PS5 “Land Acquisition and Involuntary Resettlement” doesn’t apply as The Platform acquired the leasehold rights of land either directly from local governments via public auctions or through the acquisition of a project company owning the land parcel. In either case the land use rights are acquired under commercial transactions. No natural protected areas or protected species are expected to be present at, or near, the potential project sites, as these facilities are built near industrial clusters thus PS6 “Biodiversity Conservation and Sustainable Management of Living Resources” is not applicable. Indigenous Peoples were not identified in the existing projects and are not expected in future sites; and no issues related to cultural heritage were equally identified for this project; thus PS7 “Indigenous Peoples” and PS8 “Cultural Heritage” are not applicable. Where applicable, for future sites, the management of the relevant aspects of these Performance Standards will be identified and managed by the client.

  Warehouse Land : all the warehouses under construction or in the planning stage are located in industrial parks and there are no large residential communities adjacent. The Platform   acquired the leasehold rights of these land parcels either directly from local governments via public auction or the acquisition of a project company owning the land parcel. In the former case, the land parcels from the government are usually undeveloped/of agricultural use with clean titles and without disputes. The land parcel for auction would be publicly listed, and the auction results announced after a bidder is selected and leaseholder right granted. In the latter case, oftentimes it involves industrial companies with factories which have  cea sed operations for some time; sellers would be looking to liquidate the property and realize the value of the land. The Platform considers potential protests from relocated residents as a significant operational and reputational risk, and would not participate in the auction if it becomes aware of any disputes between the local government and relocated residents. Going forward The Platform will be required to develop a formal internal land acquisition procedure to ensure that all future land acquisition transactions comply with PS5 requirements. This will be addressed  in  ESAP  #1.   

Corporate Environmental and Social (E&S) Policy : There is currently no Platform-level E&S policy in place. Carlyle is in the process of formulating a firm-level E&S policy for its Asia operations. In accordance with the ESAP #2, The Platform will develop an E&S policy as part of its corporate E&S management system (ESMS) specifying performance based outcome against Chinese regulations and IFC’s PSs. The new corporate E&S policy will also be disclosed and communicated to its stakeholders including tenants and potential tenants. 

  E&S Identification of Risks and Impacts : for every new warehouse/facility to be built, The Platform contracts external experts to conduct environmental impact assessments (EIAs) per local regulatory requirements. Based on the EIAs, the project will meet all local regulatory requirements upon successfully implementation of the proposed mitigation methods which are described in the EIAs. IFC  review ed the sample EIAs for Shenyang and Kunming facility under construction (the former is to be used for auto parts storage and to host 12 assembly lines for automobile headlights, and the latter currently planned for robot assembly) and found them of adequate quality. As specific environmental, health and safety (EHS) risks, in particular fire risks, vary greatly depending on what type of activity/tenant the warehouse/facility will host, and there will inevitably tenant turnover during the lifetime of the warehouse, going forward The Platform will be required to develop a screening mechanism to identify these risks and to ensure that tenants possess necessary regulatory permits for their operations. A fire audit should be conducted prior to new warehouse commissioning or new tenant moving in. This will be addressed in ESAP #3. 

Management Programs, Organizational Capacity and Competency :  The Platform currently doesn’t have a designated person in charge of EHS matters, nor does it have a management program in place. The project’s management company that oversees construction and warehouse management, has some basic written rules regarding safety and fire prevention. Going forward, as per ESAP # 4 The Platform will be required appoint an EHS coordinator and develop commensurate organization capacity to manage EHS risks identified. Management programs such as safety training, fire prevention, contractor management, internal audit and emergency response should also be developed as described in ESAP #5, as part of the ESMS.

Emergency Preparedness and Response : Fire hazard is the main operational risk in warehouses and the Company takes that consideration into its building specifications. In the warehouse under construction in Shenyang, there are fire alarms, smoke detectors and automatic sprinkler systems in all areas of the warehouses except the toilets. The Platform has an emergency preparedness and response plan detailing plans to various emergencies including medical, fire, chemical spills, structural failure, gas leaks, and others. Going forward and as part of the ESAP #5 on emergency response management program, The Platform is required to develop a tailored emergency preparedness and response plan for each warehouse/facility in operation based on the risks identified. This plan will also be regularly reviewed and updated. 

Monitoring and Review : currently The Platform doesn’t have any EHS monitoring and review program in place, as all the warehouses/facilities are under construction or in the planning stage. Going forward as part of the ESAP #5 The Platform will set up a monitoring and review program regularly tracking key performance indicators, including but not limited to, environmental and OHS performance during the construction and operation phase, and report to The Platform ’s management team. 

  Human Resources Policy and Procedures, Working Conditions and Management of Worker’s Relations : The Platform currently employs 26 staff directly for this project. All these employees are professionals in charge of business development, investment, leasing, legal and financial matters. It has a human resources (HR) manual that specifies the terms of employment and working conditions. These include procedures related to recruitment, probation, training, performance review, hours of work, benefits, salary and compensation, leaves and disciplinary actions. It has a non-discrimination policy.

Workers’ Organization : the company respects freedom of association, however there is no union in the company currently. Union is not common in China for a company of this size that hires highly skilled professionals.  

Third-party Workers:  The Platform hires third party workers for warehouse construction and maintenance. The company selects construction general contractors based on a set of pre-qualification criteria, of which safety and regulatory compliance records including history of delaying payments to workers are factors to evaluate. The Company requires all workers working on the construction site be formally and legally employed under employment contract by the general contractor, with basic benefits such as social security and insurance as per local labor regulation. Similar employment requirements will apply for vendors providing services for warehouse common area, including cleaning, landscaping, repair, maintenance and security. Going forward the third-party workers will be required to follow The Platform’s ESMS, as part of the ESAP #5 related to contractor management. The Platform will also ensure that third-party workers have access to its internal grievance mechanism. 

OHS Issues with Third-party Workers : As mentioned above, safety track record is one of the factors the Platform considers prior to selecting a general contractor for construction. It also has a written safety standards and emergency protocols that general contractors need to adopt and follow .  IFC reviewed the safety standards and found it detailed and comprehensive. Each contractor would also have its own safety standards, which would at the minimum meet national regulatory standards. During construction phase the Company hires 3 ^rd  party onsite inspector whose responsibilities include safety inspection. Furthermore, the Company sends its own site manager to conduct periodic inspections. General contractor is legally bound to meet OHS standards and implement measures to mitigate E&S impacts identified in EIA for construction stage, as evidenced in the construction contract signed for building Shenyang warehouse.

  Resource Efficiency : All the warehouses are either under construction or in the planning stage, therefore, no actual resources consumption figures are available currently. Warehousing and light assembly activities hosted at the warehouses are not expected to consume a large amount of electricity and other utilities. Water is from municipal water supply system and consumed minimally by onsite workers and for cleaning, while electricity is from the grid and mainly used for lighting and operation of mechanical equipment, such as loading docks and forklifts. The Platform aims to minimize projects’ carbon footprint by employing environmental friendly features, including 1) installing roof windows to make best use of natural lighting; 2) using energy-saving fluorescent or LED lighting; 3) adding heat insulation materials in walls; 4) collection and reuse of rainwater; and 5) to the extent practicable under regulation and local climate, installing solar panels on roofs. 

Per building specifications backup diesel generator sets and diesel tank will be contained and in the utility room with a controlled access.   

Pollution Preventions and Mitigation : All the sanitary and cleaning wastewater will be first treated at an onsite  sept ic tank and then discharged to municipal sewage system for treatment at municipal WWT plants. All solid wastes are collected by municipal contractors for recycles or disposals. Hazardous wastes include used oil and lubricants which are collected in a designated area and regularly picked up by a licensed service provider. Trucks are owned by tenants and the trucking emissions are tested by municipal transportation departments periodically for licenses of operations. Noise from trucks, wastewater pumps and other mechanic equipment are minimized by traffic control, building soundproofing walls and regular equipment maintenance. 

Greenhouse Gases (GHG) : As all the warehouse are either under construction or in the planning stage, there is no resources consumption figures available. As energy consumption at warehouse operations is not expected to be substantial, the GHG produced will be limited and expected to be below 25,000 tons of CO2 equivalent. 

  Community Health, safety and Security : All the warehouses under construction/to be built are located in industrial parks with no or no large residential communities nearby ( the Kunming facility to be built has a small residential community across a road). Given the nature of the project (dry warehouse with  light manufacturing processes), the impacts on the community are minimal and they are addressed adequately in the EIA both for construction and operation stages. The warehouses are not expected to handle hazardous materials. Local regulatory requirements mandate that air quality and noise level be controlled at construction sites. For example, for the Shenyang warehouse under construction, the following measures have been implemented to mitigate impacts: installation of mist sprinklers around the site perimeter to reduce dust, installation of noise and air particle monitoring devices, installation of a car/truck wash, and installation of a monitoring system connected to the construction bureau’s online monitoring platform, among other things. Potential risks that could arise during the operations such as noise, dust, and traffic disruptions due to tenants’ trucks entering and exiting facilities are also addressed in the EIAs and will be implemented. 

Emergency Preparedness and Response : The Platform has an emergency response procedures for its tenants. The procedures cover emergencies including accidents/medical emergencies, crime, fire, earthquake, hurricane, and flooding.  

Security Personnel : The Platform hires professional 3 ^rd  party security contractors for warehouse safeguarding. The security guards are not armed. As part of the ESAP #5 under contractor management program, the Platform will be required to ensure that security contractors are adequately trained in the use of force and appropriate conduct toward workers and nearby residents, are not implicated in past abuses and follow the local requirements for security contractors. 

The Carlyle Group 

1001 Pennsylvania Avenue, NW 

Washington, DC 20004-2505, USA