While all Performance Standards are applicable to this investment, IFC’s 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 

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 

PS 5 - Land Acquisition and Involuntary Resettlement 

All the projects visited are in urban or peri urban areas and previously developed by the Government. The Nhi Thranh project is to be constructed on areas formerly used for rice cultivation, while the Bac Giang project is being constructed on land previously developed including the water supply lines which follow existing servitudes which is typically the case for all supply lines. Water extraction and the associated impacts are assessed in the EIA’s for projects. Thus PS6: Biodiversity Conservation and Sustainable Management of Natural Living Resources is not considered applicable to the project currently.  However, as per the project requirements defined in the Environmental and Social Action Plan (ESAP) and related to management systems, the company will review all future projects against the requirements of this PS to ensure alignment.  Given the location of the projects within urban environments, Indigenous Peoples is not applicable to the project.  At the Nhi Thanh project there are several graves that need to be relocated and the approach to this allied to the sites for relocation have been agreed with the associated families. No issues related to cultural heritage were identified for the Bac Giang project or any of the existing operations.  Thus, as per PS6, PS8: Cultural Heritage is similarly not considered applicable to the project at this stage; however, the company will also review all future projects against the requirements of this PS to ensure alignment.                                                 

The project is defined as a category B project according to IFC’s Policy on Environmental and Social Sustainability given the limited risks and impacts which can be readily mitigated.   Key issues associated with the project include: i) ensuring adequate assessment of environmental and social impacts of new projects and effective mitigation where required; ii) implementation of environmental and occupational health and safety management (EHS) systems during construction and operations; iii) labor and working conditions during construction and operations; iv) management of solid and liquid wastes during operations; v) ensuring effective risks management practices for the storage and use of chlorine gas; and vi) land acquisition    

  Environmental and Social Assessment and Management System

The laws governing environmental protection in Vietnam include: Law on Environmental Protection No. 29/2005/L-CTN, implemented in 2006; Providing Strategic Environmental Assessment, Environmental Impact Assessment and Environmental Protection and Commitment No. 29/2011/ND-CP; and, Law on Environmental Protection No. 55/2014/QH13, implemented in 2015. Combined, these laws specify the rights and responsibilities for assessment and mitigation of environmental impacts. In accordance with the legislation new water treatment operations as proposed by DNP Water are required to undertake an Environmental Impact Assessment and regulatory approval is required from the Ministry of Natural Resource and Environment and the relevant Peoples Committee.  This assessment includes all activities associated with water treatment and supply, including extraction. The EIA’s for both the Nhi Thanh and Bac Giang projects have been completed with approval for the latter issued on 29 June 2107, while that for former is still pending. 

All the DNP operations have been accredited with ISO 9001, a quality management system, and there are staff dedicated to implementation of the systems. Based on observations at the plastics facility visited, there is a robust approach to housekeeping and materials management with the sites being neat and tidy.  Given DNP Water has only recently commenced acquiring and developing water treatment plants, the company has no formalized management systems at the respective activities. Further, based on discussions with site personnel and observations, aside from that related directly to operations, the facilities equally have no formal focus on EHS related aspects.  However, where the company has a majority stake in ownership, general housekeeping and cleanliness is good, and there is oversight to ensure this in comparison to those operations where the company is not the majority shareholder.  

 As noted, due to the nature of the operations, aside from chlorine storage, the environmental risks associated with the operations are low and relate primarily to solid and liquid waste management, and there are limited social aspects. However, a formalized approach to these issues is required, along with health and safety.  Thus, as defined in the project ESAP, DNP Water are required to develop and implement a formal EHS management system and ensure this incorporates relevant aspects related to management of applicable social issues, e.g., grievance management, for operations.  This will include an overarching policy statement, objectives and targets, training requirements, management and monitoring requirements, along with reporting. Equally, this will include a due diligence procedure to be applied to acquisitions and greenfield developments to ensure alignment with national legislative requirements and the Performance Standards inclusive of that elements referenced previously related to PS6: Biodiversity Conservation and Natural Resource Management, and PS8: Cultural Heritage. 

Given the similar nature of all operations, the EHS system can be developed at a corporate level and then applied to all the facilities, though it may be adjusted to consider specific nuances at each operation.  In respect of construction, DNP Water is also required to develop and implement an EHS system to ensure management of construction activities are aligned with good international industry practice; this will also include procedures to manage social issues as applicable. Where construction is not managed by DNP Water directly, the company will be required to ensure contractors apply their management system or, alternatively, have a system that achieves a similar level of performance with oversight from DNP Water to ensure this.  Further, contractors will be contractually bound to implement such systems.  These requirements are defined in the ESAP.

Given DNP Water intent on being the majority shareholder in all operations, as per the ESAP the company is required to implement the EHS system where a facility is majority owned.  Prior to such the company will use best efforts to ensure implementation of the system and, as a minimum, ensure operations align the national legislative requirements. 

Organizational Capacity and Competency

At the time of the appraisal there were only site specific personnel dedicated to operations with no specific individual responsible for EHS.  Considering the operations, the respective facilities do not require a dedicated resource focusing solely on EHS. Rather, as part of their overall job description an employee should have responsibility for ongoing implementation of the EHS system; this individual would then report to the plant manager. Oversight for implementation of the EHS management system across all operations would then need to be assigned to a suitable senior manager.  Thus, as per the ESAP, the company will develop Terms of Reference for the individual to be assigned responsibility for implementation of the EHS system at each facility, including the two greenfield developments underway.  Thereafter, the company will confirm to IFC the individual designated at each operation to be responsible for EHS implementation and that they have been made aware of the requirements defined in the ToR (training requirements for employees will be defined in the EHS system).  Further, the ToR for the Plant Manager at operations will be amended to include responsibility for implementation of the EHS system.  Finally, the Technical Manager, as recently appointed by the company following a recommendation from IFC, will be responsible for overarching implementation of the EHS system across operations and this will be defined in their job description. 

Emergency Preparedness and Response

None of the facilities have a documented emergency response plan; however, fire extinguishers were observed at all facilities, though the extent of availability varies.  Emergency response signage was also observed throughout the facilities, though the use thereof also varies.  While the scope of emergency situations the facilities may experience is limited, they need to consider that related to chlorine release, albeit that the probability of such event is low.  Thus, as per the ESAP, the company will develop and implement an emergency response plan for all facilities that can be amended per the specific of each operation.  This plan will also define minimum requirements for emergency response equipment and signage. 

Monitoring and Review 

There is currently no defined approach to monitoring and review, however this will be defined in the EHS management system and include key performance indicators such as those related to incidents and accidents, training, energy consumption and water quality. This information will then be reported to the Technical Manager to allow for benchmarking between operations.  These requirements are defined in the ESAP   

Human Resource Management 

At the facilities in which the company has a majority shareholding DNP Water employs 86 number of individuals, of which 17 are women.  All workers are employed on a full-time basis and have a signed contract detailing the terms of employment, benefits and salary; there are no contractors at the company other than those associated with construction.  The company does not have a consolidated set of human resource (HR) documentation given the operations have been newly acquired, and compilation thereof is currently underway.  The approach to HR presently at the company as outlined below is based on discussions with the HR Manager for DNP, allied to a review of national legislation.

The Labor Code as enacted in 2012 is the framework for labor management in Vietnam.  Alongside the Code, there are specific decrees to help guide organizations to comply with the provisions of the Labor Code, for example, the decrees on labor contracts, labor disputes, or salary.  The Labor Code covers a diverse range of labor related issues, including recruitment, employment contracts, working hours, labor discipline, and labor dispute resolution. 

As per the Labor Code, working hours are not to exceed eight hours per day, or 48 hours per week. While this may be extended through an agreement between the employer and employee, it cannot exceed four hours per day, 30 hours per month and 200 hours per year in total. Employees who work overtime are entitled to additional wages with the rates defined in the Code. 

The Labor Code allows for employment of individuals below the age of 18 i.e., defined as minor employees, and stipulates various requirements in such instances.  However, DNP Water does not employ individuals below the age of 18.   Minimum wages are defined in the Labor Code and as per discussions with the HR Manager, the company pays above the minimum wage. 

Employees are entitled to at least one rest day per week and other leave benefits are defined in the Code i.e., annual leave, sick leave and maternity leave.  Vietnam has compulsory social insurance for employees that covers sickness, maternity, work-related accidents, occupational disease and retirement.  The employer and employees are required to contribute monthly to compulsory social insurance, health insurance and unemployment insurance.  Retirement benefits are provided for under the compulsory social insurance regime.

As per the Code, all companies must permit employees to join a trade union and at DNP there is a union at every facility with collective bargaining agreements typically reviewed on an annual basis, though this may be every 2-3 years for some facilities.  

The Code defines the right for all employees to work without being discriminated against based on their gender, nationality, social class, beliefs, or religion. Moreover, employers are strictly prohibited from discriminatory behavior toward female employees or conduct that degrades female employees’ dignity and honor. Employers must implement the principle of gender equality regarding recruitment, utilization, wage, and wage increase.

 While the Labor Code defines the approach the managing disputes at work, there is no clearly defined grievance mechanism.  

Based on the above compliance with national law would largely ensure alignment with the requirement of this Performance Standard.  As per the ESAP, DNP Water are to develop and implement HR documentation that aligns with the Labor Code and the Performance Standards.  More specifically, this requires development of HR documentation including: i) a HR Policy; ii) a policy regarding equal opportunity and non-discrimination; iii) a grievance mechanism including allowance for anonymous reporting; iv) defined leave benefits, amongst other aspects as required. As part of this DNP Water will also need to demonstrate that the HR documentation has been communicated to employees.

In addition, as part of the HR documentation, the company will also define a procedure to ensure that contractors comply with national legislation including the requirement for access to a formally documented grievance mechanism. This requirement is defined in the ESAP. 

Occupational Health and Safety 

The Labor Code defines specific requirements relative to occupational health and safety, the need for safety management plans by companies, responsibilities of the employer and employees in the event of an accident, training requirements and requirement for personal protective equipment, requirement for employers to provide regular annual medical checkups for employees, amongst other aspects.  

No formal OHS documentation was available at the operations visited and there was no information available on incidents.  Based on the observations at the sites, all workers had appropriate work attire, including safety shoes.  Aside from risks related to the use of chlorine and an associated leak, the other key risk identified is that related to working at heights in that some of the sites did not have adequate guarding around the edge of flocculation and storage tanks, along with working in confined space.  Aside from these aspects general day to day activities at the facilities pose limited risk.    All the facilities visited had dedicated storage rooms for chlorine, however there is no access control and they have no or limited safety systems such as alarms, automatic shutoff valves that are activated when a chlorine release is detected, or containment systems. While all the storage rooms had safety showers located outside, not all had the necessary emergency response equipment e.g., breathing masks available for employees in the event of a leak, or safety signage.  As per the ESAP, the company is to develop a method statement for the storage and handling of chlorine at all facilities that is aligned with Good International Industry Practice (GIIP).  This statement will also define emergency response equipment to be available at the chlorine storage units, along with the requisite safety signage.  Thereafter, the company will review the storage and use of chlorine at all the facilities and implement corrective measures accordingly and ensure the statement is applied similarly at all greenfield developments prior to commissioning.  In addition, as part of the EHS management system a procedure will be developed for the handling of chlorine on-site inclusive of the training requirements for this.  DNP Water will also undertake a review of all guard rail requirements at the various operations to ensure these align with GIIP. As per the requirements for the EHS management defined previously, this will clearly define the approach to managing occupational health and safety at the various operations and will equally ensure compliance with national requirements as stipulated in the Labor Code. 

The approach to health and safety during construction will be managed by the EHS management system for this phase as referenced above and will include the approach to oversight of contractors by DNP Water      

Environmental issues to be managed during the construction phase are those typically associated with construction sites and include, amongst others, the discharge of contaminated (high silt loads / oil and grease) stormwater and diesel and oil spills. In addition, there is the potential for nuisance impacts (e.g., noise and dust) on surrounding land users including traffic congestion at some points. However, these impacts can be adequately managed with the effective implementation of EHS management system for the construction phase. 

The primary waste at the treatment plants is sludge generated as part of the water treatment operations. There are no estimates available for the total quantity of sludge produced from the various operations. The approach to the disposal of sludge varies with it either being discharged onto the land directly adjacent the plants and within the company’s premises, or in one instance it is used as cover material at a landfill.  Other general wastes generated at the facilities are collected in designated receptacles onsite and disposed of by the local municipality. As per the ESAP, DNP will develop and implement a procedure for management of wastes including sludge that is aligned with GIIP and incorporate this into the EHS management system for application at all operations.   

All the facilities had standby generators with the associated diesel storage facilities located within the generating units aside from that at the Dong Tam plant which has a separate above ground bunded storage tank.  The approach to the storage of flocculants and other limited consumables at the facilities varies with some being well managed, and others not so.  Thus, DNP Water will incorporate a procedure for materials management into the EHS management systems for the facilities. 

 Air quality during normal operating conditions is not considered an issue at the facilities given the nature of the operations and neither is noise as all the facilities are not located in proximity to residential areas.  All the facilities had adequate ablution facilities for employees which are connected to septic tanks. 

Energy usage includes electricity from the grid and is estimated to be some 6 million kWh annually for all the plants where DNP Water has a majority shareholding currently.  Use of the standby generators is limited with an estimated 6,000 liters of diesel used per annum.  Based on the total electricity and diesel usage annually the greenhouse gas (GHG) emissions attributable to the company is estimated to be 2,480 metric tons of carbon dioxide equivalents per year. The company will monitor and report on an annual basis GHG emissions using internationally acceptable methodologies. 

 The water quality supplied by the respective operations is regularly tested and reported to comply with national requirements for potable water quality in all cases.  Going forward and as part of the EHS monitoring program there be regular real time reporting of water quality at all operations to DNP Water headquarters.  

While routine operations at the plants would not pose risks to communities / individuals off-site and the facilities are not located in proximity to communities, there is a need to define and implement emergency response plans at facilities; the latter should also consider the potential for a major leak in the water supply lines.  Therefore, as per the ESAP and referenced above, an emergency response plan will be developed and implemented for all operations. These plans will also include a community involvement component to ensure adequate response and safety measures in the event of an unplanned release beyond the plant boundaries due to irregular operations or an accident at the facility. 

All facilities have access control and they company guards are unarmed.                                                

The EIA process for new developments requires stakeholder engagement. To formalize this aspect for the construction and operational phases of projects, DNP Water will develop a stakeholder engagement plan to be applied as part of the EHS management systems for these respective phases.  Given the nature of operations and that facilities are typically not located in proximity to the communities, the plan does not need to be complex, though it should define communications channels with stakeholders, and include a grievance mechanism.

This Environmental Review Summary document and ESAP will be disclosed on the World Bank Infoshop and should additional information on the project be required, please contact the individuals below.

Contact Person: Mr. T. Le Tuan

Company Name: DNP Water

Address: 10th Floor, HTP Building, 434 Tran Khat Chan, Hanoi, Vietnam

Email: Tuan.Le@dnpcorp.vn

Phone: (+84) 91787 5387