PS5: Land Acquisition and Involuntary Resettlement does not apply because the company acquired all land required for the project through voluntary sales and rental agreements with landowners, with no option of recourse to expropriation. Furthermore, there are no other land users losing access to any resources associated with these lands.

PS7: Indigenous Peoples does not apply because there are no communities of Indigenous Peoples in the project area.      

PS8: Cultural Heritage does not apply as archaeological surveys conducted at the proposed site did not identify any cultural heritage. As of 30 November 2018, the Mexican National Institute of Anthropology and History (INAH) official resolution confirming this absence of impacts to cultural heritage is still pending. However, standard Chance Finds mitigation measures are expected to be sufficient to manage the remote possibility that any cultural heritage is identified during construction or operation of the solar plant.   

 According to IFC’s Policy on Environmental and Social Sustainability, this is a Category B – Limited project.

E&S impacts and risks are expected to be limited, generally site-specific, and readily addressed through

standard mitigation measures. The key E&S impacts and risks are those typically associated with greenfield

solar PV projects.

During construction, key risks and impacts include temporary influx of labor, air quality and noise, occupational health and safety (OHS), contractor management, community safety, vegetation removal and waste management. During operations, the main risks and impacts are related to stakeholder engagement, and water use and availability. Key positive E&S impacts include construction phase direct and indirect employment, reforestation, and renewable electricity generation.

X-Elio is a global company specializing in the development, design, construction, maintenance and operation of photovoltaic (PV) plants. Currently present in 10 countries, the sponsor has 200 employees and 385 MW installed generating capacity. Their commitments to effectively assess and manage environmental and social risks and impacts are evident in the corporate policies, organizational capacity, and management systems and programs they implement in their business activities. The remaining paragraphs in this section summarize the key measures the sponsors have taken to avoid, minimize, or mitigate the main project associated E&S assessment and management risks and impacts. 

Policy: X-Elio have a corporate Integrated Quality, Environmental and Health and Safety (QEHS) Policy that identifies environmental management, social responsibility and health and safety in the workplace as key priorities. This policy is aligned with the United Nations Global Compact and the Equator Principles. The sponsor’s Compliance Committee has specific procedures to integrate and monitor policy implementation (including anti-corruption, and anti-trust, among others), and the company’s Code of Ethics and Conduct, across X-Elio business programs and actions.  

Identification of Risks and Impacts: Prior to designing any photovoltaic plant, the sponsors contract local consultants to help identify potential E&S risks and impacts, and relevant mitigation actions. In compliance with Mexican federal legislation, the sponsors contracted separate environmental (MIA) and social (EViS) impact assessments for the Perote II project. These assessments adequately identified most of the key E&S impacts and risks, and related mitigation and benefit enhancement measures discussed in the E&S Categorization and Rationale section above.  IFC’s review of the impact assessments and management plans concluded broadly that the sponsors have relevant knowledge and experience to identify key E&S impacts and risks, and to design mitigation measures aligned with IFC Performance Standards (PS) on Environmental and Social Sustainability.  However, the review identified minor gaps related to labor, security and biodiversity conservation, that are described later in this review summary under the PS1, PS4 and PS6 sections.  Consequently, IFC and the sponsors have agreed on the associated Environmental and Social Action Plan (ESAP) to bridge these gaps. These include the process the company will use to identify E&S risks and impacts during the construction and operation phases of the Perote II project (ESAP A1).

Management Programs: X-Elio’s E&S management programs are based on their Integrated Quality, Environmental and Health and Safety (QEHS) Policy. This framework is certified under ISO 9001, ISO 14001, and OHSAS 18001 standards. Across all their corporate assets, X-Elio apply specific programs to improve resource efficiency, contractor management, and employee health, among others. The environmental and social permits the sponsors obtained from the respective Mexican regulatory agencies require the company to implement a range of additional project specific management programs for conservation of flora and fauna, occupational safety, waste management, emergency preparedness, communications and community investments, among others. For example, the sponsor’s environmental license requires that flora and fauna rescue and relocation efforts be made prior to and during construction. Contractors and sub-contractors will be contractually required to implement these programs through legal agreements. The sponsors will manage these programs through their project specific Environmental and Social Management System (ESMS) that will describe the mitigation and performance improvement actions, responsibilities and resources required to manage the project’s E&S risks and impacts (ESAP A1).

Organizational Capacity and Competency: Environmental and social responsibilities for the sponsors’ projects are shared among Madrid based corporate staff, on-site project staff, and hired external consultants. For each project, in general terms, staff from the X-Elio corporate Quality, Health, Safety and Environment (QHSE) area support on-site Project Managers to comply with E&S regulatory requirements. The sponsors’ QHSE team are assisted in this task by a Health, Safety and Environment (HSE) Technician, and a pair of locally hired Health and Safety, and Environmental and Social Supervisors. The corporate QHSE area combine sponsor E&S policies with the outcomes of project specific E&S assessments and regulatory requirements to prepare detailed construction and operation phase compliance requirement frameworks. These frameworks are then used to evaluate Engineering, Procurement, and Construction (EPC) contractor proposals, and to establish collaboration agreements that specify EPC E&S compliance requirements. At the time of IFC’s review, neither the local Project Managers nor local Health, Safety and Environmental Supervisors had been appointed.  The company will finalize the Perote II project specific QHSE team staffing before start of construction. 

Emergency Preparedness and Response: The most likely emergency scenarios identified in the project’s impact assessments included hazardous material spills, fire, explosions, and flooding. To manage these risks, all company employees, including those working for contractors, must participate in mandatory training about applicable health and safety policies, emergency procedures, and medical services that accurately reflect the facility and surroundings. The sponsor will also ensure that the EPC contractor will develop and implement an Emergency Preparedness and Response plan. HSE Supervisors will know contacts (telephone numbers, radio frequencies) in case a specialized service is required, for example: rescue service, fire brigade, environmental emergency, or others. The sponsor will also require the EPC to staff and operate an onsite medical clinic and ambulance service. The sponsor will ensure this plan is updated and consulted with local authorities and communities, and that sufficient resources are available for staff training and implementation (ESAP A2).

Monitoring and Review: Sponsor staff and external consultants will monitor and produce weekly reports on the EPC contractor’s compliance with all E&S requirements in the applicable licenses and contractual agreements. According to national licensing requirements, the sponsors must also hire an Independent E&S Supervisor to report back to the national licensing authorities on implementation of required management programs and legal obligations. Lenders E&S consultants will also monitor sponsor and EPC compliance with legal and IFC E&S Performance Standards (PS) through biannual site visits during construction, and annually during the first few years of operation. As part of ESAP A1, X-Elio will ensure their monitoring and review procedures are updated with appropriate indicators and reporting formats.

The project will require a peak construction workforce of approximately 600 employees, up to 90% of whom are expected to be sourced from local communities in and around Perote, Veracruz. As such, the sponsors do not believe a temporary construction camp to be necessary. Satisfactory accommodations for non-local workers are available in nearby cities and towns. During operations, the solar plant will need roughly 15-20 permanent technical staff, with some temporary hiring for specific maintenance tasks such as grass cutting, or periodic repairs. The sponsors have many appropriate labor and working conditions related policies and programs. This section summarizes the key elements of the sponsors approach to managing labor and working conditions impacts and risks.

Human Resources Policies and Procedures: X-Elio’s Code of Conduct commits the company to comply with all laws relating to freedom of association, collective bargaining, wages and hours, and prohibiting discrimination, forced or child labor. X-Elio’s human resources policies are designed to attract and retain talented people through a shared culture of excellence, commitment, integrity, diversity, team work, and innovation. The sponsor has developed an orientation procedure for all new employees that includes training and information on compliance programs, compensation and benefits packages, occupational risk prevention, and security, among others. X-Elio requires Engineering, Procurement and Construction (EPC) contractors to comply with these policy commitments in their own recruitment and management of labor and working conditions. The sponsors ensure these outcomes by including labor and working conditions clauses in the EPC contract documents, and by reviewing sample EPC contractor labor contracts for consistency with their corporate E&S policies and procedures.      

Workers’ Organizations: As a signatory of the United Nations Global Compact, X-Elio is committed to uphold the freedom of association and the effective recognition of the right to collective bargaining. These same principles are reflected in the X-Elio Code of Conduct and will be applied to the EPC and sub-contractors as well.

Non-discrimination and Equal Opportunity: X-Elio have transparent procedures for recruitment, promotion, and sanction of employee performance and behavior. These include specific commitments to develop a diverse workforce in a respectful workplace that does not tolerate any form of discrimination or harassment based on personal characteristics such as sex, race, sexual orientation, age, disability, religion or ethnic origin. X-Elio are also committed to gender equality through the promotion of equal opportunities for men and women.

Grievance Mechanism: The sponsors have a whistleblower channel through which questions or allegations of infringements of the company’s Compliance Program can be communicated confidentially. In 2017, they received four consultations, all related to gift requirements under the Anti-Corruption Policy. The sponsors have designed their grievance mechanism to meet IFC PS no.2 requirements and comply with applicable Mexican labor standards. Staff are also encouraged to make suggestions for improvements on all matters through their Intranet portal. The hotline is open to the public, and third-party workers are encouraged to use it, as needed.

Occupational Health and Safety: The sponsors are committed to protecting and improving the health and safety of their staff and contracted workers as evidenced by one of the objectives of the X-Elio corporate Integrated Quality, Environmental and Health and Safety (QEHS) policy of zero accidents. To achieve this objective, X-Elio identifies and evaluates the risks associated with its activities and establishes appropriate preventive and corrective measures, including a strong focus on continuous training (risk prevention, security, first aid, electrical safety, etc.). For each new investment, their Health and Corporate Safety department selects and monitors the performance of the on-site Health and Safety (HS) Supervisor. With the assistance of external HSE auditors, sponsor HSE staff also monitor contractor performance. 

Workers Engaged by Third Parties: According to their Code of Conduct, X-Elio only hire legally established, reputable companies with documented histories of tax and social security payments. Contractors are contractually bound to comply with sponsor E&S policy requirements and applicable national regulations, while contractors’ employees are bound by the same code of conduct as X-Elio staff.  

 The most significant resource efficiency and pollution prevention opportunities and challenges associated

with the construction and operation of the Perote II greenfield solar PV powerplant are likely to be related to

water consumption and waste management. Applicable Mexican regulatory requirements for these matters are

closely aligned with international good practice and IFC Performance Standard 3.

Water Consumption: Water needs for construction and operation are not considered significant. During construction, expected consumption will be about 3000 m3 per year (about 30 trucks of 10 m3/month). Much of this water will be used for dust control on dirt roads. During the operation and maintenance phase (O&M), water for panel cleaning will also be supplied by authorized external vendors. As part of their commitment to environmental sustainability and resource efficiency, X-Elio continue to experiment with dry panel cleaning systems and technologies.

Waste Management: Solid waste during construction and operation (mainly food leftovers and household items) and effluent (sanitary waste) will be managed by accredited service providers. Packing materials for transport of the solar panels, including wood and plastic, are largely recyclable and will also be recycled by service providers. The sponsors will manage all hazardous materials and wastes according to their existing Technical Guidelines for the Storage and Proper Handling of Dangerous Residues developed for a similar solar project in Mexico. These guidelines comply with the criteria defined for hazardous materials established in the General Law for the Prevention and Integrated Management of Residues (LGPGIR) and the official Mexican standard NOM-052-SEMARNAT-2005, which establishes the characteristics, identification procedure, classification and listings for hazardous waste.    

According to the social impact assessment, during the anticipated 12-14-month (TBC) construction period, the project stakeholders’ most significant concerns about community health, safety and security impacts and risks include: i) potentially adverse effects of a temporary increase in the workforce (increased crime, alcohol consumption, disease, etc.), ii) reduced air quality and noise from vegetation removal and the operation of heavy machinery, and iii) increased traffic and road safety related incidents.

Community Exposure to Disease: The sponsors have recognized their need to develop a Community Health and Safety Plan (see attached Social Impact Evaluation). This plan will include training for workers and communities on health promotion and risk mitigation. These actions will be further defined, including resource allocations and implementation arrangements as part of the sponsor’s Stakeholder Engagement Plan (SEP) (ESAP A7) described below.

Infrastructure and Equipment Design and Safety: The project will require transportation of hundreds of thousands of solar panels from their shipping and handling site to the project site. This will increase dust, noise and vibrations along the route, and the risk of road incidents and accidents. The sponsor and EPC contractor will develop a Transportation Management Plan (ESAP A3) that describes how they will minimize these risks to workers and the public.

Security Personnel: In areas of the world where there are significant security threats, X- ELIO collaborates with specialized service providers who provide risk analysis, staff training, security protocols, etc. Security of the Perote II project site will be the responsibility of the EPC contractor. The sponsors will request the EPC to prepare a Security Management Plan based on a security risk assessment (ESAP A4). This plan should specify recruitment and training criteria for guards, incident/accident investigation and protocols for site access control and the use of force. The sponsor will similarly develop a security management plan for the operational phase of the project to be available three months before the end of construction (ESAP A5).

 The Perote II Project is located in the Tehuacán Valley matorral ecoregion. The area is known as the Oriental Basin, which sits at an elevation of 2,200-2,700 masl and is surrounded by a belt of high elevation mountains (the peak of Cofre de Perote is >3,800 masl). The project area is within an Important Bird and Biodiversity Area (IBA) and Key Biodiversity Area (KBA), Centro de Veracruz, and overlaps or is proximate to the range for several threatened range-restricted mammal species (Dasyprocta Mexicana, Habromys simulatus, Peromyscus bullatus, Neotoma nelson, Xerospermophilus perotensis, Megadontomys nelson) and one species of reptile (Abronia graminea). It is 9.4 km from the Cofre de Perote National Park (IUCN Management Category II).

The project area itself is agricultural land that is partially irrigated and otherwise arid with low productivity. It sits within a basin landscape that is largely agricultural and pasture. The baseline study, which was conducted in the wet season (July), registered no flora or fauna species in the project area with a conservation status of Endangered or Critically Endangered, either at a national or global level. Habitat requirements of species supporting the IBA designation indicate a very low likelihood they would utilize this site, such as the Yellow-headed Amazon (Amazona oratrix) that occurs in forests and wet savannahs, or water birds such as Double-crested Cormorant (Phalacrocorax auritus), American White Pelican (Pelecanus erythrorhynchos), and Wood Stork (Mycteria americana). With regard to the restricted-range mammal species, a review of scientific literature on their ranges and habitat requirements indicate that they are highly unlikely to occur in the project area given that the project site is a highly degraded agricultural area.  Lastly, no significant ecosystem services were identified for the project area.

Although the biodiversity values of the project area indicate that it is highly modified habitat, given that the project itself is located in an IBA/KBA, PS6 requirements for legally protected and internationally recognized areas will apply. Given that there are no impacts anticipated to significant biodiversity values however, standard good environmental industry practices as captured in Performance Standard 1 and Performance Standard 3 of this document are sufficient.  Given that the project is located in an IBA, however, and as indicated in ESAP A6, the project will be required to consult with the local partner of Birdlife International on (i) the appropriateness of their mitigation strategy; and (ii) the identification of appropriate conservation measures to enhance the aims of the Centro de Veracruz IBA/KBA.

In all communities where they operate, X-Elio consult with local authorities and residents to understand their needs and priorities. These consultations have helped to produce long-term development and engagement programs that respond to the concerns of these communities. For the proposed Perote II project, the sponsors discussed the project with local landowners and municipal authorities. The key concerns raised during these discussions, for example project E&S impacts and risks, employment opportunities, transportation and security measures, among others, will be reflected in the sponsor’s proposed Stakeholder Engagement Plan (ESAP A7). This plan will include recommendations for stakeholder engagement actions such as project signs, newsletters, and a community-oriented grievance redress mechanism. The EPC contractor will be contractually required to align their stakeholder engagement actions with this plan.               

  Company:  FV MEXSOLAR XI, S.A.P.I. DE C.V.   

Point of Contact:   Carlos Ejido Ramos    

Title:  Country Manager Mexico 

Telephone Number:   (+52) 55 4976 0988    

Email:   carlos.egido@x-elio.com  
Mailing Address:   Lago Zurich 245, Piso 11, Oficina 1101-B

Col. Amp. Granada, Del. Miguel Hidalgo. C.P. 11529; Ciudad de Mexico   

Website:      www.x-elio.com       

miguel.gomez@x-elio.com