PS 3. Resource Efficiency and Pollution Prevention; PS 4. Community Health, Safety and Security; PS7: Indigenous People do not apply as the project only covers supply chain operations; and PS8: Cultural Heritage are not expected to apply as the project covers only supply chain operations. PS5: Land Acquisition and Involuntary Resettlement is not applicable as the Facility will not finance products produced from Phoenix’s farms.                                               

The proposed investment is a category B project according to IFC’s Policy on Environmental and Social (“E&S”) Sustainability, because the environmental and social risks related to Phoenix agriculture supply chain is expected to create limited adverse E&S risks and/or impacts. Should risks or impacts emerge, they would be limited in number, site-specific, largely reversible, likely to be minimized, avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria.

The potential environmental, social, occupational health and safety (“OHS”) risks and impacts associated with this project relate to: (i) company E&S capacity to implement E&S management systems to manage supply chain risks and impacts;  (ii) screening for potential child labor, forced labor and significant OHS risks in its supply chain; (iii) implementation of E&S requirements in purchasing decisions and contracts; and (iv) adoption of a monitoring and verification system for supply chain risks and impacts.

Phoenix has presented plans to address these potential environmental and social impacts. In addition, to ensure that upon the implementation of the specific agreed mitigation measures, the Project is in line with the applicable national laws and regulations, IFC’s Performance Standards and World Bank Group (“WBG”)’s  general and sector-specific Environmental, Health and Safety (“EHS”) Guidelines, identified gaps are described in the following paragraphs and in the attached Environmental and Social Action Plan.                                       

In April 2018, Phoenix published its Environmental, Health & Safety policy which outlines its approach to managing EHS aspects in all its operations including farming operations. Topics addressed by this policy include: soil conservation and management; nutrient management; crop residue and solid waste management; water and energy management; air quality; integrated pest management; and occupational health & safety. Specific procedures for OHS, labor protection, fire safety, management of dust at silos, and pesticide handling to support the intent of the policy have been developed and are currently under implementation. Although all aspects covered are in line with the requirements under this PS, there is no policy nor procedures to address impacts on contractors and throughout the supply chain. A supplier code was developed in 2013 but has not been implemented. As stated in the ESAP (item #1), Phoenix will develop and implement an E&S management system (“ESMS”) at a corporate and country level, including a supply chain policy, specific E&S requirements for contractors and suppliers, a monitoring and verification system to ensure compliance. The details will be available for sharing with IFC at regular intervals, whenever required.

Environmental and Social Assessment and Identification of Risks and Impacts: Phoenix procedure on identification of risks and impacts is currently underpinned by compliance with national regulations and customer requirements. A due diligence process, which includes some aspects related to E&S aspects, is undertaken for each new asset and Environmental and Social Impact Assessments done for new operations. However, limited assessment of the E&S risks and impacts in its supply chains has been undertaken to date.

In January 2018, Phoenix approved a Sustainability Initiative which includes a Supplier Code. This code includes the basic standards to which all Phoenix suppliers of raw materials and products should adhere to. It includes commitments to corporate governance, quality of goods and services, labor standards and human rights, environmental matters, and respect to communities. This is a very good step towards the implementation of a robust E&S management system to address risks and impacts in Phoenix supply chain. As presented in the ESAP (item #2), Phoenix will strengthen this Supplier Code and include these requirements in all contracts with suppliers.

At Phoenix all product lines are divided in business units with operational staff in origin countries which could become mechanisms to identify and address risks and impacts within supply chains to be supported by this investment. For example, country managers could conduct supply chain risk assessments for the commodities that they source from primary suppliers. These high-level sector / commodity reviews could also be supplemented by the interactions that company extension agents could undertake as they work with suppliers or farmers. Phoenix extensively uses technology for monitoring and reporting and could therefore use GIS technology to map, assess and monitor suppliers. A robust management system will provide assurance to customers that E&S risks and impacts are managed appropriately. See the discussion on PS 2 (for specifics on labor risks in the supply chain) and PS 6 (for those related to impacts upon biodiversity).

According to the ESAP (item #3), Phoenix will map all suppliers beginning with the supply chains related to this project (rice, sugar, grain and pulses) and submit this to IFC for review. There are different types of traceability and control systems that could be used by Phoenix which can either be used to make risk-based decisions or provide direct assurance of performance. Considering the present nature of trade flows, it is not feasible to implement traceability systems to all business units. In addition, and as stated in the ESAP (item #4), Phoenix will undertake an E&S risk assessment and prioritization of all suppliers, beginning with the supply chains related to this project (rice, sugar, grain and pulses). This will include a country/commodity screening and individual supplier assessments. As part of the assessment done under ESAP action 4, Phoenix will define the type and extend of traceability systems per commodity and country

Organizational Capacity and Competency: In mid-2017, Phoenix hired a director for sustainability who is responsible for environmental, occupational health and safety and social matters at the corporate level. He has the responsibility to develop the corporate E&S policies and procedures, assess the E&S risks and impacts of all business units, and develop management programs to meet objectives. He will implement the ESMS at the corporate level and ensure adoption and implementation of E&S policies and procedures is undertaken at all country operations.

Management Programs: Gaps identified through the risk assessment process will be included into a management plan. This plan needs to include issues, corrective actions by supply chain and supplier, responsible people, budget and a timeline to correct issues or find alternative sources.

Monitoring, Review, and Reporting: As stated in the ESAP (item #5) Phoenix will implement a monitoring and verification system based on the results of its risk assessment process to ensure identified gaps are addressed and mitigation measures implemented over time. Depending on the E&S risk level and the type of leverage and control Phoenix has over its supply chain different tools and mechanisms, such as internationally recognized certification schemes, independent audits, or sustainability platforms, can be used to provide assurance of acceptable E&S performance.                                               

Supply Chain: Risks related to child labor and forced labor are documented for rice and sugar, specifically in some of the origins, such as India, Vietnam and Brazil. Phoenix has currently limited interphase with farmers and deals mainly with intermediaries. As part of the mapping and risk assessment process, Phoenix will identify the best channels and enforcement mechanisms to ensure compliance with its supplier code and IFC Performance Standards. Certification programs and third-party certification schemes that include criteria related to the supply chain is the primary means of addressing labor risks. If labor impacts are identified, the company will work with suppliers to address the issue; if it cannot be addressed the company will avoid procuring from such suppliers.                                             

There are some biodiversity related risks documented for rice and sugar, specifically in Vietnam and Brazil. As part of the mapping and risk assessment process, Phoenix will identify the best channels and enforcement mechanisms to ensure compliance with its supplier code and IFC Performance Standards. Certification programs and third-party certification schemes that include criteria related to the supply chain is the primary means of addressing biodiversity risks. If impacts are identified, the company will begin work with suppliers to address the issue; firstly, Phoenix will engage non-compliant suppliers more effectively throughout the following year with clear warning that failing to comply would stop business relationship; if issues continue to persist at the supplier, the company will avoid procuring from such supplier.                                               

The Company’s approach to community engagement is defined by local needs. Phoenix will improve its engagement with surrounding communities, through a structured Stakeholder Engagement Plan (“SEP”) and Community Grievance Mechanism, as per the ESAP (item #6). The SEP and grievance mechanism needs to be aligned with the requirements under this performance standard. The grievance procedure will include: (i) a means to receive and register external communications from the public; (ii) a process to screen and assess the issues raised and determine how to address them; (iii) a method to provide, track, and document responses, if any; and (iv) a mechanism to adjust the management program, as appropriate.                                                 

PHOENIX COMMODITIES DMCC
Mr. Nitin Navandher
44th Floor, Buliding - AA1
Mazaya Business Avenue, Jumeirah Lakes Towers (JLT), P.O. Box 49451
Dubai, United Arab Emirates
Phone: +971-4-4501200, Fax: +971-4-4501210
Email: nitin@pclworld.net