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
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
Both existing warehouses and future FCs are located in designated industrial zones with direct exit to the main roads, and, thus, IFC’s appraisal identified no PS4 impacts on communities arising from company’s business activity. Existing warehouses are located on leased land and future facilities will also be sited in industrial areas on leased land; therefore, PS 5 is not applicable.

Considering that the main activity of the company is internet retailing and delivery through its warehouses, no impacts are expected related to the other Performance Standards.

This proposed investment is expected to have limited environmental and social (E&S) impacts which are expected to be site-specific and none is expected to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. The project is designed to avoid, minimize and manage E&S risks and impacts of the company’s operations in compliance with applicable IFC’s Performance Standards and World Bank Group (WBG) General Environmental, Health and Safety (EHS) Guidelines.

Based on the findings of the appraisal visit, key E&S issues related to this project encompass the following: the company’s OHS management system, procedures and technical capacity for its effective implementation and continuous monitoring/reporting; labor and working conditions, energy efficiency, solid waste management and disposal, fire safety, and management of sustainability issues in the supply chain of products sold by the company.

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:



Policy, Management Systems and Organization: Souq complies with regulatory requirements set by the respective host country OHS legislation and has obtained the necessary permits to operate in the respective countries, including Civil Defense approvals, Building Completion Certificates and approval from the relevant water and electricity agencies. Nevertheless, an overarching Environmental and Occupational Health and Safety (EHS) Management System is not formalized.



OHS issues are handled on a regional level by the Senior Operations Director (SOD) in Dubai supported by country general managers in Kuwait, Egypt, and KSA. The SOD is well experienced in OHS and is responsible for ensuring that the FCs adhere to the 5S methodology and Lean principles which focus on Safety and Security. OHS Standard Operating Procedures (SOPs) are implemented and updated regularly covering a wide range of standards including life and fire safety and emergency response and preparedness.



Staff in the FCs and logistic centers/stations and delivery participate in routine OHS training, which mainly cover life and fire safety and OHS issues related to operation of the facilities.



The company will implement a systematic EHS management system that covers its existing operations and future expansions in line with IFC Performance Standard 1. The company will start with establishing an EHS policy in accordance with the scale of its operations and in line with WBG EHS Guidelines. As part of EHS management system, environmental procedures and instructions will be prepared and management programs will include objective settings, and monitoring of environmental key performance indicators like waste quantities. These requirements are defined in the project ESAP.



Emergency Preparedness and Response. The company has an up-to-date emergency preparedness and response plans prepared by Holdford Facilities Management. Emergency signage, evacuation routes, fire extinguishers and emergency lighting are in place and detection systems are installed in the offices and warehouses. Facilities meet host country requirements for life and fire safety and are expected to have adequate emergency exists, fire extinguishers and sprinkler system per civil defense requirements. The company also conducts semi-annual fire and emergency drill programs handled by the Facility Management contractor.



Monitoring and Review. Energy consumption, near miss and lost time accidents are among regularly monitored parameters. For OHS, lost-time accidents have to be reported on-line whereas there are no requirements for environmental reporting to authorities.



Where Souq has direct contacts with producers, the company will undertake a mapping of their direct supply chain to identify potential risks of child and forced labor and prioritize the supplier by level of risk. In doing so, the client will develop and implement supply chain mana
gement procedure related to prevention of harmful child and forced labor use by direct sellers of goods and products. The client will designate budgetary/staffing resources and implement contractual, monitoring and compliance mechanisms to address risks of inappropriate forms of labor in its direct supply chain. Tracking of suppliers’ performance will be integrated into the overall management system. Going forward, the company will monitor its supply chain on an ongoing basis in order to identify any significant changes in its supply chain. These requirements are defined in the project ESAP.



The company will also ensure that products listed in IFC’s exclusion list will not be sold.



External grievance mechanism. Customer complaints are handled by the call centers and through the company’s customer service website. As defined below and in the ESAP, the company will further enhance communications with the public to facilitate communications and grievances on EHS related issues.

Human Resources Policies and Procedures. The company has well-established local staff rules book with various internal regulations and procedures that cover core HR issues, including recruitment, training, working conditions, performance evaluation, social benefits, disciplinary actions and dismissal in line with country-specific labor code and PS 2. All legal registrations and procedures of employment contracts, social security and income are issued and legally up to date.



Working Conditions and Terms of Employment. Souq has standardized employment conditions, with written contracts of employment for each employee. These contracts describe the working conditions, terms of employment and benefits provided, including probation period, wage calculation, leaves etc. meeting the legal requirements in each country. Currently, Souq has a total of 2323 staff covering the six locations, of which 93% are permanent employees. The largest head count (including outsourced, permanent, and future hires) is in the UAE (36%), followed by KSA (26%), Egypt (20%), Kuwait (5%), Jordan (9%), and India (4%).



In Q Express, the distribution center in the UAE, 95% of delivery staff are full time employees and 5% of delivery operations is outsourced to Aramex, a courier service provider. Third party workers (cleaning staff, drivers etc) have contracts outlining the terms of employment through their direct employers.



Pay procedures are handled by HR and the Payroll team who process all salary payments on the 26th to 31st of every month. Adequate review processes are in placed to ensure that all employees are paid on time. Payroll registers are reconciled with headcount reports to ensure accuracy. In the UAE, salary payments are done through the government’s Wage Protection System (WPS) which monitors and ensures that employees with visas sponsored by Souq are paid accordingly based on the contract and agreed period. The WPS allows for the electronic processing and monitoring of salary payment using the UAE Central Bank’s Fund Transfer System.



Workers’ Organizations. Currently there are no worker’s associations or trade unions established in any of the respective country operations. Non-discrimination, equal opportunity and a worker’s grievance mechanism is integrated in to HR policy. In the absence of unions and notably in those countries such as Saudi Arabia which do not allow for such, Souq has organized for monthly forums to ensure effective communication among employees, team leaders and HR. Workers from each department will be elected internally to address concerns, ideas and suggestions.



Non-Discrimination and Equal Opportunity. There is no discrimination on the basis of personal beliefs, sex or characteristics unrelated to inherent job requirements.



Retrenchment. Souq does not anticipate a reduction in the current workforce. In fact, the project will create new employment opportunities and thus will increase the overall employment figure. Ho
wever, if it becomes necessary in future, Souq will prepare a retrenchment plan based on consultations with the affected workers, in accordance with local labor laws and IFC’s PS 2 requirements.



Grievance Mechanism. The company has a formalized worker’s grievance mechanism which allows employees to raise and register their concerns with the management team. Suggestions and complaints can be submitted through a helpline and directly to the Head of HR in the respective operational departments. This also applies to third party workers. This grievance mechanism is well communicated to the employees. Suggestions and complaints can be submitted through a helpline and directly to the Head of HR in the respective operational departments. This also applies to third party workers. Furthermore, the company has recently created an email whereby employees may submit grievances anonymously



Protecting the Workforce: As part of the hiring process, the company reviews the necessary credentials and relevant authorized documents, authenticated government issued documents of the employee’s home country. Souq ensures that applicants are of the legal working age in each country.



Supply Chain: The company has a wide range of products supplied primarily by wholesalers or traders. Souq does not have established procedures and verification practices for evaluating its primary suppliers; however, the company has a supplier rating system in place and for products, primarily in fashion, there is a category manager and quality assurance team that verify authenticity particularly for mid to high-end brands. Suppliers that are implicated in counterfeit trading are banned. To date, there have been very limited cases in counterfeit products.





Occupational Health and Safety (OHS): Souq has adopted OHS procedures and instructions for its operations, and has developed an OHS training program to cover regulatory requirements, duties and responsibilities, and job-specific risks of employees in line with the local legislation requirements. A medical examination is required for all workers including third party workers upon their recruitment.



First aid kits are available for easy access where needed. Personal Protective Equipment (PPE) is available for all employees and properly used. Use of safety shoes is mandatory. The technical team is responsible for proper operations of equipment using an established preventive maintenance program. There were no lost time incidents or near miss accidents reported during the last 12 months and no actions required to address any OHS related issues.



Souq performs risk assessments and weekly site inspections to reduce the risk of accidents. At present the company has an inventory of forklifts and stackers in the UAE (2 forklifts and 1 electric stacker), KSA (3 fork lifts and 1 electric stacker) and Egypt (1 forklift and 1 electric stacker). The battery charging zone is properly isolated from the working area and is well ventilate
d.



Workers Engaged by Third Parties:

Third party workers receive OHS trainings and benefit food and transport services as well as well as access to a worker’s grievance mechanism in that Souq’s grievance mechanism cover third party workers as well. PPE is provided by the company.

Resource Efficiency:



Souq targets optimizing the use of the electricity. In the offices, the departments are phasing in the use energy efficient lighting solutions such as switching all lighting to LED. The company ensures that FCs implement standard practices for resource efficiency including replacement of non-biodegradable material with recyclable materials, energy efficient lighting (LED), and trading in supplier’s inventories to a recycling company where necessary.



Greenhouse Gases. Electricity is supplied from the grid and from backup generators. The aggregate headquarter annual electricity consumption for the UAE, KSA, Egypt and Kuwait is 711 megawatts with an annual cost of $95,000 in total.



The primary source of greenhouse gas (GHG) emissions is the transport of goods and consumption of electricity (indirect input in GHG through the purchase of electricity from generating facilities. As in current operations, goods delivery remain the duty of the supplier and order fulfilment is handled by the company and contracted out to independent cargo/courier companies.



The GHG emissions originated from fuel consumption are estimated at 99 tons CO2eq/yr. Expected GHG emissions from electricity consumption is 569 tons CO2eq/yr.



Pollution Prevention:



Water and Wastewater. For both offices and warehouses, water is used only for domestic purposes and for canteen facilities and is provided by the municipality. Waste water from domestic use is directly discharged into the municipal waste water treatment system. In the UAE, wastewater treatment is managed by the Dubai Investment Park authority which the company pays for on a monthly basis.



For all future warehouses and logistic stations/centers, Souq will ensure that relevant terms are included in the contract agreement and that compliance monitoring is undertaken (waste water sewage connection and periodical analysis thereof, waste amounts, electricity consumption etc). The future warehouse in KSA will be connected to the municipal water and electricity facilities.



Solid Wastes: Domestic wastes are collected and disposed in an assigned landfill by the municipality. Packaging waste is originated from bulk deliveries to warehouses and is collected for recycling under contract with the municipality. Wastes such as fluorescent lights and printer cartridges, are collected separately and disposed by a licensed company. For all future operations, Souq will ensure the procurement of the services of accredited contractors who are required to prepare Site Waste Management Plans to promote recycling and reuse of materials, and comply with best practice standards (CEEQUAL or BREEAM).



Fuel tanks are used in KSA for back up diesel generators. Currently, there is a 7,500 litre capacity tank in Riyadh made out of galvanized steel and a fuel tank planned for the new FC with a 10,000 L capacity. Proper secondary containment is not evident at the existing tank and thus as per the ESAP thi
s tank allied to the new tank to be installed will have adequate bunding sufficient to accommodate 110% of the associated fuel tanks capacity.



Weekly inspections are carried out for the fuel tanks for signs of corrosion and measures are undertaken to address potential issues.



Hazardous wastes: Other than fluorescent lights, Souq operations do not generate hazardous waste materials.



Contractors are also required under the relevant agreement to establish operational controls to verify compliance including spot checks/site visits to review waste management and utilization of recyclable material. The contractor is also required to maintain a record of progress which is submitted to Souq on a regular basis.

Given the limited potential for social and environmental impacts arising from the project and its location, community engagement is not required in the UAE for the company. As an online retailer, the company has an effective website and social media accounts for any communication or grievances. The company will supplement the existing communication channels with an External Communication Procedure to receive, screen and address EHS-related communications and grievances from the public and to document responses and adjust the management program accordingly as per the attached ESAP.

The publication of this ESRS and associated ESAP, in local language, constitutes the client’s community engagement related to its project’s expansion plans.

Souq will disclose this ESRS at its websites; http://www.saudi.souq.com and http://www.uae.souq.com as well as locally at the following address:
Dubai Internet City
Thuraya Tower 2
19th Floor, Office 1902
P.O. Box 500255
Dubai, UAE
Any queries and/or comments about the project may be directed to:

Mr. Asif Keshodia
Chief Financial Officer, Souq Group Ltd. (BVI)
Dubai Internet City
Thuraya Tower 2
19th Floor, Office 1902
P.O. Box 500255
Dubai, UAE
Tel: +971-4-365-4297
Fax: +971-4-427-8157
Email: mailto:asif@souq.com

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Develop and implement a systematic Environmental and Occupational Health and Safety Management system in line with Performance Standard 1 requirements. Supply chain management and communication procedures will be integrated into the management system.	08/30/2015
Develop and implement a systematic Environmental and Occupational Health and Safety Management system in line with Performance Standard 1 requirements. Supply chain management and communication procedures will be integrated into the management system.	08/30/2015
Develop and implement a systematic Environmental and Occupational Health and Safety Management system in line with Performance Standard 1 requirements. Supply chain management and communication procedures will be integrated into the management system.	02/29/2016
Develop and implement supply chain management procedure related to prevention of harmful child and forced labor use by direct sellers of goods and products.	08/30/2015
Develop and implement supply chain management procedure related to prevention of harmful child and forced labor use by direct sellers of goods and products.	12/31/2015
Develop and implement supply chain management procedure related to prevention of harmful child and forced labor use by direct sellers of goods and products.	02/29/2016
Develop and implement an External Communication Procedure to receive, screen and address environmental, health and safety elated communications and grievances from the public and to document responses and adjust the management program accordingly	12/31/2015
Install secondary containment at the existing fuel storage tank at Riyad to accommodate 110% of the tank’s capacity. This principle is to be applied at all future fuel tank installations.	12/31/2015