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
The plant is located in the Zhuhai State High-tech Industrial Development Zone which was approved by the local government in 1999 and there are no nearby residential communities. Given the project location allied to the fact that there are no transport or security related issues, PS4: Community Health Safety and Security is not applicable to the project. Land (wetland) was reclaimed for development of the area where Essex’s plant is located and no resettlement was required for development of the project area. Some resettlement was conducted as part of broader areas of the Zhuhai zone though this was not undertaken in anticipation of the Essex project which occupies less than 1% of the total size of the industrial zone. Thus PS5: Land Acquisition and Involuntary Resettlement is not applicable to the project and neither is PS:6: Biodiversity Conservation and Sustainable Management of Living Natural Resources or PS:8: Cultural Heritage given the project location with an established industrial zone. Finally there are no indigenous people in the vicinity of the project and thus. PS7: Indigenous Peoples does not apply.

The proposed investment involves expanding existing operations. Acquisition of new sites and/or plants is not planned as part of the project. Based on information reviewed by IFC the proposed investment is expected to have limited environmental and social impacts which are expected to be site-specific and none is expected to be significant. Further, these impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria, as described in the following sections. Thus this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy.

Key E&S risks and issues related to this investment include: the company’s capacity to assess and manage its EHS and social performance; assurance of fair, safe and healthy working conditions for its own employees as well as contractors’ during operations and expansion/modernization (if any); management of air emissions and wastewater discharges; handling and management of hazardous materials and wastes; and emergency preparedness and response.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental and Social Assessment and Management System

In accordance with the national legislation in China an Environmental Impact Assessment (“EIA”) is required for construction of the manufacturing facilities. As part of the national approval process the company undertook an EIA for the plant in 2013 - 2014 and relevant approvals from the environmental authorities were obtained. The latter included public engagement in accordance with local regulations. In alignment with national requirements, in case of expansion or modernization Essex shall reevaluate environmental impacts associated with the changed production process and/or increased production capacity.



Essex is GMP certified and hence undergoes regular external and internal audits. Several aspects of EHS are covered under the requirements of GMP especially those related to occupational health and safety. In addition, the company has initiated the European Union (EU) GMP certification process for the plant.



Essex has developed operational procedures on hazardous materials handling, wastewater and waste management and occupational health and safety though there is no overarching EHS / Sustainability policy and formalized EHS management system. Thus in accordance with the Environmental and Social Action Plan (ESAP) Essex will formalize its existing procedures into an EHS management system (MS). As part of the EHS MS a policy will be developed to include the associated objectives and principles and articulate the company’s commitment to comply with the applicable laws and regulations as well as compliance with IFC Performance Standards. Consistent with the policy and the objectives and principles described therein, the client will develop and implement management, monitoring and training plans aligned with IFC Performance Standards requirements.

.

Organizational Capacity and Competency

The Executive Vice President for manufacturing is in charge of EHS management and supported by a dedicated EHS engineer. A robust EHS organizational structure is in place with nominated roles and responsibilities for managing all day-to-day operational EHS issues. Safety trainings are regularly planned and conducted at the plant (including induction, job-specific and emergency preparedness and response trainings).



Monitoring and review

The company implements a monitoring program in accordance with national requirements. Going forward and as described above, Essex will formally document its monitoring program and in doing so review the World Bank Group (WBG) General EHS Guidelines and EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing and modify the monitoring program if needed to include all the applicable parameters in those guidelines and the definition of thresholds that signal the need for corrective actions. Regular monitoring will then be conducted for these parameters and corrective actions taken as necessary.



Emergency Planning

The plant is equipped with adequat
e firefighting equipment and a fire response team has been nominated and trained. The plant was designed in accordance with the recommendations of the local Fire Protection Regulations and upon completion of construction works was inspected by the local fire safety agency and compliance with national regulations was confirmed prior to commissioning. The transport of chemicals is organized by third party suppliers. All buildings have demarcated emergency routes and exits, fire extinguishers, hydrants, smoke detectors and alarms. Emergency response procedure define roles and actions in case of emergency. Fire drills as well as training on various emergencies (e.g., leakages of hazardous materials) are regularly planned and implemented by the company.



Supply chain

For its suppliers (various chemicals) Essex maintains a formal supplier evaluation scheme through which potential vendors are evaluated based on a number of factors including quality, timely delivery and cost. As described in the ESAP, Essex will evaluate its primary supply chain and if significant occupational health and safety risks are identified, Essex will ensure these primary suppliers implement steps to prevent or to correct these risks. Where remedy is not possible, the company will shift the project’s primary supply chain over time to suppliers that can demonstrate that they are complying with Essex’s OHS requirements for suppliers.



When entering into a partnership with pharmaceutical company for exclusive distributor rights, Essex evaluates potential partners on a number of factors including quality, timely delivery, cost, and technical capabilities. In order to further strengthen its EHS risk management approach Essex will adopt a set of EHS criteria with particular focus on compliance of the partner company with national regulatory requirements and adequacy of occupational health and safety risk management; this action is part of the ESAP. These criteria should be considered during the selection process of potential partners.

Essex currently employs around 900 employees which comprises around 760 sales and marketing staff and about 140 production and R&D staff. Female employees constitute approximately 50% of the total workforce. All existing employees of Essex are directly employed



Human Resource (HR) Policy

The company has a documented HR policy in line with Chinese labor law requirements and aligned with Performance Standard 2 objectives. The policy include details such as terms of employment, policies and procedures for compensation and other benefits, training, performance evaluation process and that related to promotions.



As is common practice in China, although not explicitly stated in the Essex’s policy, employment relationships recognize the principals of non-discrimination and equal opportunity.



All the employees receive a copy of the staff handbook at the time of joining, together with their appointment letter and contract. The company allows trade unions and there is a registered workers union is active at Essex plant.



Retrenchment

The company does not expect any retrenchment.



Grievance Mechanism

Employees can raise any grievance to management through their supervisors or through their HR teams. In addition, Essex has provided a grievance box in the plant’s canteen where anyone can submit their grievances anonymously. Further, an open forum is held on a regular basis to negotiate the company salary system, management and labor related issues. So as to formalize the grievance procedure and in accordance with the ESAP, Essex will document the current approach and ensure this is consistent with Performance Standard 2 requirements.



Occupational Health and Safety

The company has in place an elaborate OHS procedures and OHS is an integral part of the induction process and ongoing GMP related trainings for all employees.



All production areas are organized following GMP and the pharmaceutical process requirements and work instructions are displayed on the shop floor.



Personal protection equipment such as overalls, gloves, safety shoes, masks and glasses are provided to all the workers in the production areas, as per the GMP requirements, and these are commensurate with the nature of operations and potential safety hazards.



Due to a strict safety procedures in place, there has been no reportable major accident or incident at the company’s operational facilities since the plant was commissioned in December 2014. Essex has developed and implemented an internal procedure on recording, investigation and reporting of incidents.



In the event of plant modernization and or expansion, the company will include relevant clauses in contracts for contractors involved such work to ensure proper OHS management on the construction sites. Moreover, the company staff will also monitor the performance of contractors to ensure compliance with stipulated requirements.

Energy Sources and GHG Emissions

The plant is connected to municipal electricity utilities. Total consumption of electricity for the company’s operations in 2015 was 3,909,510 KW/h.



A diesel generator has been installed on site as backup generator for use in the rare case of power failure. Exhaust gas produced from the standby power generator is treated by wet scrubbers before being emitted. The emissions are tested periodically and maintenance is contracted to an outside party.



Based on grid electricity purchases and diesel used for all operations, the total estimated CO2 equivalent emissions for the company’s operations in 2015 is 3,000 tons.



Water and Wastewater Treatment

Water required for process and domestic consumption is provided by the Zone authority. Potable water (in bottles) is provided by Essex to its employees. Wastewater generated during the process (mainly during cleaning and the fermentation processes) is biochemically treated onsite before being discharged to the Jinfeng sewage system from which waste water is treated at a central wastewater facility. The company’s wastewater treatment facility includes an anaerobic pool, contact oxidation, sedimentation and disinfection tanks. Wastewater generated and treated is regularly monitored in accordance with national requirements. A review of sample monitoring reports during the appraisal confirmed compliance with applicable regulatory requirements and the WBG EHS Guidelines. Storm water is discharged into the Zone sewage treatment and treated at a central wastewater facility.



Hazardous Materials and Wastes

Essex complies with all relevant regulations for the storage, handling and disposal of hazardous materials used in the production process. Hazardous materials used by the company include ethylene oxide (20%), benzalkonium bromide (maximum storage capacity is 500 liters), ethyl alcohol (100 liters), sulfuric acid (50 liters), etc. Hazardous liquid materials are stored in original packing (mainly 500 ml bottles) in a central warehouse and moved to manufacturing areas prior to use.



All the requirements for storage and handling of hazardous materials are strictly followed as per the respective Material Safety Data Sheets and GMP requirements. Adequate secondary containment is provided for spill control in the hazardous materials storage area. Detailed procedures are also available in workshops/warehouses where hazardous materials are used and stored.



The generated sludge from the plant’s wastewater treatment facility is disposed of through licensed waste management contractors as per the regulatory authorizations. Pharmaceutical waste is sent to local waste incineration station operated by a licensed contractor. General waste (average annual generation doesn’t exceed 1 ton) is disposed of by the local sanitation authority. Adequate controls during the storage and handling are in place.



Going forward, as included in the ESAP, Essex should incorporate the necessa
ry clauses in the contract with the licensed hazardous waste management contractors to require the contractor to provide a complete chain of custody documentation (signed off at various check points) during day to day waste handling/disposal.

During the EIA process public opinion on expected environmental performance and mitigation measures was collated in accordance with national requirements. Based on information reviewed during the appraisal including the results of public survey conducted in 2014, the public supported Essex’s project.

As part of its community engagement activities, the company has participated in various charity activities including donations in case of disasters.

Although there are no communities expected to be directly affected by the project, Essex should develop and implement an external grievance redress mechanism (see ESAP item) to address any concerns from communities.

All inquiries and comments may be directed to:

Contact Person: Mr. Fang Haizhou
Company Name: Essex Bio-Technology Co Ltd.
Address: No. 88, Keji 6th Road, Hi –Tech Zone, Zhuhai, Guangdong, China
Email: mailto:fanghaizhou@essex.com.cn
Phone: +8613809801958

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Formalize an Environmental, Health and Safety (EHS) Management System (MS). The EHS MS should include: a policy which will include the associated objectives and principles articulates the company’s commitment to comply with the applicable laws and regulations as well as compliance with IFC Performance Standards; management and training plans consistent with the policy; an EHS monitoring program aligned with the World Bank Group (WBG) General EHS Guidelines and EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing.	12/31/2016
Evaluate the primary supply chain and if significant occupational health and safety risks are identified, introduce procedures and mitigation measures to ensure that primary suppliers within the supply chain implement measures to prevent or to correct these.	12/31/2016
Develop a set of EHS criteria (focused on compliance with national regulatory EHS requirements and adequacy of occupational health and safety risk management) to be implemented during evaluation of potential partners.	08/31/2016
Develop and implement an external grievance redress mechanism aligned with Performance Standard 1 requirements to address any concerns from local communities.	08/31/2016
Formalize and document the current grievance mechanism in a manner consistent with Performance Standard 2 requirements and communicate this to employees.	08/31/2016
In case of modernization/expansion, include safety specific covenants in the contracts of the contractors involved in construction to ensure proper safety management on the construction site. In addition, monitor contractor compliance with the contractual requirements.	12/31/2018
Include clauses in the contract with the licensed hazardous waste management contractors to require the contractor to provide a complete chain of custody documentation (signed off at various check points) during day to day waste handling/disposal.	08/31/2016