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 integrated food park is located on an already allotted plot leased to FCEL by the Karnataka State government in an industrial area. No land acquisition is thus planned or expected under the project which may result in involuntary displacement or resettlement. Therefore, PS 5: Land Acquisition and Involuntary Resettlement is not applicable. No direct primary production of living natural resources is involved in the project and there is no material risk of significant conversion of natural and/or critical habitats in the supply chain. Thus PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is not applicable. Also, the type of risks and impacts envisaged in PS7 (Indigenous Peoples) and PS8 (Cultural Heritage) are not applicable. In the event that issues anticipated by the PSs arise, FCEL will promptly inform IFC. Screening and assessment of these issues against PSs requirements will be done through the Companies’ planned E&S management systems.

This 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. 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 according to IFC’s Policy on Environmental and Social Sustainability. In addition of seeking compliance with Indian legal and regulatory requirements, this investment will seek compliance with IFC’s Performance Standards and World Bank Group (WBG) General and Sector-specific (Food and Beverage Processing and Dairy Processing)EHS Guidelines.

Key E&S risks and issues associated with this investment are: (i) company’s and each of its subsidiary businesses’ capacity and systems to manage EHS and food safety aspects (e.g. processing facilities, warehouses); (ii) emergency preparedness and response, including life and fire safety (LFS) and ammonia-based refrigeration system; (iii) assurance of fair, safe and healthy working conditions for its workforce (including company employees, contractors and third party workers); (iv) resource efficiency (energy and water), and pollution prevention and control (e.g. solid wastes and wastewater); and, (v)labor practices within certain raw material (e.g. dairy) and private label food supply chains in line with PS2 requirements.

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 Policies and Management Systems. Future Group has been managing relevant E&S risks and impacts by meeting legal requirements applicable to all its businesses and the groups efforts in this regard were validated during the appraisal. Therefore, the main EHS emphasis of FCEL has also been focusing on legal and regulatory compliance for all their operations.

The group and some of the subsidiaries have now initiated efforts to develop and implement E&S policies and management systems. At the group level, Environment Care and OHS policies have recently been drafted (still to be reviewed and approved by the groups Board of Directors). Copies of these draft policies were shared with IFC. Generally speaking these policies cover most of IFC PSs requirements with certain areas of improvements identified below. FCEL has not yet adopted any corporate level E&S policies, however, FCEL subsidiaries have already started developing EHS management systems that include such policies. For example, the food park has initiated the development of an Environmental Management, OHS and Food Safety Management Systems, in compliance with ISO14001, OHSAS18001 and ISO22001 respectively. The scope of food processing in this park encompasses activities related to maintaining the cold chain, pulping, IQF (Individual Quick Freezing), making RTE (Ready-To-Eat) products, frozen packing, and banana and mango ripening. Draft procedures related to these activities (e.g. hazard and risk assessment, legal EHS registry, training requirements, monitoring, measurements and evaluation) were shared with IFC during appraisal. These systems, once complete, are scheduled to be independently audited with the expectation that the covered operations at the food park will be certified by the end of June, 2016. The company plans to implement these systems at the pulping operation and then to replicate such systems at all agro-processing facilities which will be located within the food park. At Nilgiris, both facilities (dairy and bakery) have started a gap analysis of their current management system elements against ISO 14001 and OHSAS 18001 requirements and IFC PSs requirements, referencing, for example, IFCs Environmental and Social Management System Handbook for Food and Beverage Processing and WBG EHS Guidelines. This gap analysis should be completed by May 2016, whereupon the company will work to close identified gaps.

As set forth in the ESAP (action #1), the group will finalize its environment and OHS policies. Before their finalization, these policies will additionally be strengthened by: (i) making explicit reference to performance-based requirements based on Indias legal and regulatory requirements, IFCs PSs, applicable WBGs EHS guidelines, and ISO 22001/HACCP for any food processing facilities. In addition, as part of implementation of the policies, the company will (ii) assign a corporate and full-time EHS coordinator at the group, companies and subsidiarys operational level as well as define an accountability framework (e.g. Board of Directors Sustainability Committee); (iii) officially assign a E&S coordinator in each of its subsidiaries; (iv) ensure an EHS communication strategy to all direct employees, subsidiaries workers, primary suppliers, contractors and stakeholders, including an explicit reference of EHS initiatives and performance review on its website; and, (v) develop corporate-level audit mechanism (with both internal and external audits) for assessing performance level of all its subsidiaries, including meeting quantifiable EHS performance targets, including Key Performance Indicators (KPIs).The EHS policies and abovementioned measures will be formally adopted by the FCEL board.

As per the ESAP (action #2), FCEL will develop a corporate level ESMS which will provide the framework under which each of the subsidiaries will develop their own policies and procedures. The ESMS at both corporate and subsidiary level (described below) will cover all elements of IFC PS1, and will be fit-for-purpose and commensurate to the risks and impacts of the operations (e.g. agro-processing, agro-sourcing, logistics and distribution).

The key aspects to be covered in the corporate ESMS at FCEL will include (a) assessment of key environment and OHS risks and impacts that each subsidiary/business (for example, agri-sourcing, food park, and dairy processing) will focus on and manage; (b) additional E&S commitments made at the corporate and subsidiary levels; (c) details on resources for E&S organization; (d) a monitoring and reporting framework, including ongoing review of compliance status of all businesses with respect to corporate EHS commitments and management systems; and, (e) provision for periodic reporting to, and review of, E&S performance by board and senior management.

All subsidiaries will complete an EHS risk assessment and develop and implement procedures and management programs to mitigate and manage the identified risks and impacts. Some of the key elements in each subsidiarys ESMS (as applicable for the nature of their respective operations) will include: (a) Risk assessment and screening of new projects (either greenfield or brownfield acquisitions) to identify any E&S risks or impacts with respect to IFC PSs and legal requirements and preparing a management plan; (b) Life & Fire Safety (LFS) management programs for all facilities;(c) Emergency preparedness and response; (d) Contractor management programs to supervise their compliance with legal requirements and IFC PSs; (e) Pollution prevention processes including solid and hazardous waste management plans; (d) OHS management programs commensurate to the risk posed by the activities; (e) Resource efficiency program with specific commitments on resource efficiency; (f) Monitoring and reporting (internal and external) framework including the key E&S performance indicators for effectiveness; (g) Community grievance mechanism; (h) Roles and responsibilities of all personnel involved; (h) Training plans with roles and responsibilities and budgetary allocation for its staff (permanent and seasonal) and contractors; and (i) Periodic management review.

As set forth in the ESAP (action #2), for the development of the EHS policies, corporate ESMS and business/subsidiary level procedures/management programs, FCEL will engage a qualified consultant (that is acceptable to IFC). Specific timelines will be discussed and agreed as part of the ESAP for (a) finalization and adoption of group level policies; (b) development and implementation of corporate ESMS; (c) development and implementation of subsidiary level ESMS including risk assessment and procedures/management programs. The terms of reference (ToR) of the consultant will also include conducting regular (e.g. bi-annual) reviews based on a pre-determined plan to review implementation progress and effectiveness at corporate and at all subsidiaries. To ensure a cost-efficient approach of this process, Future Group and its companies shall ensure cross-fertilization and mapping of EHS initiatives across all subsidiaries and share that information with the consultant.

Environmental & Social Risk and Impact Assessment. As indicated above, Future Group and/or FCEL have yet to develop such risk assessment procedure for its greenfield and brownfield operations. For the franchised retail operations, considering the size of the stores, the location in leased premises in urban commercial areas and the nature of their activities, no formal environmental and social impact assessment (ESIA) is required. The respective franchisees obtain required regulatory permits and approvals for the stores. Similarly, no formal ESIA is required for the food processing centers and warehouses for agri-sourcing.

For the agro-processing operations under FCEL, especially the food park, such environmental and social impact assessment has been carried out. Following the submission of the ESIA, the environmental clearance has been delivered by the Karnataka States Department of Ecology and Environment on July 28, 2012. Terms and conditions underlying the deliverance of such license included the establishment of an EHS team, implementation of mitigation measures during construction phase (OHS measures, including safety, first-aid, etc.) and operational phase (construction of an ETP, Reverse-Osmosis Plant, solid and hazardous water management and disposal, etc.). Consents for the establishment of the food park has also been received from the Karnataka State Pollution Control Board (KSPCB) in relation to the Water Act (1974), the Air Act (1981) and for the discharge of effluents. During IFC site visit, the food park management provided a comprehensive written progress status of the Terms and Conditions underlying the 2012 Environmental License, including safety standards, fire hydrant system, water and air emissions monitoring, installation of an ETP of total capacity of 500 KLD, rain water harvesting pond, green belt, etc. IFC has validated the presence and efficiency of these measures during its site-visit. Other licenses obtained encompass Food Safety and Standards Authority of India (FSSAI), the electricity connection, and the boiler. There is an ongoing feasibility study regarding on-site composting and valorization (bio-digester) of organic wastes. For Nilgiris dairy processing and bakery operations, these facilities did not go through such E&S risk assessment process as these facilities were established in early 1980, before such legal requirements in India had been established. As set forth in the ESAP (action #2), FCEL will develop and implement such risk screening/assessment procedure of new projects (either greenfield or brownfield acquisitions) in its subsidiaries to identify any risks, and this in compliance with national/state legal and regulatory requirements and IFCs PSs.

EHS Management Plans. As mentioned above, FCEL has not yet established an integrated corporate environmental and social management system which would then apply to all its subsidiaries. This being said, building blocks for such corporate management system already exist at subsidiary level. For the fruit and vegetable agro-processing facility located in the food park as well as Nilgiris facilities, the key EHS programs encompass occupational health and safety, food safety, solid waste management, and effluent treatment. Main regulatory management plans, aside from voluntary standards audit, CAPs and follow-up audits, encompass food safety, provision of safe working conditions to workers, including establishment of OHS committee, use of Protective Personal Equipment (PPEs), solid and hazardous waste management, efficient use of water and energy, collection and treatment of liquid effluents from on-site ETP, emergency preparedness plan, including life and fire safety, and monitoring of ambient and point source air emissions. IFCs appraisal found that i) these management plans in FCEL and its subsidiaries are adequately managed by internal EHS teams in order to achieve compliance with various legal requirements and ii) that the scope of the management plans are commensurate with EHS risks and impacts of each subsidiary operations. This being said, gaps have been identified during IFC appraisal, namely:(i) the need for strengthening the emergency preparedness planning and infrastructure at both food park operations and at Nilgiris, especially due to use of ammonia as a refrigerant;(ii) the life and fire safety system (specifically the fire hydrant system at the food park);(iii) the need to formalize the structure and implementation of EHS procedures and management plans at FCEL as well as all its subsidiaries;(iv) the need to strengthen the effective implementation and documentation of contractor OHS oversight, and the need to implement E&S requirements in the supply chain as applicable to primary suppliers. These gaps will be addressed either directly under one of the ESAP items or through the implementation of the company/subsidiary level ESMSs, discussed above.

Organizations structure and technical capacity. FCEL has not yet assigned a full-time EHS coordinator and/or an EHS team to effectively manage its corporate, and subsidiaries EHS requirements. During appraisal IFC was informed that FCELs supply chain manager is presently assigned for the drafting process of Future Group EHS policies. In addition, during appraisal FCEL was in the process of hiring an EHS manager, however, timeline for such recruitment was not finalized. As set forth in the ESAP (action #3), in order to strengthen FCELs (and its subsidiaries) EHS organization, a full-time EHS coordinator will be recruited. At a minimum, the company will appoint an appropriately qualified (e.g., holding a M.Sc. Degree in Environmental / OHS management) professional experienced in developing and implementing EHS management systems. The assigned EHS manager will be responsible for the development and implementation of EHS corporate policies and systems, and monitoring oversight of the ESMS and program effectiveness at subsidiaries level, as indicated above. FCEL shall consolidate its own EHS organizational chart and strengthen existing EHS teams at the food park operations and Nilgiris facilities.

Sourcing for the groups entire retail operations is centralized and divided into various categories. The sourcing of private label food products, agri-commodities and fruits F&V for all stores of the group has been centralized at FCEL.

Emergency Preparedness and Response. FCELs food park operations and Nilgiris facilities have potential risks associated with emergency situations, such as fires, explosions, uncontrolled hazardous material reactions, unplanned releases of hazardous (e.g. ammonia from the refrigeration system) or non-hazardous materials, bomb threats, and natural disasters, such earthquakes and floods, etc. To respond to such issues, the food park has installed a fire hydrant system for the whole park while fire extinguishers are found in each premise. On-site emergency plan has been drafted (yet to be finalized) in January 2016 to cover ammonia leakage (refrigeration system), fire/explosion (rice and flour mill and dust environment), chemical spillage (on-site diesel storage for diesel generator), natural calamities (storm, flood, and earthquake) and boiler incident. Drills have been conducted at the park since the last 18 months.

Areas of improvement identified at the food park operations during the site visit include:(i) development and implementation of an emergency response plan, (ii) formalization of the emergency team, (iii) marking of evacuation routes, (iv) strengthening the fire pumping system (in order to ensure the hydrant line is pressurized throughout the park), and (v) provision of a fire alarm system and sprinkler systems in case of ammonia leakage. An emergency preparedness procedure exist at Nilgiris facilities. Whereas the dairy processing plant is also using ammonia based refrigeration, no specific mitigation measures have yet been implemented in case of leakage, aside from a recent purchase order for handheld ammonia leak detector. Other emergency response improvements identified include the marking of evacuation routes and improvement of the emergency exits. Furthermore, one of the floors in the bakery facility did not have access to an emergency staircase. As set forth in the ESAP (action #4), FCEL and its subsidiaries (food park operations and Nilgiris facilities) will develop and strengthen its emergency preparedness response plans, including potential ammonia leakages (with handling and storage practices in accordance with industrys best practices, for example, from the International Institute of ammonia Refrigeration (http://www.iiar.org)). All employees and contractual workers will be trained on the updated emergency response plans through appropriate training and drills. The company will also review emergency evacuation preparedness at its facilities, including marking of evacuation exist and route signage, alarm systems, access to emergency exists, provision for control of leakage of ammonia and implement required corrective actions within the timelines agreed with IFC. The updated emergency response plans, sample of training, and mock drills record will be shared with IFC.

Training. Training plans encompassing environmental and occupational health and safety, material safety data sheets (MSDS), food and hygiene, waste segregation, first aid and emergency preparedness were provided for each company and subsidiary. Needs assessment for the preparation of the training plans is aligned with each subsidiarys legal and regulatory EHS requirements and licenses. Going forward, as set forth in the ESAP (action #2), upon completion of the ESMSs at corporate/companies level, in coordination with its respective subsidiaries, FCEL will define a training needs assessment and plan, for IFC review, including center of responsibility and budgetary allocation for its staffs (permanent and seasonal) and contractors at the food processing facilities in order to support effective implementation of their ESMSs.

Monitoring and Reporting. FCEL has not yet defined or implemented a comprehensive corporate and/or company level EHS monitoring and reporting system procedure. However, in accordance with their environmental licenses, FCEL subsidiaries (food park operations and Nilgiris facilities) prepare and submit annual monitoring reports to the Karnataka State Pollution Control Board (KSPCB), "known as Environmental Statement, which cover analysis of parameters, such as ambient air quality and point source air emissions, effluents, noise, solid/hazardous waste characterization, volume, and disposal, energy and water consumption and efficiency, and other EHS relevant aspects. FCEL subsidiaries also report on OHS related accidents to the labor authorities. IFC reviewed examples of these monitoring reports at all these sites. The scope of these reports covers the majority of the required EHS monitoring as included in WBG General and Sector-specific EHS Guidelines; exceptions include lost-time accidents statistics (LTIFR), estimation of GHG emissions, customer and community complaints, primary suppliers and contractors EHS performance. Major customers also undertake third-party audits against industry standards. Ad-hoc inspections from various Indian authorities (e.g. Environmental and Labor Authorities, fire safety) also take place. Based on information provided during appraisal, FCEL and its subsidiaries did not incur over the last three years on any material regulatory penalties, fines or sanctions for contraventions or non-compliance with statutory obligations, nor any reported fatalities at any of its retails and agro-processing operations.

As set forth in the ESAP (action #2) and as part of the ESMS development and implementation, FCEL will develop a monitoring and reporting framework at both corporate and subsidiary levels. The monitoring and reporting framework will describe: (a) key performance indicators (KPIs) on E&S compliance and performance as well as objectives and targets on sustainability(resource efficiency); (b) monitoring processes (e.g. corporate audits, internal/external audits); (c) reporting requirements in specific formats; and (d) process of regular management review for all subsidiaries by senior management. In line with the corporate monitoring and review framework guidelines, each subsidiary will develop and implement their own monitoring and review procedures including a subsidiary level management review. Each subsidiary will specify KPIs to be monitored, monitoring frequencies for all facilities and type of monitoring and the definition of thresholds that signal the need for corrective actions. In addition to applicable legal requirements, the monitoring thresholds will include thresholds specified in the WBG EHS Guidelines (both general as well as sector specific).

Also, a consolidated annual report, either using IFCs Annual Monitoring Report format or the Global Reporting Initiative (GRI) (G-4 Guidelines) will be critical to feed into a review of the implementation and effectiveness of the EHS management system. The above mentioned proposed Board of Directors Sustainability Sub-Committee will have oversight over this reporting process and will inform Future Group and FCELs Board of Directors on EHS performance at corporate, company and subsidiary level.

Stakeholder Engagement Plan. As indicated above, the majority of FCELs operations are located in semi-urban/rural industrial areas. As such, there is no directly affected communities and therefore no requirement for these operations to develop a Stakeholder Engagement Plan (SEP). As set forth in the ESAP (action #2), FCELs subsidiaries will nevertheless develop a Community Grievance Mechanism for all applicable sites, in case of any grievances related to noise and transport. EHS coordinator at FCELs subsidiaries should be assigned as community liaison officer.

FCEL has an employee strength of about 2,000 with a large proportion of its employees involved in agri-sourcing (about 700) and Nilgiri’s facilities (about 600). From this total, 26 employees work at the recently established food park operations. In addition, 226 contract workers are employed at the food park operations and 426 at Nilgiris’ facilities.



HR Policies, procedures, working conditions and terms of employment. Future Group has adopted a suite of HR policies (latest version as of May 1, 2015) which are then adopted/adjusted in all group’s companies, including FCEL, depending of the nature of the operations. These policies meet the requirements underlying the Indian Labor, Retail and Factory Acts, including freedom of association, diversity, non-discrimination and equal opportunity and prohibition of child and forced labor. All operations are required to obtain Factories License or its Certificate of Registration from the Department of Labor. The scope of these policies is applicable to all permanent employee with indefinite term of contract. Being a recently acquired business, Nilgiris still has its own HR policies. There is an on-going process of reviewing and harmonizing their policies to ensure alignment with Future Group and FCEL policies. All policies are available on the intranet and accessible to all employees. However, the communication of HR policies to employees at the food park operations and Nilgiris’ facilities is still largely informal. As set forth in the ESAP (action #5), FCEL shall ensure formal communication of its HR policies to its employees through induction sessions, HR handbooks or Board displays. All employees receive a written appointment letter explaining the working conditions. The State Department of Labor also undertakes annual inspections (at the processing facilities) and reports are provided, in case of non-compliance. Future Group’s HR team has received the certificate of HR Excellence by the Retail Association of India in 2015 as well as the award for employing maximum number of employees with physical disabilities.



Grievance mechanism. The group has a documented policy on redressal of employee grievances. As per the policy, any employee can raise a grievance to his/her immediate manager and then to the People Office representative at the unit. In case the grievance is not resolved, the same can be escalated to the unit head followed by Head of People Office for the company who will form a corporate grievance committee. The timelines for processing of grievances is defined within the policy. To strengthen the grievance mechanism in line with PS2 requirements, as set forth in the ESAP (action #6), specific methods of allowing filing of grievances anonymously will be included in the policy. In addition, a grievance logbook will be adopted at FCEL and its subsidiaries, and a summary of grievances received in a given year will be reported to senior management to address systemic issues, including rev
iewing the HR training plan at the corporate and companies’ level.



Freedom of Association. Future Group and FCEL fully support the principles of the freedom of association and collective bargaining in accordance with the Indian Labor Act and Trade Union Act. Currently, the employees at FCEL are not part of a union.



Non-discrimination and equal opportunity. The group has a documented policy on diversity and equal opportunity which commits to provide a work environment free of discrimination.



Protection of workforce. The group HR policy includes a policy on prevention of child labor which prohibits employment of anyone younger than 18 years. Age proofs are collected for employees and contract workers prior to employment. No specific instances of child labor or forced labor were noted during appraisal site visits of the facilities.



Occupational Health and Safety (OHS).Currently the OHS procedures are mainly targeted towards legal compliance. The food park operations and Nilgiris’ facilities have initiated the development process of an OHS management system. OHS Policy, workplace risk assessment, legal OHS registry, etc. have been completed. As set forth in the ESAP (action #2), the food park operations and Nilgiris’ facilities will finalize and implement its OHS management system. The risk assessment and implementation of the required management programs will be ensured through implementation of the ESMS for FCEL as part of the ESAP.



Supply Chain Risk Assessment and Management. Based on the wide range of products sold in Future Group stores, the sourcing is divided among a number of categories, e.g. fashion (garments), food, FMCG, staples, fresh F&V, general merchandise, furniture, crockery and decoration, furnishings, electronics, etc. For most of the abovementioned categories, sourcing is handled by different teams within FRL. Sourcing of private label food products and agri commodities including F&V, cereals (rice, wheat), pulses, dry fruits, oils, flours, etc. is led by FCEL teams. The latter has a network of 51 collection centers (sourcing hubs) and six processing centers (mainly for repacking of bulk goods into consumer packs) sourcing more than 100,000 tons/year. Among agri commodities, most of the commodities are sourced from either traders or millers in bulk. There are no direct relationships with primary suppliers, which are mostly comprised of smallholders. The F&V are sourced both from farmers as well as from traders at local agricultural produce markets (mandis). These transactions are spot market based and there is no long term management relationship between buyers and sellers. The company has a sourcing team in each of its 51 collection points, composed of two extension officers in each of the zones which monitors the crop production in the area, maintains rapport with the farmers in the area and provides them knowledge on local crops (e.g. on improving yields, seed varieties). Currently the company is directly
sourcing from 400 farmers, however, they do not have any long-term contracting relationship with the company and these suppliers are free to sell their produce to anyone.



For private label food products, FCEL has a network of 50+ suppliers. The suppliers are selected through a pre-assessment audit process from FCEL. The audit focuses on quality and food safety (ref. Food Safety and Standards Authority of India). Most of the suppliers for FCEL have food safety and quality certification. However, FCEL does not have a formal E&S code of conduct or checklist for these suppliers.



In accordance with the United States Department of Labor’s (DoL’s) list of goods produced by child or forced labor, high risk of child labor and forced labor (relevant for a business like FCEL’s) in India is present in rice, sugarcane and garment production. In this case, the rice and sugar are sourced from mills. Thus FCEL does not have any direct relationship with the rice and sugarcane smallholders. However, considering brand risk associated with the private label food suppliers, as per the ESAP (action #8), FCEL will complete a risk assessment of these suppliers with respect to potential of child labor, forced labor and significant OHS issues. Based on the risk assessment, FCEL will conduct compliance audits of a sample of such suppliers. The audits will be conducted through a qualified professional (acceptable to IFC) and in case any changes are needed in the supply chain risk management processes of the company, the same will be agreed and implemented in the time frame agreed with IFC. Further, as set forth in the ESAP (action #8), FCEL will prepare a Supplier Code of Conduct for its suppliers and make explicit reference to applicable supply chain requirements in the IFC PSs. Specific requirements of the code of conduct will then be included in the contracts signed with suppliers. The company will also document and implement oversight monitoring and review processes which will include inspections for screening on an ongoing basis for suppliers (with a potential risk of child labor and/or forced labor) with agreed consequences of non-compliance. The ongoing risk assessment of the supply chain shall be part of the FCEL ESMS.



As it relates to milk sourcing for the Nilgiris dairy processing, the US Department of Labor List of Goods produced by child labor and forced labor does not identify child labor associated with the dairy industry in India. This plant is sourcing raw milk from 5,000 suppliers, each having 3-4 cows, within a radius of 120km. The raw milk is being brought to 27 collection/chilling centers. Nilgiris has been developing a training program for these farmers to improve raw milk quality and has provided technical (veterinarian) assistance on animal feed and husbandry (semi-confined model). Based on information provided during appraisal, there is limited child involvement in this activity. In order to prevent any incidence of child labor in its su
pply chain, Nilgiris will adopt, as set forth in the ESAP (action #8), a management procedure for its supply chain, which include the development and implementation of a Supplier’s Code of Conduct which will be mainstream into its contractual agreement with dairy suppliers. Effective implementation of this code will be done by Nilgiris extension officers located at collection centers.



Third party workers. Contract workers are employed at the food park and at Nilgiris for the manufacturing operations as well as housekeeping. The HR personnel at both FCEL and subsidiary facilities review contractors’ documentation to ensure compliance with the wages (i.e. at least minimum wage) and working hours.



As a number of new facilities are being constructed at the food park, including FCEL’s rice and wheat mill and more expansion projects are expected in the future, as per the ESAP (action #7), FCEL will monitor and document construction contractors’ performance (against legal requirements and WBG General EHS Guidelines) at all operations. These reports will be shared with the corporate management. FCEL will formalize the monitoring of contractor performance as part of the job description of responsible employee (s) for applicable sites.

Energy use and greenhouse gas emissions. Provision of electricity at FCEL is provided by the national grid at the warehouses and agro-processing facilities. In addition, back-up diesel generators (DG) are found at agro-processing operations for power outages. Back-up DG sets are provided for the manufacturing facilities at the food park as well as at Nilgiris’ facilities. The boilers at different processing plants runs on diesel, briquettes (ref. food park) or wood (Nilgiris’ dairy processing plant). Energy consumption is being closely monitored at all sites, in order to minimize operational costs. Data on electricity, diesel, and liquefied petroleum gas (LPG) (Nilgiris’ bakery) were available during appraisal. Resource efficiency initiatives are continuously being investigated at each subsidiary/business level. For example, the food park is exploring the option for the installation of solar panels on warehouse roofs. Similarly Nilgiris’ facilities have implemented various energy saving initiatives to reduce electricity and LPG consumption. For example, at the dairy facility, new refrigeration compressors and automated power factor modulating unit has been installed ensuring to maintain the power factor at 95% at all times. As per available data, the power consumption at the dairy facility is 0.07 kWh/liter of milk processed, which is lower than the industry benchmarks provided in WBG EHS Guidelines for Dairy Processing. Also, at the bakery facility, a gas evaporation system has been installed for LPG which helps in total utilization of LPG and resulting in saving of 3-5% LPG consumption.



At a corporate level, in the absence of a well-defined EHS policy, FCEL has not yet established any energy efficiency objectives and targets which would prioritize and drive wider resource efficiency program, which would be monthly/annually monitored through the KPIs process. As part of the development of the corporate ESMS mentioned in PS1, the company will define specific commitments on resource efficiency and develop and implement a resource efficiency program at all their businesses/subsidiaries.



Greenhouse gas (GHG) Emissions: Based on available data, the annual GHG emissions from FCEL operations (including the current food park operations and Nilgiris’ facilities as well as the three new units under construction/proposed at the food park) are estimated to be about 20,000 tons of CO2 equivalent.



Air emissions monitoring. Main source of air emissions are the gensets at all sites and boilers at the processing plants. Gensets are only used for emergency basis as power outage seldom happened. Boilers and gensets undergo semi-annual maintenance inspection to optimize efficiency. The emissions from the boilers and gensets are tested, by independent laboratories, in accordance with applicable national standards. Latest available data (December 2015) confirmed that boilers and gensets’ point source air emissions were in compliance with KSPCB (ref. Consent
on air quality) and WBG point source air emissions limits (ref. small combustion facilities emissions guidelines). Nilgiris dairy processing has changed its High Sulfur boiler and stopped using fossil fuel and now uses briquettes and biomass as feedstock. Registration of the wood suppliers with the Karnataka Forest Department have been validated during appraisal. Ambient air quality parameters (as of December 2015) provided for the food park operations and Nilgiris’ facilities (as of November 2015) are within the limits as per standards provided in the National Ambient air Quality Standards (NNAAQS) and WHO Ambient Air Quality Guidelines.



Noise. All processing sites (food park operations and Nilgiris’ facilities) comply with local regulation for noise and WBG noise level guidelines. In high noise environments (e.g. proximate to the genset or boiler), appraisal site visit confirmed that workers were wearing ear plugs.



Water use and efficiency. Water supply at the food park operations and Nilgiris’ dairy facility is groundwater abstracted through on-site bore wells. The bakery facility purchases water from an external vendor, which is supplied through tankers. The water is suitably treated through reverse osmosis (RO) plants for process use after analysis to confirm quality parameters required for the process. The dairy and bakery facilities are located in one of the Taluks (a local administrative zone within a district) notified by central groundwater board (CGWB) (where no new bore wells are allowed). It is critical for the Nilgiris dairy operation to assess the sustainability of its groundwater supply. As set forth in the ESAP (action #9), Nilgiris will agree with IFC on Terms of Reference (ToR) for conducting a hydrogeological study and the development of groundwater sustainability plan for its facilities (especially applicable for the dairy processing facility considering its current water footprint of 100,000 liters/day). The company will hire an external consultant (acceptable to IFC), who will undertake the required studies and develop the plan within agreed timelines. The study will assess availability of the groundwater resources and will describe various measures the company will need to take to ensure that its groundwater abstraction is sustainable. The company will prepare an implementation plan for these measures and agree on timelines with IFC. The food park has implemented a rainwater harvesting (RWH) system wherein all the rooftop as well as surface rainwater runoff is collected in RWH pits. Part of the rainwater is reused (after treatment) whereas part of it is used for recharging the groundwater.



Wastewater treatment. As required in the Environmental License’ Terms and Conditions, a common effluent treatment plant (CETP) has been provided at the food park, which is maintained by FCEL. Domestic sewage generated at the food park is also treated within the CETP. On-site ETPs are also present at Nilgiris’ facilities for
treating process effluents whereas the domestic sewage is discharged in the septic tanks provided on-site. Treated effluent from the CETP (at food park)/ETP (at Nilgiris’ facilities) is reused on-site for gardening. The effluent quality test results for these plants were noted to be in compliance with Karnataka State Pollution Control Board. As it relates to WBG’s indicated values for treated sanitary sewage discharges, results demonstrate compliance regarding pH, total solid particulates and, oil and grease. A slight exceedance on BOD is noted (48 versus 30) at Nilgiris dairy ETP. As all the treated effluents from all sites are not released to surface waters and are used for irrigation purposes, CETP/ETP performance is judged satisfactory.



Management of solid and hazardous waste. At the food park operations, the main waste streams generated are the organic waste (cooked food, F&V, especially waste generated from mango and tomato pulping) and recyclable - plastic, metal and packaging waste (cardboard, paper). Waste are collected in separate bins of organic and other wastes, placed at a number of locations. The food park management engages with an external consultant regarding a waste management plan for the entire park (including anticipating future needs.) Currently the organic waste is being composted and the option of bio-gas based power plant (with the organic waste as input) is being evaluated. Also, it is proposed to use the mango stones as feedstock for the biomass boiler in the future. The recyclable waste is sold to external waste management service providers. Hazardous waste generated at the food park includes used oil (used for initial firing of the briquette boiler), used batteries (returned to the vendor), electronic waste and ETP sludge (disposed of through authorized vendors). Confirmation of the existence of appropriate secondary structures consisting of walls capable of containing more than 110 percent of the tank volume (diesel) were observed at the food park and Nilgiris’ dairy and bakery operations.



Pest Management Control. For all FCEL sites, in accordance with HACCP requirements, pest control is outsourced to a service provider.

Though new facilities will become operational in the food park in the future, the park is located in an industrial area within 1 km of a national highway. Therefore, traffic related impacts are expected to be limited. No expansion is expected in Nilgiris’ manufacturing operations as a result of the project.



Security forces. Unarmed private security guards are employed at all manufacturing facilities. As indicated above, as the manufacturing facilities are located in industrial areas and stores are mostly in urban commercial areas, no specific community related impacts are expected.



Transportation safety. As regards to transportation, all vehicles used for transportation by FCEL are hired through external transport service providers. As part of the ESMS, driver training, awareness and control systems will be implemented to minimize risks to safety of communities from vehicles plying to and from the warehouses/stores.

As per the requirements of the Companies Act 2013, FCEL is required to spend 2% of its average past 3 years net profit (after tax) on corporate social responsibility (CSR) activity as defined under the CSR Rules, 2014. FCEL has therefore set up a CSR Committee at the Board of Directors level and documented a CSR policy. As per the policy, the company will focus on activities on eradicating hunger, providing safe drinking water, education, women empowerment, environmental sustainability, promoting arts, culture and sports among others. As per the policy, Annual Report of the company includes a section on CSR which describes CSR policy, committee, initiatives undertaken by company, and CSR spend during the financial year.

In terms of disclosure of E&S information, the publication of the ESRS and ESAP will be the company’s first disclosure of such information. As per the ESAP (action #2) and as part of development of ESMS procedures, FCEL’s subsidiaries will develop a Community Grievance Mechanism for all applicable sites, in case of any grievances relates to noise and transport. EHS coordinator at FCEL’ subsidiaries should be assigned as community liaison officer.

Considering the corporate nature of the investment, FCEL will disclose this ESRS and the ESAP at the following address:

Future Consumer Enterprise Limited
Tower C, 4th Floor, 247 Park
LBS Marg, Vikhroli (W)
Mumbai – 400083, India.
Phone: +91 22 61994093
Facsimile: +91 22 61995391

Any queries and/or comments about the project may be directed to:

Mr. Manoj Saraf
Chief Financial Officer
Future Consumer Enterprise Limited
Tower C, 4th Floor, 247 Park
LBS Marg, Vikhroli (W)
Mumbai – 400083, India.
Phone: +91 22 61994093
Facsimile: +91 22 61995391
Email: mailto:manoj.saraf@futureconsumer.in

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
(a) Strengthen the corporate environment and occupational health and safety (OHS) policies with additional elements as described in the ESRS and share a draft copy with IFC. The policies to be formally adopted by FCEL board. [to be completed by 30th June 2016] (b) All FCEL subsidiaries to document their E&S policies in line with the corporate policies.	12/31/2016
Engage a qualified consultant (that meets IFC’s requirements) and agree with IFC on terms of reference (ToR) for the consultant for development of a corporate level E&S management system, which covers all the key elements described in the ESRS and as described below. The ToR of the consultant will also include providing support to the company in implementation of the ESMS (at least for a year) and conducting regular (e.g. six monthly) reviews based on a pre-determined plan to review implementation at corporate and subsidiary levels.	06/30/2016
In line with the corporate environment and OHS policies, develop a corporate level environmental and social management systems (ESMS) encompassing all elements of IFC Performance Standard (PS) 1. The key aspects covered in the corporate ESMSs will include: • Assessment of key environment and OHS risks and impacts that each subsidiary/business (for example, agri-sourcing, food park, brands and convenience store businesses) will focus on and manage • E&S commitments at corporate and subsidiary levels • E&S organization • Monitoring and review framework including ongoing review of compliance status of all businesses with respect to corporate commitments and management systems, including KPIs • Periodic reporting to and review of E&S performance by board and senior management	01/31/2017
Ensure that all subsidiaries develop their ESMSs (in line with the corporate policies and management systems) and include IFC PSs requirements as described in the ESRS. Some of the key elements in each subsidiary’s ESMS will include: • Risk assessment and screening of new projects (either greenfield or brownfield acquisitions) to identify any E&S risks or impacts with respect to IFC PSs and legal requirements and preparing a management plan for the same; • Life & Fire Safety (LFS) management programs for all facilities; • Emergency preparedness and response; • Contractor management programs to supervise their compliance with legal requirements and IFC PSs; • Pollution prevention processes, including solid and hazardous waste management plans; • Occupational, health and safety management programs commensurate to the risk posed by the activities; • Resource efficiency program with specific commitments on resource efficiency; • Transport safety management; • Monitoring and reporting (internal and external) framework including the key E&S performance indicators for effectiveness; • Community grievance mechanism; • Roles and responsibilities of all personnel involved; • Training plans with roles and responsibilities and budgetary allocation for its staff (permanent and seasonal) and contractors; and • Periodic management review.	07/01/2017
Ensure implementation of both the corporate and subsidiary level ESMSs.	06/30/2018
Appoint appropriately qualified (ref. M.Sc. Degree in Environmental/OHS management system) and experienced full-time EHS managers, who will be responsible for development/implementation of corporate EHS policies and systems, and monitoring oversight of EHS management systems and program effectiveness at subsidiaries level, as described in the ESRS.	01/31/2017
(a) FCEL subsidiaries (food park operations and Nilgiris facilities) to develop and strengthen its emergency preparedness response plans, including potential ammonia leakage (with handling and storage practices in accordance with industry’s best practices, for example, from the International Institute of ammonia Refrigeration (www.iiar.org)). [to be completed by 31st March 2017] (b) All employees and contractual workers to be trained at these facilities on the updated emergency responses plans through class room training and mock drills. (c) Strengthen emergency evacuation preparedness at these facilities, by marking of evacuation exits and routes, provision of alarm systems, provision of adequate pumping capacity for hydrant system (at food park operations), access to emergency exits, provision for control of leakage of ammonia. [to be completed by 31st March 2017]	07/01/2017
Ensure formal communication of its human resource (HR) policies to its employees through induction sessions, HR handbooks or Board displays.	03/31/2017
Strengthen the Group’s grievance mechanism, in line with PS2 requirements, by including specific methods of allowing filing of grievances anonymously. Also, as part of the grievance mechanism, adopt a grievance logbook in FCEL and subsidiaries, and initiate preparation of a summary of grievances received in a given year which shall be reported to senior management to address systemic issues.	03/31/2017
Develop an oversight mechanism for monitoring and documenting construction contractors’ performance as part of daily business of its owned sites and reports to be shared with the corporate management. Also to formalize the monitoring of contractor performance as part of job description of responsible employee (s) for applicable sites.	03/31/2017
(a) Prepare a Supplier Code of Conduct for suppliers and make explicit reference to applicable requirements of IFC PSs for supply chain (i.e. prevention of harmful child labor, forced labor and ensuring safety of workers) in the code of conduct. [to be completed by 28th February 2017] The code of conduct shall be supported by oversight monitoring and review processes which will include inspections for screening on an ongoing basis for suppliers (with a potential risk of harmful child labor, forced labor and significant safety risks) with agreed consequences of non-compliance. (b) Include specific requirements of the code of conduct in the contracts signed with suppliers especially for categories with potential risk of harmful child labor, forced labor or significant safety issues (e.g. dairy suppliers) or risk of association with the brand (e.g. private label food suppliers). [to be completed by 31st March 2017] (c) Complete a risk assessment of its supply chain of private label food suppliers with respect to potential of harmful child labor and forced labor. [to be completed by 31st December 2016] (d) Based on the risk assessment, conduct compliance audits of a sample of private label food suppliers through a qualified professional (acceptable to IFC). [to be completed by 31st March 2017] (e) Based on the audits, in case any changes are needed in the supply chain risk management processes of the company, the same to be agreed and implemented in the time frame agreed with IFC. Deliverables: (i) Suppliers code of conduct; (ii) Sample supplier contract with code of conduct requirements included; (iii) Results of risk assessment and audits of selected private label food suppliers; (iv) in case required, a plan describing changes needed in the supply chain risk management processes with timelines.	06/30/2017
(a) Nilgiris/FCEL to agree with IFC on terms of reference (ToR) for conducting a hydrogeological study and development of groundwater sustainability plan for its facilities (especially applicable for the dairy processing facility considering its current water footprint of 100,000 liters/day). [to be completed by 30th June 2016] (b) Based on the ToR, conduct the studies and develop the plan through an external consultant (acceptable to IFC) within agreed timelines, describing various measures the company will take to ensure that its groundwater abstraction is sustainable. [to be completed by 31st March 2017] (c) Prepare an implementation plan for these measures and agree on timelines with IFC.	06/30/2017