While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
The manufacturing site (18 hectares) was developed in 1996 and the unused land was acquired through a willing buyer willing seller transaction which did not result in any physical or economic displacement. In addition, in 2013 the company acquired an adjacent 5 hectares of land which was previously used for agricultural purposes. The land was acquired similarly through a willing buyer willing seller transaction and acquisition did not result in physical or economical displacement. Thus PS5: Land Acquisition and Involuntary Resettlement is not applicable to the project.

Similarly, given that the company’s manufacturing facility is located in a developed area, PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous People, and PS8: Cultural Heritage are not considered applicable to this project.

The proposed investment involves expanding existing operations. Acquisition of new sites and/or plants is not planned as part of the project. Based on information reviewed by IFC the proposed investment is expected to have limited environmental and social impacts which are expected to be site-specific and none is expected to be significant. Further, these 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.

Key environmental and social items considered applicable to this appraisal include: (i) the company’s capacity to: (a) identify, assess and manage EHS risks and impacts associated with its existing tyre manufacturing activities as well as expanded operations; (b) identify and manage risks and impacts associated with the primary natural rubber supply chain; (ii) labor and working conditions; (iii) management of wastewater, air emissions, wastes and hazardous materials; and (iv) management of community health and safety risks and impacts. Actions have been defined in the project Environmental and Social Action Plan (ESAP) to address these issues and ensure compliance with IFC’s Performance Standards (PSs).

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

The management of environmental and social performance in the company is guided by applicable national regulations. In accordance with these requirements, the company has developed operational procedures on waste management and emergency response and received the obligatory environmental permits.



While EP Tyre has implemented a quality management system certified against ISO 9001:2008, the company does not have a fully functional, structured and documented environmental and social management system, and an environmental, health and safety policy has not been developed. Thus EP Tyre shall formalize existing EHS procedures into a Management System (EHS MS) and shall align this with PS1 requirements. This will include a policy and establishment of EHS objectives and targets guiding the company’s business activities. For further enhancement of EHS risk management the company will also identify EHS risks and impacts associated with its operations and identify mitigation measures as required as part of its EHS MS. The company will also develop and implement clearly defined management programs and incorporate EHS performance indicators into the EHS MS to measure the progress. The latter requirements are defined in the ESAP.



Identification of risks and impacts

The regulatory requirements of Indonesia stipulate conditions and procedures for Environmental Impact Assessment (EIA) including a definition of projects that are subject to EIA’s. In accordance with the national legislation the EIA (AMDAL) was developed for the EP Tyre plant and subsequently amended in 2013 and 2015 to incorporate an assessment of risks and impacts and mitigation measures associated with the new land plot acquisition (5 ha), and installation and commissioning of coal and gas fired boilers. The EIA was amended by a qualified independent consultant using national EIA guidelines and necessary approvals were obtained from national authorities. In accordance with relevant legislation the planned operational expansion doesn’t trigger the eligibility criteria for the EIA process.



The company does not identify risks and impacts on a regular basis and the scope of monitoring is limited and is not aligned with risks inherent to the plant. Thus as part of the EHS MS development and implementation, the company will conduct an environmental, occupational health and safety, and life and fire safety audit of the EP Tyre plant against national requirements and good international industry practice (GIIP); the increase of production capacity will also be considered during the audit. As part of the audit, workplace conditions and environmental parameters (e.g., emissions, waste water) will be undertaken and the results assessed against national requirements and those defined for such in the World Bank Group EHS Guidelines. The audit will also define a regular monitoring plan for the various parameters which can then be incorpor
ated into the EHS MS.



Organizational Capacity and Competency

EP Tyre has a full-time dedicated team (7 people including a manager, supervisors and specialists) to manage the EHS related issues, with defined roles and responsibilities. The team is responsible for EHS permitting, training, supervision and monitoring activities. The organization of environmental, health and safety resources is adequate for the current approach where the focus is on solely compliance with Indonesian requirements. In order to further strengthen the existing approach, in accordance with the ESAP the company shall nominate a full-time EHS officer with responsibility with suitable experience for development and implementation of the EHS MS.



Emergency Preparedness and Response

EP Tyre has to comply with regulatory requirements on emergencies and have defined documentation supporting their approach to emergency preparedness and response. The plant is equipped with fire extinguishers that are checked regularly. A fire safety procedure is available and includes key response actions in case of fire. As referred above, the EHS audit will review existing fire safety measures to ensure these align with national requirements and good industry practice for such. As part of the EHS MS development the company shall tailor the existing emergency procedure to the hazards associated with its activities.



Supply chain

The rubber supply chain is a critical part of the company’s operations. In 2014 EP Tyre purchased 10,000 tons of locally harvested and processed natural rubber. In Indonesia the majority of rubber (around 80-85%) is produced by smallholders. The supply chain associated with bringing rubber to market is extended and in a majority of cases may involve smallholders selling rubber to collectors/aggregators who bring the raw product to processing facilities; these then sell to traders/brokers who in turn sell natural rubber onto the market. EP Tyre purchases natural rubber from local processing facilities and traders. As described in the ESAP, the company shall amend its supply chain management procedure such that in cases where a processing company supplies natural rubber directly to the company, EP Tyre will assess whether child labor, forced labor and/or significant OHS risks exist among suppliers. EP Tyre will also monitor its key rubber suppliers on an ongoing basis and take immediate steps to address suppliers whose activity poses labour and OHS risks; ultimate sanction where there is no redress by suppliers will be elimination of such suppliers from the supply chain.

Human Resources Policies and Procedures

Currently the company employs 2,000 employees though only some 40 are women who are involved mainly in administrative tasks. All services are generally carried out by the company. Outsourcing is restricted mainly to security and cleaning services.



Hiring is conducted in accordance with the national labor law.



The company does not restrict the employees’ rights for freedom of association and all employees of the company are unionized at the plant level. Currently, the company has a collective bargaining agreement specifying employee rights under national law on hours of work, leave, compensation and wages. The company provides benefits to its employees in accordance with legal requirements. In addition, the company provides food and transportation for employees by buses (outsourced). Employees can address their grievances to supervisors, however a grievance procedure has not been formalized as yet. Discrimination in employment and occupation is prohibited in Indonesia and regulated by national law. In order to ensure that all workers, regardless of if they are unionized or not, are managed in accordance with national law and the requirements of this Performance Standard, EP Tyre will consolidate the current approach regarding management of labour into one system. The system will include an HR policy and associated procedures related to non-discrimination and equal opportunities, retrenchment and a grievance mechanism. Once established, the policy shall be formally communicated to employees. This requirement is defined in the ESAP.



No retrenchment is currently planned by the company.



The company does not use contractors on a regular basis. It is expected that a limited number of contractors will be involved in construction/installation works associated with the expansion. EP Tyre will require these contractors involved in installation works as well as the outsourcing companies (security and cleaning) to comply with the requirements of PS 2 as applicable to contractors. In addition, the company shall ensure the contractors’ and outsourcing companies’ employees have access to a grievance mechanism established by EP Tyre. This is defined in the ESAP.



Occupational health and safety (OHS)



Safety specialists are appointed at the plant with the main responsibilities focused on implementation of legal requirements (including permitting, reporting and training).



Key OHS hazards of company activities are mainly associated with exposure to chemical and physical hazards such as dust, solvents, temperature, rotating and moving equipment, noise and energy hazards. Workshops are equipped with ventilation and machinery is equipped with emergency switch buttons.



New employees receive initial basic health and safety and fire protection training. In accordance with the ESAP though and in order to further strengthen its approach to training, as per the EHS MS the company shall define a formal appro
ach to all aspects of training.



Internal OHS inspections are carried out regularly and reports are prepared accordingly and provided to the plant management. The company has initiated limited measurements of workplace conditions and thus as per the EHS audit this will include workplace monitoring for heat stress, noise, illumination and indoor air quality. Thereafter, and based on the findings EP Tyre will implement corrective actions as need be. Personal protective equipment is provided to employees, however its usage varies and is considered as partially not sufficient considering inherent risks. This aspect will also be further formalized via development and implementation of the EHS MS. The above requirements are all incorporated into the ESAP.



The company has developed and implemented an injury/accident reporting procedure. In accordance with the procedure if any incident occurs, the latter is recorded and investigation is carried out. Occupational accidents and incidents are reported to the authority by the company. Based on results of accidents investigation the company identifies and implements corrective actions. Through implementation of the EHS audit allied to the EHS MS it is anticipated that there will be a reduction in injury rates and a target aligned with best practice will be included in the management system.



As referred above, contract specifications with contractors to be involved in construction and installation works will include requirements on compliance with PS2 including that related to OHS. In addition, the company shall regularly supervise implementation of OHS requirements by contractors.

Resource Efficiency

The plant is connected to municipal electricity utilities. Total consumption of electricity for the company’s operations in 2014 was 40 MWh, with average consumption 1,000 kWh per one ton of manufactured tyres. These results align with publicly available benchmarking data for similar production facilities.



EP Tyre regularly monitors consumption of resources including electricity, water and fuels (gas and coal) and implements corrective actions when excessive consumption is identified. Based on fuel consumption by vehicles, grid electricity purchases and coal/natural gas used for all operations, the total estimated CO2 equivalent emissions for the company’s operations in 2015 is 52,000 tons.



Pollution Prevention

The major air emissions are associated with; (i) compounding operations as fugitive air emissions can be released from the area, where dry chemicals are weighed and put into bags prior to mixing as well as with; (ii) coal (with 20 tons average daily coal consumption) and gas boilers. The internal mixers are equipped with bag filters and the coal boiler with wet scrubbers to control emissions. The primary emissions are dust, sulphur dioxide, carbon monoxide and oxides of nitrogen and there is currently no monitoring of emissions from the coal boiler.



In accordance with the ESAP, the company shall review current practices related to control of emissions during weighting operations and modernize the weighting area (such as isolation and ventilation of the compounding area) to ensure minimization of fugitive air emissions aligned with GIIP. In addition and as part of the ESAP, the company will undertake point source emissions monitoring of the boilers and the carbon black silo. Based on the findings thereof and if necessary the company will agree with IFC on a time based plan to ensure compliance of such emissions with the limits defined in the WBG EHS Guidelines.



Drinking water is purchased from a local supplier and rain water is collected in 4,000 cubic meters reservoir, thereafter treated and used for steam generation, cooling and domestic needs (cleaning and flushing). Daily consumption of water is 370 cubic meters. Sewer water is discharged to a septic tank. The company uses oil traps to treat the process wastewater and after treatment this wastewater is discharged back to the rain water reservoir from where it is reused. In case of heavy rains overflow from the reservoir is discharged into the nearest river. Storm water generated at the plant is partially discharged into the nearest river, which is not used for drinking or recreational purposes, without any treatment. Thus the company will develop and implement a stormwater management plan aligned with GIIP.



The main hazardous materials used by the company are diesel, industrial oil and special boiling point – XX solvent (the solvent with aliphatic hydrocarbon compound). The company stores hazardous materials in aboveground tanks and material s
afety data sheets are available for the hazardous materials in use. The majority of EP Tyre’s waste is non-cured rubber waste, which can be to large extent recycled within the plant. Wastes (scrap, steel cord, tires, used oil) are collected by licensed waste management contractors for further recycling. Current practice in respect to hazardous materials and waste management meets relevant local requirements. The EHS audit will review the approach to the storage and handling of hazardous materials and the company will implement necessary corrective measures such as improved tanks bunding, containment for loading/unloading areas, decommissioning of unused equipment and additional safety measures as may be required to ensure these align with GIIP. This requirement is included in the ESAP.

The plant is located in 50 meters from residential houses of Sangkali and Lengo villages (1,500 and 1,200 people respectively). Community health and safety issues associated with tyre products manufacturing primarily include exposure to particulate matters. In 2013 the company received complaints from the local community regarding significant emissions of carbon black and corrective actions such as replacement of the filter were implemented by the company. In addition the company provided support so as to clean houses and the surrounding areas. The company has initiated monitoring of ambient air and the quality of ambient air was found to be compliant with national requirements (SO2 – 900 mg/m3 one-hour average concentration; CO – 30,000 mg/m3; NO2 – 400 mg/m3). As part of EHS audit the company will review and amend its existing air monitoring program to ensure this is aligned with the WBG EHS guidelines. Further, based on the findings and if necessary, the company will implement remedial measures to ensure ambient air quality complies with the requirements defined in the WBG EHS Guidelines.



As referred to above, the EHS audit will include a review of life and safety requirements allied to emergency response and the company will implement the necessary corrective measures as may be identified.



Security at the company facilities is provided by unarmed guards. Transportation of hazardous materials is provided by licensed transportation companies.

EP Tyre is one of the largest employers in the area and has been sponsoring various developments to support the local community.

In accordance with national requirements, the company conducted public consultations during the EIA process. Currently, there is no formal approach in respect to regular stakeholder engagement and thus the company shall develop a Stakeholder Engagement Plan (SEP) for its activities. The SEP shall also include a community grievance mechanism.

The ESRS and companion ESAP will be made available via the World Bank Group’s InfoShop. The company will also make IFC’s environmental and social review summary (ESRS) and ESAP available for consultation at their office in Bogor, Indonesia.

Contact person: Mr. Sudarmo Ali, Plant General Manager
Phone: +62 813 1110 8555
E-mail: mailto:sudarmo_ali@eptyres.com
Address: PT Elangperdana Tyre Industry
Jl. Elang - Desa Sukahati, Citeureup
Bogor 16810
Indonesia

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Formalize the existing environmental, health and safety (EHS) procedures into an EHS Management System (EHS MS), including the occupational health and safety (OHS) procedures such the system complies with the requirements of PS1: the EHS Management System should include as a minimum: a policy statement; EHS objectives and targets including performance indicators; identification of EHS risks and impacts associated with EP Tyre’s activities and operations; risk assessments for all tasks such that the personal protective equipment (PPE) requirements are defined; management and monitoring plans and procedures as applicable; a training program for all workers including that related to first aid; emergency preparedness and response plan (communicated to local community) tailored to the plant hazards.	06/30/2016
Conduct an environmental, occupational health and safety and life and fire safety audit of the plant against national requirements and good international industry practice (GIIP). This is to include existing and new activities and incorporate risk-based measurements associated with workplace conditions (heat stress, air quality, noise) and environmental performance (air emissions – point source and fugitive - and wastewater discharge) compared against national requirements and those of the World Bank Group EHS Guidelines and the approach to the storage and handling of hazardous materials. This audit is to be undertaken by a suitably qualified specialist agreed upon by IFC; the latter equally applies to the Terms of the Reference for the audit. Based on the audit findings, agree with IFC on a time based action plan to address / implement the audit findings.	02/29/2016
Nominate a full-time EHS officer (agreed by IFC) with responsibility for EHS management system development and implementation.	02/29/2016
Amend a supply chain management procedure to ensure screening of suppliers (natural rubber processing companies) in respect to child labor, forced labor and/or significant OHS risks.	02/29/2016
Develop and implement a Stakeholder Engagement Plan (“SEP”) aligned with Performance Standard 1 requirements. The SEP shall include a grievance mechanism.	02/29/2016
Develop an HR policy and associated procedures consistent with national law and Performance Standard 2 requirements. The policy and procedures should address such items as working conditions and terms of employment, non-discrimination and equal opportunities, retrenchment and grievance mechanism. Once established, the policy and procedures shall be formally communicated to employees.	02/29/2016
Contractually require contractors to comply with PS 2 requirements related to such and ensure contractors have access to the EP Tyre grievance mechanism to be developed for employees.	02/29/2016
Require contractors to include provisions in contracts noting the requirement to comply with EP Tyre’s OHS requirements. Include the requirement in the EHS MS for the monitoring of contractor OHS performance and the associated procedure to ensure such.	03/31/2016
Modernize compounding area in order to organize and control emissions during weighting operations in accordance with GIIP.	03/31/2016
Develop and implement an ambient air quality program aligned with the requirements of the WBG EHS Guidelines.	03/31/2016
Based on the findings of the air quality monitoring undertaken, agree with IFC on a time based action plan to ensure emissions / air quality complies with the WBG EHS Guideline requirements.	06/30/2016
Develop a stormwater management plan aligned with the WBG General EHS guidelines (Section 1.3).	03/31/2016