PS5: Land Acquisition and Involuntary Resettlement is not applicable as the farm lands leased or bought by the company which are either privately or State owned (for use in both crop production and to site the farms themselves) are leased or bought through willing buyer/lessor/willing seller/lessee transactions. Land transactions can be summarized as follows: Land availability is tied to each village with each hectare of land being valued by the State in this region at a maximum of 35,000 Hryvna or UAH (approximately 1308 USD). Agricultural land can only be leased whereas industrial land can be bought. This practice is set by law. The land for the new processing facility (5 ha), being industrial land, was bought from several different owners 5 years ago.  When the land is State owned an amount of 8% of the maximum land value is paid as annual rent for the land, and when it is privately owned the rental price is currently negotiated up to 11% (3,850 UAH). Current lease agreements for farm land run between 5-10 years, which the company is trying to extend to 7 – 12 years upon renewal (7 years now being the legal minimum); land used for the pig farms (and therefore built upon) is for up to a 49 years’ lease, which used to be the maximum length of time allowed under law. Lease agreements up to 99 years can now also be negotiated. Payment for the use of land for pig farms is required to be paid as a lump sum (i.e. the valued amount), up front at the time of signing the lease. 

PS6: Biodiversity Conservation and Sustainable Management of Living Natural is not applicable as there are no impacts to critical or natural habitat and the land has long been used for agricultural purposes. 

PS7: Indigenous Peoples (IP’s) and PS8: Cultural Heritage do not apply as IPs are not present and the land was long been used for agricultural purposes and does not contain any cultural heritage. 

In addition to the above, the WBG Environmental, Health and Safety (EHS) General and sector-specific Guidelines for Mammalian Livestock Production, Crop Production and Meat Processing apply to this investment. 

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. The environmental and social risks and impacts associated with this project are limited, site-specific and can be readily addressed through generally accepted mitigation measures as described in this document and the attached Environmental and Social Action Plan (ESAP).

The main E&S risks and issues of Nyva’s operations are related to the following: ensuring on-going compliance with Ukraine regulation governing the need to conduct environmental assessment of new developments (including the location of the new farm, slaughter and meat processing operation, including cumulative risks and impacts of the existing operations and the design and construction of the waste recycling facility); obtaining and maintaining associated construction and operating permits, and the expansion and implementation of the integrated environmental, occupational health and safety (EHS) management system; maintaining biosecurity and food safety/quality management system to these new operations. The company also needs to engage with the communities located near the company’s new operations to ensure they are aware of company operations and that any impacts stemming from these activities are understood (including pesticide application, manure application, movement of heavy farming equipment and other company trucks, etc.). The company needs to ensure that these communities understand they have a means to raise any issues they may have regarding these impacts and that those complaints or comments will be adequately addressed in a timely manner.

  Environmental and Social Risk and Impact Assessment and Management System (ESMS): The company has established, and maintains a process for identifying and managing the environmental and social risks of its existing operations. An Environmental Impact Assessment (EIA) is required to be developed (OVNS in Ukrainian) and submitted to authorities to obtain an operating permit for each operation. All project components will be assessed by the government authority prior to the start of construction as part of the permitting process. At the time of the site visit, the project was still in design phase and the EIA process had not yet started. The company shall complete the required EIAs, including public consultations, and share the documents with IFC for review (ESAP #1). The EIA for the new processing facility will include cumulative risks and impacts as it will be adjacent to existing Nyva operations (i.e. concrete plant, waste water treatment facility and processing facility and feed mill). Preparing an EIA is not only a requirement for new projects, but also for existing operations every 5 years. Last year the feed mill/processing complex EIA was updated, which is now valid for 10 years. The report showed that the operations are in compliance with all regulatory requirements. The company uses qualified consulting companies that are licensed by the government to conduct the EIAs. Subsequently, assessments are used to inform company policies, practices, procedures and yearly management programs. 

Policy:  The company has established an overarching policy that defines its environmental, (including occupational health and safety) and social objectives and principles. It includes the commitment to comply with applicable Ukraine laws and regulations and be consistent with the principles of the Performance Standards and the WBG General EHS Guidelines. The company published the policy on their website (Link:   http://niva-group.com ).

Management Programs: The company has developed an environmental, health and safety (EHS) management system which incorporates a variety of procedures and practices that are operationalized by managers and staff throughout the organization. The meat processing operation is certified to both ISO 9001 and ISO 22000, incorporating a Hazard Analysis and Critical Control Point (HACCP) program. The proposed processing facility will also be certified for both ISO certifications. 

Organizational Capacity and Competency: The cultivated lands are under the responsibility of the Chief Agronomist and good agricultural practices are implemented (such as safe application of pesticides, manure application, etc.) by his team of agronomists. They work alongside the Group-wide Environmental manager and OHS manager, who were recently appointed. Group-wide Human Resources are managed by a manager and her team. The maintenance of the ISO 9001 and 22000 systems is the responsibility of the general manager at the processing facility.

The company interfaces with regulators (including those responsible for environmental oversight) through the corporate environmental manager. His duties include maintaining permits and licenses, overseeing the monitoring program and ensuring proper waste collection and disposal. After the political upheaval in 2014, the Cabinet of Ministers issued a moratorium banning fire, sanitary, labor and environmental inspections of the meat processing sector due to economic reasons. Only veterinary inspections are currently done. As of December 2017, all inspections will be reinstated. The company will receive the its first inspection in December 2017.

Training: The company provides training for those engaged in jobs that are related to food safety, environmental and occupational health and safety hazards and risks. All employees receive an annual OHS training and there are specific trainings for high-risk jobs: e.g. electrical works, welding, working at height, crane operators, applying pesticides and working in the cold storage.  However, due to the nature of these jobs, the head of the relevant department in cooperation with the OHS manager provides every 3 months a safety instruction as a refresher. The risks of these high-risk jobs are assessed by both workers, OHS manager and the managers in a collaborative process. Safe working procedures are then developed and documented.  Specific examples of this practice are provided below in the section describing the company’s OHS practices. 

Emergency Preparedness and Response: Emergency Preparedness is required by the State Fire Security Department (under the auspices of the Ministry of Extraordinary Situations.) The plans that are developed were done so in conjunction with the Department that then reviews the document prior to it being adopted by the company. These plans are part of the EHS management system. Required permits also address possible sources of accidents that may lead to emergencies, e.g. those that pertain to the management of hazardous materials. In absence of fire inspections, the company is maintaining the plans in line with the regulations. There is an annual plan for executing drills covering all operations. The first upcoming drill is in November for the elevator and dryer operations. 

Monitoring and Review:  As stated above, currently the company does not receive any government inspections, except for veterinary inspections. The above management programs incorporate performance indicators; for example, waste water is treated to meet effluent standards (see below for more details) and occupational health and safety is judged against lost time incident frequency reporting (LTIFR) (This is further discussed below.). Internal OHS audits are performed across all operations, but no environmental audits are performed. In the past, the Heads of Department held a monthly safety committee and managers also convened a weekly safety meeting. Due to recent changes in E&S staff this practice was not upheld, but the company will reinstate the meetings as well as undertake environmental audits as is required by Performance Standard 1, and the company’s EHS management system. As per the certified management system requirements and the internal EHS management system, senior management receives periodic performance reviews on the effectiveness of those systems.

E&S key performance indicators (KPIs) are not currently used as performance targets for operations level management. To derive full benefit from the use of KPIs in performance monitoring and review, as set forth in the ESAP (ESAP #2), the Safety Committee in cooperation with the human resources department shall set E&S performance indicators and targets for all management levels to be reviewed on an annual basis.

  Working Conditions and Management of Worker Relationship: There are a total of 1,235 employees of which 253 (20.5%) are women (who mostly work in the meat processing operation.) They are all permanent employees and there are no part time or temporary workers. When a worker doing a particular job does not have sufficient work they are re-assigned to another job within the organization. Also, to accommodate the seasonality of crop production work, the company allows flexible working hours (as per Ukraine labor law for agricultural workers) so longer hours when needed are balanced with shorter hours when the work is less intense. There are no contracted workers.

The minimum age for full time employment in Ukraine is 18; although the law allows apprentices/ trainees to be hired at 16. During the summer, the company has approximately 20 trainees, who can only work 7 hours a day and are prohibited from undertaking hazardous work or working overtime or night shifts. These trainees are paid an above minimum wage salary that ranges between 50-70% of what a full-time employee performing the same job is paid. Proof of identification – and age – is required as part of the recruitment process. The current minimum wage in Ukraine for all workers is 3,200 UAH/month (USD119/month); however, the company’s minimum salary paid is approximately double of this amount. 

As part of the project the company will be hiring 214 new employees. Given the competition among companies in the region the new hires may come from other parts of Ukraine as is already the case. For these employees, the company has dormitories where they can stay for free. An existing office building will be remodeled into a new dormitory to house an additional 94 remote employees going forward. As set forth in the ESAP (ESAP #3), the dormitory design will meet the IFC and EBRD guidance note on Workers’ accommodation: processes and standards.

Workers’ Organization: Within the company there is an internal commission of employees, formed by employees who are elected every 3 years. This body provides a variety of functions including that of a social organization (that provides support to worker’s families with funds provided by the company for example) and does collective bargaining as required under the labor law for better wages and other benefits. Unlike a trade union, no dues are required to be paid to the organization. Company management stated that if the commission wanted to become part of a larger trade union they could not prevent this from happening.

Human Resources (HR) Policies and Procedures: The company has adopted and implemented human resources policies and procedures that are either in compliance with, or exceeding the requirements of national labor law. As part of the first investment, HR policies and procedures were enhanced regarding the employee grievance mechanism – to also include the ability to internally record complaints anonymously – and this was communicated to the entire workforce in accordance with the requirements of this performance standard. Since 2014, the company has not received any inspection by labor authorities as these come under the same moratorium as noted above. The company maintains its labor practices to demonstrate compliance to applicable requirements when inspections will be restarted.

Working Conditions and Terms of Employment: General terms of employment are contained in a collective contract, which is registered with the state, and that every worker gets from the company upon being hired. This document includes details on terms of employment such as pay and working conditions, as well as overall benefits. An individual’s specific job requirements are communicated during the interview process and are also contained in a written offer letter. The Ukrainian constitution contains provisions for non-discrimination in hiring and promotion which is included in the HR policy. Jobs are advertised based on the skills and experience required. Equal opportunity (regarding promotion) is achieved by internally posting the job requirements for new positions as well as advertising them externally. Bonuses are paid annually to all employees which is calculated individually based on company performance.

Retrenchment: Given the company has been expanding over the last 12 years (by building more pig farms) there has been no retrenchment; this trend will continue as the company expands to 10 farms in total. The project will create approximately 220 new jobs. It was stated that if retrenchment was to be required, then the company would follow the provisions of Ukraine labor law which are aligned with the requirements under this PS and include: at least two months' notice, one average monthly salary, compensation for unused vacation and their employment book. A written resolution (order) should be issued by the company's director or chairman, which contains certain information, such as the reasons and date of termination.

Grievance Mechanism: The company has an employee grievance mechanism, which includes the ability to receive and record complaints anonymously. It was reported that this mechanism is presented at the job interview as part of the rights and duties of employment. In addition, the State’s labor department can also receive complaints directly from employees, including those posted anonymously. They will then visit the company and review the issue. No grievances were lodged recently. 

Occupational Health and Safety: Jobs that involve hazards and risks (e.g., welding, fabricating and then using cranes to move and load concrete floor and wall elements onto trucks and then offloading them at construction sites, working at heights, those working in grain elevators, those operating heavy farm equipment and applying pesticides, those working in confined spaces, and those using vertical saws in the meat processing plant) are subject to written work instructions that describe the hazards and risks and the mitigation of those risks. Measures taken based on the risk assessment follow the mitigation hierarchy and include risk avoidance measures such safety devices and machine guarding on equipment in the processing facility, mechanical loading of the boilers. Administrative controls include limiting the hours that individuals work those jobs and making line supervisors and managers responsible for the behaviors of those who report to them. Engineering controls include preventative regular cleaning of the workplace to prevent dust build up, and the maintenance of cranes and other equipment and use of personnel protective equipment (hard hats, boots, dust masks or respirators, safety glasses and/or full-face masks, gloves and coveralls as appropriate). Those who conduct such work are trained and only upon completion of such, and the subsequent receipt of a worker’s card permitting them to undertake such work, can they carry out those tasks. Provision of training is the responsibility of the respective Heads of Department. 

All workers undergo mandatory periodical medical examination specific for their job. When an accident occurs an accident committee, including the State Authority, is formed to investigate the accident and mitigation measures are developed to address root-causes. These are communicated to all employees and employees doing a similar job are retrained. The company reported 2 lost time injuries in the past year with a lost time injury frequency rate (LTIFR) of 0.8. This should be compared to a LTIFR of 9 for crop production, 11 for animal production and 5 for the meat processing industry based on US data. As these rates appear to indicate a very safe working environment, the company will review its overall reporting practices to ensure that all accidents, incidents and near misses are reported and fully recorded. Annual reporting of data from all operation will further allow for benchmarking and identification of areas where improvements shall be required.

The company only uses a limited number of contractors. For example, the new grain storage silos are constructed by a contractor and specialist repairs to equipment (cranes, combine harvesters, etc.) are carried out by outside service providers. Contracts with these service providers contain requirements related to labor and occupational health and safety regulatory requirements and such companies are required to provide evidence of current licenses and permits prior to the commencement of work. General awareness of hazards and risks (e.g., fire prevention and protection) and specific instruction based on risk and job type are also reviewed with the contractors before work can commence. Despite these measures, an unsafe working situation was observed during the IFC visit where a subcontractor did not adhere to the working instruction for working at heights. As set forth in the ESAP (ESAP #4), the company will strengthen its OHS monitoring program and ensure that contractors adhere to the contractual OHS requirements and the company’s OHS procedures. 

Fire Safety:  Sufficient fire safety equipment is present to prevent and manage fire incidents. The company’s fire safety plan includes periodic fire and evacuation drills and a system to ensure that corrective measures are implemented. Lately no evacuation drills have been conducted; only class-room instructions have been provided. As of November 2017, the company will restart conducting drills for all their operations as per their fire safety plan as well as the regulatory requirements. Drills will be analyzed and corrective measures implemented accordingly. 

  The main environmental risks associated with the Nyva vertically integrated operations are related to solid waste management, wastewater management, air emissions and resource consumption.  

Resource Efficiency: Water at crop production: Crops are rain fed and do not require irrigation. Given that the region experiences between 500-700mm of rainfall per annum, this element of the vertically integrated production system is not a significant consumer of water. 

Water at farms and processing operations: Raw water needs for the pig farms are met from permitted groundwater sources. The State’s geological department conducts quarterly monitoring of these wells to ensure the extraction levels do not exceed the amount approved in the permits and to ensure water quality is not deteriorating. The farms can extract a maximum of 300 m ³  of ground water per day and on average farms are consuming 159 m3 per day. Monthly consumption of water at the pig farms and at the meat processing plant is reported to the authorities. In 2016, the water consumption expressed per pig reared was 1.47 m ³ /pig/180 days. Whereas on the higher end, it is still within the range of consumption reported in the literature (i.e. an average of 8 liters/day throughout the entire life cycle of the pig). A competition is held among the farm managers to conserve water where possible and the results are compared periodically. The company will look for further opportunities to implement water conservation practices and report targets on an annual basis.

Energy: The meat processing operation uses steam generated by a recently installed boiler that is fired using straw. This boiler also provides steam for use in the feed mill. The capacity of the boiler is 2.5 ton of steam/hour (which equates to 2MWth). Each farm (and the concrete plant and the area used to service agricultural machinery) is equipped with a small straw burning 0.75MW boiler (approximately 1.2MWth) to produce hot air and hot water – to keep both employees and pigs warm in winter. As per environmental regulations, the use of each boiler is subject to an assessment prior to its use. This assessment takes into consideration the proximity of any communities; as mentioned elsewhere in this document farms are located away from communities (at least 1.5km from the nearest settlement). Each boiler is equipped with a 100m ³  capacity water tank. The size of these boilers precludes the need for monitoring under the General EH&S Guidelines; however, monitoring is undertaken to satisfy Ukraine regulations (under Ukraine Standard 201-97). The company is in compliance with the requirements contained therein. 

The meat processing operation has six cold storages and the refrigerant used in the meat processing operation is R407C and R404A, a non-ozone depleting substance. For the new processing plant, another technology will be used which uses ammonia as refrigerant. Risk and impacts of ammonia use will be included in the required EIA (see ESAP #1). 

The boilers on the farms and that in use at the construction site consumed a total of 10,567 tons of straw in 2016. The company is self-sufficient in straw production. The State issues an operating permit for the straw fired boilers. The company is in compliance with all operating parameters and limits. The grain dryers use natural gas as fuel source and the annual consumption 2016 was 1,397,050 m ³ . Electricity consumption was 18,494,479 kwh. 

Greenhouse Gas Emissions: Scope 1 greenhouse gas (GHG) emissions from the raising of pigs and combustion of the above amounts of straw (for the current 9 farms in operation), and the natural gas consumed in the processing and the feed mill plant equated to 16,252 tons of CO2 equivalent. Scope 2 emissions (from electricity consumption) added a further 5,363 tons. The company will report their GHG emissions annually and will consider alternatives and implement technically and financially feasible and cost-effective options (such as those discovered by undertaking an energy audit) to reduce project related GHG emissions.

Pollution Prevention:  The farms utilize forced ventilation (mechanical) for odor and ammonia control at the pig housings. In the processing plant, the cooking and smoking of meats only occurs to a small proportion of the products and the process was not noted to be inherently odorous during the IFC visit. There have been no complaints from the local village situated about 250-300m at the closest point. At the feed mills, all 10 elevators are equipped with dust respiration systems. During the IFC visit dust particles were noted around the unloading station at the elevators. The unloading station is an open dump pit which will be covered when it is raining. The company stated that they measure dust emissions at fixed points and measurements do not exceed the regulatory limit of 50 mg/m ³ . However, there are nearby residents (approximately at 200m distance) that could experience nuisance of dust releases. The company has not received any complaints via their grievance mechanism. As set forth in the ESAP (ESAP #5), the company will build a roof and install ventilation at the pit level to prevent dust releases during unloading at the two unloading areas. The company will report on an annual basis all dust measurements benchmarked against the Ukraine regulatory limit and WBG EHD guideline levels. Mitigation measures are taken if the limit is exceeded. 

Wastewater Treatment: Wastewater from the meat processing plant is treated in an on-site treatment plant that also treats the sanitary waste water (approximately 20% of the total treated volume) from the nearby community. Monitoring results reviewed indicated compliance with WBG EHS Guidelines for meat processing. The treatment plant, placed in operation in April 2017, was designed by an Austrian company and is working efficiently. Monitoring results regarding effluent quality will be recorded annually and any deficiencies corrected to ensure continuous compliance with wastewater WBG EHS Guidelines levels. Waste water from the pig farms is discharged to the closed manure storage at the farm. The slurry is discharged to the company’s own fields twice a year. 

  Community Health and Safety: Adverse impacts upon the health and safety of communities located nearby Nyva operations could result from practices associated with farming, such as inadvertent exposure to land application of effluent (used as fertilizer), exposure to agrochemicals (e.g. pesticides), inappropriate operation of company trucks in populated areas or exposure to excess noise and/or inappropriate disposal of effluent from processing operations, and odor and ammonia releases. In addition, possible outbreak of diseases in the pig population that could transfer to human populations could also occur. 

Measures have been taken at the farms to minimize odor and ammonia releases. Extreme odor was not noted during the site visit to the farm visited. Covered manure storages are built where they are least likely to cause annoyance to sensitive receptors, considering the distance to receptors and prevailing wind direction. The company will ensure the good practices currently implemented on existing farms land are extended to the new farm and lands acquired. For example, land application of slurry which is injected twice a year, for the summer and winter crops, is generally limited to areas close to pig farms. Furthermore, spreading is done during the day and weekends and public holidays are avoided, and attention is paid to wind direction in relation to neighboring houses. As noted elsewhere the farms are required to be located away at least 1.5km from areas of population. Through their community liaison officer, the company informs local villages of the intention to apply the slurry as well as application of agrochemicals. 

Trucks (for moving pigs and feed between operations and other agricultural raw materials to and from operations) are maintained by the company; the garage and chief mechanic are required to review and sign off on a vehicle after maintenance and before it can be used to ensure it is roadworthy. All truck drivers are tested every day for alcohol and blood pressure before being allowed to drive; they also undergo a comprehensive annual health examination. The company reports that there have been no accidents involving their trucks. The company should be cognizant of all impacts that may occur due to truck traffic moving through local villages (such as dust, vibration and noise) and ensure that all trucks are driven per local laws and that they are not overloaded. Being receptive to complaints stemming from truck traffic must be considered as part of the updated stakeholder engagement plan, (see below). 

In September 2016, a biosecurity audit was undertaken by representatives of the United States Department of Agriculture and the Association of Ukrainian Pig Breeders in relation to African Swine Fever (ASF). For over a year, the company has strict quarantine rules in place which was acknowledged during the audit. Some recommendations (i.e. clear brush and weeds in 10m zone around perimeter fence; cleaning protocol to focus on clean section before dirty section; farm management to meet routinely with village leaders on ASF and measures taken) were made which were implemented by the company.  Management of carcasses from farms was improved as part of the first investment and noted in the biosecurity report. 

Separation of the public from company operations is achieved by maintaining a sanitary protection zone (SPZ) with the farms being at a distance of 1.5km from areas of population and their being surrounded by 2.7m high concrete walls as part of the biosecurity measures. The exception is farm 4, where the distance to the community is 900m. There are no inhabitants in this community and the company has received an exception permit form the government. The chance of inadvertent access to the farms (and exposure to any kind of transmissible disease) is further minimized as measures regarding limiting access to authorized personnel only by having on-site, unarmed security guards. 

  External Communications and Grievance Mechanisms: Current means of community engagement with communities include consultations through the EIA process (therefore driven by regulation which includes a public disclosure element) and through activities related to the company’s corporate social responsibility program. As set forth in the ESAP (ESAP #7), the 2014 Stakeholder Engagement Plan (SEP) and community grievance mechanism will be updated to include the new operations. Reporting on the implementation of the updated plan, and a synopsis of activities of ongoing reporting to affected communities will be reported on an annual basis.

The company will disclose this ESRS and the associated ESAP on its website (having first translated it into Ukrainian) and locally in appropriate venues (e.g. town halls, churches, etc.) and communicate its availability to local communities. 

 Contact name: Oleksandr Kucher

JV LLC Nyva Pereyaslavschyny

2 Pryvokzalna St.

v. Pereyaslavske

Pereyaslav-Khmelnitskiy district

Kyiv oblast, Ukraine