The project expansion activities will occur on the existing schools’ land (footprint) owned by YuHua, or will be based on future acquisition of existing schools. No land acquisition is foreseen therefore PS5 is considered not applicable to this project. The existing facilities and future schools to be acquired are in modified urban or peri-urban locations and risks on biodiversity are limited – PS6 is therefore not considered applicable. PS 7 and PS 8 are not considered applicable as no Indigenous Peoples or cultural properties are known to be present or adversely impacted in the project area.                                             

     The investment has been classified as Category B according to IFC’s Policy on Social and Environmental Sustainability as adverse environmental and social risks and impacts arising from the projects are limited, generally site specific and could be addressed through the implementation of Good International Industry Practice (GIIP). Key issues and impacts identified during appraisal, discussed in more detail in the following paragraphs, include: E&S management system development and implementation in existing assets and future schools; labor and working conditions including occupational health and safety during construction and operation; waste management; energy and water savings; and community health and safety including life and fire safety management associated with the schools as these are public access buildings                                              

         Local environmental authorities have required the company to commission an environmental impact assessment (EIA) by a qualified technical institute, for expansion projects. No future greenfield facilities or land acquisition are programmed by the company in the next three years.  The EIAs specify management programs and monitoring requirements, and adequately address key risks and impacts; which are found to be no significant as per the nature of the business activities. 

The company has an overall EHS policy at the corporate level; it covers worker’s safety and environmental aspects. The company, formulated the “Staff Health and Safety Management System of YuHua Education Corporation” to prevent and reduce safety accidents, and it has set up a leading group to effectively implement and supervise the system. A basic ESMS complying with the Environmental Protection Law of the PRC, has been implemented to control E&S aspects during daily operation. Furthermore, in order to enhance energy and water-saving awareness, the company formulated a specialized training program on “energy/water conservation and emission reduction”, for staff and students on a regular basis.

The company utilizes the corporate E&S policy and E&S management system (ESMS) to manage current operations and future acquisitions. The ESMS covers the following aspects, i) identification, management and control of E&S risks, ii) organizational capacity and basic performance evaluation indicators, iii) L&FS management requirements for various building/occupancy types (e.g. dormitories/cafeterias/lecture halls), facility and equipment inspections, and emergency response, iv) construction contractor occupational health and safety, v) energy and water consumption and efficiency, and vi) monitoring, review and control of selected indicators.  Day to day operations are implemented based on the above and other operational procedures, and performance is evaluated as per established indicators. The procedural documents adopt a similar format across the various campuses, while their actual content was developed by each school per local conditions. 

YuHua will develop as part of the ESAP, a preliminary E&S due diligence checklist to be used in new acquisition targets, to assess potential E&S/L&FS risks and to identify cost estimates for the acquisition.

Emergency Preparedness and Response (EPR):

Operational L&FS and emergency response procedural documents are in place at schools, as are EPR procedures detailing actions to be taken in case of emergencies related to fire events, accidents, food safety, traffic incidents, natural disasters, and public health incidents (i.e. epidemic outbreaks) in coordination with HR department and local administration departments, including medical service. Fire drills are undertaken at each school semi-annually, and the local fire brigades conduct daily inspections of buildings as part of overall EPR readiness with direct contact with local fire authorities. The L&FS procedures define the roles and responsibilities of the school principal, fire wardens and other related personnel in case of fire incidents, and of various working groups (e.g. evacuation team; medical response team) set up to deal with a fire situation. The Company’s schools organize special events, inviting local firefighters to come to schools to educate teachers, staff and students on fire safety knowledge and guide the fire drills, with a total of 37 fire drills conducted during the past school year (2016/2017) with the participation of a total of 59,643 people.

Organizational Capacity:

As describe above, EHS management is administered by on-site personnel at each school in line with local procedures, based on corporate ESMS. At each school, the Administrative, Security, and Logistics department is responsible for overall campus safety and security, L&FS management, contractor management, and energy and waste management. The company has at the corporate level, appointed a EHS Officer, responsible for overall coordination of risk management activities in relation to the following: life and fire safety (L&FS); emergency preparedness and response; waste management; resource efficiency; and stakeholder engagement.

The responsibilities of  the  EHS officer  include: the developing new or refining existing standard operating procedures within the Health and Safety Management System of YuHua Education Corporation (including those on construction contractor E&S management, land acquisition and involuntary resettlement); ensuring consistent application of standards and procedures (e.g. OHS, energy savings, food safety, pollution prevention and L&FS) at YuHua corporate level and across schools; providing summary reporting information to senior management on E&S performance, that is presented on the Company’s Annual Report.

Land Acquisition and Involuntary Resettlement

No land acquisition is foreseen on this project. The existing facilities and future schools to be acquired are in modified urban or peri-urban location.  With respect to K-12 schools, the company plans to add more high schools on vacant land within the existing school campuses in the next three years to meet the needs of graduating students. In case the company receives land use right certificate for a plot of land  from the local government to construct future schools, the possible occupants households will be provided with compensation and assistance as follows: (i) cash compensation as per the District Government Land Acquisition Documents, which detailed various compensation standards for lost non-housing agricultural land, crops, livestock, etc., based on the different types and quality of lost land and assets (e.g. Grade 1 agricultural land  would be compensated at a higher rate than grade 2 farm land; concrete-brick houses would receive higher compensation than wooden houses); (ii) relocation assistance payments – as detailed in the same Government documents; (iii) all households moved into resettlement housing provided by the Government complete with local infrastructural provisions such as electricity supply; (iv) affected and eligible household members would be enrolled in the Government social security scheme.                                          

      As of August 2017, the company has 4,086 employees, with 32.4% (1,325) male and 67.6% (2,761) female ratio, and the staff turnover rate was approximately 8%. The employees are mostly based on campuses and includes full time or part-time teaching staff, administrative, support, security, and building maintenance personnel. The company contracts with staff directly and uses labor intermediaries, to recruit new graduates; the company provides business skills training to help new staff integrate into the team. During the scholar period 2016/2017, all staff of the Company participated in the training activities held by the Company. Among them, senior and mid-level management personnel completed an average of 48 training hours while other staff completed an average of 128 training hours each.

In compliance with local law (Tentative Provisions on Payment of Wages, Regulations on the Administration of Housing Fund, Regulation on the Annual Leave with Pay and other laws and regulations), the Company provides statutory benefits including maternity leave, marriage leave and breast-feeding leave; paternity leave, women’s day benefits, and children of the teachers and staff enjoy tuition discount.

Salary and benefits levels are determined by labor market rates at comparable educational institutions. The company observes national labor laws including provisions on minimum wage, working and overtime hours, mandatory social security enrolment, etc. in all material aspects. The group has developed a detailed set of human resource policies and procedures which have been shared with IFC. Terms of employment (e.g. on working hours; leave) are communicated to employees in written contracts. Overtime is not expected to any significant extent.

Retrenchment could be expected in the foreseeable future as the company is expanding operations through the acquisition of schools; for this, the company will prepare, as part of the ESAP, a corporate retrenchment policy and procedures (including a framework for retrenchment plans) aligned with labor regulations in China and PS2 requirements.   The company will carry out an analysis of alternatives and as needed will develop and submit a retrenchment plan.

Key means of management-worker communications are drop boxes, emails to management is an option, regular staff meetings, and day to day direct dialogue between workers and supervisors. Where a worker recognizes that an issue remains unresolved, s/he can escalate this to the administration department, human resource department or to senior managers. During the last years, the company hasn’t received complaints of any form of discrimination or forced labor.

IFC’s review did not find any signs of the use of child or forced labor, racial discrimination or improper punitive measures; employment practices of the company are consistent with principles of non-discrimination and equal opportunity (Based on regulations of the PRC: Labor Law, the Protection of Minors, the Prohibition of Using Child Labor, the Teacher Law, the Code of Ethics of Teachers in Primary and Secondary Schools).

As informed by the HR manager, there are labor unions in place at national level, and the company does not place any restrictions on any staff members wishing to join a labor union.

There have been no major occupational health and safety (OHS) incidents at any of the schools in the past, including work related traffic accidents. There are various chemical laboratories for educational purposes at high school and bachelor (university) level. These labs are well managed with strict supervision of students and correct storage and handling of chemicals utilized for the classes.  Additionally, in accordance with applicable PRC laws and regulations , the Company has developed the safety management system, and set up a special leading group for safety and health work to effectively implement and supervise the implementation of the system, and has established the safety inspection system and accountability system for safety at corporate level.

Overall, given the company’s business nature, the OHS risks during operation are expected to be limited. The company has implemented OHS management procedures and a system to record accidents and incidents, with monthly reporting that are later summarized in the company’s annual report. The report includes ESG elements.

During construction of new buildings or refurbishment of campuses, OHS risk management is undertaken by construction contractors as per national requirements on the use of personal protective equipment, accident reporting, safety supervision and oversight, etc. The company, in its procurement process, looks at various performance aspects of construction contractors including their labor practices, and regularly conducts its own inspections during actual construction. For any new construction or renovation, YuHua engages only nationally-recognized and reputable construction companies with good occupational standard, provide adequate housing for workers when needed and do not employ forced labor or under age workers for any type of activity.        

     Resource Efficiency and Greenhouse Gas Emissions:

The project on an annual basis is expected to consume:  29.7 million kWh per year of electricity from the grid (or estimated 557 kWh/student), with and 2.2 Mm3 of natural gas as fuel used in mainly in kitchens and boilers (84,725 m3/school). Water consumption is expected to be 1,189,000 cubic meters per annum (45,700 m3/school; 22.3 m3/student/year). Total gasoline consumption is expected to be 56,660 litres (2,180 litres/school). Given the geographical location, heating system is utilized in the campuses and it is based on heat pumps (split-systems) technology and centralized boilers. 

The company has established an energy saving leading group to control energy use. The options considered cover aspects of management, technology and behaviour. The company has set up a system of energy consumption to accurate monitor, report publicly and define management strategies.

The main program for electricity savings is directly applied in the university student dormitories, where each room has been furbished with smart electricity meters; the students are then charged for the electricity in excess in their respective room and this encourage them to have good saving practices. Also, each campus has available electricity meters per floor on each educational building to have a better understanding of the consumption segregated by department or faculty.  

The Company has launched other saving projects, including expansion of sewage stations, burning gas instead of coal in boiler, energy-saving project for air-conditioning etc. For instance, the project of green lightening promoted the application of LED fixtures to improve the lightening facilities in schools. During the scholar period August 2016 to July 2017, the total electricity consumption and per capita electricity consumption both decreased by approximately 0.5% and 6.4% respectively. Similarly, in the same period, the total water consumption and per capita water consumption dropped approximately 0.16% and 6% respectively.

The project’s annual greenhouse gas emissions are estimated at 23,460 tons CO2 equivalent for the all schools, attributable to consumption of grid electricity, and fuels used for boilers and vehicles.

The company’s paper consumption reduction is one of the main internal E&S management programs in all schools. Therefore, the company promotes the paperless office environment to minimize the paper consumption while strictly implementing the provisions on the use of paper. The Company also orders the textbooks in accordance with the demand. In addition, the Company strongly promotes the reforestation activities to abide the obligation of protecting the environment. During 2016/2017, YuHua planted approximately 725 thousand trees (equivalent expected reduction of 16,660 tons of CO2).

However, the project ‘s use of energy and emissions are expected to exceed 25,000 tons CO2 equivalent after the future acquisitions. The company will use an internationally recognized methodology to estimate and report annual GHG emission levels – refer to the ESAP for details.

Pollution Prevention:

Project air emissions are limited to few combustion units such as small boilers, gas fired steam and water heaters, and fuel oil fired emergency generators which receive limited usage. The company monitor and account all its emission sources and levels. Sanitary and kitchen wastewater is discharged to the municipal sewage system as per local regulations. Grease traps are in place at kitchens, and oils and grease are collected and disposed of by licensed external governmental contractors.

The quantity of solid wastes generated at campuses is expected to be limited, and the universities have started the implementation of recycling programs that must be strengthened.

The schools’ solid waste is collected and transported to the garbage recycling area in a unified manner (i.e. no separation or recycling procedures are taken on site). Waste then is transferred by the municipal disposal company to the garbage transfer station designated by environmental, health and other departments in line with relevant national and regional treatment standards. The waste collection areas of schools are disinfected twice at least each day. The Company did not have specific statistical data on non-hazardous wastes (e.g. used cooking oil). As part of the review of E&S procedures the company will reinforce the waste management program as per ESAP.                                     

    Food Safety

YuHua outsource all the food service in canteens to independent third parties and restaurants that are regulated by a governmental system for food safety categorization. For example, all student canteens that were visited have received "Grade B" food safety classification and one has no classification. The rating is based on the respective “Province Food and Beverages Safety Supervision Report” index and even though, the category B is normally an acceptable level for operation of the canteens in the campuses. YuHua has implemented a plan that makes emphasis on outsourcing management of providers under the following factors: (i) permittable environment; (ii) system and personnel management; (iii) hygienic condition, facilities and equipment; (iv) food and raw materials procurement, storage and operation; (v) processing operation; (vi) food transport; (vii) utensils cleaning and disinfection process; (viii) food logistics and transportation; (ix) food samples, waste oil and meal waste disposal in accordance with local legislation. 

Campus Safety and Security

There have been no major security and safety incidents (i.e. fires; food poisoning; epidemic outbreaks; harassment incidents; vandalism; etc.) at any of the schools in the last 10 years. All schools employ in-house unarmed security guards, who receive training provided by a qualified external trainer on topics such as professional behaviour and good conduct, and neutralizing security scenarios including the exercise of restraint where the use of force becomes inevitable. There are detailed procedures in place on the maintenance and use of security equipment.

The company has a good level of life and fire safety compliance at its schools, and is in constant contact with local fire departments which conduct routine and non-routine on-site inspections. The on-site fire brigade is staffed by two firemen who are employed directly by the schools, and equipped with fire communication means (radios, cell phones) and other equipment (uniforms, shovels, special PPE, flash lights, first-aid kits). The use of a private fire team is a corporate rule to improve emergency response and ensure that any fire event is controlled in its early stages. This team is responsible for L&FS inspections and fire-fighting at the school facilities. The on-site fire brigade station kept records of daily inspections against a list of indicators. This arrangement will be maintained by YuHua to be applied in future acquired schools.

YuHua made a comprehensive disclosure on E&S related matters, including basic L&FS conditions. Presently, all company schools and 100% respective buildings had passed the local fire brigade’s control assessment and given the age (few years) of the buildings, all were designed at today’s local PRC L&FS regulations and standards. The schools maintain close contact with the local fire department that has issued the respective building fire permits for all existing campuses and buildings.

IFC’s visit to several dormitories, and other type of buildings, found the following in relation to life and fires safety (L&FS): (i) the buildings are designed considering egress needs including multiple exit doors and at least two exit stairs of proper width based on occupancy load; (ii) operation policies are in place, for example, any heating or cooking devices were strictly prohibited in dorm rooms and housekeeping is  good with no obstructions in corridors or other risky areas ; (iii) fire-fighting equipment, signage, and emergency lighting were in place and all equipment appeared well maintained and identified; (iv) there were records of regular inspections/verification of electrical system functionality; (v) fire drills are performed twice a year as a minimum; (vi) abundant water for fire-fighting is supplied to each building by the municipal water supply  company; (vii) fire notification alarm system is available in the dormitories and other tall buildings by means of exterior loud speakers and horns; (viii) sprinklers were installed in specific buildings - as per the updated national fire code. 

The company will commission a qualified Life and Fire Safety (L&FS) professional to undertake a scoping-level review of the L&FS design, building infrastructure, emergency response capabilities and operational aspects of the Company’s future school acquisitions. The review should consider the requirements of the national code and one internationally recognized L&FS code (e.g. U.S. NFPA) as defined in the World Bank Group (WBG) General Environmental Health and Safety (EHS) Guidelines. Where gaps are identified, the company will develop and duly implement a corrective action plan (CAP). Each corrective action should have a completion timeline and milestones, responsible implementation party/persons specified, indicators of completion, and resource/budgetary requirements to the extent that these can be estimated during the integration period.

The plan should cover the issues identified by IFC regarding some locked (pad-locked) exit stairs and emergency doors at various of the schools visited.          

    Key stakeholder groups for the project are its students, teacher and non-teacher staff members, and residents near each campus. To date, there have been no known grievances or issues of public concern associated with this project. During school operations, the administrative support offices as well as security entry points at each campus are the key public interfaces to receive external communications including grievances from the public if any; and members of the public can also dial into each school’s general inquiry phone number to communicate any concerns they may have.

YuHua has organized and implemented corporate social responsibility and donation activities and given full play to the social role of each of its school’s members, for the development of the community (e.g.: fund-raising and clothing donation activities in Zhengzhou Technology and Business University; organized 150 volunteers to participate in the greeting activities of “Care for the Vulnerable Group” and “Care for Autistic Children” in Zhengzhou Jingcheng Ability Training Centre; campaign of “Delivering Warmth on Christmas Eve”; “Care for the Elderly” campaign in Liuji Town Community; contributions to community development; among other programs).

In the last year, the company took part in over 31 voluntary services, in which nearly 10,000 participants were involved.                                                 

       Company: China YuHua Education Corporation Limited

Point of Contact: Xu Bin

Title: Chief Financial Officer

Telephone Number: +86 0371 60673938

Email: xubin@yuhuachina.com

Mailing Address: No 21, Beida Huayuan, 4th Floo Block 10, 3 Mazhuang Street Zhengzhou China

Website: www.yuhuachina.com