PS5: Land Acquisition and Involuntary Resettlement does not apply because no new land will be required for the project; as most of the capex will be incurred within the existing footprint of the company operations. The company acquired all land necessary for the its existing facility through voluntary market-based transactions with no option of involuntary acquisition.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources does not apply

because the project sites are urban modified habitats occupied for industrial and commercial use, and do not host any significant biodiversity values.

PS7: Indigenous Peoples does not apply because there are no communities of Indigenous Peoples within the

vicinity of the project area of influence.

PS8: Cultural Heritage does not apply because the project does not affect any cultural heritage.

The project may involve acquisition of facilities in Central America in future, the details of which are not defined yet. In such a case, the company will undertake an assessment of the target acquisition vis-a-vis the requirements of IFC’s Performance Standards (PS), and applicable World Bank Group (WBG) Environmental, Health, and Safety (EHS) Guidelines as described under PS1 section.                                          

   This is a category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific environmental and social (E&S) impacts may result that can be avoided or mitigated by adhering to generally recognized good international industry practices. 

Key E&S issues associated with this project include company’s capacity and systems to manage social, and EHS aspects of its operations in compliance with legal requirements as well as IFC PSs and WBG EHS Guidelines; assurance of fair, safe and healthy working conditions as per the local regulatory requirements and relevant IFC PSs; management of wastes (particularly hazardous and biomedical waste), air emissions and liquid effluents; emergency preparedness and response and community health, safety & security.. Other E&S issues include emergency preparedness and response; and road safety provisions for the sales workforce.                                                

  Environmental and Social Assessment and Management System: Siegfried Rhein has all required environmental, and occupational health and safety (OHS) permits for its manufacturing facilities. These are approved as per the Good Manufacturing Practices (GMP) requirements of the Mexican Federal Committee for Protection from Sanitary Risks (COFEPRIS). The company implements an integrated environmental, OHS and quality management system - known as its IMS – covering all its current operations. This management system is ISO 9001 (2015), ISO 14001 (2015) and OHSAS 18001 (2007) certified. The company is currently preparing to upgrade its OHS management system to achieve ISO 45001 (2018) certification during the next audit planned for February 2019. Siegfried’s corporate policies are implemented through standard operating procedures (SOPs), work instructions, and training programs. The policy objectives are monitored through a system of key performance indicators (KPIs), and frequent reporting activities form the basis of continuous improvements throughout their operations.

Identification of Risks and Impacts and Management Programs: The proposed project does not include any greenfield development; therefore, an Environmental and Social Impact Assessment is not required as per the local regulations. Environmental impacts and OHS risks of the operations have been identified through the environmental plans required by the regulatory agency COFEPRIS. The company has developed and implemented SOPs to manage the identified risks and impacts. The SOPs incorporate OHS and environmental work instructions and cover issues such as effluents, emissions, solid waste, accident investigation and control of individual OHS risks (physical, chemical and biological).

As part of this project, if and when Siegfried decides to acquire a manufacturing facility in Central America, it will undertake an environmental, OHS and labor practices gap assessment against the requirements of IFC’s PSs, and applicable WBG EHS Guidelines. Based on the results of this assessment, the company will develop and implement an action plan to ensure that all environmental and social (E&S) impacts and risks associated with this facility are adequately identified and managed in accordance with its own IMS and IFC PSs.      

Organizational Capacity and Competency: The Siegfried Rhein team that manage E&S impacts and risks is composed of a Director of Operations, an Engineering and Maintenance team, and a Human Resources department with a Senior Director and several directors in charge of compensation, labor relations, career development, etc. The Director of Operations is supported by a Manager of Engineering and Maintenance (EM) and a team of five specialists, including two OHS specialists, one at their corporate office, and one at the manufacturing plant. This core team ensures compliance with the company’s resource efficiency and pollution control commitments, including energy, water, air supply and treatment, and waste management. The company also has an internal Director of Auditing that continuously assesses compliance with corporate quality and management objectives, including E&S performance.

In keeping with Mexican labor requirements, the OHS specialists are supported by accident prevention committees. Together they help ensure compliance with OHS commitments, including the prevention of accidents and illness among staff and visitors. Siegfried has trained safety brigades who respond in case of emergencies, and full-time on-site medical doctors provide support at both the corporate office and manufacturing facility. Training is provided to employees on OHS topics, including nutritional consultations, and internal communications are sent via email to promote topics such as safe driving for sales representatives.

Emergency Preparedness and Response: Siegfried Rhein has developed detailed emergency response plans for its operations. These plans are based on qualified third-party vulnerability assessments. The corporate offices are rated “Low Risk”, while the manufacturing facility is designated “High Risk” due to the variety of chemical ingredients they use. Training for emergency preparedness and response and first aid is provided to all employees. The company also conducts regular fire and emergency drills. As mentioned earlier, the closest residential community from the company’s facilities is approximately 0.5 km away. Siegfried’s emergency response plan has considered the potential impacts on and from this community. Other industries in the park present limited safety risks and emergency plans consider the relevant potential scenarios and mitigation measures, including contact numbers for emergency public services and supplementary insurance policies that cover major health care costs. 

Monitoring and Review: Siegfried’s monitoring and review activities are determined by both licensing requirements and its quality commitments as per GMP certifications. As is common in the pharma sector, third-party certification and regulatory bodies audit the facilities periodically as part of surveillance protocols and GMP audits. Third-party and internal auditors conduct regular environmental and OHS monitoring activities of KPIs including: air and water quality, noise, lighting, workplace exposure to chemicals, injuries, etc. Monitoring reports made available by the company confirm that these parameters are currently within the recommended limits of their licensing requirements and applicable World Bank Group (WBG) General Environmental, Health, and Safety (EHS) Guidelines, and WBG EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing.                                                 

     Human Resources Policies and Procedures: Siegfried has policies and procedures that cover all key aspects of HR management, including: recruitment, compensation, labor relations, induction and training, codes of conduct, annual performance evaluations, promotion, and disciplinary actions, among others. Company provided documentation confirmed the consistency of these policies and procedures with IFC PS2 requirements.

Working Conditions and Terms of Employment: Siegfried provides employees with clear terms of employment, including relevant information about their corporate code of conduct, industrial relations, and the roles and responsibilities of all staff within the organization. Siegfried pays all their staff above the minimum wage required by applicable law and collective bargaining agreements. Salary and benefits data provided by the company confirmed that all staff, even the lowest paid cleaning assistants, earn more than twice the national legal minimum wage, and that gross compensation levels for all positions are within the 90th to 100th percentile of market comparators. Siegfried creates opportunities for promotion within the company. Sales representatives are compensated based on a combination of fixed salary plus commission; minimum income is guaranteed, and terms of payment are well described in the contracts. Average overtime hours worked per month is approximately 10 per operational staff. Overtime is considered hours worked above 40 per week. Hours worked between 41- 49 per week are compensated at double the value. Over 50 hours per week, overtime hours are compensated at triple the hourly rate.  

Protecting the Work Force, Non-Discrimination and Equal Opportunity: Siegfried’s current workforce includes 1225 employees, of which 48% are female, and close to half are sales representatives. In addition, the company contracts third-party services providers for security and pest control services at its facilities.

All staff are required to acknowledge their willingness to comply with the company’s code of conduct, and to participate in regular training sessions on key performance aspects of the core values expressed in this code (team work, integrity and passion). According to their code of conduct, Siegfried is an equal opportunity employer, promoting fair and equitable treatment of employees through processes of hiring, promotion and termination of employment. There is no evidence of discrimination based on personal characteristics or gender. The company complies with relevant legislative requirements, including prohibitions against the use child or forced labor.

Workers’ Organizations: Siegfried supports freedom of association and collective bargaining rights for all their employees. The company currently has one collective agreement with a union that represents approximately 8% of all staff, mostly machine operators and maintenance employees at the manufacturing facility.     

Grievance Mechanism: Siegfried employees can raise their grievances through various forms provided by the company. Staff are encouraged to approach human resources directly with their concerns; alternatively, they can do so anonymously through the company Intranet. Managers also proactively seek staff feedback during frequent production and sales meetings. Third-party service providers too receive induction training that explains the company’s Integrated Management System, code of conduct, and HR policies, including who to contact in case of complaints or grievances.

Occupational health and safety (OHS): Staff at Siegfried’s corporate offices and production facility implement OHS management systems that are aligned with the requirements of applicable Mexican norms and standards. This includes OHSAS 18001 certified workplace risk assessment, mitigation and monitoring and reporting programs and procedures, and worker participation in accident prevention committees that address everyday risks from chemical exposure and ergonomic postures, to falls and traffic accidents. Staff exposed to hazardous chemicals during the manufacturing process are provided with appropriate safety procedures and equipment, including monitoring devises, containment mechanisms, eye wash stations, showers, etc. Staff also undergo regular medical checkups. Information is provided to sales representatives on safe driving through innovative campaigns using internal mail and educational materials, including graphic reminders that can be placed on vehicle rearview mirrors. Siegfried staff are required to report all injuries and near misses for detailed incident investigations and development of corrective action plans. The company has not experienced any fatalities or major accidents and incidents in the past.

Supply Chain: Siegfried Rhein sub-contracts close to 50% of its manufacturing production to qualified third-party firms. These firms are contractually obliged to comply with the objectives and procedures of the company’s Integrated Management System (IMS). Siegfried regularly audits their suppliers and services providers for compliance with their IMS through a supply chain control program implemented by their internal audit division. These audits have turned up some gaps and incidents of non-compliance, for example access controls for restricted sanitary areas, and adequate safety process signage. Siegfried also works closely with these suppliers to develop and monitor time-bound corrective and preventative action plans to address such deficiencies.                                              

    Resource Efficiency: Siegfried Rhein has implemented several initiatives on resource efficiency (e.g. use of natural gas to power boilers, installation of efficient water chillers, LED lighting systems, etc.) and has replaced equipment such as fire suppression and sprinkler systems, and back-up generators with more efficient ones. The plant in Queretaro is a modern facility with up-to date auxiliary systems equipped with energy and water efficient features. Siegfried’s plant relies mostly on electricity from the grid.

Greenhouse Gas Emissions:  Current total greenhouse gas emissions from the manufacturing plant (electricity and fuels) and from fuels used for transportation of the sales force, have been estimated at approximately 4,900 tonnes CO2-equivalent per year. Additional GHG emissions are not expected to be significant due to the project.

Air Emissions: To ensure product integrity and meet air quality emissions standards, the company uses

high efficiency particulate air (HEPA) filters in their heating ventilation and air conditioning (HVAC) system.  Siegfried has an annual plan for monitoring air emissions from process units and combustion sources. Results shared during appraisal confirm that air emissions at the Queretaro plant comply with local laws and WBG EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing (Table 1). Emissions from vehicles used for sales representatives, although important in number, are well managed through periodic maintenance programs and frequent renewal of the vehicle fleet.

Water Consumption and Wastewater Treatment: Water is sourced from the municipality. Water for production undergoes extensive treatment including filtration and reverse osmosis. Effluents from the production plant are treated through physicochemical and biological treatments. This treated wastewater is tested for compliance with national wastewater standards prior to being pumped into the municipal wastewater collection and treatment system. Results shared during appraisal confirm that effluents from the Queretaro plants comply with local laws and WBG EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing (Table 2).

Solid Waste Management: Siegfried has a comprehensive solid waste management plan, involving waste reduction, segregation and disposal through authorized companies. Waste is segregated according to hazardous, special treatment, or household categories. The former includes all materials that are potentially corrosive, reactive, explosive, toxic, flammable, or biologically infectious. The special treatment category includes electronic equipment, batteries, etc. The household category includes organic, inorganic recyclable, and inorganic non-recyclable materials. Segregated wastes are stored in well ventilated and gated designated areas that were kept clean and not overfilled at the time of IFC’s site visit. Hazardous waste is monitored through periodic audits of authorized companies’ certification status and chain of custody procedures.

Hazardous Materials Management: Raw materials and active pharmaceutical ingredients are segregated and stored in warehouses in accordance with GMP requirements. The warehouses have designated areas for flammables and materials requiring controlled access, and/or special temperature and relative humidity conditions. Warehouse staff have access to a database with Material Safety Data Sheets (MSDS) and safety information in case of emergency.                                               

   Community Health and Safety: As described above in the PS1 section on Emergency Preparedness and Response, Siegfried’s manufacturing plant is located in an established industrial park. The closest residential community is approximately 0.5 km away. According to national legal requirements, the company contracted a civil protection specialist to prepare a vulnerability assessment that considered potential risks and impacts to and from this community. This assessment generated a series of compliance requirements for protecting community health and safety, including evacuation drills with fire department and paramedics.

The company has defined mechanisms to receive and address concerns from the community, either through their Internet webpage or at the reception area for the Queretaro plant. The company also operates a pharmacovigilance hotline where the public can get information about possible side effects of using their products, and report suspected adverse reactions.

Transportation of raw materials and products at all operations is sub-contracted to specialized companies with safety and verification protocols, including GPS tracking and real-time reporting of chain of custody. 

Security Personnel: Siegfried’s vulnerability assessment looked at security risks, including unauthorized access to their properties, and the possibility of armed robbery, among others. As the latter is considered low risk, current contract conditions provide for the presence of two unarmed security guards during working hours, one at night, and a roaming supervisor who visits periodically, or when called to the site. These security functions are subcontracted to a specialized firm that is authorized and regulated by relevant government authorities. This firm applies the required industry certification standards to recruitment, training and monitoring of security personnel performance.                                                

   No significant footprint expansion has occurred in recent years; therefore, no formal consultation processes has taken place. In addition to its Internet webpage, Siegfried uses Facebook, Twitter, Google+, and LinkedIn to maintain regular communications with over 10,000 interested stakeholders (followers) and the public.  

The company supports several civil society groups through job mentoring, donations, and volunteer activities. Recent stakeholder engagement campaigns have included recycling and reforestation, medicines for vulnerable people, and training for college students.                                                      

   FROM SII         

SIEGFRIED RHEIN

Antonio Dovalí Jaime #70, Torre D,

Piso 12, Santa Fe, Del. Álvaro Obregón

C.P.01210 México, Ciudad de México

E-mail: contacto@siegfried.com.mx