The project does not include any greenfield development and therefore, no new land is expected to be acquired. PS5 (Land Acquisition and Involuntary Resettlement) will therefore be not applicable to the project. The current operations are located in industrial zones or highly urbanized areas, considered modified habitats without significant biodiversity value, with no known historical and/or cultural heritage sites; the project and its activities will not impact any indigenous people/community. Therefore PS6: Biodiversity Conservation and Sustainable Management of Living Resources, PS7: Indigenous Peoples and PS8: Cultural Heritage, are not applicable.

This is a category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific E&S impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards and guidelines. 

Key E&S issues associated with this project include FV’s corporate environmental, occupational health and safety, and HR policies and the manner in which these are implemented across the company; in particular, how these policies are implemented in new acquisitions targets and the impact on the workforce. FV manufacturing operations have impacts related to water and energy consumption; air emissions and liquid effluents from washers, ovens and metal treatment processes and solid and hazardous waste. Other elements considered included activities related to emergency preparedness and response; community engagement; management of the supply chain and potential opportunities to incorporate new technologies and services focused on energy and water efficiency within FV products.

Through past engagements, IFC is aware of FV’s commitment and capacity for managing environmental and social (E&S) issues in its operations.

Environmental and Social Assessment and Management System: FV has implemented functional Environmental, OHS and HR management systems. At individual production facilities the company has achieved certifications under ISO 14001, OHSAS 18001 and ISO 9001.  As part of the corporate strategy, FV plans to implement and certify similar management systems for its acquisition targets. FV has set corporate policies which are linked to targets, and operationalized through management programs, procedures and key performance indicators. It was observed that the systems are functional and continuous improvement is promoted throughout the operations. As per the E&S Action Plan (ESAP) item #1, FV will implement an environmental, OHS and HR management system for the operations of the acquisition target, as per its corporate policies and integrate with its corporate management systems. The company holds the required environmental and operational permits for its plants; including environmental permits (Certificado de Aptitud Ambiental), gaseous emission discharge and liquid effluent discharge permits. 

Identification of Risks and Impacts and Management Programs: The proposed project does not include any greenfield development, therefore an Environmental and Social Impact Assessment is not required. Environmental impacts and OHS risks of the operations have been identified and are updated periodically; in particular, when process changes are implemented. The company has developed and implemented operational procedures to manage the risks and impacts identified. Operational procedures incorporate OHS and environmental instructions and cover issues such as effluents, emissions, solid waste and occupational exposure monitoring.

FV systematically conducts a detailed environmental and social due diligence on the companies targeted for acquisition. In line with the corporate policies and practices of the company, as per ESAP item # 2 FV will perform the environmental, OHS and labor practices due diligence for the new acquisition target against the requirements of IFC’s Performance Standards and will set and implement a time-bound corrective action plan to address identified gaps.

Organizational Capacity and Competency: FV has a corporate environmental, health and safety (EHS) unit; which is well staffed (about 12 professionals) and reports directly to the top management of FV. EHS is one of the few functions at corporate level within FV. Roles and responsibilities of the various other functional units in managing the ESH issues are well defined in procedures and job description cards. The EHS unit ensures consistent approach throughout different companies and different plants of the group. Each manufacturing plant has a full-time EHS officer and a team of technicians. A similar structure is planned for the new acquisition. Although labor aspects are managed by the Human Resources (HR) department, there is ample responsibility and support at corporate and plant level. Plant managers and coordinators (jefes) have accountability on managing labor relations. There are two medical doctors and three nurses providing support in the production plants.

FV has an established program to provide necessary induction and periodic training for all its direct and contractor employees on OHS aspects, environmental management, and labor issues related to its operations.

Emergency Preparedness and Response: FV has developed detailed emergency response plans for its operations, aligned with local legal requirements and good industry practices. Training for emergency preparedness and response and first aid is provided to all employees and there are emergency brigades at each plant who undergo specific training. Fire and emergency drills are periodically conducted. The company has gradually migrated the industrial operations located in Florida to the Villa Rosa plant to minimize the impact in the residential community nearby. Villa Rosa plant is located in an industrial zone, with no residential communities in the nearby vicinity. Emergency response plans include potential impacts on the nearby communities and collaboration with other industrial companies located in the vicinity. As part of the E&S management system to be developed for the new acquisition, FV will implement appropriate emergency response plans.

Monitoring and Review: In line with its E&S management systems and local regulatory permit requirements, FV has comprehensive environmental and safety monitoring program. The EHS parameters monitored are in line with the requirements of WBG EHS Guidelines. The company has a well-designed dashboard where key indicators are shared and communicated across the company. Periodic audits are performed, in particular for OHS aspects. Annual reviews on EHS management and performance are conducted and later discussed with top management (directors and board members) to determine corrective measures as needed. EHS targets are monitored as part of the overall scorecard of the organization. FV reports annually to IFC through the AMR on the E&S performance of the operations in Argentina.

Managing Supply Chain: FV has a sourcing system, which includes a supplier evaluation process to assess quality, HR, planning, logistics, legal compliance and quality aspects. Raw materials used by FV require an advance degree of specialization and technology that make it unlikely to have labor issues within the supply chain. FV has strategic alliances with a select and well-established group of suppliers providing core components and products from China. FV, through its own engineering and quality control teams, verifies product conditions and conducts periodic visits to the international core suppliers. FV has a strict selection process, in which legal and technical aspects are assessed; however, there is no formal evaluation of EHS elements. As per ESAP item #3,FV will develop and implement a verification process to confirm that child labor, forced labor, significant OHS elements are not present at the facilities of core international suppliers.

Human Resources Policies and Procedures:FV has HR policies and procedures that cover all key aspects, including recruitment, induction and training, performance evaluation, promotion, disciplinary actions and dismissal. The company has documented its strategic vision (Declaracion de Orientacion Estrategica: DOE) which describes core values, which guides the behaviors across the company. During the induction program, FV policies and the DOE are provided to the new staff and all procedures are readily available to staff. Training programs are planned and implemented based on an assessment of needs and skills required for the production processes, including environmental, production, emergency preparedness and OHS elements.  When acquiring other companies, FV has worked systematically to maintain policies that are important for the workers while incorporating FV’s core values; usually through participatory processes. The company will ensure proper compliance with local laws and as part of the management system, described in ESAP #1, will implement corporate policies to any new acquisition.

Working Conditions and Terms of Employment: FV provides employees with clear terms of employment, and provides information regarding industrial relations, disciplinary procedures, and roles and responsibilities within the organization. FV pays wages as agreed under the collective bargaining agreement and above those required by local law. Sub-contracting is very limited within the company; only specialized maintenance and external security is managed by third party companies. The proposed project does not require any new construction, therefore no additional third party employees will be engaged.

Protecting the Work Force, Non-Discrimination and Equal Opportunity: FV is an equal opportunity employer, promoting fair and equitable treatment of employees, including processes of hiring, promotion and termination of employment. FV creates opportunities for promotion within the company. There is no evidence of discrimination based on personal characteristics or gender. The company complies with relevant legislative requirements. No employees under18 years are contracted and no child labor or forced labor is used by the company.FV’s workforce is about 1490 employee, of which 10.5% are female employees.

Retrenchment: FV has had a steady workforce of about 1450 employees during the last few years. Staff turnover is around 7%, the workforce is generally stable, particularly after the first year of employment in the company. FV has plans to maintain the current workforce at its acquisition targets, as in previous cases. Typically, acquired companies retain its identity (brand) and the objective of FV is to expand and support its growth; therefore retrenchment is not expected in this project. In case FV identify the need to undergo retrenchment processes, these will be conducted following the requirements of IFC’s Performance Standard 2.

Workers’ Organizations:FV supports freedom of association among its workers. FV adheres to collective bargaining agreements with different workers’ organizations, among them the Union Obrera Metalurgica (UOM), Asociación de Supervisores de la Industria Metalmecánica (ASIMRA), and Asociación Viajantes Vendedores (AVVA). The company reports a stable industrial relations climate.  Union’s representatives are part of internal labor committees and channel workers grievances.

Grievance Mechanism:The company has documented an internal grievance mechanism with several channels for workers to raise grievances. Alternatives to submit grievances include communications to HR, to supervisors, and worker’s representatives; submitting grievances anonymously is an option. Meetings and working groups are also identified as points to collect grievances, and are viewed as a healthy exchange of ideas and offer an opportunity to express grievances without retaliation. In addition there is an open door policy across the organization.  FV documents and record the grievances, which are communicated to top management, including the directors committee of the company.  Argentinian law has in place mechanisms to protect third party workers and within FV, they also could use the existing grievance mechanism.

Occupational health and safety (OHS): FV main production facility has implemented a functional OHS management system which is certified under OHSAS 18001. The company has a proper methodology to identify and manage OHS risks, supported by operational procedures and programs that are implemented across the company. There is a comprehensive workplace monitoring program, that covers key risks of the operations such as exposure to dust, mists and fumes, including sulfuric acid, hydrochloric acid, chromic acid and chromium; the company also monitors noise levels and thermal load among others. Monitoring is conducted annually and corrective measures are implemented where identified. Additionally, periodic medical exams are conducted for the employees based on the risks. Monitoring results show overall compliance with the Threshold Limit Values (TLVs). FV has already implemented some engineering controls to address elevated noise levels in the plant, such as modular enclosures, installation of noise absorbing panels and modification of tasks to reduce noise exposure on critical areas. FV has a well-defined plan to further reduce noise and is working on the implementation of additional controls on selected production zones. As defined in ESAP item #1 FV will implement OHS management systems in the acquisition targets.

The company in the last five years had implemented a series of engineering controls including forced extraction and changes in equipment to minimize exposure to fumes in the foundry hall and electroplating areas; in addition, plating solutions use fume suppressants to reduce exposure. Personal protective equipment is provided and used during operations. Recently the company has improved ergonomic condition in the plant, by modifying work places and providing better tools to achieve acceptable reach distances and angles, and to minimize back bending. The company plans to continue the efforts to improve worker’s ergonomic programs and overall safety in the production plants.

Resource Efficiency: FV follows strict quality and lean manufacturing criteria during production, which includes a focus on optimization of raw materials and reduction of re-work; this supports the proper use of other resources such as energy and water. FV has implemented some initiatives on cleaner production, reutilization of materials and has worked with some universities to identify alternatives to use some discarded materials. FV will identify resource efficiency opportunities in the new acquisition target and will implement such measures.

Greenhouse Gas Emissions:  Current greenhouse emissions from the production plants in Argentina has been estimated to approximately 18,300 tonnes CO2-equivalent per year.  The proposed acquisition is not an energy or fuel intense process, therefore additional GHG emissions are not expected to be significant.

Air Emissions: FV generates air emissions from combustion units and process units (melting furnaces, molding and core production, pickling, electroplating and finishing processes). Controls in the electroplating area include: addition of fume suppressants to reduce chromium emissions, installation of extraction systems and a highly efficient mesh-pad demister, and installation of wet scrubbers to eliminate acid compounds. In 2015 the company installed a best-in class air emissions treatment system for the furnaces, which has not only significantly reduced particulate matter and zinc oxide air emissions, but also has reduced occupational exposure. Air emissions are monitored at least annually based on key pollutants (e.g carbon monoxide, sulfur dioxide, lead, hydrochloric acid, formaldehyde, ethanol, nitrogen oxides, copper, zinc oxide, oil mist and nickel); the results show consistent compliance with national and applicable WBG EHS Guidelines.  

Wastewater treatment: FV separates the different wastewater streams (industrial, sanitary and storm water). Industrial effluents generated are mainly from electroplating, metal shaping and surface preparation processes. FV aims to optimize the use of water, and effluents are treated in several steps within the facility. In 2011 FV built a waste water plant with a capacity of 160 m³/day to treat electroplating effluents. The plant includes equalization, chromium reduction and precipitation, neutralization, flocculation and hydroxide settling to treat trivalent chromium, nickel and copper, effluent clarification, sulfide settling, final filtration and chlorination. Effluents are discharged to a surface water in compliance with local permit conditions and the treated effluents are within the applicable WBG EHS Guideline limits. The plant also includes a sludge conditioning process with ferric chloride and a filter press to dewater the sludge before off-site disposal. FV has an extensive monitoring program for effluents and currently effluents are in compliance with applicable IFC guidelines including levels for nickel, hexavalent chromium and copper.  FV will evaluate current management of industrial effluents at the acquisition target and will identify optimal alternatives aligned with local law and the applicable WBG EHS Guideline limits.

Solid Waste Management: FV has a robust and adequate solid waste management plan, involving waste reduction, segregation and disposal through authorized companies. Waste is segregated between organic, recyclable and hazardous materials. Waste generation is adequately monitored, and the main streams of industrial waste include molding and core sand waste, sludge from electroplating process, and waste oil. Scrap, re-work and filter dust from abatement treatment is recycled in the furnaces.  Metalworking oils and fluids from metal cutting and shaping are recovered from metal chips through the use of centrifuges, and recycled.  After treatment, the metal particles contain approximately 3 to 4 percent of oil and are returned to the foundry.  FV has invested in equipment to further reduce the oil contained in the recovered metal particles, thereby reducing the emission of fumes at the foundry.  Wastes are disposed of at off-site authorized treatment and disposal facilities, authorized vendors are audited by FV to ensure proper management of waste. Solid waste management in Argentina is coordinated through the authorities of Buenos Aires Province, in particular OPDS (organismo provincial para el desarrollo sostenible). Chain of custody is tracked through the legal records managed by OPDS, of which FV receives copies.

Hazardous Materials Management: FV uses chemicals mainly for the electroplating processes, there are specific areas for storage of hazardous materials. There are operational procedures in the plants on how to manage products; such procedures include supply, acceptance, unloading, handling, storage and labeling of the chemicals.  Safety Data Sheets are available at the points of use and employees are aware of the risks and controls in place. Specific detailed procedures are available for granular and powder chemicals, liquid chemicals, combustible materials, and oils. Tank tightness tests are periodically performed on the existing diesel fuel tanks. 

As defined in ESAP item #1, FV as part of the implementation of the ESMS in the new acquisition targets, will address any environmental non-compliances and will bring the acquired company to compliance with the requirements of the PS3 and the parameters of the applicable WBG EHS guidelines.

Community Health and Safety: The main production plant is located in the suburbs of Villa Rosa, without households in the immediate proximity. However, the company has proactively engaged the city council to address any potential concerns and coordinates with emergency response teams during drills and as part of the emergency response plan as described under PS1. Transport of raw materials and products is contracted to transport companies.  Adequate internal controls are in place and implemented by the security team to ensure that vehicles and trucks entering and leaving FV’s facilities are in good conditions, documents are in order, and loading/unloading procedures are safely implemented.  The risk assessment of the operations has considered the presence of communities and has determined a minimal risk to them.

Security Personnel: Security functions are divided by coverage between internal and external perimeters. External security is subcontracted to a specialized firm which is registered to the national authorities, and includes the use and proper management of firearms. The specialized company is periodically audited by the Ministry of Defense and is mandated to attend training courses, provided by an external certified body. Internal security is managed by FV’s staff.  FV has developed an internal procedure for security staff, covering their functions, documentation, obligations, prohibitions, duties and code of conduct, including appropriate management of complains. 

FV focus its community engagement efforts towards the community of Villa Rosa, where the plant is located and a big portion of the workforce is sourced from. FV has disclosed the Environmental and Social Review Summaries of previous transactions with IFC and those are available at IFC disclosure portal. No significant footprint expansion has occurred in recent years; therefore, no formal consultation processes has taken place. Nevertheless, the company has a documented procedure for internal and external communications, which cover the requests from communities as well as the engagement of those communities in case of emergency. There are mechanisms in place on how communities can raise concerns, including the availability of a phone line and e-mail under the program “FV responde.” In addition, the community can submit letters to the company and reach to them during public events. Very few requests have been raised on E&S issues and when there is a request the company has promptly processed and responded to the queries. The company is planning to implement a public report covering E&S aspects of the operations.

FV has several corporate social responsibility initiatives for local communities, including: (i) support to local healthcare centers in Villa Rosa; (ii) coordination with the municipal center for education; (iii) financial support to community primary schools, including reading clubs; (iv) training programs to target unemployment in the local communities; (v) cultural activities; and (vi) a program of donations for public initiatives. The company is committed to continue its community relations and support activities.