PS5: Land Acquisition and Involuntary Resettlement is not applicable as land acquisition transactions have been done on willing buyer–willing seller basis. Latest land transaction took place in 2017 for the proposed expansion of the Battambang mill and was acquired from one household over 1 ha. Record of such land transaction was only available in Khmer language. Otherwise, use of proceeds from proposed IFC investment will be within the current footprint of Amru’s mills, reprocessing/packaging plant, noodle factory and sourcing operations; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources (aside from supply chain provisions) is not applicable as Amru’s mills, packaging facility, and rice noodle factory are located within unassigned industrial estate surrounded by paddy fields and local communities. Based on the location of its assets and not being involved in primary agricultural production, PS7 and PS8 requirements on Indigenous Peoples and Cultural Heritage are not applicable.

   This is a Category B project based on IFC’s Policy on Environmental and Social Sustainability. The E&S risks and impacts associated with this project are limited, site-specific, and can be readily addressed through generally accepted mitigation measures described in this document and the attached Environmental and Social Action Plan (ESAP). Key E&S issues associated with this investment are: (i) compliance with applicable Cambodian legal and regulatory requirements, including securing all necessary operational permits; (ii) effectiveness of Amru’s management competency and capacity to implement the integrated EHS/labor/food safety management systems; (iii) emergency preparedness and response plan, especially Life and Fire Safety (L&FS); (iv) resource (energy/water) efficiency and effluent management; point source (stack) air emissions; ambient dust and noise; solid (e.g. bran and rice husk) and hazardous waste management; (v) supply chain risk assessment and management, including harmful child/forced labor and conversion of natural/critical habitats in paddy rice sourcing areas.

    Policies. Aside from its Food Safety and Quality Policy developed during the ISO 22001 standard certification for the re-processing/packaging plant in 2014, Amru is in the process of defining a comprehensive set of policies outlining its intent to manage Environment, Human Resources, and Occupational Health and Safety issues applying to all its operations. Such policies will outline Amru’s core values, performance level commitment, how the company expect its staff to behave and how external stakeholders can expect the company to operate. Amru will finalize and implement a comprehensive QEHS policies framework indicating that (i) the scope of the policies encompasses all Amru’s operations (sourcing, milling, packaging, and export), (ii) the QEHS performance-level requirements will include applicable Cambodian legal and regulatory requirements, IFC’s Performance Standards, WBG EHS General and Sector-specific Guidelines (ESAP#1). The implementation of these QEHS policies will be under the corporate leadership of the Administrative and Human Resources Manager. To ensure the effective implementation of these QEHS policies, these QEHS responsibilities will also be included in the job descriptions of the VP & Managing Director and the General/Factory managers at all operations. A documented process to review annually the implementation of the QEHS policies at the Board of Directors level and to revise them every three years will be implemented. Amru will ensure on-going communication of its QEHS policies to all employees, contractors, service providers, third-party paddy rice suppliers, and stakeholders through awareness-raising during staff induction, board posting at all operations, worker/contractor induction session and its external website (http://www.amrurice.com.kh). Written acknowledgement of such policies by each employee and contractor will be required. These policies will be included into contractual agreement with contractors and service providers.

Environmental & Social Impact Assessment. In accordance with the Cambodian Government Sub-Decree on Environmental Impact Assessment (EIA) Process (No. 72 ANRK.BK of August 11, 1999), Annex 1, all rice mills with a minimum capacity of 3,000 MT/year are prescribed to undertake an EIA Study. Based on a Memorandum of Agreement (MoU) between the Ministry of Environment (MoE) and the Cambodian Rice Federation of October 7th, 2016, rice millers have been exempted from such obligation in the spirit of the Royal Government of Cambodia’s policy of exporting one million ton of rice per year. However, rice millers are required to commit themselves towards an environmental protection contract attached with an environmental management plan. This contract will be valid for two years while bi-annual site inspection will be undertaken by Provincial/Municipal Department of Environment to verify compliance with contractual provisions and to review the environmental monitoring report. The Phnom Penh Municipal Department of Environment has inspected in October 2018 Amru’s rice mill and re-processing plant in Phnom Penh and is in the process of issuing an environmental management plan. Amru will provide to IFC, for review, the Battambang, Kampong Thom and Phnom Penh processing facility’s environmental protection contract and associated E&S management plan (ESMP), including implementation workplan and resources (financial/human) (ESAP#2).

Amru maintains a legal EHS and labour registry to identify all applicable Cambodian laws and regulations to its operations (e.g. Ministry of Commerce – Certification of Incorporation, Memorandum and Article of Association, Value Add Tax – VAT, Business License, Yearly Patent; Ministry of Labour – Labour Act (existing 1997 and proposed 2019 Act, National Social Security Fund, Employment Contract; Ministry of Industry – Heavy Equipment Permit, Industry Registration; Ministry of Environment – waste monitoring and air/water pollution; Local Authority – Fire Safety and Construction Permit). All regulatory texts are accessible to the Quality, Health, Safety, and Environment (QHSE) team and operational management teams. IFC was informed that public consultation has been carried out by Local Authorities before delivering the construction permit for Amru’s rice milling operations.

EHS Management System and Programs. Since 2013, Amru has been focusing its efforts on the development and implementation of Food Safety and Quality management systems. Amru successfully obtained the following management system certifications: GMP/HACCP and ISO 22001 at its Phnom Penh reprocessing plant, GMP/HACCP at its Battambang rice mill and Organic Rice Certificate (USFDA and EU) at its rice noodle factory. With its progressive vertical integration since 2015 toward rice milling and under the impetus of two recent independent audits (Business Social Compliance Initiative, BSCI - https://www.amfori.org/content/what-we-do-0 and Ecocert (http://www.ecocert.com/en/fair-trade/) – mostly focusing on labor and working conditions at its operations, and supply chain issues in 2018, Amru has started establishing the foundation of an integrated EHS management system at its operations, including developing a Master List of EHS Standard Operating Procedures (SOPs). More progress is needed to achieve full compliance with international EHS Management Standards.

Based on IFC’s appraisal review, PS1 elements which have yet to be successfully completed include: (i) preparation and approval of corporate EHS policies (see ESAP#1 above), (ii) development of comprehensive multi-year EHS management plan (see ESAP#2 above) inherent to mills, processing plant and noodle factory, including associated facilities (e.g. rice husk co-generation plant) for all identified EHS risks and impacts (e.g. water supply, including hydrogeological study and sustainable yield, wastewater treatment, ambient and point source air emission, solid and hazardous waste management, emergency preparedness, including life and fire safety, safe hazardous material storage, ash management), (iii) further development of EHS Standard Operating Procedures and Working Instructions (ESAP#3); (iv) organizational EHS competency and capacity for its implementation (ESAP#4, see below); (v) monitoring and reporting of EHS plans, including Key Performance Indicators (KPIs) allowing Amru to assess its overall EHS compliance and performance (ESAP#5, see below); (vi) supply chain risk assessment and management of its sourcing operations (ESAP#6-7, see below); (vii) EHS / labor requirements applicable to contractors, including due diligence, monitoring oversight, and enforcement (ESAP#8, see below); (viii) establishment of safe work permit system (e.g. confined space, hot work, working at height, Lockout-Tagout (LOTO) (ESAP#15, see below). Amru has yet to establish an annual and multi-year budgetary allocations to its EHS/labor management programs to ensure effective implementation. 

Mitigation measures, including corrective actions, will be defined in the prescribed E&S Management Plans (ESMP) formulated by MoE, including assigned responsibilities, budgetary allocations (CAPEX/OPEX) and due date for completion. It will also address any non-compliance with above mentioned performance-based requirements and needed licenses from local authorities required for underground water abstraction, treatment of water effluents and point source air emissions, noise disturbances, solid waste disposal, life and fire safety, and storage of hazardous substances, such as an on-site diesel tank, and fumigation products.

Organizational competency & capacity. Amru has assigned the Administrative and Human Resource Manager to coordinate its corporate EHS issues. This manager has been trained as Lead Auditor for ISO14001 (Environmental Management System) and OHSAS18001 (Occupational Health and Safety) Standards in 2015. The Business Development Manager is leading special corporate initiatives (e.g. feasibility study of using risk husk as renewable energy at mills and noodle factory and CSR/Sustainable Sourcing activities). Rice mills, processing plant and noodle factory’s general/plant managers and HR officers are jointly responsible to ensure compliance with EHS/labor legal and regulatory requirements. Amru’s sourcing team is composed of 8 resource-persons (agronomists, extension officers). Based on IFC’s appraisal review, there is a need to further strengthen this corporate EHS function with the recruitment of an additional full-time EHS professional (ESAP#4) having successful experience in developing and implementing international EHS management systems in rice mills and processing plant. This additional resource-person will also be responsible to lead the timely implementation of the environmental management plan which is presently formulated by the MoE. Amru will officially establish a Sustainability Committee which will review the implementation effectiveness of the QEHS, labor and food safety policies and management plans on a quarterly basis.

In compliance with labor regulatory requirements, plant-level EHS Coordination Committee (EHSCC) composed of management and worker’s representatives and an OHS/Emergency Preparedness and Response Group (EPRG) have also been established at all operations. Workplan and minutes of recent meetings of this EHSCC committee and EPRG were not available during IFC appraisal. After the formulation of the environmental management plan by MoE, the scope of intervention of this Committee will be extended to address the effective implementation of the EHS Management Plan(s), including its monitoring and reporting functions. Amru has established an internal audit function which will be mostly focusing on social impact assessment of third-party paddy suppliers and communities.

Training. Amru shared its 2018 training plan which include training sessions on Amru’s food safety policies and procedures (e.g. personal hygiene, chemical handling, GMP / HACCP / ISO22000 refreshers). Training sessions on use of PPEs, first aid, fire safety, evacuation drill are also scheduled but not yet explicitly referred into the 2018 training plan. The scope (and budget) of Amru’s training plan will need to be further extended to the activities described in EHS management systems and plans, focusing on QEHS management systems (policies and procedures) and OHS training sessions of mill workers and contractors, including working permit system (ESAP#5). The training delivery will have to cover Amru’s permanent, term and seasonal workers as well as service providers and contractors.

Emergency Preparedness & Response. Emergencies associated with rice milling and processing operations may include dust explosion, fire, chemical spills, structural or power failures, and natural disasters. Amru recently developed a generic emergency preparedness and response procedure (July 2018) which is being progressively implemented. Clear passage marking, evacuation plan and assembly point for the Phnom Penh reprocessing plant, the Battambang mill and the noodle factory has been sighted during appraisal at different site locations. Further improvements are nevertheless required. The EPRG is composed of nine staff members and is responsible for the establishment of plans and training promoting emergency awareness and competency among Amru’s employees and contractors and, as needed, conduct investigations after an emergency. Four teams support the EPRG, namely the Firefighting Team (FT), the Chemical Spill and Response Team (CSRT), the Medical Team (MT) and the Transportation Team (MT). Workplan and minutes of the EPRG and of underlying teams’ meetings were not available during IFC appraisal visit. This EPRG is assigned to every shift and coordinates procedure’s implementation with the Regional Department of Fire Police and Rescue. Amru provided during IFC appraisal the Fire Safety Certificates for Battambang (August 10, 2018) and the Phnom Penh processing plant (August 18, 2018) confirming the delivery of a technical training course on firefighting to Amru staff, including evacuation drill to an assembly point. The certificate has been received for the recently commissioned Kampong Thom rice mill but has yet to be provided for the noodle factory.

Aside from extinguishers available in different plant locations (fire extinguisher layout has been provided to IFC for all operations), Amru has not procured on-site fire truck and pumping machines at its mills and factories. It was indicated that such truck is available at District level (within 5 minutes response time of each mill). Two water storage tanks for firefighting purposes exist at each mill. Amru indicated that there has been no emergency incident at its operations since 2011. Availability of an internal accident register was available during IFC appraisal. As set forth in ESAP#2 above, validation of existing emergency preparedness and fire risks and response provisions will be assessed as part of the environmental protection contract and environmental management plan which is presently formulated by MoE experts. If this issue is not covered by the MoE, validation of the fire prevention system at all operations will be certified by a nationally qualified L&FS auditor and corrective measures as needed, will be implemented within the following three-month period (ESAP#6). Based on the review of existing fire safety provisions from the 2018 BSCI audit, Amru in the process of installing/updating its firefighting prevention equipment, in accordance with local fire safety requirements and implement all fire audit recommendations for all operations, including the installation of a conventional firefighting system at rice mills. It will also equip its mills with lower explosive limit detectors. Audible/visual alarms systems will alert plant operators and employees to high concentration of dust that could lead to an explosion. The mill’s response plan should define annual employee training (e.g. safety precautions, preventive measures, safety procedures – grinding equipment, housekeeping, hot work) and drill to optimize response effectiveness in case of emergency.

EHS Monitoring & Reporting. Amru has yet to establish a structured EHS procedure for monitoring and reporting on its EHS performance against agreed KPIs. Such procedure will be defined as part of the on-going formulation of the environmental management plan from the MoE experts. In August 2018, Amru has developed a series of procedures to monitor energy (electricity, diesel, petrol, LPG) and water consumption. Consumption measurements have been provided for the Battambang rice mill, the Phnom Penh’s rice processing facility and the Kampong Speu’s noodle factory for the period of January – September 2018. Such series of procedures will be updated to include other bio-physical parameters (e.g. liquid effluents, solid and hazardous waste management, air pollution monitoring (ambient and point source) and control, noise, fire safety) and performance targets (e.g. GHG emissions) and included in the MoE’s environmental protection contract and related management plan (ESAP#7). Amru will report on a bi-annual basis on such KPIs to MoE and annually to all its stakeholders, including IFC as part of the Annual Monitoring Report (AMR) or using the format and indicators as prescribed by GRI/G-4 Guidelines. Annual EHS performance audits are expected to be carried out by the EHS coordinator, local MoE authorities, and external auditors as part of the ISO45001 certification process for rice mills once obtained in 2020. Amru undergoes regular independent audits from its rice products off takers as part of the implementation of the Buyers’ Supplier Code of Conduct. Recommended corrective actions have been successfully implemented based on supporting documentation for corrective / preventive non-conformities or are in the process of such. Within two years of the adoption of the MoE’s Environmental Protection Contract (expected in December 2018) and this ESAP, a competent/independent EHS auditor will be recruited to assess implementation and effectiveness of Amru’ integrated EHS management systems (ESAP#8).

Supply Chain Risk Assessment & Management. Amru is sourcing its paddy (white/conventional rice) from smallholders in Cambodia’s Central Zone (Kampong Speu, Kampon Chhang, Kampong Thom, Cham Provinces, representing 50% of its total sourcing). Its organic and Sustainable Rice Platform (SRP - http://www.sustainablerice.org/) paddy sourcing come from the North Zone (Preah Vihaer Province – mostly organic) and North-West Zone (Battambang, Siem Reap, Pursay and Bantea Meanchey Provinces, mostly fragrant rice, representing 50% of its total sourcing). Amru is investigating to expand its sourcing in Stung Treng and Mondolkiri Provinces located in the Northern Zone.

Its conventional rice sourcing is mostly from other rice mills and from 800 farmers on 2,000 ha. This 50% sourcing is not traceable (spot purchase). However, its organic and SRP sourcing is coming from 30 cooperatives (representing 4,500 farmers producing on 14,143 ha) and 18 cooperatives (representing 1,200 farmers producing on 3,300 ha) respectively. Amru Rice has its own sourcing team of 8 staffs who have direct relationships with smallholders under an annual contract farming arrangement and who coordinate field monitoring, agronomic support (yield increase), input supply (certified seed), purchasing and transport. For 50% of its sourcing (organic and SRP), Amru has a database of third-party suppliers and associated cooperatives, including their GPS localization. As such, this direct sourcing from Amru is fully traceable to farm. This direct sourcing operation triggered PSs’ supply chain requirements.

Based on IFC Global Map of Environmental and Social Risks in Agro-Commodity Production (GMAP), rice production in Cambodia is associated with high risk of harmful child/forced labor, significant occupational safety risks and biodiversity loss due to conversion of natural/critical habitats. To address labor and OHS risks, the Cambodian Rice Federation has adopted in 2015 an Ethical Code of Conduct. Amru Rice has also adopted in 2015 its own Supplier Code of Conduct (known as Corporate Social Responsibility Policy) which commit Amru towards environmental protection, no use of harmful child/forced labor, safe working conditions and human rights, among others. To implement such Supplier Code of Conduct, Amru has developed and implemented a series of supply chain management procedures, including the training of its sourcing team to implement its CSR manual. Specifically, starting in 2013, Amru Rice has implemented Internal Control System (ICS) in each of the existing 48 cooperatives, including individual farmer recording book where risks of harmful child / forced labor and occupational health and safety (use of PPEs and storage/management of pesticides) are being identified through a written questionnaire completed by Amru Rice extension officers. Worthwhile to underline that the Organic and SRP certification requirements also include such provisions. In its Contractual Agreement with each CACC, explicit provisions of prohibition of harmful child / forced labor and safe working conditions to farmers are also indicated. Continuous verification of the effective implementation of such provisions is done through Amru Rice sourcing team, individual cooperative management team and lead farmers. Independent audit of Amru Rice’s organic and SRP sourcing operations is done annually (e.g. 2016 Ecocert ESR audit, 2018 Fair for Life, etc.) and corrective actions identified are rapidly implemented (e.g. reliable system for registering working hours, existence of an annual training plan). Amru will strengthen its supply chain risk assessment and management system to encompass biodiversity risks, especially in the context of the proposed expansion in the northern Zone close to Laos border (ESAP#9). As part of IFC appraisal, preliminary risk assessment using IBAT screening has been carried out. Please refer to PS6 below for further risk assessment details. Third-party verification of effective implementation of Amru Rice’s Supplier Code of Conduct will be undertaken during the 2019 paddy harvest (ESAP#10).

Stakeholder Engagement Plan and Community Grievance Mechanism. Even though, limited number of households have been observed at the entrance and around the existing Amru operations, it is expected that the expansion of the mills and other operations will lead to a measurable increase in traffic volume from third-party transport fleet generated by increased volume of paddy delivery and increase presence of truck drivers in the parking lot. The noodle factory and the re-processing plant are gradually surrounded by continued urbanization. At the time of the appraisal, Amru confirmed that there was no community complaint associated with its operations. Amru will develop a Community Grievance Mechanism and will communicate this mechanism to locally identified stakeholders through a structured communication plan to manage any potential community grievances, including traffic and emergency provisions (ESAP#11). A log book will be established to record such complaint and document responses.

   Human Resources Policies and Procedures: As of October 1st, 2018, Amru employed 205 full-time/permanent employees, including managers, office staffs and factory workers. Additional daily/casual workers (estimated at 50-60) are mobilized, especially during the “high paddy sourcing season” (November-January). These casual workers are recruited directly by Amru Rice. The number of additional full-time employees to be recruited with the proposed expansion is estimated at 50-60 employees. Overall gender split between male and female is currently 71% male and 29% female. Amru has a 50% women representation in its senior management team.

In accordance with the Cambodia Labor Law (1997), Amru adopted an Internal Human Resources Regulation which was approved by the Ministry of Labor and Vocational Training (MoLVT) in 2014. This Internal Regulation was amended in 2018 to update for two provisions identified during the BSCI audit, namely maximum working hours and overtime payment for factories’ employees. The MoLVT approved this updated version in September 2018.

The Cambodian Labor Law of 1997 has been amended in August 2018 with the update of some of its provisions, namely on seniority compensation (Article 89), union contribution fee from employees’ wages on the condition that there is consent from the relevant employees (Prakas 300), and enterprises with a minimum of eight employees must have a shop steward and assistant shop steward (ref. workers’ representatives), each with a term of two years (Prakas 302). This updated Cambodia Labour Act has been submitted in 2018 to Parliament for review and approval, which main recommendations include the (i) increase of the minimum salary from US$170 to 182 per month, (ii) payment to a Retirement Fund (4% employer and 4% employees), (iii) wage payment twice a month, (iv) payment of seniority pay of 15 days/year (from 2008 onwards). Amru will be implementing these provisions at all its operations, when officially effective.

To support the implementation of its Internal Regulation, Amru has recently adopted several policies and procedures addressing PS2 requirements (e.g. recruitment, disadvantages worker inclusion policies and programs, annual medical and women pregnancy, no child worker’s policy, workers representative committee, employee’s Code of Conduct and discipline measurement, and workers’ grievances and resolution procedures). As mentioned above, Amru underwent an amfori BCSI audit in July 2018 to assess its level of compliance with the Cambodian Labor Law (1997). This labor audit confirmed that all Amru provides all its employees (open, term and seasonal) with the basic legal provisions, including an employment contract, payment of minimum salary (US$170/month, which 10% of its total workforce received – mostly unskilled/casual workers assigned to cleaning responsibilities in mills), including benefits (transport, attendance bonus, seniority payment). It also stated that Amru HR function is well documented and organized, with paper records available for all workers. Numerous areas of improvement have been recommended, namely (re-) election of worker representatives once every two years, systematic training of all workers on rights and responsibilities, improvement of disclosure of complaint mechanism (grievance mechanism for communities was found absent), maximum consecutive working days, and continuous due diligence of service providers to ensure compliance with EHS/labor obligations (e.g. security guards). Amru has successfully resolved all identified corrective actions by October 2018.

Amru HR function will (i) undertake a comparative analysis between Cambodia Labor Law and IFC PS2; (ii) based on the findings and latest development from the Cambodian Labor Act, Amru will update its HR Policy/Procedures and register its updated Internal Regulation with the MoLVT; (iii) Amru will then develop an HR Employee Handbook which will be distributed to all permanent/casual workers and contractors and discussed during staff/worker/contractor induction session (ESAP#12). This handbook will provide the details related to the recruitment process, the probation period, salary and compensation, other compensation benefits, working schedule, leave benefits (e.g. annual, sick, maternity), medical insurance, non-discrimination and harassment, minimal age, freedom of association and right for collective bargaining, safety measures for employees, contractors and visitors, etc. Employees will be required to acknowledge the understanding of the HR Policies and Procedures. Amru’s HR policies and procedures will then be also posted on boards in offices and at each operation. Implementation of all above actions will ensure compliance with national labor law, PS2 and any other voluntary certification requirements Amru is interested to comply with (e.g. amfori BCSI, Ecocert ESR, Fair for Life). As it relates to its HR capacity, the assigned HR manager recently underwent an Executive Education Program on Human Resources Management (ref. Cambodia Labor Law and HR compliance, HR Manual and Policy Writing, Managing Compensation and Benefits, Conflict management and effective resolution, management and leadership skills, strategic talent management, etc.). Based on the above, there is no obvious need to further strengthen the HR function.

Working Conditions and Terms of Employment. Salaries of permanent and temporary employees are aligned with Cambodia’s monthly minimum salary, in addition of prescribed benefits (e.g. health insurance, transportation, public holiday, attendance bonus). An estimated 10% of Amru workforce (mostly casual workers, either cleaners and unskilled workers) received such salary. All workers in Amru have a one-year renewable contract after successfully completed their probation period (three months for staffs and one month for workers). Working hours (44 hours / week for head office staff and 48 hours/ week for factory and warehouse staff. Maximum overtime for factory staff is 12 hours/week) and overtime payment policy are defined in Amru’s internal regulation. Labor contracts of all employees are duly signed by both parties and are properly kept and maintained in their personal files. Based on employment contract reviewed, it was noted that the employment contract contained references on basic minimum wage, other benefits, contract validity and working hours for its employees. Sample of workers interviewed indicated that Terms and Conditions of their contract have been explained to them before signing their contract. A copy of employment contract has also been given to every employee. No unsecure clause of employment was noted within the employment contract.

Worker’s Organization. Amru has established policy and procedures on the rights of freedom of association and collective bargaining agreement (ref. worker representative election procedure). Based on Cambodia Labor Law, every operation ought to have a shop steward and assistant shop steward (ref. workers’ representatives) elected every two years. IFC appraisal findings confirms that employees’ representatives are freely elected. A Shop Steward Election Procedure has been adopted in July 2018. The worker’ representative committee is registered with MoLVT. Regular (monthly/quarterly) meeting with senior and plant-level management also took place. Issues raised over the last months include request to increase salary (ref. living wage versus minimum wage), performance bonus and working conditions (ref. overtime and success working days). Even though Amru does not forbid workers to organize themselves in a union or bargain collectively, such provision has not yet materialized in Amru operations.

Non-discrimination & equal opportunity. Amru is committed to establish a work environment free from discrimination in compliance with the Cambodian Labor Law. Such commitment is reflected in an internal HR Policy against any forms of discrimination in hiring, compensation, access to training, promotion, etc. based on race, origin, age, gender, etc. Sample of interviewed workers during IFC appraisal visit confirmed they were treated with respect and dignity. Amru Rice does not require pregnancy testing as a condition of employment. Going forward, Amru will develop and implement a sexual harassment policy and relevant procedures to deal with this type of cases (ESAP#13).

Retrenchment Plan. Considering the expansion phase of Amru operations, there is no retrenchment plan envisioned in the next years. In fact, it is estimated that 50-60 additional staff will be recruited at mills and processing plant and additional 10-15 sourcing staff.

Worker and Contractor’s Grievance Mechanism. Amru adopted a Worker’s Complaint and Resolution Management Procedure (July 2018). Demonstration of training to Amru management and workers of such procedure and access to log books was not available during IFC appraisal. This procedure needs to be updated to ensure that all permanent, casual workers and contractors can access such mechanism as well as to ensure sexual harassment cases can be brought forward and confidentiality will be respected (ESAP#14). It will then be included into the Employee Handbook. The procedure needs also to be updated to reflect, through a diagram, the steps to be taken by workers/contractors to manifest any concerns, including through anonymous channels, contact responsible persons, engage in mediation process, and provide timely feedback. Finally, a formal Grievance Committee will be established. Awareness of this procedure will continuously take place during staff induction session. Mill managers and supervisors will be trained to ensure effective implementation.  

Protecting the workforce. Amru recently adopted a procedure for remediation of child worker in alignment with the Cambodian Child Workers Policy requirements (July 2018). This procedure stipulates that Amru will not engage child labor in its processing and sourcing operations. In effect, as stipulated in Amru HR Internal Regulation and Recruitment Policy, all Amru employees are required to be above the age of 18. Job announcement with terms and conditions of recruitment make sure that the applicant met such provision. All applicants are required to present their age proofs to recruitment staff during the application process. Representation of age proofs may include national ID card, family book, election card, birth certificate. A copy is kept on worker’s personal file for reference. Internal rules against child labor was also posted on notice board at facilities. All expatriate employees at management and supervisory levels possess valid visa, working permit and an employment card issued by the MoLVT. All operations are annually inspected by the local immigration police from the Ministry of Interior to verify the presence of illegal foreign workers. Based on amfori BSCI audit, no original documents were kept on files based on review of sample of employee’ personal files which has been validated by employees themselves.

Occupational Health and Safety. All Amru’s operations are fully automated, especially where the highest risks may be present (e.g. mills). As such, the OHS risks are limited. As indicated earlier, Amru has not yet developed a corporate OHS Policy (see ESAP#1 above). Starting in 2016, Amru has progressively established its OHS management systems, including the development of a workplace risk assessment procedure entitled “Hazard Identification and Risk Assessment Control” at all departments/workplace stations. Recently developed procedures (e.g. chemical, paint, electrical) have been drafted but have yet to be implemented. Based on amfori BSCI audit, numerous OHS deficiencies have been identified in Amru’s operations, including lack of systematic health check-up before hiring and then on annual basis, absence of workplace risk assessment for young workers, pregnant women and new mothers, and communicable and non-communicable diseases, pro-active provision of ear plugs, presence of internal accident register, establishment of comprehensive set of SOPs, including work permit system, and training plans to ensure effective implementation, rubber mat at electrical panels location, posting of the evacuation plan, etc. IFC’s appraisal visit confirmed that many of these deficiencies have been successfully closed during its site visit. More progress is needed to achieve full compliance with an international integrated EHS management system, e.g. comprehensive set of SOPs, including work permit system, assignment of an OHS coordinator, implementation of monitoring and reporting of OHS leading indicators (e.g. safety training, ergonomic opportunities identified and corrected, employee perception surveys, safety audits) and OHS lagging indicators (e.g. injury frequency and severity, OSHA recordable injuries, lost workdays, worker’s compensation cost), etc.

As mentioned above, in compliance with Cambodia regulatory requirements, an EHS Coordination Committee (EHSCC) has been established at all operations, but workplan and minutes of meetings were not available during IFC appraisal. The internal accident register sighted during appraisal identified 5 Loss-Time Accidents (LTA) so far in 2018 (no lost working day), where only one of them happened at Amru’s factories (four minor accidents were transport related accidents during workers commuting to work). It was indicated that there has been no fatality registered in Amru’s operations since 2011. As per ESAP#2 above, Amru will upgrade its integrated EHS management system structure, in accordance with ISO45000 requirements (Amru intends to certify its two rice mills against this Standard in 2020), and will distribute PPEs (protective boot, overall, mask, helmet, ear plugs) to all permanent and casual workers based on workplace risk assessment (ESAP#15). Amru will ensure that such equipment provision/use is strictly enforced with contractor’s workers. The implementation of this OHS management system will be under the responsibilities of the VP Operations, corporate HR/EHS manager and newly recruited EHS coordinator (see ESAP#3), and general/factory plant managers. All employees and contractors will be required to complete a comprehensive safety orientation checklist and on the job training plan. Their supervisors will be required to validate, based on workplace risk and hazards (e.g. hot work, confined space, working at height), that every worker has successfully complete his/her training program and demonstrate job competency. Workers’ occupational health is scheduled to be monitored through annual medical check-up at a licensed clinic. Amru does not have any on-site clinic but has established a contractual agreement with nearby health clinics, in case of emergencies. Amru’s EHSCC team has been recently trained by the Cambodia Red Cross and first aid kits have been sighted during site visit. Recommendations was made by amfori BCSI auditor to add the number of first aid kits into processing areas. Amru has recently appointed qualified forklift and generator operators and has obtained generator and air compressor inspection certificate from responsible authorities.

Workers engaged by third-party contractors. Amru has recently adopted a Supplier and Sub-Contractor Procedure (August 2018) which stipulated (i) its commitment towards legal compliance, human rights and safe labor and working conditions of its third-party contractors and sub-contractors with Cambodia EHS and Labor regulatory requirements, (ii) inclusion of these requirements into contracts, and (iii) establishment of monitoring programs. IFC’s appraisal findings identified deficiencies on the enforcement of this procedure, namely contractors’ workers not using PPEs and deficient worker’s accommodations (at Kampong Thom mill) while amfori BCSI audit identified non-compliance of payment of minimum wages to third-party’s service providers (security guards). As set forth in ESAP#16, Amru will develop a checklist and workplan to demonstrate effective implementation of such procedure. The ToRs of the EHSCC will also be amended to ensure that there is a prescribed monitoring oversight, strict enforcement of contractor’s EHS / labor management requirements, and training plan before contractual agreement and during execution. Procedures will be enforced by the EHSCC and on-site EHS coordinator. Any non-compliance will trigger penalties which will be included in contracts. Finally, Amru’s EHS/HR manager will undertake a EHS/labor due diligence of service providers before signing any contractual agreement. As indicated above, MoE will undertake bi-annual site visit of Amru’s operations to verify effective implementation of environmental and OHS related corrective measures.

Supply chain. There are significant social risks associated paddy production in Cambodia. Based on the US Department of Labor (“Findings on the worst forms of child labor, 2014”), child labor is widespread in the agriculture sector. It is estimated that 62.1% of children between the ages of 5-14 are working in agriculture, including in the rice sector. This risk assessment is accessible through the IFC’s Global Map for risk assessment and management of agro-commodity production (GMAP, www.ifc.org/GMAP). Please refer to PS1 Supply Chain section for corrective actions already implemented by Amru Rice.

   As a dry mechanical process, rice mills and processing plant require limited raw water inputs but high energy consumption levels. All solid waste from the rice milling process is used as feed mill (livestock), agricultural inputs (organic compost/fertilizer), or energy production (rice husk as feedstock). The noodle factory is the only operation requiring measurable volume of water.

Resource (Energy and Water) Efficiency: Rice mills consume significant energy for drying, cleaning, hulling, polishing, sorting and bagging processes. Amru mills, processing plant and noodle factory source its energy from Electricite du Cambodge, the state-owned electricity utility company. To maximize its operational efficiency, the company purchased best available rice milling and processing equipment (Satake and Buhler) at its mills. To reduce its overall energy consumption and increase its operational competitiveness, Amru is investigating the feasibility of several energy efficiency measures. In partnership with UNIDO/GEF, Amru is in the process of installing a 40-kilowatts (kW) biomass (rice husk briquettes as feedstock instead of wood logs) gasifier combined heat and power (CHP) plant at its noodle factory. This unit will replace an out-of-date steam boiler and will produce more than 95% of the factory’s electricity demand. It is estimated an annual reduction of 179 tons of CO2 emissions. In addition, US$1 million dollars of future CAPEX may be allocated for the design and construction of a 1.0 to 1.5 MW rice husk co-generation plant at its Kampong Thom mill for its energy needs and the replacement of fossil fuel fired paddy drier with hot air dryer. Based on available information, total GHG emissions are estimated to be >25,000 tons CO2 equivalent annually. Amru Rice will have to report on its GHG emissions annually to IFC. Raw water is extracted from on-site ground water wells. Hydrogeological studies were not available during IFC appraisal at any operation. Water treatment process at the noodle factory encompasses filtration, reverse osmosis, UV system and chlorination. Amru has recently started documenting (Jan 2018) its water and energy (electricity, diesel, petrol, and LPG) consumption. Efficiency benchmarking against local rice mills competitors has yet to start. Potable water for workers is provided by on-site treatment. Based on analysis of 2015 and 2017 from the Industrial Laboratory Center of Cambodia, these meet Cambodian drinking water quality. Going forward, Amru will have to complement this compliance of drinking water with WHO quality parameters on a quarterly basis.

Air Emissions Monitoring and Ambient Air Quality. The mill process generates significant dust emissions, especially from the cleaning and milling sections. The particulate emission limit in Cambodia is 150 mg/m3 (ref. IFC/WB General EHS Guidelines allowable particulate emissions range from 50 or up to 150 mg/Nm3, if justified by environmental assessment considering environmental capacity of the site). Point source and ambient air emissions will be analyzed/quantified during the environmental management plan’s baseline measurement process and effectiveness of the dust extraction system, including bag-filter control system for efficient capture of fine particulates and a separate air pollution control device (APCD) for the cleaning and milling sections, will be assessed. The APCD should be considered adequate if there are no visible fugitive emissions from all material handling and process equipment. Mitigation measures and monitoring requirements will be defined in the environmental management plan (see ESAP#2 above). Monitoring of ambient air quality against WHO guidelines for PM10 and PM2.5 will also be established. The rice mill shall comply with Cambodia regulations and WBG EHS guidelines for point source emissions (PM10: 50-150 mg/Nm³, NO2: 460mg/Nm³; SO2: 2,000mg/Nm³) and WHO ambient air quality guidelines.

Noise. As per local regulations and WBG EHS guidelines, the ambient noise level should not exceed 70 dBA in day and night time. All material handling and process equipment is enclosed to reduce noise levels at source. As indicated above under PS2 OHS section, ear plugs and ear muffs has been/will be provided to workers exposed to higher noise levels.

Wastewater treatment. The only on-site wastewater treatment unit exist at the noodle factory. The treatment unit of 40-50 m3/day is presently being upgraded based on additional production lines. Technical specifications of this unit were not available during IFC’s appraisal visit. Amru indicated on-going discussion with the MoE on that unit. It is assumed that such unit will be covered under the environmental management plan being presently formulated by the MoE. Amru will have to demonstrate that this unit meet WBG indicative values for sanitary sewage discharges. The limited domestic sewage from all other operations (mills and processing plants) is collected in septic tanks and treated on-site through a seepage field.

Solid and hazardous wastes. Amru has recently adopted a Waste Management Procedure. Based on IFC’s appraisal visit, this procedure has yet to be implemented based on field observations at the Battambang mill. Dust collected from the cleaning section of the mill contains dirt, silica, dead insects, damaged grains and other foreign material from farmlands. This dust has no value and will be disposed at a licensed landfill. The dust collected from the milling section comes primarily from removal of shell (bran) and can be sold as animal feed. Rice husks collected at the rice mills are estimated at 20-25% of dry paddy. As mentioned above, Amru intends to use the rice husk as feedstock for the biomass gasifier combined heat and power (CHP) plant at the noodle factory and for the proposed co-generation plant at Kampong Thom mill. Ash generated through these units, when commissioned, will be used as an agricultural fertilizer or in the cement/ceramic sector. Handling and field application will be done in accordance with specific procedures due to potential health risks which will be documented in the environmental management plan. Used oils is collected and disposed by a licensed service provider (no due diligence presently done for such provider). The on-site diesel reservoirs at all operations were judged not meeting the WBG EHS guidelines as no secondary containment has been built in case of spill (ESAP#17).

Fumigation Management Plan. Amru has implemented a Food Safety Management System, aligned with ISO22000 and GMP/HACCP requirements at its operations. An on-site QC laboratory monitors the quality of the end-products. Products are fumigated for pest control using either carbon dioxide (CO2) for organic rice or aluminium phosphide for conventional rice. Fumigation is carried out in the warehouses by licensed vendors and in compliance with local regulatory requirements. Due diligence review of these licensed vendors was not available during IFC appraisal.

  Community Health and Safety. Amru has not yet adopted a Road Safety Policy applying for its own fleet and its third-party transport contractors. Amru fleet is limited (4 cars and 6 forklifts). All forklift drivers have obtained a safety training certificate which is renewed annually. Health certificate is provided at hiring while annual medical health check-up is required.

Food Safety Management System. The Battambang mill is certified Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP) for food safety while the rice reprocessing/packaging in Phnom Penh is certified GMP / HACCP and ISO 22001. Amru is certified as an organic rice producer and exporter meeting European Union and US Department of Agriculture (USDA) Organic Certification (2018). Based on 2019 workplan, the Battambang mill is scheduled to achieve ISO 22001 certification while the re-processing plant is scheduled to achieve FSCC 22000. The Kampong Thom mill and the noodle factory are scheduled to achieve GMP and HACCP certification in 2019.

Security Personnel. Amru operations have not been exposed to any security issues in the recent years. Amru is using a third-party service provider to guard the Kampong Thom and processing plant on a 24 hours’ basis. As part of the environmental protection plan (see ESAP#2), Amru is developing security procedures based on accepted international standards, e.g. Voluntary Principles on Security and Human Rights, for managing the use of security personnel and ensure adequate training is being provided. Based on amfori BCSI audit of July 2018, Amru implemented a corrective action to ensure compliance of this service provider with applicable EHS/labor requirements. This action has been documented in the management monthly meeting of September 30, 2018. Training of security guards on BSCI Code of Conduct and Worker Safety has also been provided as well as verification of security payslip and roster to ensure compliance with Labor Law. CCTV system has been installed at all operations.

  Supply chain. There are significant biodiversity related risks associated with paddy production in Cambodia. Encroachment on flooded forests has been observed over the last years as farmers clear land for new rice paddies to meet the high demand and rural population growth. According to FAO, area under rice production has increased from 2.1 million ha in 2004 to 3.1 million ha in 2014. This expansion has taken place mostly in the north-east of Cambodia (Kompong Speu and Koh Kong provinces), including in several Important Bird Areas. This risk assessment is accessible through the IFC’s Global Map for risk assessment and management of agro-commodity production (GMAP, www.ifc.org/GMAP). Please refer to PS1 Supply Chain section for corrective actions (refer to ESAP #9 and 10).

  Name and Address:

Mr. Song Saran, Chief Executive Officer & President, Amru Rice (Cambodia) Co. Ltd.

Head Office: #13A-15A Borey Rith, Sangkat Russei Keo, Phnom Penh, Cambodia

E-mail : ssaran@amrurice.com.kh

Phone/Fax : (+855) 23 990 900 ; Mobile : (+855) 12 30 30 16

E-mail : export@amrurice.com.kh; ceo@amrurice.com.kh

Web site: www.amrurice.com.kh