As described before, the project aims to: improve processing capacity of its existing plants; engage third party operated pulse processing plants; improve its geographical presence across the country; increase local sourcing of pulses; and introduce company branded processed pulses products.  There is no proposal to build new processing facilities or expand existing ones therefore, no land is expected to be acquired and the project will be developed in the existing footprint, PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS7: Indigenous Peoples; and PS8: Cultural Heritage are not expected for this investment.

This is a Category B project as per IFC’s Policy on Environmental and Social Sustainability.

Key E&S risks identified include: Environment, health and safety (EHS) and labor management practices at pulses storage and processing facilities of ETC Agro including a focus on workplace environment and life & fire safety (L&FS); transport safety in logistics activities; and the supply chain risks associated with leasing more 3P millers proposed in the project (as many as 12-15 mills to be leased in coming years) including compliance with IFC Performance Standards (PSs) requirements.

E&S Assessment and Management Systems

Policy and management systems: ETG has formulated and implemented an overarching policy on environmental, social and other aspects (such as energy, hazard control, food safety and quality) that is applicable to all its operations including ETC Agro.  The policy promulgated first in 2011 and updated in June 2018 aims to benchmark its operations to ISO standards (such as ISO 9001, ISO 22000 / HACCP, ISO 14001, ISO 50001, OHSAS 18001, SA 8000); IFC Performance Standards; and ILO Conventions  (http://www.etgworld.com/#/sustainability/sustainability-policy).

Company rolled out an ETG-wide integrated management systems (ETGMS) in 2011 that standardizes all operational processes and practices in line with applicable ISO, IFC and ILO standards and host country regulations.  Globally, the implementation of ETGMS has been certified to relevant ISO standards (including ISO 14001 and OHSAS 18001) in sixteen (16) ETG plants while in India ETC Agro has got ETGMS implemented in two (Khopoli in Maharashtra and Kolkata in West Bengal) of its three Indian facilities certified to ISO standards while the third one (Vasad plant in Gujarat) is planning to get ISO accreditation by December 2019.  Social accountability system standards (as per SA8000) are being implemented as part of ETGMS but accreditation to the standard has been discontinued probably due to cost factors.

Identification of risks and impacts: ETC Agro has instituted an appropriate legal & compliance management systems and procedures that ensures straightforward application of E&S regulations, standards, and permitting conditions. A legal register (that includes all E&S related regulations applicable on plant operations) is maintained for each plant and kept updated and revised at plant level which is monitored by the legal and compliance staff at ETC Agro corporate office.  Last IFC investment in developing the greenfield Kolkata pulse processing plant was subjected to environmental and social impact assessment (ESIA) process in line with ETGMS and PS 1 requirements.

In the current project, as there are no physical assets are to be built, application of ESIA requirements does not arise.  However, proposed project operations such as: a) increased local procurement of pulses; b) augmenting pulse processing capacity by leasing 3P mills in next 1-3 years; and c) the resultant increase in transportation (road, rail and water transport modes) and logistics will have certain E&S risks and impacts. 

Company plans to increase its local (within India) procurement of the pulses as the import regulations in India are dynamically altering every year depending on many factors (annual rainfall, pulses crop cultivation area, credit available to farmers, minimum selling price of pulses determined by government etc).  Currently company does not procure directly from farmers as the prevailing regulations prohibit such direct procurement. Pulses are not identified as a crop with high risk of child or forced labor (source: US Department of labour https://www.dol.gov/sites/dolgov/files/ILAB/ListofGoods.pdf) or being produced in regions with a risk of significant conversion of natural/critical habitats based on the review of annual reports of Directorate of Pulses Development, in the Ministry of Agriculture & Farmers Welfare, Government of India (Source: http://dpd.gov.in/Annual%20Report%202017-18.pdf).

As per government reports, pulses are generally produced in poor soils not suited to other crops in India, with a minimum use of resources and have a very low water footprint. Of the total net sown area of 141.40 million hectares (Mha) in India, about 20% (>29 Mha) are pulses cultivation area and is the largest pulse producing country in the world.  In India pulses farming is largely done in mixed/intercropping systems, crop rotation and dry farming to cultivate green vegetable (pods/beans) and nutritious fodder for cattle as well thereby contributing to a more sustainable food system. Hence, supply chain risks are not envisaged in the project if the current procurement strategy does not change in near future. ETC Agro will periodically review its supply chain risks and procurement practices/strategy to anticipate and manage potential risks in compliance with PS2 and PS6 requirements.  Company procures pulses for processing through four different methods as listed below:

1) about 10% procurement is through commission agents (10-20 number of agents identified across India);

2) about 10% procurement is through government tenders (e.g National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) tenders);

3) Procurement from warehouses; and

4) About 80% procured through pulse traders (about 100 traders are identified by the Company across India) who are licensed to operate in agricultural produce markets where the farmers bring in their pulses for sale.

As discussed earlier, company plans to increase its pulse processing capacity by improving the operational capacity of its existing plants and lease third party operated pulse processing plants (3P mills).  Company prefers shorter period leases say 11 months and in FY19 it had leased five (5) 3P mills for such period.  3P mills are identified based on a screening and evaluation criterion and background verification.  Risks and liabilities of leasing 3P mills are managed through lease agreement clauses that clearly define the roles and responsibilities in managing these risks.  As a condition of IFC investment in the project and as part of ESAP#1, Company will review and strengthen 3P mill leasing process to integrate and mitigate E&S associated risks and liabilities such as: environmental and factory related regulatory compliance; compliance to labor laws and labor welfare measures; neighborhood community health, safety and security; ETGMS requirements on occupational health and safety (OHS); life and fire safety; and waste management.

Management Programs: Under ETGMS, ETC Agro annually formulates and implements specific management programs covering broad objectives (environmental, OHS, energy, social responsibility, food safety, and quality management, etc.), activities defined to meet those objectives with measurable targets.  For example, during the current fiscal year (FY2019-2020), ETG has prescribed focus areas such as: efficient utilization of resource promoting reuse and recycle of available resources; and a safe and healthy work environmental for employees.  Based on this prescription, at unit level guidelines such as: resource conservation through pulse waste management and aiming to zero work related accident and occupational illness has been identified for implementation and specific actions are implemented.    These activities are derived both from India specific objectives and ETG Group focus areas discussed above.

Organisational Capacity and Competency: ETG Group has instituted a global, corporate sustainability team headed by General Manager level cadre staff (stationed at Bengaluru in India) and comprising of two additional members (a manager stationed at Malawi and another senior officer stationed at Bengaluru in India).  ETG Group has five business verticals and each business vertical has an EHS co-ordinator identified to drive the sustainability programs of the corporate team through EHS site co-ordinators identified at facility/plant level in their respective business vertical.  Responsibilities for EHS management predominantly lie at the plant management level at ETC Agro with operational and production in charges also taking lead role in their respective operational areas.  The plant managers are experienced individuals who are familiar with the risks and impacts of their operations as they pertain to environmental, labor, and OHS matters.  The head of operations in ETC Agro is the management representative of ETGMS and co-ordinates all management system related documentation (such as ISO 14001 and OHSAS 18001 standards) with plant level EHS co-ordinators.

HR and other related E&S functions (industrial relations, procurement/supply chain logistics, legal and compliance including compliance reporting, production/efficiency reviews and innovations) are centered at ETC Agro corporate office in Mumbai.  Production/plant managers, based at each plant, are responsible for implementation of these shared practices and procedures, and therefore the safe and compliant operation of their plants along with the EHS co-ordinator identified in the line management (generally from HR or quality department).

To improve the competency levels of plant level management staff in managing EHS aspects, global sustainability team has started implementing a three-level competency and capacity building initiative in collaboration with external third-party agencies (M/s DNV-GL is helping ETG Group in this assignment).  The first level (Level 1) capacity building and training with a qualifying examination (of 30-minute duration) is for all staff and aims to provide basic EHS related training spread over 2.5 days of formal, classroom-based training.  The second level (Level 2) training which has been introduced since last year is subject or job-specific training imparted to respective staff using M/s DNV-GL resources and competency certificates are issued after an examination.  Third and final level (Level 3) training is limited to Level 2 qualified candidates and aims to test and certify them as lead internal auditors.  At plant level, training and capacity building programs organized and conducted by human resources department is an ongoing program besides the corporate program discussed above and the average training manhours spent by each staff in a year at plant level in ETC Agro varies between 16 – 30 (i.e 2 - 4 man days of training in a year).

Emergency preparedness and response: Pulse processing operations are relatively simple that pose limited hazards and risks.  ETC Agro has implemented facility-specific emergency response plan in each of its operational plants in India, using the ETGMS emergency preparedness requirement as a basis for plan development; risks are properly identified. The plan lists primary and secondary contacts, emergency contact information, lists the other kinds of emergencies that could occur (fires, falling from height, earthquakes, electric shocks, etc.), location of emergency equipment, and the types of training required of (listed) employees with emergency duties. Fire and mock drills are required to be conducted periodically.  Appropriate life & fire safety (L&FS) infrastructure including: fire extinguishers; manual call points; fire alarms; fire hydrant (only at Kolkata plant), flame proof electrical switches etc. have been installed, operated, periodically inspected (using external third-party specialist vendors) and maintained in full operational condition in every ETG Agro plant in India. 

Monitoring and review: An appropriate E&S monitoring and review systems is in place from plant level to ETG’s global corporate office.  From every level, monthly operational reports that includes E&S parameters are generated, collated and reviewed at appropriate management levels.  Under ETGMS, regular internal and external audits are undertaken including surveillance audits by certification agency under ISO standards, corrective actions are implemented.

Previous IFC investments in ETG and ETC Agro have appraised the IFC PS 2 standards and have affirmed that both at ETG group and ETC Agro operations in India are compliant to PS 2 standards.  A Group HR policy signed by the Chairman of ETG guides the development of local HR policies for ETC Agro that is specific to Indian operations.  The local HR policies and procedures counting 20 or so in numbers are widely published and shared with the employees through notice boards and email communications.  These policies and procedures will also be posted online soon through company’s intranet (SAP software platform) that is currently under development.  Company has also formulated a policy on prevention of sexual harassment of women at workplace (POSH) and instituted a 5-member internal complaints committee on POSH aspects in compliance to local regulations.

As of September 2019, company had 337 staff on payroll out of which 27 staff are females (23 female staff are working in ETC Agro’s corporate office in Mumbai).  There are 364 off-roll workers employed with the company at plant level for security, housekeeping, production shop floor operations etc.  Besides, company also engages loading and unloading laborers at plant level through labour contractors on job work (loading/unloading tonnage of bags) basis, aligned with local legal requirements.  The attrition rates among on-roll employees varies between 2-3% and is high among blue collar workers.

Grievance Mechanism: The details of grievance redress cell with a common email is published in every newsletter published by the company and circulated among the employees.  Provision is made to receive grievances from workers, using traditional reporting structures (local HR representative, Director of HR in Mumbai, Senior Management, if needed) including those submitted anonymously. There have been no major grievances received or left unresolved till date.  Company HR representatives keep meeting and engaging the workforce regularly and organizes quarterly townhall meetings with senior management.  For off-roll, contract workers engaged through labour contractors, HR department encourages and accepts grievances from them and gets it resolved through labour contractors.  Labour law compliance by labour contractors is strictly enforced and monitored every month.

Freedom of Association/Collective Bargaining is provided for under Indian law; there is no discrimination against unions at the company. However, there are no labor unions operational at any of the company owned plants in India.

Workers accommodation: Company has provided accommodation to workers in two of its facilities (Kolkata and Vasad).  A separate building has been constructed within the plant premises in both the facilities.  The building has multiple rooms on (ground and two upper floors configuration at Vasad and ground and four upper floors configuration at Kolkata.  Kolkata has two buildings each for workers and management staff) sharing basis with common facilities such as adequate number of toilets, bathrooms, piped drinking water supply, light and fan provisions and canteen etc.  In both the facilities, the residential accommodation has been designed for about 90-130 workers and staff.

Occupational Health and Safety (OHS): OHS related risks in the milling operation are managed by plant management, with responsibilities delegated to line management and supervisors.  Under ETGMS, OHS risks are managed through OHS management systems and procedures that are certified to OHSAS 18001 standards.  OHS risk assessments are incorporated into work plans and the hazards (noise, dust, moving parts, working at height) and their associated risks (loss of hearing, respiratory impacts, pinched fingers or more severe physical impacts to hands, arms, etc.) are eliminated (using engineering controls for example) or, if they cannot be eliminated, they are managed or mitigated through supervisory control and stringent enforcement of personal protective equipment’s (PPE). Appropriate signages and/or demarcations were in place and instructions for appropriate PPE use in each operational area were on display prominently.  Occupational health centres (OHC) have not been established yet but first aid kits are available at every operational floors/areas within the plant which are checked and restocked by industrial relations department staff.  In case of emergencies, plant management has arrangements with nearby hospitals and ambulance services for providing immediate response.

OHS training covering key risks and impacts are imparted as part of annual training calendar co-ordinated and monitored by local and corporate HR department of the company.  It is the responsibility of management to ensure those conducting potentially hazardous work are first trained and deemed competent in that work. The company operates an apprentice-style program that exposes workers to methods and practices that allow them to develop new skills and progress along a career path. Workers are trained by experience personnel as part of this program.  The OHS of contracted workers is also the responsibility of ETC Agro.

Monthly reporting on OHS performance is regular from each of the plants to ETC Agro corporate office and subsequently to ETG Sustainability team.  Safety statistics reviewed as part of IFC appraisal and interviews held with safety management team indicates zero fatal accidents across ETC Agro’s Indian operations.

Workplace and ambient environment (air and noise levels) monitoring is undertaken every six months in the Kolkata plant.  During appraisal visit it was evident that workplace noise and dust is a key OHS risk and needs to be mitigated and monitored across all ETG Agro’s facilities for formulating the risk mitigation plan.  The workplace monitoring program followed at Kolkata plant needs to be reviewed with respect to Section 2.9 of IFC EHS General guideline requirements and replicated across all ETC Agro facilities in India.  As a condition of IFC investment in the project and as part of ESAP#2, Company will define a corrective action plan to reduce dust exposure and any other parameter (e.g workplace noise, illumination levels, temperature) identified as non-in-compliance with exposure limits across all Indian plants/facilities    The workplace monitoring program will also include periodical surveillance of both company and contract workers health in compliance to Section 2.9 of IFC General EHS guidelines, April 2007.

Resource efficiency: The main inputs to the processing operation are electrical power and the raw food materials (lentils and other pulses) themselves. The mill consumes electric power to move pulses around the facility so they can be cleaned, processed, sorted, graded and bagged.  Under ETGMS, all plants are managed for resource efficiency as per ISO 50001 standard requirements.  Operational data on daily production rates and energy consumption are constantly collected and reported as part of monthly reporting to ETC Agro corporate and ETG Global where they are analyzed and used as a basis for proposing new approaches to reduce resources and energy consumption.  In Kolkata plant, company commissioned an energy audit to be done by independent third party (M/s SGS) in October 2019.  During portfolio management post IFC investment, Company will be encouraged to explore starting a project to install rooftop solar photovoltaic plants to generate electricity using the vast roof area available in its plants, if found feasible.

Air emissions:  Emissions to ambient air environment is limited as diesel is used either as fuel for electricity back-up generators or used as fuel in the dryers at Vasad facility.  Since electricity availability from the grid is reliable in the facilities not much of diesel generator back-up has been used.  At Vasad, diesel consumption in dryers has been around 7.2 liters per ton of pulses processed.  In summer months, open sun drying of pulses is resorted to reduce diesel and electricity consumption by about 40-60%.  Hence, air emissions are minimal and are monitored as part of routine ambient environmental monitoring program for compliance to emission standards.

Water consumption: Very little water is used as pulses processing is mainly a dry process. The water that is used, is used for softening the husks prior to their removal. Water used in the process is not required to be treated; there is no process effluent as moisture is retained and ultimately lost to evaporation through the drying process.  The primary water consumption on site is for the use in the cafeteria and for domestic use. The domestic sewage is treated on site through sewage treatment plants (STP) and the treated water is either used in irrigating the gardens developed within the facility or drained into municipal sewer system, if available. Water for drinking is either procured from outside drinking water supply vendors or from in-house reverse osmosis treatment plants.  Quality of drinking water is checked periodically.  Raw water is sourced either from groundwater borewells (example Vasad plant in Gujarat) or municipal supply (example Kolkata plant in West Bengal).

Waste management: Milling and allied processing operations, except for leaves and extraneous materials separated from raw materials during pre-cleaning and cleaning steps, generate minimal (and only organic) waste.  One consistent surplus are the bags used for transporting raw materials to the mill.  Currently, these bags are recycled and used for packaging of cattle feed products; or, sold to local informal sector mills. There are no waste streams per se as all of the raw materials are used, either for product or second-tier quality product.  Husks from pulse milling are sold for cattle feed. 

ETC Agro’s’ modern milling equipment is designed to collect all dust emanating from processes to avoid air emissions discharges and to protect mill employees.  Processing equipment includes dust management technology including extraction fans and bag filters and collected particulate matter is incorporated into cattle feed that are packaged for sale.  

Pesticide use and management: In case of requirement, the pulses are fumigated, and the fumigation services are subcontracted to a licensed pest control company that also provides routine pest control around milling operations.  Fumigation chemicals used are approved for food products and no World Health Organization (WHO) Class Ia, Ib, or II products, which are prohibited by PS3, are employed in these operations.

The processing facilities of ETC Agro are in industrial zone (e.g Kolkata) or well away from neighbourhood communities (e.g Vasad).  The facilities were designed in-house and constructed using engineering, procurement and construction (EPC) contractor services specialized in building pulse processing plants.  The layout of the plants has been designed to have linear process flow with adequate space in and around the equipment’s, process areas and the buildings for emergency access and movement.  Appropriate life and fire safety infrastructure have been installed, operated & maintained and tested periodically through mock drills. 

Security personnel deployed in ETC Agro are from outsourced security service agencies with no arms and ammunition.  Security services operate under the administration department of the facility and has a security officer to monitor the services of security guards.  Security team is trained on soft skills required to interact with workers and neighbourhood community members. 

As discussed before, as the pulse processing and production targets are set to be increased under the project in next 2-3 years, transport & logistics will also increase due to increased raw material and finished goods movement.  Transport and logistics are centrally managed through ETC Agro’s corporate office in Mumbai.  Company does not own any transport fleet operational assets.  Transport requirements are sourced through about 20 number of regional/national transport service providers who have entered into 3-year service agreements with the company.  Company also does not own and operate any warehouse assets and hires about 25-30 warehouses across India as per operational requirements that charge based on number of bags stored and storage duration.  As a condition of IFC investment in the project and as part of ESAP#3, Company will review and strengthen the transport service agreements to integrate and mitigate E&S associated risks and liabilities such as: regulatory compliance including labour law compliance; IFC PS 2 requirements on protecting the fleet operational workforce; fleet maintenance; driver training programs; and transport safety requirements of ETGMS.

As noted elsewhere in this document, there are no project affected communities as there is no physical asset development proposed in this project and existing facilities are located in industrial areas not close to local communities.  The key stakeholders who are exposed to project E&S risks and impacts are the workers in the pulse processing facilities and transport fleet operators.  ETG sustainability policy aims to mitigate such risk on its workers by striving to: provide for safe and healthy working environment for its employees; adopt principle of hazard identification and risk assessment in its activities and promote healthy living conditions and sustainable environmental practices.  Through ETGMS the policy objective has been realized through: effective plant layout and structural design with adequate space to move around safely; process design, equipment selection, operational procedures, recurrent training to employees, and periodical workplace monitoring etc.  However, company will further strengthen its management procedures to achieve its policy objectives by implementing ESAP #2 and #3 as part of IFC investment to this project.

As part of external communication, ETG has started publishing annual sustainability reports since fiscal year (FY) 2018 and the latest report published in September 2019 for FY18-19 was shared with IFC during appraisal.  ETG plans to publish the sustainability report in compliance with green reporting initiative (GRI) framework in the coming years.

The company will locally disclose the social and environmental information for the project at the following locations: 

1. Company HQ address: Office No.805/06/07 Neelkanth Corporate IT Park, Nathani Road, Vidyavihar Society, Mumbai, Maharashtra Pin: 400086 

Any queries and/or comments about the project may be directed to: