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
PS6: Biodiversity Conservation and Sustainable Natural Resource Management – Does not apply as this project takes place in previously urban or industrial areas.- PS7: Indigenous Peoples - Does not apply as this project does not take place in indigenous people’s lands and does not affect Indigenous Peoples.- PS8: Cultural Heritage - Does not apply as this project will be constructed in previously developed land and will not affect Cultural Heritage resources.

This Project has been categorized as B, due to the limited number of risks and impacts associated with Pandurata Alimentos/Bauducco’s operations, which can be mitigated through accepted means of control in the bakery industry. Key E&S aspects and risks include: E&S management system and management capacity, wastewater production and discharge; Solid wastes production and management; workers protection and OHS hazards/risks; environmental noise, odors emissions, truck traffic and community health and safety.

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. Pandurata Alimentos/Bauducco has agreed to take some actions to enhance the existing management function aimed to mitigate environmental and social risks, which includes the following: conducting a Rapid Impact Assessment for the expansion project listing all impacts and specific mitigation measures related to the project; implementing an integrated ESMS based on international standards such as ISO 14000, OHSAS 18000 and SA 8000; elaborating (and subsequently implementing) an updated project to increase the capacity of the wastewater treatment plant in Extrema

Pandurata Alimentos/Bauducco’s operations can be considered as low risk and key E&S aspects have been adequaly managed under Brazilian regulatory framework. As a result of previous requirements of IFC investments Pandurata Alimentos/Bauducco is implementing an integrated ESMS based on international standards (ISO14000; OHSAS 18000 and SA 8000). Pandurata Alimentos/Bauducco hired an international consulting firm (DNV) which is supporting them on the Implementation that is expected to be completed in 2017, and following agreed schedule with IFC . Pandurata Alimentos/Bauducco is currently working in a draft of its E&S policy which, as set forth in ESAP, will be approved by the board of the company and disclosed in the company’s website.



Environmental and Social Assessment:

This proposed IFC investment will support the expansion of existing site in Extrema, which will include a new building and 5 new production lines. The plant in Extrema produces wafers, salty biscuits, sandwich cookies and buttery biscuits, besides extruded goods (bars and cookies) and Panettone. Altogether there are now 14 production lines which were implemented gradually since 2000. The plant already has an environmental license that was issued after the completion of an impact assessment back in 2000 (EIA, in Portuguese), and is following local regulatory licensing requirements.

Going forward Pandurata Alimentos/Bauducco will request to the authorities an extension of the existing license to cover the expansion in production capacity. As set forth in the ESAP, Pandurata Alimentos/Bauducco will complete a Rapid Impact Assessment for the expansion, to include a description of the expansion project (infrastructure, equipment, project layout, production, facilities etc…); schedule of construction; identification of impacts and mitigation measures (from both construction and operations); and proposed management programs associated with these impacts. Pandurata Alimentos/Bauducco will also present to IFC all the three applicable Environmental licenses for the expansion: Previous and Installation/Construction license (prior to construction phase or Dec 2016, whichever comes first) and updated operational license (prior to the start of new production lines or Dec 2018 whichever comes first).

Under the implementation of the ESMS, Pandurata Alimentos/Bauducco is conducting a formal identification of hazards/risks and aspects/impacts from all sites and, in addition, Pandurata Alimentos/Bauducco will conduct a legal EHS gap analysis. As set forth in ESAP, Pandurata Alimentos/Bauducco will complete the respective corrective action plans to close the regulatory gaps and reduce identified operational risks/impacts from existing plants and avoiding, managing or mitigating risks.



Management Programs

Following the local, social and environmental regulations, Pandurata Alimentos/Bauducco has a whole set of mandatory OHS programs as described in PS2 OHS section below. Bauducco also has
all required licenses and permits and they treat and monitor their wastewater discharges as required in the environmental licenses. Further, Pandurata Alimentos/Bauducco has food safety management systems based upon HACCP and GMP in their factories.



As a result of previous IFC investment requirements, Pandurata Alimentos/Bauducco defined the following management programs, which now will be consolidated under the ongoing ESMS development and implementation:

Environmental noise monitoring consistent with NBR 10151 standard and IFC EHS Guidelines.

Wastewater monitoring and control.

Waste Management: segregation, storage and disposal, including garbage and hazardous waste consistent with local requirements and IFC EHS Guidelines.

Internal Grievance Mechanism consistent with IFC PS2 requirements (further outlined in Guidance Note 2).

Community Engagement and Grievance Mechanism consistent with IFC PS1 requirements.

Hazardous Materials handling and Storage consistent with IFC EHS Guidelines.

OHS Safety procedures consistent with local Standards and IFC EHS Guidelines.

OHS Job Observation and Inspection Program.

Occupational Health and Safety External audits: covering PPRA implementation and local regulations compliance.



Organizational Capacity

Pandurata Alimentos/Bauducco has increased its internal capacity hiring a qualified E&S manager with proven experience in the food industry. This person is supported by a team, including an OHS Engineer and EHS coordinator at the corporate level, and both wastewater operators and an EHS technician at each plant. There is also one nurse and one part time physician in each factory.



Training: Pandurata Alimentos/Bauducco has a comprehensive training program for new and existing employees. The Company provides periodic training on emergency response, first aid, safety behavioral, and environmental topics such as management of waste and efficient use of resources. Each site identifies training needs through a managerial annual assessment and observation in the field. All operational workers have specific training on existing workplace risks, on required prevention measures, and on the results of the workplace monitoring assessments.



Monitoring

Pandurata Alimentos/Bauducco has an Occupational Health and Safety (OHS) monitoring system under the nationally required Workplace Risk Prevention Program (PPRA) and Occupational Health Monitoring Program (PCMSO). They have a periodic workplace noise monitoring, ergonomic assessment, Safety of Electrical Facilities assessment and daily OHS workplace inspections. All workers are subject to an admission, periodic and dismissal medical examination.

Pandurata Alimentos/Bauducco monitors its wastewater discharges and solid wastes production, treatment and disposal. They also monitor the water, gas and energy consumption. They periodically monitor the gas/oxygen rate in the ovens to optimize the gas consumption and have water meters to measure water consump
tion and to set reduction targets.

Going Forward, and as part of ESMS implementation program, Pandurata Alimentos/Baudduco will formalize a set of monitoring procedures defining annual internal system audits and periodic external verification of the monitoring program Pandurata Alimentos/Bauducco will also define Key E&S Indicators, frequency of monitoring and appropriate sampling techniques.



Reporting

Pandurata Alimentos/Bauducco has a monthly OHS report that is shared with operational managers and discussed in the Accidents Prevention Internal Committee (CIPA), constituted by represents of workers, OHS staff, task leaders and management. All accidents that result in lost work days are reported to the Social Security Authority.

Pandurata Alimentos/Bauducco reports biannually its monthly wastewater totals, environmental noise measurements and amounts of solid waste produced to the Local State Environmental Authority, and annually reports to the Federal Authority (IBAMA) its wastewater, solid wastes, hazardous wastes production and disposal and air emissions releases, demonstrating compliance with the requirements of applicable limits, standard requirements and environmental conditions to operate

Going forward, and as part of its ESMS implementation program, Pandurata Alimentos/Bauducco will structure an operational E&S report including the Key Performance Indicators, to be shared with relevant internal audience and discussed on operational monthly meetings.

Working Conditions and Management of Worker Relationship:

Pandurata Alimentos/Bauducco employs approximately 4600 permanent staff, 730 seasonal workers for a total of about 5393 employees. Forty six percent of the workforce are women and fifty four percent are men. In Brazil there is a legal labor requirement defining minimum quota of disabled people within company’s workforce. In order to meet this regulatory requirement, Pandurata Alimentos/Bauducco has developed a set of programs designed to offer job opportunities for disabled people. They have a partnership with an assistance organizations (AACD) that identify and train potential candidates to work for Pandurata Alimentos/Bauducco. The Company has a now 199 employees with different physical or mental disabilities. The company adapted workplace environment to facilitate access to the areas and job opportunities are first advertised and offered for disabled people. During the project in Extrema/MG, which will be completed on 2019, about 500 new job positions will be created divided into three shifts of work.

Pandurata Alimentos/Bauducco has a human resources (HR) policy and follows Brazilian labor regulations, which are consistent with ILO standards (Brazil is a signatory of relevant ILO conventions). The terms of employment, such as wages and benefits, hours of work, overtime arrangements and overtime compensation, annual and sick live, maternity, vacation or holiday leave are established by local labor regulations. Although Brazilian workers in general are familiar with the national terms of employment, the Company also informs them during the recruiting phase about the specific terms of the job position and additional benefits.

Labor rights in Brazil are enshrined in the constitution and the consolidated labor laws (known as Consolidação das Leis do Trabalho, or CLT, in Portuguese), and labor relations are highly regulated under the country''s laws and labor practices, including the requirement for most categories of workers to belong to a union. The Company respects the employee’s union’s collective bargaining agreements and the company pays a sector minimum wage bargained with Unions which is 8% above the national minimum wage. Bauducco hires unionized workers and unions representatives. There is no evidence that Pandurata Alimentos/Bauducco restricts the freedom of workers to associate. During appraisal no evidence of labor misconduct was found by IFC team of specialists.



Protecting the Workforce:

The minimum workers age is 16 years, but under a national part time training program in cooperation of technical schools (Programa Novo Aprendiz), and underage workers are not allowed to handle or work with hazardous materials or activities. For all other workers the minimum age is 18 years old, as defined by law.



Internal Grievance Mechanism:

Pandurata Alimentos/Bauducco has several internal mechanisms that handle worker grievances and provides different avenues for the expression
and resolution of worker grievances. These activities include periodic open chats between managers and workers; private and direct access to HR analysts; and access to Union representatives in cases where workers want to remain anonymous or where they have not received acceptable feedback from the Company.

To meet IFC previous investment requirements Pandurata Alimentos/Bauducco implemented a revamped internal communication channel for their employees. It is called ETHICALL, designed to cover/treat corruption and/or unethical behavior in the work environment. This too allows for anonymous complaints to be posted. The main topics covered are: Moral/Sexual harassment; employees/suppliers/clients conduct; discrimination; fraud; theft; environmental issues; work safety; complaints and suggestions. The claims are received through an email or phone number and the system is managed by a credible third party, which receives the complaint and duly forward the issue to the right people in Pandurata Alimentos/Bauducco for assessment, corrective action(s) and feedback.



Retrenchment: The Company has increased its workforce over the last years, and the proposed IFC project will create about 500 new jobs. Therefore retrenchment is not expected from this project.



Occupational Health and Safety:

Pandurata Alimentos/Bauducco has an OHS department developing mandatory programs regarding Work Environment Risk Prevention, Occupational Health Medical Control, Ergonomics, Internal Commission for Accident Prevention and Personal Protection Equipment (PPE). The company has an OHS monitoring system under the nationally required Workplace Risk Prevention Program (PPRA) and Occupational Health Monitoring Program (PCMSO). They have a periodic workplace noise monitoring, ergonomic assessments, Safety of Electrical Facilities assessment and daily OHS workplace inspections. All workers are subject to an admission and periodic medical examinations. Pandurata Alimentos/Bauducco reported a total of 84 accidents with lost time and 13.86 million worked hours, resulting in an accident frequency rate of 6 accidents per million worked hours, which is considered acceptable and comparable to industry benchmarks, however they are expected to be further improved upon once the ESMS is fully deployed and effective.

As already mentioned in PS1 section, Pandurata Alimentos/Bauducco is implementing an ESMS also based on OHSAS 18000 standard and is conducting both hazard/risk assessment and legal requirements gap analysis for all plants. Going forward, Bauducco will provide to IFC a corrective action plan to meet Brazilian OHS regulatory requirements including the NR-10 (OHS Regulatory standard safety requirement of electrical equipment/circuits and electrician works, including a review of security systems/measures for electrical panels and circuits and implementation of appropriate safety measures e.g. a formal LOTO procedure mainly during electrical repairs); NR12 (machinery prot
ection); NR33 (confined Spaces); NR35 (working at heights) and so forth.

As set forth in ESAP, for the construction of expansion building, Pandurata Alimentos/Bauducco will contractually require the construction contractors to have an OHS Management Plan that will encompasses regulatory norms, such as: Risk Prevention Plan (PPRA); PCMSO (Occupational Health Medical Control Program); CIPA (Internal Commission for Accident Prevention); PPE (Personal Protection Equipment); Fall Prevention Program; Construction Workplace Conditions Program (NR18); Safety in handling; lifting of cargo and daily inspections.

Pandurata Alimentos/Bauducco will conduct monthly EHS inspections over the construction period to check contractors’ Occupational Health and Safety performance and compliance with national regulations.

Pandurata Alimentos/Bauducco has all required operational Emergency Response Plans covering scenarios for emergency situations such as fires, explosions, and leaks to the environment. Firefighting equipment is in place, and the company has a trained fire brigade team and an operating permit from the local fire department has been previously issued and remains current.



Supply Chain

Although there is no evidence of use of child/forced labor in supply chain, The Company audits and ranks its suppliers according to technical issues and they have included social issues in the contracts, particularly on child labor and forced labor.

Waste water

Wastewater is one of Pandurata Alimentos/Bauducco’s main environmental aspects. Effluents consist of sanitary and industrial effluent (emanating from manufacturing processes and from cleaning floors and bakery utensils washing.)

The liquid effluents from existing plants are treated and discharged to public sanitary sewer systems (for post treatment). They are periodically monitored and meet local regulatory requirements and IFC Standards. All existing plants treat their effluents according to the local environmental regulations. The Company monitors treated effluents for biochemical oxygen demand (BOD), COD (Chemical Oxygen Demand) PH, Temperature, Oils and Grazes and Total Suspended Solids.



At Extrema site there is now a full waste-water treatment plant including a primary treatment with static strainer and physical-chemical separation processes (flotation). There is also a secondary treatment with biological treatment (activated sludge), extended aeration mode, osmosis filtration and anaerobic reactor. Finally there is the tertiary treatment before discharge with UV disinfection and equalization lagoon. The existing treatment capacity is 20M3/h with 98% efficiency of BOD and QOD reduction. Going forward, and as part of the Rapid Environmental Impact Assessment mentioned in PS1 section, Pandurata Alimentos/Bauducco will elaborate an expansion project of wastewater treatment plant to meet future demand of the new 5 production lines, by December 2016

Air Emissions



The main source of air emissions from Pandurata Alimentos/Bauducco’s operations are the ovens which are fired with natural gas and which therefore do not emit significant levels of hazardous air pollutants. The main issue associated with air emissions are nuisance odors. All oven stacks have filters to prevent odor emissions and there are no reports of community complaints at existing facilities.

The company presented the monitoring reports from air emissions carried out in compliance with the Environmental License and conditions to operate, consistent with local threshold requirements.



Solid Waste Management

The existing plants generate various types of residues such as organic and food processing wastes as well as wastes directly related to production such as packaging, recyclables (mainly paper and cardboard, plastics, plastic drums, metal drums, pallets and production waste). The waste is properly stored and part of it is disposed of in landfills (sludge, green waste and food), part recycled (paper and cardboard packages and plastic packages) and part is used as animal feed.

As a result of previous IFC investment requirement, Pandurata Alimentos/Bauducco developed an environmental procedure for solid wastes management, including segregation and volume monitoring. A report is periodically sent to the environmental agency containing the detailed data and information about waste generation, transportation, storage and disposal. All storage areas are licens
ed or regulated and the company relies on a centralized waste facility in Extrema covered with roof, sealed floor, waste segregation and warning signs.



- Environmental Noise emissions

The company monitors its noise emissions and has deployed noise control measures such as isolating the emissions sources. As a result of previous IFC investment requirements, Bauducco is monitoring noise emissions from its sites following Brazilian standard ABNT NBR 10.151

.

-Resources Conservation and energy efficiency

Pandurata Alimentos/Bauducco is working on a cleaner production program that allows them to have significant savings of water and energy consumption. The water from the water treatment plant in Extrema is reused in the sanitary system and they have burners’ optimization and maintenance measures to reduce natural gas consumption.

As a result of previous IFC investment requirements, Pandurata Alimentos/Bauducco conducted an energy efficiency assessment and listed in a report all the actions they have taken to increase the efficiency of energy consumption. Measure have been taken includes maintenance and means of control of leaks in the compressed air system (pneumatic system), deployment of natural gas flowmeters and adjustment/ maintenance of burners in the industrial ovens to ensure most efficient burning process, replacement of industrial light bulbs/lamps to led illumination.

In the new production lines, Pandurata Alimentos/Bauducco is assessing the possibility to test a new oven design to increase heat efficiency. The new ovens will be designed to use waste heat to preheat and maintain ovens to a minimum temperature of 40oC. Given the processing temperature for the ovens is 90-100oC, there will be energy saving per the reduced use of energy for the temperature delta of 40 oC to 100 oC.

Emergency Preparedness and Response: The company has an established emergency response plan called "Procedures in Case of Emergency", but so far there has been no incidences of abnormal or emergency situations.

The company has an emergency brigade regularly trained by official and professional firefighters, and integrated with the local Fire authority that can be triggered on a mutual emergency response with other industries in the region. Fire brigade personal are trained in: prevention and firefighting (composition, means of propagation, extinguishing methods and general practices); basic first-aid (analysis, cardiopulmonary resuscitation, fractures, burns, transport); evacuation and isolation of areas (training monitors to coordinate evacuation); and environmental impact mitigation. Training sessions are both recorded with a list of attendees which is then officially reported.

Going forward, as part of the expansion project at Extrema site and as set forth in ESAP, Pandurata Alimentos/Bauducco must elaborate an updated firefighting project design to include all new areas of production, in accordance to Minas Gerais State requirements, to be submitted for the fire authority approval. Than company must implement all required system upgrades, subject themselves to a post-construction inspection, and obtain a final fire authority permit or AVCB (Auto de vistoria do corpos de Bombeiros, in Portuguese).

Pandurata Alimentos/Bauducco engages with communities on an ongoing basis through the implementation of different social projects.. This program includes proactive community engagement / communication activities such as contact and invitations to neighbors as already done at the Guarulhos plants, where neighbors were identified and contacted by the Social Assistance Unit. The program includes periodic contact and invitations for chats to help establish open channels of communication. Pandurata Alimentos/Bauducco’s impacts to local communities are limited to nuisance resulting from truck traffic and eventual noise emissions. Community engagement practices are consistent with these impacts and aligned with IFC PS1 requirements.
Pandurata Alimentos/Bauducco has a Consumer Services Center (SAC) system in place that can be accessed through the internet: http://www.bauducco.com.br/bauducco.html , by phone via a toll free line at 0800 7011599, or by post: Caixa Postal 11039, CEP 05422-970. These contact options are widely announced through the Company’s consumer products. Most complaints that come through the SAC are related to product quality. The SAC is consistent with Brazilian consumers’ rights regulations. All claims are registered and a product replacement is offered. The defective products are analyzed and a monthly report of products claims is shared with managers and directors, who decide if any corrective action is needed.
Pandurata Alimentos/Bauducco has a Social Investment Program that includes support for local organizations that assist poor children and mental disabled people. They actively support a Bakery Training Center at the organization to assist mentally disabled people (APAE) were they prepare and hire trainees for their social inclusion program.
Pandurata Alimentos/Bauducco has an Open Factory program for the community interested in visiting its plants, mainly targeting school-age students.
Most complaints that come through the SAC are related to product quality.

Rua José Antonio Pereira Passos N° 899, Bairro dos Pires, Extrema-MG

Broad Community Support is not applicable for this project

Bauducco III(37708) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
ESMS Implementation Pandurata/Bauducco will complete and aprove its E&S policy, which will be disclosed in the company’s website	31-Mar-2016	Completed	Completed	4/27/2022
Pandurata/Bauducco will complete a Rapid Impact Assessment for the expansion	31-Dec-2016	Completed	Completed	4/27/2022
Bauducco will also present to IFC all the three applicable Environmental licenses for the expansion: Previous and Instalation/Construction license (prior to construction phase) and updated operational license (prior to the start of new production lines)	31-Dec-2016	Completed	Completed	4/27/2022
Pandurata/Bauducco will also present to IFC all the three applicable Environmental licenses for the expansion: Previous and Instalation/Construction license (prior to construction phase) and updated operational license (prior to the start of new production lines)	31-Dec-2018	Completed	Completed	4/27/2022
Pandurata/Bauducco will perform a regulatory gap analysis and complete the respective corrective action plans to close the regulatory gaps and reduce identified operational risks/impacts from existing plants.	31-Dec-2016	Completed	Completed	4/27/2022
For the construction of expansion building, Bauducco will contractually require the construction contractors to have an OHS Management Plan that will encompasses: Risk Prevention Plan (PPRA); PCMSO (Occupational Health Medical Control Program); CIPA (Internal Commission for Accident Prevention); PPE (Personal Protection Equipment); Fall Prevention Program; Construction Workplace Conditions Program (NR18); Safety in handling; lifting of cargo and daily inspections	31-Dec-2016	Completed	Completed	4/27/2022
Bauducco will conduct monthly EHS inspections over the construction area to check contractors’ Occupational Health and Safety performance and compliance with national regulations.	31-Dec-2017	Completed	Completed	4/27/2022
Bauducco will elaborate an expansion project of wastewater treatment plant to meet future demand of the new 5 production lines	31-Dec-2016	Completed	Completed	4/27/2022
Bauducco must elaborate an updated firefighting project design, in accordance to Minas Gerais State requirements, to be submitted for the fire authority approval. Than company must implement all the system upgrades to finally has a post construction inspection and the final fire authority permit in a format of a document called AVCB (Auto de vistoria do corpos de Bombeiros, in Portuguese).	31-Dec-2017	Completed	Completed	4/27/2022
Bauducco must elaborate an updated firefighting project design, in accordance to Minas Gerais State requirements, to be submitted for the fire authority approval. Than company must implement all the system upgrades to finally has a post construction inspection and the final fire authority permit in a format of a document called AVCB (Auto de vistoria do corpos de Bombeiros, in Portuguese).	31-Dec-2019	Completed	Completed	4/27/2022