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

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

The environmental and social impacts that are expected to occur among Soriana’s suppliers are those related primarily to production, manufacturing and distribution of food products (both processed and raw products), household goods, health and beauty products, and apparel items among others. Production of raw material, depending on the foodstuff, and the size and characteristics of the farm, commonly involves issues of labor and working conditions, pollution from fertilizers and pesticides, and management of agricultural waste. Food processing and household goods manufacturing may also involve issues pertaining to labor and working conditions including occupational health and safety, pollution prevention and resource management. A key issue for food production and distribution is also food safety, including traceability.

Comerci’s supplier systems, which will be adapted and used by Soriana consider potential impacts of the suppliers in the aspects related to PS1 (Assessment and Management of Environmental and Social Risks and Impacts) and PS2 (Labor and working conditions); some elements of PS3 (Resource Efficiency and Pollution Prevention) are considered in the evaluation process. The suppliers to be financed within this Project are all existing companies. Since no greenfield companies will be financed, the impacts related to PS5 (Land Acquisition and Involuntary Resettlement); PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), PS7 (Indigenous Peoples), and PS8 (Cultural Heritage) are not expected. Suppliers impacts are limited mostly to their premises and no impacts to local communities are expected, therefore PS4 (Community Health, Safety and Security) issues are not expected.

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.

Social and Environmental Management Program:

Comerci has developed a Supplier Assurance Program (SAP), which assess Suppliers’ compliance with environmental and social elements, aligned with IFC’s Performance Standards. This program applies to suppliers using the short term finance program financed by IFC. Soriana will use the same procedures already in place to evaluate suppliers participating in this project and thus and implement the same Supplier Assurance Program as developed by Comerci.



Under Comerci’s SAP, suppliers provide information regarding their environmental and social performance, through a written questionnaire, including compliance with local labor laws, practices regarding freedom of association, occupational health and safety, and labor unrest. On the environmental aspects elements such as compliance with environmental permits, licenses and local law are covered, as well as management of water and air pollution, and solid wastes. Additional practices such as programs for conservation of natural resources and E&S management programs are also evaluated. Suppliers are required to make representations in these areas and others. For example, most Buyer CSR systems do not consider land acquisition, therefore Suppliers are required to represent that they have no ongoing land related disputes with respect to the land on which they have operations.



Based on the information provided, suppliers are categorized as A, B, C, or D, as per table below. The higher a supplier is rated, it is indicative of material compliance with the Performance Standards. Only suppliers evaluated and categorized highly by the company’s E&S rating methodology are eligible for IFC finance.



A. Suppliers fully compliant with national and IFC requirements (all applicable items of the Questionnaire) and/or with a relevant management system (item 1.1 in the Questionnaire) in place will be included in the GTSF program without further ado.



B. Suppliers in material compliance with national law (labor, environmental, etc.) and/or IFC Performance Standards (all applicable items in the Questionnaire) will produce an action plan to address any minor non-compliances, to be agreed upon by the company.



C. Suppliers with non-compliances with national law (labor, environmental, etc.) and/or IFC Performance Standards, or without the necessary environmental or labor permits, will produce an action plan for immediate implementation in order to be included in the GTSF program, prior agreement by the company and IFC.



D. Suppliers with activities in the IFC Exclusion List or egregious non-compliance with local legal requirements or Performance Standards would be excluded from IFC finance.



It has been defined that if the company’s SAP identifies additional gaps between the supplier’s systems and Performance Standards considerations, then a corrective action plan should be agreed; however up to now, there has not been such action plans generated for activities as
sociated with Comerci, given the limited time in which the SAP has been operating.



The company will enhance the existing Supplier Assurance Program (SAP) to ensure that improvement action plans will be defined with those suppliers that need improvement, and also to initiate a targeted verification process, by which the company confirm through visits the answers to the initial questionnaire. Soriana commits to follow the SAP to evaluate any supplier using the GTSF line under this project.



In addition to the SAP programs, Comerci''s has other programs with suppliers such as the Eco-Friendliness Rating Program (EFRP); which was developed together with two reputable organizations, Universidad del Medio Ambiente (UMA) and Ecolosystems. The EFRP involves 5 stages: assessment, rating, advisory, capacity building and evolution. The emphasis of the program is to help suppliers improve rather than screen out those who do not comply. To promote high scorers, Comerci labels eco-friendly products at the shops and informs customers of the meaning and value of the various ratings; this scheme will continue to operate under Soriana.



Soriana has a publicly available code of ethics, which is guided towards employees; however, it mentions the expectation that suppliers conduct business based on those core principles. Furthermore, the company has a well defined procedure to select and manage suppliers, which is documented in the internal rules “Reglamento de Buenas Prácticas de Gestión de la Compra de Mercancía, Materiales y Servicios” and the acceptance letter “Carta de Aceptación y Lineamientos de Proveedores de Organización Soriana” which define commercial terms and key principles of the relation buyer-supplier.



Organizational Capacity and Competency:

Soriana has a procurement unit and the support of the platform E-Factor, which currently is compiling the E&S information from the suppliers. At the moment there is not a dedicated function managing E&S elements of the supply chain. In order to implement the verification process and ensure follow up of agreed action plans, Soriana will designate a responsible person to ensure that the SAP is being implemented as planned and that if there is an expansion of the program to additional suppliers from other stores, those are in compliance with the criteria defined in the SAP.



Monitoring and Review:

Soriana will enhance the SAP to initiate a verification process, by which the company will confirm through site visits the level of compliance and the assigned rating. The company should review/update at least every two years the information of the suppliers regarding E&S compliance, as the situation of the suppliers might change.

The company’s SSAP considers core elements of IFC’s Performance Standard 2 (Labor and Working Conditions). The assessment questionnaire has provisions on legally required social benefits, compliance with local labor law, policies to ensure freedom of association, proper health and safety provisions and any fines or communication from the local authorities. Child, slave, prison or forced labor are covered by local law and therefore covered in the assessment. Other elements covered include preparedness and response to emergencies.

Regarding resource efficiency and pollution prevention, the questionnaire used to evaluate suppliers covers compliance with local environmental legislation, and issues related to air pollution, water pollution, management of solid waste, and hazardous materials. In case of management of effluents the provisions for treatment and discharge in compliance with local requirements are addressed.

Soriana publishes annually a sustainability and corporate social responsibility report, which is available on line: recursos.soriana.com/recursos/Resources/InfoFin/InformeAnual/2014/RSocial/RS_2014.pdf and focuses on the internal processes and there are some remarks on suppliers. The company also has available a telephone and e-mail line to raise concerns (“Linea directa”) regarding compliance of the code of ethics. The company has a well-designed web-site for suppliers with resources and information on payments, terms of purchase and other relevant information. Soriana support different social initiatives in the areas of education and health; detailed information is provided in the sustainability report.

PleThis ESRS will be disclosed locally at the address as per below and the individual referenced may be contacted for inqinquries or further information about the environmental and social impacts of this project:

CoCompany: Soriana
NaName: Eugenio Gonzalez Franco de la Peza
Email: mailto:egonzale@sorianaccm.com
Ph Phone: +52 55-5375-9662
AdAddress: Avenida Adolfo López Mateos 201, Colonia Santa Cruz Acatlán. Naucalpan, Estado de México. C.P. 53140

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Soriana will develop and implement the Supplier Assurance Program, aligned with the existing one used by Comerci	08/31/2016
Soriana to nominate a responsible person to continue implementation of the Supplier Assurance Program.	06/30/2016
Soriana will re-evaluate the active suppliers, collect supporting documents on compliance and generate a database with the rating and highlighting those suppliers with a low E&S rating to define corrective action plans .	09/30/2016
Soriana will perform annual site verification of E&S elements to high risk suppliers involved in the GTSF program. As needed corrective action plans will be agreed with the suppliers.	08/31/2017
Soriana maintain, monitor and update the E&S information/performance of suppliers at least every two years.	12/30/2017