Environmental and Social Assessment and Management System

The company has undertaken the necessary E&S assessment processes in adherence with Uruguayan regulatory requirements to obtain the necessary operating permits and licenses.  

Conaprole has actively incorporated IFC Performance Standards requirements into its Environmental and Social Management System (ESMS) and day to day operations, and overall its ESMS is in line with the requirements under PS1. Since IFC’s first investment in 2002, the company has assigned resources to improve environmental and social performance. Conaprole has documented procedures to address risks associated with internal operations. Company operations are undertaken according to internationally recognized standards consistent with the principles and practices of food safety (ISO 22000), quality (ISO 9001), environmental management (ISO 14001), occupational health and safety (OSHAS 18001), and general requirements for the competence of testing and calibration of laboratories (ISO-17025). In 2017, ISO 14001 certification was migrated to the latest version (2015) at 7 of Conaprole’s plants. San Ramon plant is currently working to certify the plant ISO 14001. Procedures are aligned with these standards and are routinely reviewed and updated as part of Conaprole’s continual improvement.

Identification of Risks and Impacts

In 2018, Conaprole conducted several audits as follows: (i) a refrigeration safety audit at Montevideo, Florida, San Ramon and Villa Rodriguez plants consistent with the American National Standards Institute (ANSI) and American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE). Key non-conformities identified during the audit include boilers sharing the same room with compressors and equipment pipes and valves presenting signs of corrosion, and lack of alarm systems in some plants. Corrective actions from these assessments are currently being implemented. As set forth in ESAP action # 5, Conaprole will implement priority actions included in the ammonia corrective action plan by July 2019 and will implement the rest of the actions by December 2019. For the smaller industrial plants (Plant #16 Mercedes, Plant # 11 Rincon del Pino, Plant #10 San Carlos, Plant # 14 Rivera), priority actions will also be implemented by December 2019; (ii) gap analysis conducted at all plants against the national requirement for life and fire safety – Resolucion N 124/2018-Direccion Nacional de Bomberos that requires industrial companies to implement upgrades of their fire suppression systems. Conaprole hired a third-party company to conduct the gap assessment against this new requirement. As set forth in ESAP # 4, Conaprole will implement the hydraulic suppression and fire alarm system recommendations at all plants to ensure full compliance with in-country requirements and alignment with IFC Performance Standards and WBG EHS Guidelines; and, (iii) Conaprole has initiated an extensive upgrade of its effluent treatment plants to enhance performance and optimize cost. Upgrading efforts include the construction of new treatment works, installation of high-density polyethylene (HDPE) lines for all inground tanks, process improvements for enhanced nutrient removal; and fencing the perimeter of the San Ramon, Florida and Villa Rodriguez plants as indicated under ESAP # 9;(iv) As part of its continual improvement processes, Conaprole will conduct an ammonia dispersion risk analysis specifically for the industrial plants of San Ramon, Mercedes and Rivera, as set forth in ESAP # 8. Should the air dispersion audit results predict hazardous off-site concentrations of ammonia, Conaprole will communicate as needed with affected communities and will enhance its emergency response procedures. Conaprole conducted ammonia risk analysis for the other plants in 2014 and confirmed that the studies do not need to be updated.

The expansion project at Villa Rodriguez is still under analysis and the final suppliers and civil works are still under discussion. The expansion project will be subject to a project feasibility study and an environmental assessment that will be submitted to DINAMA, Uruguay’s Environmental Authority. The environmental assessment will include a description of the project components including equipment and design criteria, industrial processes, resource consumption, pollution standards and mitigation measures. As set forth in ESAP action # 1, Conaprole will submit a copy of the Environmental Assessment and additional documents related to environmental and social aspects of the expansion plan to the IFC.

Management Programs

Conaprole industrial facilities have been designed with infrastructure and equipment to avoid and minimize potential E&S impacts and risks associated with its production processes. The company has developed and implemented procedures and work instructions for labor and working conditions, occupational health and safety, human resources, food safety, product recall, traceability, and emergency management in compliance with applicable regulatory requirements. Management programs are in place for all E&S risks and impacts identified through the assessment process.

Organizational Capacity and Competency

Conaprole senior management is commitment to improve E&S performance and has nominated a dedicated E&S function at corporate level and assigned skilled staff to implement environmental and social (E&S) policies and procedures at all facilities. These E&S functions manage all the aspects related to the identified risks and impacts with special focus on food safety, quality management, operational health and safety, supplier product requirements, and human resources. The human resources function is managed centrally at headquarters and supported at the industrial sites by plant managers. Each of Conaprole’s industrial plants have dedicated environmental engineers, quality team, OHS officer, supply chain officer, industrial engineers, and social affairs staff that reports directly to the senior environmental manager at the corporate level.

Emergency Preparedness and Response

Conaprole has developed and implemented emergency preparedness and response procedures. The company has undertaken a hazard assessment and identified risk scenarios for a range of occurrences including fires, ammonia leaks, food recall and traceability among others. Communication and specific training on these procedures has been provided to pertinent staff. As pertains to fire risks, the company is currently implementing a hydraulic suppression program and fire alarm system upgrade as referenced above. The company has established a fire and emergency brigade at all plants, with fire drills conducted regularly with the support of the local fire department. Conaprole is currently upgrading its ammonia refrigeration systems as described under PS2. In addition, the company is deploying several corporate applications to share potential emergency scenarios in real time.

Monitoring and Review

Conaprole has comprehensive systems for monitoring and reporting environmental and social performance of its operations. Monitoring frequencies and methodologies are defined by the management system and annual plans, and all monitoring data stored in an enterprise software (SAP) system from which reports are widely available. Monthly monitoring reports are available and shared with management, which include some of the following key performance indicators (KPIs), g lost time accidents, process water testing, effluent quality, energy use, and specific use of water, electricity and fuels to name a few. During monthly management meetings, managers review these KPIs and takes actions to mitigate issues if neededConaprole’ s supply chain is increasingly under scrutiny through more frequent client audits of the farms. To date Conaprole’s own audits and quality assurance programs have focused on product quality and animal husbandry practices.

Supply Chain management- Farmer Extension Programs

Conaprole has an extensive supply chain consisting of 1,923 dairy farmers, with 67% of producers’ farms between 50 to 500 hectares, 27% smaller farms under 50 hectares, and 7% larger farms exceeding 500 hectares.  Dairy farmers are now being asked by the government to better manage manure and effluents with the objective of reducing non-point source pollution from the farms. Enforcement of environmental regulations is being prioritized for larger farms, particularly those in the Santa Lucia watershed. Through its extension services, Conaprole is currently working with 120 farmers (75% of which are in the Santa Lucia watershed) to provide technical and financial support for farmers to build effluent treatment ponds and implement best practices for manure management. Several farms visited as part of the appraisal appeared well run, e.g., waste management practices including effluents appeared to be well managed.

Stakeholder Engagement

The company’s approach to community engagement is defined by local needs. Conaprole is well known in the regions where it operates through its ongoing relationships with producers, clients, legal authorities, consumers and community stakeholders. Current corporate social responsibility programs include: (i) other initiatives such as financing sport events and community activities; (ii) art and youth programs; (iii) osteoporosis campaign; and (iv) cardiovascular health. Conaprole’s webpage (www.conaprole.com.uy) includes information on sustainability and environmental activities, the company uses other social media outlets to share company news, projects, initiatives, and marketing of new products.

The company addresses community concerns and complaints on an as-needed basis, and comments and complaints can be communicated through the company’s customer service phone number or at the main entrance of each industrial site. As part of this project, Conaprole is going to enhance the grievance procedure by developing a written procedure that will detail the methods to: (i) receive and register external communications from the public; (ii) screen and assess the issues raised and determine how to address them; (iii) provide, track, and document responses, if any; and (iv) adjust the management program, as appropriate. As set forth in ESAP # 2, Conaprole will implement an external grievance mechanism for receiving, addressing, and recording/documenting complaints and communications from stakeholders, thereby facilitating resolution of affected communities’ concerns and grievances.

Human Resource Policy and Management

Conaprole employs approximately 2.150 direct workers and 250 contractors, which are mostly employed to provide support during high season based upon availability of milk. The workforce distribution is 18% female and 72% male, approximately 22% of women are employed in senior management positions. Workers and contractors engaged by the cooperative are made aware of their rights and responsibilities at the beginning of their contract. Terms of employment and working conditions as defined and communicated by Conaprole, considers such things as employment trial period, hours and days of work, overtime and overtime pay, specific job details, national holidays, paid vacations, salaries and disciplinary actions. Direct workers and contractors have different contracts by definition, but terms of employment and working conditions are equal in accordance with national law. All workers have access to health coverage and payment to the social security system. According to National Law N19.127 (cannabis regulation and control) and its regulatory decree N128/2016 (Drugs in the Workplace) Conaprole implemented a new drug policy including a random testing protocol that has been agreed with Conaprole’s labor union. A third-party company started to conduct random tests in the first quarter of 2019. As part of its HR practices, Conaprole also has developed and implemented an Ethics Code, a copy of the code is available at: https://etica.conaprole.com.uy/comite

Workers’ Organizations

There is one labor union, Asociacion de Obreros y Empleados de Conaprole (AOEC), that represents Conaprole’s employees and is a member of the Uruguayan Labor Organization. Approximately 77% of Conaprole’s employees belong to this union. In September 2018, the salary agreement was updated Consejo de Salario to reflect salary increase. Conditions under the CBA cover all full-time workers.

Non-discrimination and equal opportunity

Discriminatory practices are prohibited, and equal opportunity is included as part of the company’s working philosophy. The company has developed a comprehensive manual that includes job descriptions and capacity needed for each post. Hiring decisions are based on competence and experience. Sexual harassment aspects are covered under Conaprole’s Ethics Code.

Protecting the workforce

The company’s Ethic Code includes the prohibition of child labor and, all employees and contractors must be above the age of 18 years.

Grievance Mechanism

Conaprole conducts several employee meetings during the year in which employees can raise their grievances. There are also open channels for workers to express their grievances in person or using a corporate web application that was released in June 2018. The mechanism allows for anonymous complaints to be raised. All complaints are reviewed by the Ethics Committee. Conaprole follows the principles stated by the United National Global Compacts which sets out the corporate principles for ethical, social and environmental responsibility. The Global Compact is a United Nations initiative that encourages businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

Occupational Health and Safety

OHS programs are in place and include identification of occupational health & safety risks, job hazard analysis, implementation of controls, and monitoring of working conditions and accident statistics. Although Conaprole has an OSHAS 18001 certified management system in place at all plants, injury rates are high. OHS data reviewed during the visit and data reported by the company show a high number of accidents, resulting in an average lost time injury frequency rate (LTIFR) of 23.44 accidents per million worked hours. This indicator varies significantly from plant to plant e.g., Villa Rodriguez LTIFR was 27.6, while Rincon del Pino Plant had an LTIFR of 8.

Efforts are underway to reduce accidents with plant managers accountable for accidents as of January 2019. In addition, a new phone application (“App”) is being developed to share real time accident statistics and corrective actions among all plant managers and the management team.  As set forth in ESAP # 3, Conaprole will hire a senior external OHS consultant to assess OHS risk and management system gaps to define time-bounded corrective actions at the Montevideo and Villa Rodriguez plants, the plants with the highest number of accidents. In addition, the consultant will conduct a detailed assessment of accidents and workplace monitoring results at the remaining six plants, for the previous two years, to identify trends and root-causes. The consultant will identify priorities and define a time-bounded corrective action plan. As part of this assessment, Conaprole has agreed to implement corrective actions and report on progress including training and key performance indicators to the IFC.

Conaprole reported monitoring results of required indicators of worker’s exposures to occupational agents, heat/cold temperatures and noise, as well as workplace illumination levels. Results show that whenever exposure is exceeding thresholds levels, engineering measures are taken to reduce exposure and when this is not possible personal protective equipment (PPE) is provided (ear plugs, coats).

Ammonia Safety

As is typical in the dairy industry, Conaprole’s processing plants use large ammonia-based refrigeration systems, which contain substantial amounts of ammonia, a substance that is toxic and can explode when present in the air in concentrations between 14% and 27%.  Although refrigeration systems are modern and in fair condition at the sites visited, IFC found opportunities for improvement. For example, a single machinery room contains both ammonia compressors and steam boilers - according to best practices, ammonia equipment needs to be placed in dedicated rooms. Other gaps found included pipes and valves with signs of corrosion. As described above, under PS1, Conaprole commissioned an external audit to assess ammonia safety risks. The company has already started to implement corrective actions resulting from the audit. Per ESAP #5, the company will implement all actions required to close the gaps and will submit a final report confirming implementation of the action plan.

Supply Chain

Conaprole sources milk from family farms with which it has long standing purchasing agreements. There is not a high risk of economically exploitative child labor or forced labor in these milk supply chains. 

Resource Efficiency

Resource consumption objectives and performance indicators are part of Conaprole’s operating procedures and commitment to sustainability. Conaprole has implemented an ongoing program to identify and implement measures to increase energy efficiency across all operations, which has qualified them to benefit on 10% energy fee reduction under official energy efficiency program in Uruguay. 

Energy audits on the industrial facilities are scheduled semiannually to reduce pollution and enhance energy efficiency.  Main monitoring points are steam leaks, thermal insulation screening, control of power consumption per hour (cost of kwh) including high peaks, air leaks among others. A monthly energy efficiency audit is conducted at all company boilers with minimum acceptable thresholds of 85% for firewood furnaces and 90% for oil furnaces.  Conaprole is currently analyzing different alternatives to replace and upgrade to wind or solar energy sources. LED lighting has been adopted company-wide to improve energy efficiency. Conaprole has achieved notable results through several energy efficiency projects including the following: (i) efficiency increase in pasteurization with savings of US$100,000/year at the Montevideo plant; (ii) thermal energy recovery for milk and whey pasteurization; (iii) improvements in chilling plant resulting in estimated savings of US$ 60,000 at Florida Plant. For Villa Rodriguez plant, recovery of energy in the form of biogas to be utilized to offset fuel usage for generation of steam is in advanced stages of implementation.

Greenhouse emissions

Based on data supplied by Conaprole, between 2017 and 2018 the company generated 1.455.64 tons of CO2 equivalent for electricity use and 124.219 tons of CO2 equivalent for fuel consumption. Conaprole will report CO2 emission for Villa Rodriguez once the new project is implemented. Conaprole is currently developing a procedure to quantify its direct annual GHG emissions in CO2 using international recognized methodologies. As part of its annual report Conaprole will submit its GHG emissions to the IFC.

Air Emissions

Conaprole will conduct air emissions testing for PM, NOx and SO2 and will report results to the IFC. If emissions exceed WBG EHS Guidelines values for Air Emissions and Ambient Air Quality, then appropriate pollution control measures will be agreed with IFC and implemented. As set forth in the ESAP # 6, Conaprole will conduct air emission analysis and will report results to the IFC.

Water:

The gross volume of water consumed by Conaprole comes mostly from wells. The Montevideo plant is connected to the public water distribution company in Montevideo (OSE), but also extracts water from wells. All company wells are registered and licensed by DINAGUA, Uruguay’s national authority responsible to grant water use permits. During 2018, Conaprole consumed 2.795.020 m3, which is 3.6% more than the water consumed in the previous reporting period. However, this increase is the result of Conaprole processing 6.9% more of milk than in 2017. Water use per thousand liters in 2018 is around 1.98 m3 vs. 2.04 m3/thousand liters in 2017. Conaprole has developed a water submetering network at some plants including Villa Rodriguez. In 2018, the company reused 26% of water coming from the cleaning equipment and water from evaporators- cow water.

Wastewater

All of Conaprole’s industrial plants have wastewater treatment plants. As indicated above, Conaprole has initiated an extensive upgrade of its effluent treatment plants to enhance performance and optimize cost. Out of 8 industrial plants, 6 are required to comply with WBG EHS guidelines, while the other two plants release water into city treatment facilities which treat the effluent further before final discharge. The facilities that are required to comply with WBG EHS guidelines are: Florida, Villa Rodriguez, San Ramon, San Carlos, Rincon del Pino and Mercedes.

Villa Rodriguez- the largest of Conaprole’s facility has an effluent treatment system that is designed to treat up to 6,000 m3 of wastewater per day. Currently the facility is operated at less than 50% of its design capacity, as such the expansion plan will not require additional works to the treatment facility. The effluent treatment system discharges to surface water after treatment through a secondary biological treatment system with biological and physico-chemical nutrient removal, nitrogen and phosphorus. The effluent treatment system consists of anaerobic lagoons, followed by aerobic activated sludge with nitrification/denitrification steps, and physico-chemical treatment for phosphorus removal. Recovery of energy in the form of biogas to be utilized to offset fuel usage for generation of steam is in advance stage of implementation. Quality of discharged effluent is in compliance with local regulatory requirements, and largely consistent with applicable WBG EHS guidelines for discharge of treated effluents to surface water.

Montevideo – the Conaprole facility at Montevideo (CIM) discharges pre-treated effluents to the city sewer system for further treatment. The city’s municipal wastewater treatment is understood to be operational. The current effluent treatment system consists of a dissolved air floatation (DAF) system for separation of fats, oils and grease. After treatment through the DAF unit, effluent is treated in an aerobic biofilter before discharge to the sewer. Sludge from the DAF and biofilter are dewatered and disposed / processed as compost. The CIM facility is in compliance with the city’s permit requirements. The company is evaluating alternate treatment technologies including energy recovery to optimize operation costs.

San Ramon – The effluent treatment system at San Ramon discharges to surface water after treatment through a secondary biological treatment system with biological and physico-chemical nutrient removal nitrogen and phosphorus. The effluent treatment system consists of anaerobic lagoons, followed by aerobic activated sludge with nitrification/denitrification steps, and physico-chemical treatment for phosphorus removal. Biogas is flared. Quality of discharged effluent is marginally out of compliance with local regulatory requirements and applicable WBG EHS guidelines for discharge of treated effluents to surface water from dairy processing. Conaprole is continually working toward improving its performance through process enhancements and infrastructure upgradation.

Florida – The effluent treatment system at Florida is currently under construction, with commissioning anticipated by December 2019. The effluent treatment plant will discharge to surface water after treatment through a secondary biological treatment system with biological, physico-chemical nutrient removal (nitrogen and phosphorus), and a wetland treatment system for polishing before final discharge. The effluent treatment system consists of flow equalization, anaerobic lagoons, followed by aerobic activated sludge with nitrification/denitrification steps, and physico-chemical treatment for phosphorus removal. Biogas will be flared. Currently the quality of discharged effluent does not meet local regulatory requirements or applicable WBG EHS guidelines for discharge of treated effluents to surface water from dairy processing. On completion of the new wastewater treatment facility it is anticipated that discharge of treated effluent will be compliant with both country and WBG EHS applicable requirements for Dairy Processing.

As set forth in the ESAP # 7, Conaprole will upgrade all processing plants’ waste water treatment facilities as required, such that treated effluent is in material compliance with Uruguayan regulation and WBG EHS Guidelines values for all parameters.

Hazardous materials

Hazardous materials used in Conaprole include paints, oils, ammonia, cleaning agents such as nitric acid, hydrochloric acid and sodium hydroxide. Hazardous waste is stored onsite in separate, locked facilities with appropriate signage warning. This waste is collected by specialized companies that have the required permits for proper disposal. During the inspection visit conducted at the San Ramon plant, on-site waste storage conditions were found to be adequate.

Waste

The company has implemented corporate wide objectives including key performance indicators for waste minimization. On a yearly basis Conaprole reports to the IFC its solid waste data per waste category and industrial site. Conarpole has developed partnerships to recycle its waste, currently the company has the following partnerships: (i) partnership with the Chamber of Industry to develop a program about reduction of packaging materials; (ii) NGO agreement with Repapel and San Vicente; and (iii) local government conservation award: “Sello Canario.”

The company’s operations do not pose serious risks to health and safety across the communities where it operates. The company has developed and implemented comprehensive procedures to manage potential operational risks. As part of this investment, Conaprole will implement a formal grievance mechanism, as referenced under PS 1.

Food Safety

The essential requirement for a food manufacturing company is a food safety management system and associated product traceability. As indicated above, Conaprole has implemented food safety (ISO 22000). This certification is recognized by the Global Food Safety Initiative (GFSI), which is coordinated by the Food Business Forum CIES. This forum is a global food network made up of approximately 450 retailers and manufacturers worldwide. Additional pertinent certifications as described above in PS 1 include:  quality certification (ISO 9001) and laboratory quality programs (ISO 17025) to guarantee the quality and safety of its products. On a yearly basis Conaprole’s quality food safety management system is audited by LSQA and by Conaprole’s clients. In addition to the food safety certification, Conaprole recently inaugurated a state-of-the-art quality control lab. The lab is located adjacent to the Montevideo industrial complex, this lab is also certified it can conduct analysis for pathogens and complex instrumental analysis that cannot be conducted at the industrial plant labs. The lab is also used to provide analysis support to the farmers.

Emergency Preparedness and Response

Conaprole has an emergency response and preparedness plan including identification of emergency scenarios and risks, internal and external communication procedures, emergency brigades, and emergency response. The company periodically conducts emergency drills at its industrial plants.

Security Personnel Requirements

Security for physical assets and access control are provided by third party-service providers. Conaprole does not employ armed personnel. 

Cynthia Noel Lima Diverio

Profession. Green MBA, Chemical Engineer

Phone + 598 29247171 ext 2539 or 2273

Address. Magallanes 1871, mvdeo. Uruguay. Zip 11800