Issues related to PS5: Land Acquisition and Involuntary Resettlement, PS7: Indigenous Peoples and PS8: Cultural Heritage are not expected with this investment for the following reasons: there is no planned onshore operational expansion related to this investment; the populations of the Solomon Islands is indigenous, with no group identifying itself in a manner which would trigger PS7 for this project; no known cultural artifacts and/or property was identified as being impacted by the company’s operational footprint project in a manner which would trigger PS8. In the event that issues anticipated by these PSs arise, NFD will inform IFC. Screening and assessment of these issues against PSs requirements will be done through the proposed NFD’s EHS management system.

This is IFC’s second direct investment in a project having a wild-catch fisheries component since the IFC’s Performance Standards were updated in 2012 (first one being Solomon Islands, SolTuna #32053). NFD has made significant progress on fishery sustainability through the Marine Stewardship Council (MSC) certification process. In addition, Tri Marine Group has recently adopted a Code of Conduct and a Ethical Sourcing Policy which are progressively implemented. Nonetheless, based on sustainability risks inherent to wild capture fisheries, concerns with the sustainability of the longline fishing, and risks of forced labor and human trafficking on distant water fishing vessels, this loan is categorized as Category A as per IFC’s Environmental and Social Sustainability Policy. Category A projects are defined as those which have business activities with potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented. IFC’s Lead Environmental and Social Specialist (LESS), with the technical assistance of a World Bank’s fishery expert, has followed the same set of principles, defined under #32053 http://ifcextapps.ifc.org/ifcext/spiwebsite1.nsf/78e3b305216fcdba85257a8b0075079d/ef45494ee2faaf3385257b410065bb9f?opendocument. These principles help guide its engagement with the Solomon Islands tuna fisheries as well as the regionally based tuna management organization (WCPFC) where the intent is to support the strengthening of the fishery governance and the long-term sustainability of the tuna resources.

Overall E&S issues associated with this investment are: (i) compliance with regional and national fisheries regimes to ensure sustainability of all tuna fisheries used by the project; (ii) compliance with SIs’ Tuna Management and Development Plan (TMDP) for purse and seine and pole and line, Pole and Line’s Baitfish Management Plan, Purse Seine FAD Management Plan, Longline (LL) Fisheries Improvement Program (FIP); (iii) applicable national laws and regulations and validity of operational licenses; (iv) robustness of the NFD’s environmental, occupational health and safety (EHS), and social (labor) management systems for offshore and onshore operations, including QEHS organizational structure and technical competency for effective implementation; (v) monitoring and reporting of NFD’s QEHS management system and overall performance; (vi) fair and safe working conditions meeting Solomon Islands’ labor and OHS laws and PS2 requirements for permanent and casual employees, including sea crew and contractors; (vii) Emergency Preparedness and Response Plan, including fire safety provisions for offshore and onshore operations; (viii) water and energy use efficiency; solid/hazardous waste collection and disposal, effluents and air emissions, (ix) community health and traffic safety, (x) supply chain risk assessment and management, including forced labor and human trafficking risks and on-boat safe working conditions.

Environmental and Social Policies. Tri Marine has adopted a suite of policies and supports global and regional partnerships with the intent to: (i) promote best fishery practices, through its membership of the International Seafood Sustainability Foundation (ISSF, http://iss-foundation.org/), a global partnership that include scientists, most of the world’s leading tuna processors and brands, and the World Wildlife Fund (WWF); (ii) supply responsibly caught products sourcing tuna resources from Marine Stewardship Council’s (MSC) standards - https://www.msc.org/- certified fisheries; (iii) invest in collaborative scientific research, including working with the Secretariat of the Pacific Community (SPC) to test and institute digital logbooks for tuna fishing vessels, to enable researchers access to its purse seine vessels to develop by-catch mitigation measures, to partnering with SPC and FFA to develop electronic monitoring on long liners for improved observer coverage; conducting tuna tagging onboard its vessels to help scientists gather important data on tuna behavior, etc.; (iv) engage with policy makers to promote better fisheries management; (v) facilitate multi-stakeholders fisheries improvement projects, including the Solomon Islands’ Tuna Longline Fishery Improvement Project (FIP) – further details being provided in PS6; and (vi) support coastal communities through local recruitment for its onshore facilities. NFD and SolTuna contributes significantly to food security through the domestic distribution of canned tuna products.

Tri Marine adopted in January 2014 a “Code of Conduct” outlining a set of responsible principles and ethical standards applying to all Tri Marine and affiliates (including NFD & SolTuna) operations, on EHS and labor requirements. To support the implementation of the Tri Marine’ Code of Conduct by its third-party suppliers, Tri Marine adopted an Ethical Sourcing Policy in November 2015 which aims to prevent any abuses, including unsafe working, forced labor practices and any human trafficking in Tri Marine and affiliates’ supply chains. Applicable standards are based on compliance with all International Labor Organization (ILO) fundamental conventions – all captured within IFC PS2 requirements – and The Work in Fishing Convention (2007, No. 188). Details on operationalization of this policy will be provided in PS1-Supply Chain Risk Assessment and Management section (ref. 30 longline operators under NFD’s fishing licenses in 2016).

NFD’s main EHS efforts so far has been focusing in managing relevant E&S risks and impacts of its offshore and onshore operations by complying with applicable Solomon Islands’ legal and regulatory requirements. NFD has not yet adopted corporate level QEHS policies or Standard Operating Procedures (SOPs) outlining its intent to pro-actively manage Quality, Environment, Occupational Health and Safety, and Social (Labor) issues in its operations. As set forth in the attached ESAP, NFD will develop and implement a comprehensive QEHS policy framework indicating that (i) the scope of the policies encompass all NFD’s offshore and onshore operations, including supply chain risks associated with longline operators, (ii) the QEHS performance-level objectives will include reference to applicable Solomon Islands’ legal and regulatory requirements, IFC’s Performance Standards, WBG General EHS Guidelines, the IMO (safety at sea) and ILO (Work in Fishing Convention) requirements, (iii) the structure of the QEHS management system will be consistent with ISO 14001, OHSAS 18001 and ISO 22001 management system structure and requirements. Upon completion of the QEHS drafting process, the policies will be reviewed and officially endorsed by NFD’s Board of Directors. The policies will be translated to local language(s), will be communicated through a structured EHS communication strategy to all NFD’s permanent and casual employees, contractors and third-party suppliers (e.g. licensed longline operators as well as non-licensed long liners supplying NFD). The QEHS policies will be posted in NFD offices and warehouses, and will be made available on NFD’s external and internal website. These QEHS policies will be introduced during worker and contractor induction sessions. Written acknowledgement of such policies by each employee and contractor will be required. Job description of NFD’s Managing Director, Operations Manager, HR and Business Line Managers (Purse and Seine, Pole and Line, Longline and onshore operations) will be updated to reflect these new QEHS responsibilities. These policies will also be included into each contractual agreement.

In order to ensure effective implementation of the QEHS policies, as set forth in the ESAP and mentioned below in the PS1-Organization Structure and Competency section, NFD will recruit a full-time EHS coordinator as well as to officially establish an accountability framework (e.g. NFD’s EHS Committee) which will review, on a quarterly basis, progress achieved on QEHS policies implementation, effectiveness and overall performance. NFD’s EHS Committee will develop a corporate-level audit mechanism (with both internal and external audit) to assess annual EHS performance of NFD’s operations, including meeting quantifiable EHS performance targets and, based on EHS audit’s findings, will recommend Corrective Action Plan (CAP), responsibilities, budgetary allocations (CAPEX) and due date to address any non-compliance against these QEHS policies requirements. The NFD’s QEHS policies should be reviewed and updated every three years. The Board of Directors of NFD has endorsed at its November 17^th, 2016 the objectives of the E&S Action Plan (ESAP)

Human Resource Policy and Management. NFD has presently 365 permanent employees (94% male and 6% female) including 345 Solomon Islands nationals (212 on its purse seine and pole and line fleet and 133 onshore). On average, each boat is staffed with 25 seafarers, including the captain and chief engineer. Fisheries observers from the MFMR are also on-board for every fishing trip. NFD is in the process of developing its HR Policies and Manual of Procedures which are tentatively scheduled to be reviewed and approved by NFD’s Board of Directors in 2017 (see ESAP). These policies and procedures will be responsive to applicable labor and OHS requirements include in Tri Marine’s Code of Conduct and Ethical Sourcing Policy, and national legal and regulatory provisions. Legal requirements underlying the Labor Act include the provision of having a written working agreement wages and hours of work, overtime, payment of wages, remunerations other than wages, penalties and disciplinary measures, minimum wage, annual leave, prohibition of harmful child labor and forced labor, freedom of association, and care for the workers. Neither the draft NFD HR policies and procedures nor the Performance Management System and the Career Progression Plan were available for review during IFC’s appraisal, though draft sections of the HR policies cover recruitment and vacancy policy, annual leave, salary scale, benefits (social security and health insurance) and operating procedures (e.g. employment Terms and Conditions, Job classification and requirement, working hours, promotion and appointments, and allowances). In the context of this IFC investment, as set forth in the ESAP, NFD’s HR function will undertake a comparative analysis between Solomon Islands’ legal and regulatory HR requirements, IFC Performance Standard 2 and international welfare requirements specifically applicable to fishery sub-sector (e.g. ILO Work in Fishing Convention, 188) and will update accordingly NFD’s draft HR policies and procedures and register these policies with the Social Security Board. Recruitment processes are based on merit for both technical and support services within NFD. Non-discrimination and equal opportunity are paramount, while taking into account that all seafarers are male by the nature of the requirements for working offshore. About 88% of NFD workforce are Solomon Islanders with the remaining 12% being expatriates of various ethnicities (mostly Philippines nationals). All new employees are screened and interviewed by a recruitment panel. Measures to prevent harassment and discrimination are included in the national labor law and will be incorporated into NFD manual of procedures. Upon completion of its HR policies and procedures framework, NFD will develop an HR handbook (to be translated to Pidgin) which will be distributed to all permanent and casual employees and contractors. Employees will be required to acknowledge understanding of the HR policies and procedures.

Protecting the Workforce. As per Solomon Islands Labor Law, NFD do not employ employees under the age of 18. Screening of health assurance card during recruitment process indicating birth date is used to enforce this provision. No children were seen working at NFD operations during site appraisal.

Working Conditions and Terms of Employment. Salaries provided to permanent and casual employees are aligned with the minimum national salary (SBD$4.50/hour – US60 cents - and above for onshore based employees and SBD$3.50/hour – US45 cents for seafarers). Catch-based bonus system (for sea crew) and performance-based bonuses (for onshore staff) are also available. Retention loss rate of permanent employee was estimated at less than 6% which is a reflection of worker satisfaction with NFD’s salary and performance-based bonus, quality working environment and career/ development opportunities. The total number of hours per week is 40 hours and 160 hours per month. Overtime hours should not be more than 57 hours per week, inclusive of normal working hours, and not exceeding 228 hours as per the Labor Act (73), section 13 (5) & (6). Minimum hours of rest on the boats should not be less than 10 hours in any 24-hour period and 77 hours in any seven-day period. Living sea crew arrangements has been validated for the purse seine visited for general living/sleeping space, air ventilation, and fire prevention. NFD owns five new residential houses in Noro and in Honiara. NFD also rent houses for its staff in Honiara and Noro from private owners. Human Resources management is under the responsibility of an HR manager. Considering NFD operational expansion with the purchase of a new purse seiner, the HR function will be strengthened with the addition of a HR officer in 2017.

Retrenchment Plan. Considering NFD’s expansion plan of its offshore operations, additional employment in its offshore and onshore operations is expected. There is no retrenchment plan envisioned in the next years.

Worker and Contractor’s Grievance Mechanism

Energy use and greenhouse gas emissions. Provisions of electricity at NFD’s onshore operations comes from the national grid (Solomon Islands Electricity Authority). The cold storage facility requires a full-time genset. In case of energy shortage, on-site generators are available for the maintenance workshops and other onshore facilities. NFD owns a transport fleet. Diesel is used for the offshore operations (vessels) and transport fleet. There is no procedure to monitor energy consumption (aside from referring to utility bills) and/or energy efficiency, including a formalized vessel fuel efficiency/optimization program.

Estimates received during appraisal indicate annual energy consumption at 364,028 kWh of purchased electricity (mostly onshore operations), 4,142 kg of LPG and 7,468 tons of diesel (mostly used by fishing fleets and onshore gensets) in 2015. As fuel cost is a major operational cost, with the support of FFA, a consultancy firm carried out a comprehensive energy audit in 2015 of NFD fishing vessels. A number of energy efficiency projects were recommended. Specifically, NFD has recently replaced the engines of four of its five purse seine vessels to minimize diesel usage. These new engines have in-built monitoring systems. More fuel efficient main and auxiliary engines have resulted in a 40% energy saving. Replacement of the engines for the remaining purse seine vessel will take place in the coming months. NFD’s fish masters are encouraged to adopt most efficient planning technique in fish scouting to reduce diesel consumption. The Solomon Islands’ Ministry of Environment undertook a GHG assessment on the NFD fleet and onshore operations. Findings were not available during IFC appraisal visit. Feasibility study is ongoing for the installation of solar panels on the warehouse’s roofs. Energy use is expected to increase in the context of this investment.

Air emissions monitoring. The main sources of air emissions are at the offshore engines and the onshore gensets. MoE has conducted air emissions testing for NFD’s onshore gensets though results were not available during site visit to permit evaluation of compliance with air emissions guidelines summarized in the WBG EHS General Guidelines. NFD’s generators undergo maintenance inspections every six months in order to optimize efficiency. IFC was informed that aggregate NFD’s generators are less than 3MWth in installed capacity and are thus not considered significant source of air emissions nor do they require emissions monitoring. Nonetheless, NFD has installed a chimney of 10 meters on all its generators to help ensure proper air dispersion and avoid nuisance odors.

Water use and efficiency. Water for NFD’s operations is bought from the Solomon Islands Water Authority (SIWA). This chlorinated water is used for process and sanitary purposes. Water consumption is monitored as part of cost analysis and measures are being developed to manage water more efficiently. As a Critical Control Point (CCP) under HACCP principles and EU food safety requirements, water is tested monthly for total coliforms, E. coli and enterococcus by the National Public Health Laboratory. Results for samples collected on July 6^th, 2016 were provided to IFC during its site visit and confirmed compliance with WHO guidelines for drinking water. Bottled water is provided for workers’ drinking needs for offshore and onshore operations. In order to reduce its dependence on SIWA supply, NFD recently sunk one on-site borehole of 30 meters depth as a stand-by water source. A hydrogeological study has been conducted for these underground waters but was not available during IFC site visit. Borehole water quality will be tested by an independent lab to assess its compliance with WHO recommendations for use as drinking water. Small desalinization plants are found on the purse seine vessels. Treated water is used for brine water production, boat cleaning and maintenance, and cooking. As already installed on SolTuna’s warehouse roofs, NFD is planning to adopt a rainwater harvesting system to increase its water storage onsite and reduce its dependency on SIWA water supply.

Wastewater Treatment. Wastewater generation comes mainly from sanitary and shower facilities. It is stored in an on-site septic tank which are regularly emptied by a service provider into a non-authorized discharge pit in Noro. NFD is working with the provincial and national government to ensure discharge is appropriately handled. Residual cleaning water is also generated in production area. After review of the Environment Act (1998) and the Fisheries Act (2015), there isno specific requirement for the collection and

Community Health and Safety. NFD has not yet adopted a Safe Vehicle/Vessel Policy and Training Safety Procedure for its own transport (e.g. forklift) and vessel fleets and/or licensed long liner boats. Safe vessel operating practices are required under the Solomon Islands’ Maritime and Safety Administration requirements and IFC PS4 requirements. Officers and crew of the vessels are subject to Solomon Islands requirements and international regulations. As set forth in the ESAP, NFD will develop and implement such policy and procedures.

The increasing presence of longline vessels’ crew unloading tuna catches at Kitano port zone may increase risk of transmission of HIV/AIDS and other sexually transmitted diseases (STDs) to the community. NFD and SolTuna have not initiated a sexually transmitted disease education program for sea crew, onshore workers and Noro residents. As set forth in the ESAP, NFD will develop an HIV/AIDS and Sexually Transmitted Diseases Policy and develop a Community Health Management Plan. This plan will cover an epidemiological profile of communicable disease of the surrounding communities and NFD workers, and will provide health guidance for consultation and supporting programs. Implementation of such plan will be coordinated with the Ministry of Health and Medical Services for training, voluntary and anonymous testing for HIV/AIDS, STDs, and access to anti-retroviral drug.

Food safety. In order to ensure that all its operated fishing vessels obtain European Union accreditation, NFD has developed an HACCP Compliance Manual and Sanitation Standard Operating Procedures (SSOP). Copies of the HACCP Manual and checklists have been shared with IFC. This qualifies NFD to unload directly to SolTuna’s processing plant to supply the EU market. The HACCP system is audited by the Solomon Islands’ Inspection and Certification Unit, Environmental Health Division of the Ministry of Health and Medical Services. Department of Public Health. SolTuna has renewed its BRC certification in May 2016.

Security Personnel. NFD offshore and onshore operations have not been exposed to any serious security issues in the recent years. The onshore operations are delimited by an eight feet fence. NFD’s security personnel are assigned to guard the entrance on a 24 hours’ basis. Security personnel are on duty on fishing vessels when at port. As there are no operational procedures for such function, as set forth in the ESAP, NFD will undertake a risk assessment and develop and implement clear procedures, based on accepted international standards, e.g. Voluntary Principles on Security and Human Rights, for managing the use of security personnel and ensure adequate training is provided.

Protection and Conservation of Biodiversity: tuna supply and sustainability. In order to assess the state of the marine living resources, and the management regime that regulates their exploitation, the type of fishing by and for NFD can be divided by (i) species; (ii) type of gear used; (iii) how the gear is being used, and (iv) the waters in which said fishing is taking place.

The tuna species targeted by NFD are yellowfin (Thunnus albacares), skipjack (Katsuwonus pelamis) and albacore (Thunnus alalunga) and to a lesser extent, bigeye (Thunnus obesus). The three types of vessels used comprise NFD’s purse-seiners, pole and line vessels, and third-party longline operators, that operate under licenses granted by SIG to NFD. The three purse seiners that will be added to NFD’s fleet through this project has a larger capacity and range than the existing purse seiners, which will allow it to fish outside the archipelagic waters, throughout the country’s Exclusive Economic Zone (EEZ), in adjacent areas of the high seas and in the EEZs of surrounding PNA members’ countries. The Tuna Supply and Sustainability Report (TSSR), appended to this document, provides IFC’s analysis of the health of the fisheries that NFD operates within, including assessment against the criteria for (i) supply origin and habitat affected; (ii) supply chain mapping and review; (iii) demonstration of not contributing to significant conversion of natural and/or critical habitats (including third party certification options); and (iv) actions to improve the E&S performance of NFD operations over time. It is an updated version of the original report prepared and disclosed under the SolTuna Expansion project (#32053). The figures have been updated when new, more recent data became available or when the situation has become materially different.

In general, purse-seiners operate by setting on anchored Fish Aggregating Devices (FADs), drifting (unattached) FADs, and on free swimming schools of tuna (‘unassociated sets’). Current NFD five purse seiners (and two pole and line boats) operate solely within the Solomon Islands’ archipelagic waters, referred to as Main Group Archipelago (MGA) waters.  Since July 2016, this fishery has been certified under the Marine Stewardship Council (MSC) system (Solomon Islands Skipjack and Yellowfin Tuna Purse Seine and Pole and Line), with the exclusion of sets on unattached FADs. Collaboration with other parties to achieve this certification was part of the ESAP for the SolTuna Expansion project and is therefore a notable success. The certification is valid through July 2021 and will be subject to routine surveillance audits that are posted on the MSC website (where the assessment document is available). As such, 95% of the current five NFD purse seiner and two pole and line tuna catches are MSC certified.

The three additional purse seiners will operate in the SI EEZ, which falls under an MSC certification associated with fisheries in Parties to the Nauru Agreement (PNA Western and Central Pacific Skipjack and Yellowfin unassociated / non FAD set, tuna purse seine). This fishery was MSC certified in December 2011 and has been subject to four subsequent surveillance audits. In 2016, the reassessment process started, as the certification is set to expire in June 2017. All of these documents are posted on the MSC website. It is estimated that the MSC catches of the purse seiners operating in the SI EEZ are 70% of total catches. The new purse seiners will also operate  in the adjacent high seas and EEZs of surrounding PNA member countries. The fishing effort in PNA member countries’ waters is managed by a Vessel Day Scheme (VDS), and just like any other boat fishing in the PNA waters, total fishing effort will not increase. It will only displaced existing fishing efforts from other operators in Solomon Islands EEZ and PNA member countries’ waters. In addition, total annual tuna take by the three vessels is expected to be in the range of 20,000 – 25,000 MT annum, which is not material (0.4%) compared to the 3 million tons /annum tuna fishery The Solomon Islands Government has allocated some of its limited number of FSMA (Federated States of Micronesia Arrangements) days to NFD new purse seiners.

Stakeholder Engagement Plan and Community Grievance Mechanism. NFD’s existing onshore operations visited during IFC’s appraisal are located at sea level and within the industrial (port) zones of Noro. Eight-feet fencing surrounds all NFD operations. Noro town is located on the hillside above it (distance of 200 meters). As the social relationships is reactive in nature and in order to pro-actively respond to any communities’ grievances from its offshore and onshore operations (e.g. fishing vessel grounding on coral reefs, NFD’s fuel depot located near the boundary of Noro town), as set forth in the ESAP, NFD will develop a Community Grievance Mechanism and will communicate such mechanism through a structured communication plan to pro-actively manage any potential community grievances on EHS risks and impacts of its operations, including on Emergency Preparedness and Response. A log book will be established in order to record such complaint, document NFD’s responses and document joint resolution.

The ESRS, the attached ESAP and the tuna wild-catch sector-based research, comparative analysis, and consultation findings entitled “Tuna supply and Sustainability” will be made available via IFC website. NFD will place an advertisement in a local newspaper and its onshore plant, and on Tri Marine website (http://www.trimarinegroup.com/) to inform the public of IFC’s environmental and social review (ESRS) and ESAP’s corrective actions.  

Name and Address

Matthew Owens, Director, Environmental Policy and Social Responsibility

Tri Marine International Inc.

10500 N.E. 8^th Street, Suite 1888, Bellevue, Washington State, USA 98004

Tel: (+1 425) 688-1288; Fax: (+1 425) 688-1388;

E-mail: mowens@trimarinegroup.com;

Website: www.trimarinegroup.com

Frank Wickham, General Manager,

National Fisheries Developments Ltd.

PO Box 717, Honiara, Solomon Islands, Tel: (677) 30991

E-mail: fwickham@trimarinegroup.com;

Website: www.trimarinegroup.com