efficiency in terms of water use, energy consumption, and its competitiveness in the conversion of feed to finished body weight of shrimp across all primary activities. OMARSA’s Farming practices are considered “extensive” with a single daily feeding, stocking densities below 15 shrimp per square meter, and less than 10% of daily water exchange. The Company’s use of water and energy, and its overall greenhouse gas emissions footprint, are in line with industry good practices and the IFC EHS Guidelines for Aquaculture.

Feed conversion efficiencies depend on various factors, including the quality and protein content of the feed, quality of fry stock and the management regime of a particular farm. Protein content of feed varies from 28% to 35% (see below for typical feed formulation), and good quality feeds have good quality ingredients. Achievement of high FCRs is much easier in smaller ponds with decentralized feeding systems, which operate several times a day. But the more intensive the system, the higher the probability of viral and bacterial problems which seriously affected the shrimp industry in Ecuador 20 years ago and is now affecting Asian producers. The key seems to be distributing the feed evenly and when shrimp are the hungriest which results in less wasted food and better weight gain. OMARSA is expanding its use of various new “auto calibrating” feeders which have demonstrated the ability to improve the FCRs.

Aquaculture food is variable but normally about two thirds cereals (maize, wheat) and oil seeds (soy and sunflower) and one third fishmeal and fish oil by weight. To obtain ASC certification the principal fishmeal and oil must originate from fisheries under sustainable management as recognized by international organizations. In Latin America FishSource is the organization which analyses the origins of feed sources and assesses fisheries management to determine if they have achieved or are on the path to achieve Marine Stewardship Council certification. According to the ASC audit three feed suppliers are used by OMARSA:Vitapro, Gisis and Alimentsa which had 28-35% crude protein and varying blends of fishmeal, fish oil and vegetable component. Fishscore, which verifies fish by-product origin, indicates that only the Anchovie species (Engraulis ringens) is associated with a plausible plan to meet the Marine Stewardship Certification fisheries standard and that the other primary source of fishmeal - Makarael (Scomber japonicas) – has no score. Nicovita contains Anchovies spp. from Peru ASC but Gisis and Alimentsa are either unclear or include Makarel. ASC has asked OM
ARSA to work with the feed suppliers to develop an Action Plan to ensure that feed is supplied through a registered Fishsource supplier. ASC certification results, and details on the sustainability of fishmeal and fish oil sources, will be included in the Annual Monitoring Report (AMR) to IFC.

Water Consumption – Puná Farm currently operates 890 ha distributed across about 70 separate ponds with 1.3-1.6 meter depths. Puná Farm uses brackish water pumped from the Jambeli Channel by large pumps at two separate stations. Water is pumped from the estuary and retained in the sedimentation area prior to release into the shrimp ponds through a central canal. Water is returned by gravity to the estuaries through large expanses of native mangroves. Water use is insignificant relative to the total amount of water available. Information provided by the Company indicates that key effluent parameters - nitrogen, phosphorus and suspended solids -- are lower at discharge from the farm into mangroves lining the Jambeli Canal than water at intake. No fresh water is used in the systems and all water flows gravitationally after initial pumping. Release valves at each pond control release to mangrove canals which is timed at high tide levels for dilution purposes. No more than 10% of the total water is exchanged on a daily bases which was verified by records and ASC findings.

Pollution Prevention- Reducing pollution is largely dependent on the efficient provision of feed, and careful attention to limiting overfeeding. Measuring effluent from shrimp ponds generally occurs at the discharge gate and should be done at least twice a month; ASC found that OMARSA was only making these measurements once a month, which needs to be corrected. Information provided by the Company for Puná Farm indicates that effluent leaving Puná Farm is lower in nitrogen, phosphorus and sediments than intake water.

Greenhouse Gases – the primary source of OMARSA’s GHG emissions stem from diesel use in the pumping of brackish water into outgrowing systems. The Puná Farm operates two pumping stations with a total of twelve large diesel generators. Information provided by the client in terms of production and diesel use indicate that it’s energy efficiency is approximately 2.8 MWH per ton of shrimp produced which equates to roughly 5,394 tCO2e/year which is below IFC’s reporting threshold.

Waste Management – Organic waste retained in the drained ponds after harvest is allowed to dry in place and is treated with Calcium carbonate to neutralize pH and accelerate decomposition before the ponds are refilled. Other solid waste is composed of feed packaging, metal barrels for hydraulic fluids and petroleum, and general refuse. Plastic feedbags are reused and paper packaging is composted at the farms. Non-compostable waste, including recyclable material is consolidated, separated and transported to Durán for management and disposal by the city’s solid waste system. Exact quantities of the
various solid components was not available at the time of the appraisal.

Pesticide Use and Management –- OMARSA makes minimal use of hazardous materials and uses no antibiotics. Integrated Pest Management is in its infancy in aquaculture and treatment for pests once recognized results in immediately harvesting the entire pond. The use of low stocking rates (less than 150,000 individuals per hectare) and disease resistant shrimp are key pillars of the Company’s strategy to prevent disease outbreaks including the White Spot virus disease which devastated the industry in LAC 20 years ago. These practices are complemented by breeding for vigor and resistance to disease and provision of probiotic supplements to enhance the capacity of shrimp populations to resist harmful viruses and bacteria. The toxin it uses to control undesirable fish and mollusks within its ponds, rotenone, is a low toxicity substance derived from barbasco (Lonchocarpus), a family of plants indigenous peoples have used to fish for centuries in South and Central America. Rotenone is chemically unstable and breaks down rapidly in the environment, yielding water-soluble non-toxic products. There is no long-term accumulation in water, soil, plants, or animals. Rotenone has low mobility in soil and does not impact groundwater supplies. Plants, birds, adult amphibians, and mammals are not affected by rotenone as it is readily metabolized to non-toxic substances in the bodies of vertebrates receiving a sub-lethal dose. The Company uses calcium carbonate to adjust pH and fertilizers, none of them toxic or hazardous when applied responsibly. Regular monitoring of outgoing water ensures that water quality parameters are well within allowed limits.

Hazardous Materials Management - In the absence of antibiotics and pesticides the most dangerous substances used by OMARSA are petroleum-derived products: diesel and lubricants used in pumps, generators and vehicles. Each farms stores and uses nearly 250,000 gallons of diesel annually for the large capacity pumps which pull brackish water up to the head of the sediment pond. OMARSA only utilizes licensed transport companies that are monitored by the Government of Ecuador’s Directorate of Hydrocarbons. This minimizes the chances of accidental and occasional spills. The diesel fuel is stored in steel tanks surrounded by concrete containment walls that meet Government of Ecuador requirements. Used oil and oil filters are temporarily stored on site and then transported to Duran for processing and/or disposal by companies licensed to provide these services. Fire prevention and suppression guidance and equipment are available at appropriate sites. While present, the risk of significant spills is minimized by OMARSA’s use of specialized petroleum product transporters and handlers, and the use of appropriate storage facilities on land.

Community Health and Safety - Farm ponds are spread across an extensive estuary, populated with few villages or enclaves, the inhabitants of which engage in a variety of “wild caught” fishing of other harvesting of marine animals including conch, crab, shrimp, mussels, scallops and demi dorsal fish. One community (El Zapote) is within one kilometer of the shrimp farm where the project will take place. El Zapote consists of two clusters of houses: El Zapote itself and Puerto Zapote. Together, they host around 350 people. El Zapote has a communal title to 2140 hectares adjacent to OMARSA’s property. According to the Biodiversity and Social and Environmental Assessment commissioned by OMARSA and approved by the GoE, 90% of households have fishing as their principal source of livelihood. This is complemented by agriculture, particularly livestock rearing. Hunting is also practiced. A few families use OMARSA’s property as an extensive grazing area. Besides Zapote, other communities fish in mangroves and channels adjacent to, or along OMARSA’s shipping routes. Potential risks to communities include accidents associated with transportation of materials, impact on ecosystem services resulting from farm operations, and security measures. These risks, however, are minimal because of the measures taken and systems used by the company and the social and environmental context in which the project is situated.



Infrastructure and Equipment Design and Safety - The expansion of shrimp ponds will entail the movement of earth material to erect pond walls. The depth of excavation will be less than 0.5 meters. OMARSA owns the equipment it uses to build shrimp ponds. The Company has extensive experience building and maintaining shrimp farms. The construction will take place more than 2.5 kilometers from the nearest housing cluster (Puerto Zapote). Community members and individuals not involved in the building operations themselves are not allowed in the construction site. The building of shrimp ponds as contemplated by OMARSA will yield no significant waste and will not interfere with access to community lands or open fisheries. Thus, the expansion of the shrimp-pond area and associated construction works will pose no risk to communities or its members. Care should be exercised during routine maintenance and refueling of equipment to reduce the probability of minor fuel and lubricant spills.



Hazardous Materials Management and Safety – As described above OMARSA makes minimal use of hazardous materials and uses no antibiotics. While present, the risk of significant spills is minimized by OMARSA’s use of specialized petroleum product transporters and handlers, and the use of appropriate storage facilities on land. Hazardous materials pose a low risk to communities. Rodent populations at the farms and processing mill are controlled by physical devises monitored by a specialty contractor.



Ecosystem Services - The most important ecosystem service to local commu
nities is the production of fish, mollusks and crustaceans by mangrove ecosystems. Mangroves have been minimally impacted by OMARSA’s operations. A small number of community members – less than 10% - own free-grazing livestock, some of which graze on OMARSA’s unfenced but privately owned upland property (about 3000 hectares). The community itself owns 2140 hectares available for grazing and hunting. The Company has no near-term plans to either fence or place its upland areas into any other use besides conservation. OMARSA is currently looking at potential government forest conservation programs in which it may participate to help it conserve the 3000 hectares that are not part of its shrimp-producing operation. The Company has already begun restoring mangroves on some areas on its other farms to rectify unauthorized clearing by prior owners on another farm, not Puna. The Project will not have significant impact on mangroves and will not compromise the ecosystem services it provides. Grazing and hunting in land owned by OMARSA are of secondary importance. The Company has no near-term plans to restrict access or change the use of its upland areas. Company policy and past behavior indicates that an informed and participatory dialogue with local communities would precede any significant changes in land use. Given that OMARSA will only farm up to 2,000 ha it leaves a balance of 3,000 of upland area. Given the importance of Puná as a migratory corridor for many species of bird there would be significant benefit of using the B-EIA information and other studies and crafting a “Private Reserve” with some protection for the remaining habitat. The Company will Undertake Biodiversity Action Plan in Order to identify those species which frequent areas over which Omarsa has control and determine to what extent activities could be undertaken in order protect any vulnerable populations identified (ESAP Item 4)



Community Exposure to Disease - OMARSA’s workers remain in the Company’s compound for the duration of their 10-day shift in the shrimp farms. They are also housed in the Company’s facilities, which are located about one kilometer from the nearest population center (Puerto Zapote). Contact with local populations is minimal. OMARSA’s presence in Puná Island poses no additional disease risk to communities.



Emergency Preparedness and Response – The Company includes training for the most likely events seismic movements, flooding and fires. Review of training records and observance of signage and preparedness suggests there was understanding of the basic risks and response requirements. Review of the ASC certification audit indicated some lapses in the placement or condition of firefighting equipment although this was not observed during the appraisal. Communications between the farms and the base headquarters operations are good and guaranteed by radio and cellular service. One concern is the potential for severe weather events which could render
existing channels and around the gulf islands impassable. Loading and passengers disembarkation facilities were noted to be poorly structured and vulnerable to tidal extremes and severe weather events which could impinge on the successful evacuation of staff under the worst conditions. The Company should reevaluate these landings to ensure that they are able to handle the volume of workers which might occur under an unusual event. This review will be conducted as part of ESAP Item 2, above.



Security Personnel - A professional security company (INSEVIG; http://www.insevig.net) licensed by the Government of Ecuador provides security services to OMARSA. The Government closely monitors the security industry in Ecuador. Security guards undergo a comprehensive government-approved training program. OMARSA’s own security personnel – an overall security coordinator (retired air force coronel) and two field-level coordinators - monitor the performance of the security company and ensure that it adheres to OMARSA’s policy. OMARSA’s security approach is multi-pronged: 1) it works closely with the National Federation of Fishing Cooperatives of Ecuador (FENACOPEC) to engage with local fishermen; 2) it has inventoried all local artisanal fishermen and boats; 3) it helps artisanal fishermen obtain their fishing licenses and paint their vessels to ensure that matriculations are clearly visible; 4) it has installed infrared detection camera on its farms to deter thieves and monitor the movement of vessels and vehicles. The overall goal is to deter illegal activities before they take place, and thus avoid confrontation. The measures allow OMARSA to know when outsiders are in the area and foster a positive relationship with local fishermen. In case illegal acts are performed and perpetrators are caught or detected, the competent government authority (police or navy) is notified and requested to intervene. These measures have resulted in a reduction of between 50% and 60% of illegal incidents (shrimp theft) since 2013.

Protection and Conservation of Biodiversity – The IFC team screened this investment using the International Biodiversity Assessment Tool (“IBAT”). IFC also developed an ArcGIS model which was used to bring additional biological and land-use information to bear during the appraisal. The mangroves in the entire Gulf of Guayaquil are protected under a battery of laws since at least 1978; chief among them the Forestry and Conservation of Natural Areas and Wildlife Law, more specifically Supreme Decree 2939-B (Decreto Supremo 2939-B) of 1978, and the Fishing and Fisheries Development Law. Therefore, Puná Island is important to the conservation of biodiversity and the provision of ecosystem services. This is of special significance in the case of mangroves.

The shrimp industry in the Gulf of Guayaquil established shrimp ponds and facilities in elevated areas devoid of mangroves. The industry’s effect on mangroves was reduced as per visual aerial observation. A biodiversity and environmental and social impact assessment (B-EIA) was completed in 2014 by a team of biologists to meet ASC requirements. This supplements the EIA required by Ecuadorian law for the expansion project in Puná Island. The B-EIA identified three bird species (Rostramus Sociabilis, Forpus Coelestis, Buteogallus meridionalis), two mammal species (Lonntra longicaudis, Leopardu tigrinus) and one reptile (Boa constrictor) in the vulnerable category of IUCN’s Red List. The B-EIA concluded that OMARSA’s activities would not increase the threat of conversion of the island’s remaining vegetation which is significantly modified but still important habitat for bird species.

The ASC certification determined that OMARSA has reduced impact on mangroves and other natural habitats. ASC’s Principle 2 requires “farms to be situated in environmentally suitable locations while conserving biodiversity and important natural systems.”

Modified Habitat - Puná Island has been inhabited for at least 2000 years. Today, free-ranging donkeys and cattle graze land neighboring OMARSA’s shrimp farms. Man-made straight lines that crisscross the upland vegetation on OMARSA’ unutilized areas are visible in satellite imagery from the 1970s and discernible from the air by a trained eye. All of this suggests that Puná Island’s ecosystems have been influenced by human kind for centuries.

The expansion of the shrimp ponds will take place in modified habitat that is out of the ecological boundaries for mangroves (too elevated) and upland forest (high soil salinity). In the late 1990s, the property owner previous to OMARSA disturbed vegetation and soil in a failed attempt to expand shrimp ponds in some of the same area where the current project proposed by OMARSA would take place. Evidence of earth movement prior to OMARSA’ purchase of the site is visible from the air and in old satellite imagery. In this sense, the Project will be implemented in modified habitat.

Natural Habitat - It is apparent from visual
airborne observations that the mangroves in the Gulf of Guayaquil, including those fringing Puná Island, are in good ecological condition. OMARSA’s operations to date have had no apparent negative impact on mangrove vegetation. Its shrimp farm on the island yields no chemicals harmful to either fauna or flora. There are no indications that the expansion of OMARSA’s shrimp ponds and associated infrastructure will affect the mangrove ecosystem.

Mangroves is a critical habitat because of the role it plays in maintaining biodiversity and the provision of critical ecosystem services, chief among them serving as a nursery to fish, crustaceans, and mollusks. OMARSA’s operations are adjacent to Mangrove patches. Nonetheless, as indicated above, OMARSA’s, shrimp farm on Puná Island have no apparent negative impact on the integrity of mangroves. OMARSA’s shrimp rearing protocol, which adheres to ASC standards, does not entail the use of antibiotics or chemicals that may negatively affect the mangroves’ flora and fauna. Water quality leaving OMARSA’s shrimp ponds have lower concentrations of phosphorus and nitrogen than intake water. This may be explained by the fact that the water in the Gulf of Guayaquil is the receptacle for municipal wastewater and runoff from agricultural field. In summary, OMARSA in general and the shrimp farm expansion as proposed will have no adverse impact on the species identified within the KBA.

The Center for Inventory of Natural Resources with Remote Sensing (CLIRSEN) was commissioned by the Government of Ecuador to undertake an assessment of the number of hectares of mangroves that had been irregularly transformed into shrimp ponds. It was found that over 40,000 hectares of mangroves in Ecuador were illegally established in mangroves. Presidential Decree 1391 of 2008 requires shrimp producers to legalize their situation. Shrimp operations that caused the destruction of mangroves were required to reforest the area impacted. CLIRSEN’s analysis showed that a previous owner of one of OMARSA’s other properties (Chongon Farm) had cleared approximately 50 hectares of mangroves. To address this legacy environmental impact and normalize its status, the company decommissioned and reforested several shrimp ponds amounting to 98 hectares, forty in excess of what it was required to do. There is no evidence of illegal clearing on the Puna Farm which is the object of expansion under the propose project. As identified above in ESAP Item 4 the Company will undertake development of a Biodiversity Action Plan to improve the Puna Farm’s contribution to the conservation of natural habitat and protection for migratory species which may use the farm.

Legally Protected and Internationally Recognized Areas - All mangroves are legally protected in Ecuador. Moreover, Puná Island is considered to be an important bird area (IBA) by Birdlife International, as are most of the Gulf of Guayaquil’s mangroves. The Churute Nature Reserve, which is dom
inated by mangroves, is within a 50-kilometer radius of Puná. Communities manage ten thousand hectares of mangroves in the reserve under a concession agreement with the government. In spite of the relative closeness of the Churute reserve and the project site there is no indication that either mangroves in general or the Churute reserve in particular will be affected. For these same reasons much of the Guayaquil Golf is listed as a Key Biodiversity Area Key Biodiversity Areas (KBA) are nationally mapped sites of global significance for biodiversity conservation that have been selected using globally standard criteria and thresholds. Their identification follows best practice protected area guidelines developed by IUCN. Based on a framework of vulnerability and irreplaceability widely used in systematic conservation planning, KBAs could largely be divided into the following categories.

Invasive Alien Species - OMARSA cultivates Pacific White Shrimp (Panaeus vannamei) which is native to the west coast of South and Central America. The expansion of the shrimp farms will not entail the introduction of new species into the ecosystem. However, the Gulf of Guayaquil has been a major shipping line for centuries and has been exposed to the introduction of alien species. Puná Island’s natural vegetation has been largely modified by many generations of agriculture and the introduction of many alien and invasive species. Phytosanitary laws are strictly enforced and the Company will not deliberately introduce any alien species with a high-risk invasive behavior.

Management of Ecosystem Services - Mangroves provide critical ecosystem services (provisioning, regulating, support). As indicated elsewhere in this document, the expansion of the shrimp farm contemplated under the project will have no significant impact on mangroves, as it will be located on mineral soils (salt flats) adjacent to the coastal mangroves.

Sustainable Management of Living Natural Resources and- OMARSA is the first shrimp processing and producing company in the world to have obtained ASC Shrimp certification. ASC is the current benchmark for aquaculture standards designed for shrimp production. In addition to ASC certification, OMARSA has seven other certifications, most dealing with food safety. One of its farms, Chongon, has organic certification. Moreover, in the one case where OMARSA bought property where the previous owner had impacted mangroves, the company has compensated for this legacy impact by reforesting 1.5 times what had been previously impacted.

Supply Chain - OMARSA is ASC Shrimp certified. ASC’s Principle 7 requires certified producers to: Use resources in an environmentally efficient and responsible manner. Criteria 7.2 and 7.4 refer to sources of feed, particularly ingredients derived from wild caught fish. The requirements include adherence to FAO’s Code of Conduct for Responsible Fisheries and minimal requirements for FishSource Scores (http://www.fishso
urce.com/). Hence, from an environmental perspective the ASC certification indicates that OMARSA’s feed suppliers meet acceptable environmental standards. Moreover, the fish-derived content in the shrimp rations used by OMARSA are primarily from byproducts generated by the tuna processing industry or from fisheries that are in the process of securing Marine Stewardship Council (MSC) certification. This is the case for feed acquired from Peru where the anchovy’s fisheries are in the certification process. The single largest gap in OMARSA’s system is its ability to direct and influence its third party suppliers to practice the same level sustainability. While the Company carefully assesses its suppliers’ production practices – and in effect is changing the standards used across the industry – they have little control over the breeding practices, selection of feed, or management of water on their suppliers’ farms. The OMARSA team reviews farming practices a few days before harvesting and takes full control of the harvest and transport to the mill gate. IFC visited OMARSA’s largest supplier and were impressed with the similarity in practices. OMARSA is coaching them to fully adapt their operations to the ASC standard. Strict quality control and traceability are critical to shrimp markets. Omarsa will report on the status of it various certification systems annually within the Annual Monitoring Report.

Protection of Cultural Heritage in Project Design and Execution - Puná Island is archeologically important, as it was the geo-political capital of the Huancavilca culture and an important pre-Colombian trade hub (pamenriquez.blogspot.com /2013/04/huancavilca.html). The project in Puná Island will entail the movement of soil material. While the likelihood of chance findings may be lower on the side of the island where OMARSA operates, there is some possibility that pre-Colombian artifacts may be found. Community members in El Zapote were not aware of cultural relics being found in its area but indicated historical burial sites in the mountainous areas in central portions of the island. The Venezuelan oil company (PDVSA) did find at least one archaeological site during its prospection activities. As such, the island is bound to contain sites of archeological importance. Ecuador’s Cultural Heritage Law (Ley do Patrimonio Cultural No. 3501) invokes the precautionary principle to avoid the loss of the country’s cultural heritage. The law states that all culturally important objects are state property.



Chance Find Procedures - The aforementioned law provides guidance in case of chance findings related to earth movement. The Heritage Law stipulates that in case objects or structures of potential archaeological importance are found during earth movement the contractor must cease operations immediately and report the occurrence to the National Cultural Heritage Institute. The institute in turn must conduct an analysis to establish the archaeological importance of the find. This being the case, OMARSA will put in place procedures in case artifacts and/or important archaeological sites are found fortuitously in accordance with the Heritage Law and IFC’s PS8 (ESAP Item 5). OMARSA will commit to meeting its legal requirements under the Heritage Law: cease operations that may threaten the integrity of the object or site and notify the Cultural Heritage Institute as soon as possible. If a potentially important archaeological site is unearthed OMARSA should also protect the site against potential looters.

Stakeholder Engagement – OMARSA has developed Community Relations Plans with directly affected communities adjacent to all of its farms. These plans are based on sequential consultations with the communities who have appointed representative (interlocutors) who are the “official” liaison with the Company. Communications plans have been developed with each farm and a Social Development Fund has helped organize and fund activities, which include internet connections, sports teams’ sponsorship and most recently a water distribution plan in El Zapote. Importantly, these plans and consultations have identified several projects aimed at improving the protection of the mangroves and identifying common security problems and encroachment issues.

The Company will be requested to place an advertisement in a local newspaper in the Province of Guayaquil as well as its website (http://www.omarsa.com) to inform the public of IFC’s environmental and social review (ESRS) findings and ESAP corrective action items.
OPERADORA Y PROCESADORA DE PRODUCTOS MARINOS OMARSA S.A.
Dirección: Lotización Industrial Al Rio Solar 3. Guayas - Durán , Ecuador
Teléfono: +593-4-255-0220
Fax: +593-4-255-0169
http://www.omarsa.com.ec/index.php/es/
Key Documents to be disclosed:
ESTUDIO DE IMPACTO AMBIENTAL & BIODIVERSIDAD CAMARONERA OMARSA S.A – PUNÁ . Diciembre 2013. Elaborado por Consultor: Blgo. Jorge Quintero – Código MAE-207-CI
ASC Final Certification Audit Report: http://www.asc-aqua.org/upload/20140930_Omarsa_Camaronera%20Puná %20Farm_FINAL.pdf

Broad Community Support is not applicable for this project

S.no	Description	Anticipated Completion Date	Status
1	Conduct Expert Review of Companies many standards and certifications to identify redundancies, overlaps and omission and consolidate them into a single system with abridged SOPs and common document control systems..	12/31/2015	Completed
2	Conduct an external OHS audit to identify areas with high frequencies of accidents and identify improveents in materials flow including embrakation points and mixing points.	12/31/2015	Completed
3	Conduct an internal gap assessment bewteen Omarsa's management practices and certification requeirments and those of primary suppliers. Develop an Action Plan to reduce those gaps for primary suppliers through training or material support.	03/31/2016	Completed
4	Prepare a Biodiversity Action Plan for Puna Farm to identify and conserve Modified & Natural Habitat that includes significant biodiversity value	12/31/2015	Completed
5	Chance Find Procedures - Establish procedures in case artifacts and/or important archaeological sites are found in accordance with Ley Cultural and IFC’s PS.	12/31/2015	Completed