Performance Standard 5 (Land Acquisition and Involuntary Resettlement) is not applicable for this project as the company does not plan to acquire any additional land to expand operations so there will be no physical or economic displacement. Performance Standard 7 (Indigenous Peoples) is not applicable because no indigenous people will be impacted by the project or are located within project’s area of influence. Performance Standard 8 (Cultural Heritage) is not triggered as this is a brownfield project and will not require expansion or construction that would cause impacts on cultural heritage.                                                  

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because E&S impacts and risks for this project are expected to be limited, generally site-specific, and readily addressed through standard mitigation measures. No expansion of the sugar plantations and/or mill is expected as part of this investment. E&S risks in the sugar sector in Central America include the potential presence of child labor and the possible connection of high rates of chronic kidney disease (CKD) to workers chronic dehydration from strenuous labor. Additional key E&S risks and impacts of this project are linked to water consumption, air emissions from biomass boilers, generation of waste, reuse of industrial effluents for irrigation, bagasse fires and sugar dust explosions in the industrial facilities, occupational health and safety, exposure of workers to heat and pesticides, provision of fair and safe working conditions, and exposure of communities to pesticides, truck traffic, and malicious fires. Key E&S risks linked to the company’s supply chain are potential presence of child and forced labor, workers’ exposure to significant OHS risks, and potential conversion of natural and critical habitats.                                       

Working Conditions and Management of Worker Relationship. Monte Rosa employs 600 permanent workers and 1600 temporary workers along the year. Due to the seasonality of sugar cane harvesting activities, Monte Rosa’s operations involve an increased number of workers during the harvesting season (zafra), when the number of temporary workers raises to 3200 in total. Temporary workers are hired directly by Monte Rosa (i.e. no reliance on labor agencies or contractors) and 80 to 90 percent have worked for Monte Rosa in the past. About 16% of both permanent and seasonal workers are women. The company does not rely on migrant workers as seasonal workers are from nearby localities.

Human Resources Policies and Procedures. Pantaleon has a corporate Code of Conduct and Ethics (CoC) that includes the commitment to comply with labor law, provide a safe working environment, ensure equal opportunities, and prevent harassment in the workplace (https://www.pantaleon.com/personas-y-cultura/codigo-de-etica-y-conducta/). Pantaleon has also a manual of corporate policies that include a policy on responsible working conditions, both this policy and the CoC are in line with the requirements of Performance Standard 2. At the beginning of each zafra, an abridged version of the CoC is distributed among workers, and short videos on the CoC, grievance mechanisms, internal work regulations, and benefits are used for induction training.

Working Conditions and Terms of Employment. Working conditions and terms of employment for permanent and seasonal workers are established in the Internal Work Regulations and Collective Bargaining Agreement, which have been approved by the national labor authority. All workers receive written contracts that document the type of employment, pay, and hours of work.  Statutory working hours in Nicaragua are 48 hours per week, and 36 hours per week for dangerous work (e.g. sugar cane cutters, pesticide applicators). Agricultural workers in Monte Rosa work up to a maximum of 60 hours per week and are paid by piece rate. Monte Rosa guarantees that the piece rate payment is always equal or above the minimum wage for the statutory working hours. Hours and productivity beyond 48/week are paid at overtime rate.

Workers’ Organization. The corporate policies of Pantaleon express the commitment to comply with collective bargaining agreements in the subsidiaries where workers’ organizations exist. Monte Rosa has signed a collective bargaining agreement with the Union Ramon Salvatierra, which is negotiated every two years. While only 70 employees pay union dues, the benefits of the collective bargaining agreement extend to all permanent and seasonal workers and mainly consist on access to medical services for the worker and family and extended paid medical leave.

Non-discrimination and Equal Opportunity. Pantaleon’s CoC and corporate policies include the commitment to non-discrimination and equal opportunities, and to provide a work environment free of harassment. Sugar cane is a male dominated sector. Nevertheless, the representation of women in Monte Rosa is 17% which is the highest among all Pantaleon’ sugar subsidiaries. Monte Rosa has also successfully implemented skills training for women in non-traditional roles. 

While the CoC and corporate policies do not explicitly mention the prohibition of sexual harassment, Pantaleon’s Grievance Mechanism (https://denuncias.etictel.com/?company=1828) handles sexual harassment related complaints, and in the last two years, three sexual harassment complaints have been investigated in Monte Rosa by Pantaleon’s Compliance Department.

Retrenchment. No collective dismissal among permanent workers is planned by Monte Rosa as part of this investment. During the last decades, Monte Rosa has progressively mechanized agricultural activities, in particular sugar cane harvesting which is expected to become 100% mechanized in the next three years. While this has reduced the amount of seasonal jobs for non-skilled workers, it has reduced workers exposure to heat related illnesses and opened the opportunity to safer and better paid jobs as machine operators.  The company is committed to reinsert sugar cane harvesters in other agricultural activities.

Internal Grievance Mechanism. Workers in Monte Rosa have access to two internal grievance mechanisms (IGM):

(i) Pantaleon has a corporate confidential channel to receive grievances related to breaches to its CoC (see Linea etica at: https://denuncias.etictel.com/?company=1828). This Grievance Mechanism is under the responsibility of an Ethics Committee established by Pantaleon’s Board of Directors. An abridged version of the CoC with information on how to report grievances is distributed among workers at the beginning of each zafra. In 2019, 17 complaints were filed through the system in Nicaragua;

(ii) Complaints and inquiries related to daily operations such as payments, provision of PPE, access to hydration, uniforms, etc. can be raised through multiple channels, including weekly group meetings lead by each supervisor (momentos de dialogo) and in person with the Human Resources department. Anonymous and confidential complaints can be raised through the Union delegates. In addition, twice per month during pay days, Monte Rosa sets up a kiosk where workers can present their inquiries and complaints. In 2019, 231 complaints were recorded and solved through the various mechanisms. Complaints related to daily operations are resolved locally and are not escalated to the Ethics Committee.  Lastly, no labor claims have been filed by workers against Monte Rosa.

Protecting the Work Force. Pantaleon’s corporate policy on responsible working conditions states the company’s commitment to comply with labor laws, offer fair working conditions and do not employ children. Monte Rosa does not employ workers under 18 years of age either directly or through contractors. Monte Rosa verifies the authenticity of workers’ national identification documents to ensure the fulfillment with its policy.

Workers Engaged by Third Parties. Monte Rosa relies on contractors for activities such as industrial maintenance (i.e. welding), transportation of finished products, and physical security. Currently, Monte Rosa has a database of 218 companies and 3,100 contracted workers. Monte Rosa maintains a contractor management software to keep track of the pre-requisites to qualify as contractor (e.g, copies of identity documentation, social security payments, certificate of attendance to OHS training, etc.). Through the system, Monte Rosa verifies that only authorized companies, workers, and equipment enter the worksite (for linear works Monte Rosa performs daily controls).

Supply Chain. Half of the sugar cane processed by Monte Rosa originates from 250 independent sugar cane growers. About 100 are small suppliers having 10 hectares or less, while the other 150 are medium and large suppliers. There are significant social risks associated with sugar cane production in Central America. However, the U.S. Department of Labor (“List of goods produced by child labor or forced labor”, 2018) does not list sugar cane in Nicaragua as a sector at risk of child and forced labor. In addition, all the sugar cane is harvested by Monte Rosa’ workforce to prevent risks of heat exposure to sugar cane cutters (as of last zafra, 97% of harvesting is mechanized).

All contracts with suppliers include provisions to (i) comply with labor law (wages); (ii) do not employ children under the age of 18; (iii) provide PPE; and (iv) correctly manage hazardous waste (i.e. empty agrochemical containers). These provisions are also reinforced through communication campaigns with APRICO, the association of private sugar cane producers. Monte Rosa’s technicians (Negocios de cana) regularly conduct unannounced visits to suppliers and are trained to detect and report any major non-compliance (i.e. child labor, lack of PPE). In 2019, Monte Rosa retained a consulting firm to assess the level of labor and environmental compliance by its suppliers. The program includes 20 suppliers and is voluntary. The information collected will be used to design training material and a manual to support sugar cane growers. A similar program has been already implemented by Pantaleon in Guatemala.

Occupational Health and Safety. Monte Rosa has established an Occupational Health and Safety (OHS) management system encompassing both the agricultural and industrial operations certified under the OHSAS 18001 Standard. The system includes hazard identification and risk assessments (HIRA) and controls for all job positions. Controls include engineering controls, administrative controls, training, and provision of personal protective equipment (PPE). Dangerous work permits and logout/tagout procedures are also in place and only approved contractors, which have attended Monte Rosa OHS induction, are allowed on site. Corrective actions identified during regular OHS inspections and joint OHS committee meetings are recorded and implementation progress is monitored. All injuries with lost time, injuries without lost time and near misses are recorded and investigated.  As a result, the number of lost time injuries has significantly decreased from 600 in the 2009-2010 zafra to less than 30 in the last four years. Lost time injury rates are below the industry benchmarks for sugar mill and agricultural operations (i.e. USDOL 2013). Monte Rosa has also a workplace exposure program in the industrial (noise, illumination, heat) and agricultural (heat, dust) operations, and a medical surveillance program, under the responsibility of qualified professionals, for workers exposed to heat, noise and pesticides.

Chronic kidney disease. The emergence of a new form of chronic kidney disease of unknown cause (CKDu) has resulted in considerable morbidity and mortality among male rural agricultural workers in Central America. The disease was first identified in 2002 among sugar cane cutters, but it also occurs in other occupational groups, including other agricultural workers, fishermen, miners and construction workers; it also occurs at a lower frequency in women. A large number of causes related to agriculture have been suggested for CKDu. Heat/dehydration, infection/inflammation and pesticides are the main hypotheses proposed. Other possible causes include non-steroidal anti-inflammatory drugs (NSAIDs), population genetics and alcohol consumption. While the cause(s) of CKD has yet to be determined, heat stress and dehydration has become the favored explanation for the CKDu epidemic. To protect the health of sugar cane cutters, Monte Rosa started implementation of a heat stress prevention program more than 10 years ago. Today, the program covers all workers exposed to heat and its main components are regular mandatory rest under shade (10 minutes per hour), and easy access to potable water (1 liter/hour/worker) and rehydration solution (5 liter/day/worker). Health brigadiers are assigned to groups of 30-40 workers each and are responsible to monitor for the correct implementation of the mandatory rests and hydration. Monte Rosa also conducts aleatory monitoring of alcoholaemia (zero tolerance) and urine (to check hydration levels). Health brigadiers are trained to detect signs of heat exhaustion. Workers that have suffered heat exhaustion have a 24 hour mandatory paid medical leave; workers that have suffered a heat stroke cannot resume work until cleared by Monte Rosa’s medical department. Health brigadiers have also the authority to increase the frequency of mandatory rests.

Monte Rosa also performs creatinine tests for all workers at the beginning and during the zafra. The creatinine is used to calculate the estimated glomerular filtration rate (eGFR). Workers with eGFR below 15 are ineligible to work and are referred to the national health system. Workers with eGFR below 60 are ineligible to work in conditions exposed to heat stress and are referred to the national health system for follow up. Only workers with eGFR above 90 are eligible to work as sugar cane cutters or pesticide applicators. According to Monte Rosa, the percentage of workers with altered creatinine levels has markedly decreased among sugar cane cutters in the last ten years and is now lower among returning seasonal workers than among new workers. No new case of CKDu has been diagnosed among Monte Rosa workers in the last five years.  

ASOTRAIRC (Association of ex-workers with CKD). ASOTRAIRC was created in 2013 and has 381 affiliated ex-workers. In 2014, Monte Rosa supported ASOTRAIRC in the formalization of a cooperative and the donation of a capital of USD $39,000. The cooperative supplies the uniforms of the company. Approximately USD $32,000 are allocated annually by Monte Rosa as part of its CSR program. This includes: (i) food baskets (beans, rice, sugar, salt, oil and corn) on quarterly basis; (ii) 100 school scholarships; (iii) rent, services and fuel payments for the cooperative; and (iv) long term loans without interest as cash equity. Annually the cooperative’s profits are around US$37,000. According to the ASOTRAIRC leader, interviewed during the appraisal, the cooperative is considered a success, but annual dividends are less than US$100/member. The leader sees as positive the benefit to ex-workers affected by CKD and their families in health attention in the company’s hospital. 

COVID 19. Covid19 prevention and management protocols were implemented by Monte Rosa by mid-March. Some elements include the distribution and mandatory use of masks by all workers, temperature checks at the entrance of the mill and in the field, home based work for all personnel that qualify for working remotely, social distancing rules for office based staff, mandatory paid leave for workers at risk (e.g. affected by CKD) and workers showing symptoms of Covid19, increased disinfection of buses and facilities, no meetings in closed spaces, and additional biosafety protocols in cafeteria.

From November to May, Monte Rosa operates the sugar mill which has an installed capacity of 16,000 metric tons per day. The mill crushes 2.8 million tons of sugar cane supplied from 28,000 ha, and produces 270,000 tons of sugar and 30,000 tons of molasses, per season. From November to August, Monte Rosa operates two biomass co-generators with an installed capacity of 47 MW (a third 13 MW generator is used only for emergencies) powered by bagasse (760,000 tons per season) and eucalyptus woodchips. Agricultural operations take place all year round.

Resource Efficiency

All the electricity and steam required by the mill is generated on site from the two biomass boilers. Monte Rosa produces 230,000 MWh per season, it consumes about 30% and sells the excess electricity (164,000 MWh) to the national grid. The sugar mill consumes an average of 240 kWh or 860MJ per ton of sugar.

Water Consumption

Water efficiency measures implemented by Monte Rosa include dry cleaning of sugar cane at the mill and monitoring of soil humidity in the farms. The sugar mill consumes 2.8 million m3 of water per season to process 2.8 million m3 of sugar cane; consumption of process water (1 m3/ton of sugar cane) materially complies with WBG EHS Guidelines for Sugar Manufacturing (Table 2. Resource and energy consumption).

Sugar cane is a water demanding crop; it requires an average of 1,500 – 2,500 mm of water per year. The average precipitation in the area where Monte Rosa plantations are located is 1,500 – 1,600 mm per year, with a marked dry season lasting from November to April. In 2018-2019, Monte Rosa consumed about 30.5 million m3 of water (including 3.5 million m3 of industrial effluents) to irrigate 10,500 ha, which corresponds to an additional 300 mm of water. The average yield for irrigated plots is 105 ton/ha (up to 125 ton/ha with drip irrigation), and for non-irrigated plots is 95 ton/ha. Dynamic and static water levels in boreholes range from 20 to 200 feet (average 60 feet). Monte Rosa does not extract water where levels are below 200 feet as the fuel cost of pumping the water is higher than the productivity gains. Monte Rosa does not use surface or flood irrigation which is the least efficient system of irrigation. However, about two thirds of the area are irrigated with sprinklers instead of more efficient pivot and drip irrigation. 

Monte Rosa sources irrigation water from 94 boreholes and 24 surface water extraction points. Monte Rosa monitors water consumption and water levels in all extraction points but is required to report data to the National Water Agency (ANA) only for 37 boreholes and the 24 surface water points; water extracted in these points is consistently below permitted (sustainable) extraction levels. Water extracted from the remaining 57 boreholes does not have to be reported to ANA as this was not required at the time they were permitted. However, the water extracted in these 57 boreholes amounts to less than one quarter of total water consumption. As part of the water extraction permit renewal, Monte Rosa in coordination with ANA, has retained a consulting firm to conduct a hydrology study of the area. The study includes the collection of data on dynamic and static water levels of the aquifers and infiltration field tests to estimate the groundwater recharge. The study should be completed in 2020 and ANA will use the information to establish new permitted extraction levels for all the boreholes (94) used by Monte Rosa and other users in the area of influence.

GHG Emissions

Total CO2 equivalent emissions is 50,000 tons per year (0.18 ton CO2e per ton of sugar) including scope 1 and 2 emissions; which is below Bonsucro standards (0.4 ton CO2e per ton of sugar). Scope 1 emissions in order of magnitude are the consumption of fuel in agricultural operations (24,000 tons), the application of Nitrogen fertilizer (11,000 tons), the combustion of biomass (i.e., bagasse and eucalyptus woodchips sourced from 1,500 ha owned plantations) in the co-generators (7,000 tons) and emissions from industrial effluents (7,000 tons) and burning of sugar cane for manual harvesting (1,000 tons). Scope 2 emissions from electricity acquired from the national grid are less than 200 tons as most electricity is consumed on site. The 50,000 tons of CO2e emissions do not consider the avoided emissions from the 164,000 MWh sold annually to the grid.

Pollution Prevention

Air Emissions and Ambient Air Quality. The main sources of air emissions are the two biomass co-generators with an installed capacity of 47 MW (a third 13 MW generator is used only for emergencies). Monte Rosa has installed wet scrubbers in both co-generators in order to control the emission of particulate matter. Stack emissions are tested annually, and they are materially in compliance with WBG EHS Guidelines for Thermal Power Plants (Table 6c. Boilers).

Ambient air quality is monitored twice per year, during the zafra which coincides with the dry season, and outside the zafra during the rainy season. Four monitoring points are located at the perimeter of the industrial site, and one is located at the entrance of the community closest to the fly ash landfill. Concentration of PM10 has been above national guidelines (NTON 05 012 – 01) during the last two zafras. Monte Rosa will implement additional technically feasible and financially viable mitigation measures to reduce the environmental concentration of PM10 at sensitive receptors (i.e. communities) in the vicinity of the plant. (ESAP #3)

Noise. Noise is measured in the same locations where ambient air quality is monitored. Some of these locations, while at the perimeter of the industrial site, limit with communities and therefore need to be classified as sensitive receptors where stricter noise guideline values apply. Monte Rosa will carry out noise monitoring on sensitive receptors close to the mill during and outside of the harvesting season (zafra) according to the guidance provided in WBG EHS General Guidelines to obtain noise levels data at daytime and nighttime and implement technically feasible and financially viable mitigation measures if necessary. (ESAP #3)

Wastewater and Water Quality. Industrial effluents from the sugar mill (3.5 million m3/year) are transported through 5km of impermeable channels and reused to irrigate 650 ha (about 500 mm). Effluents have high concentrations of BOD (1,000 – 4,000 mg/l), COD (2,000 – 6,000 mg/l), TSS (200 – 500 mg/l), total Nitrogen (about 20 mg/l), total Phosphorus (about 15 mg/l), and Aluminum (about 12 mg/l). Application of effluents from the sugar mill to agricultural fields is a viable method of disposal that can reduce fertilizer consumption and irrigation water cost. Conductivity, total soluble salts, pH, and sodium adsorption rate are monitored by external laboratories three times per year and results meet national legal requirements (NTON 05 031-07); pH and conductivity are also monitored by Monte Rosa every 12 hours and sent to an emergency lagoon for treatment if parameters are out of compliance. Soil quality is monitored three times per year and there is no evidence of soil salinization as the variation in the concentration of minerals in the soil is not distinguishable compared with fields irrigated only with groundwater. Groundwater quality in the area irrigated with industrial effluents is monitored once per year (i.e. total Nitrogen, total Phosphorus, heavy metals, TDS, coliforms, etc.) and meets local regulatory requirements for drinking water. Fields irrigated with the sugar mill’ effluents have higher yields than those irrigated with groundwater. In the past, there have been complaints from neighboring communities due to foul odors from sugar mill’ effluents. According to Monte Rosa, this issue is now largely resolved thanks to the use of odor controlling bacteria. Liquid effluents from the quality control laboratory are segregated and disposed as hazardous waste by an authorized contractor.

ANA mandates regular testing of heavy metals, organochlorines and organophosphates pesticides in surface and groundwater. Five boreholes were tested in 2018-2019 season, results indicate that the concentration of DDE (a breakdown product of DDT) and arsenic in the boreholes located in Pozo Imperia and Olocton respectively, are above WHO guideline values for drinking water. DDT and DDE above WHO guideline values has been also detected in surface water. These pesticides are not used by Monte Rosa but were commonly used by cotton growers in the area 40 to 50 years ago. No testing is required by ANA for the presence of pesticides (i.e., glyphosate, 2,4-D, ametryn, diuron) currently used by the company. These chemicals will be included in the existing water quality monitoring program and reported to IFC as part of the Annual Monitoring Report (AMR).

Wastes. The sugar mill generates about 900,000 tons of non-hazardous wastes per zafra. Eighty-five percent of the waste is bagasse which is used to feed the boilers, and 10 percent (100,000) is mud press cake (“cachaza”) which is composted and reutilized as soil amendment. About 5 percent (50,000 tons) is fly ash from the biomass-fired boilers which is disposed in a site approved by the MARENA within the company’s owned land.  Ashes are scattered at the site to prevent fugitive emissions. IFC will confirm in its next site visit that the permit requirements of the fly ash landfill are implemented (i.e. preservation and reforestation of 50 meter buffer along water body; use of covers to prevent fugitive dust during transportation; revegetation of areas that have reached maximum height; maintenance of records, etc.) and that risks are adequately mitigated. About 50 tons of plastic and paper are recycled each zafra, and 1,500 tons of undifferentiated waste is sent to an on-site permitted sanitary landfill within the company’s owned land.

Hazardous wastes consist of used oil and materials contaminated with used oils, used batteries, fluorescent lights, electronics, and liquid waste from the quality control laboratory. Monte Rosa relies on licensed companies by MARENA to collect, treat and/or dispose of these wastes. Empty agrochemical containers are regularly shipped to the collection center of the Nicaraguan Association of Agrochemicals Distributors (ANIFODA) in Chinandega and finally sent for recycling to companies licensed by the environmental authority (MARENA). IFC will confirm in its next site visit if the on-site waste segregation and temporary hazardous waste storage areas are consistent with good international industry practice (GIIP). Medical wastes produced in the company’s clinic (about 50 kg/month) are segregated and sent to a hospital in Chinandega to be incinerated.

Hazardous Materials

Monte Rosa consumes 2.4 million gallons of diesel every season. Diesel is stored in six underground double-wall fuel storage tanks with a total capacity of 120,000 gallons, and one above ground 5,000-gallon tank. Annual tank tightness testing is carried out for all underground tanks to control their integrity. The above ground tank is inside a concrete dike with sufficient capacity for secondary containment.

The main hazardous materials used in the sugar mill are caustic soda (NaOH) and phosphoric acid (H3PO4). They are stored in enclosed above ground tanks to prevent access to non-authorized personnel. From the pictures provided by the company, it was observed opportunities for improvement in the storage area of the caustic soda tanks, such as insufficient secondary containment and water inside the dikes. To systematically address any potential non-compliance, Monte Rosa has prioritized the implementation of a spill prevention and control program for all hazardous materials. Other hazardous materials, such as lubricants are adequately stored in rooms with contention ditches around the perimeter to collect any eventual spills and leakages.

Monte Rosa consumes about 10,000 tons of fertilizer and 170 tons of pesticides per season. These hazardous materials are stored in two permitted facilities. The main storage facility was built in 2013 and is located away from sensitive receptors (the closest dwelling is 0.7 km away and the closest water body is 1.6 km away). Access to the storage facility is controlled and from the pictures it can be observed that the facility is clean, well organized, well signed and adequately lit. Like the other hazardous material storage rooms, a contention ditch exists around the perimeter to contain any eventual spills and leakages. IFC will confirm in its next site visit that ventilation is adequate and that protective clothing, material safety data sheets (MSDS) and emergency kits are easily accessible, and that emergency eye-wash and showers are fully functional.

Pesticide Use and Management. Monte Rosa applies 6 kg of active ingredients of pesticides per hectare per zafra, which is slightly higher than the Bonsucro requirement (<5kg/ha). Monte Rosa has successfully implemented an integrated pesticide management program that includes the monitoring and identification of pests, the definition of action thresholds, and reliance on biological controls for the most common insects and diseases. Chemical control (Imidacloprid) is only used for the control of the saliva bug above a determined Economic Threshold Level (ETL) in combination with biological controls. In 2018-2019, Monte Rosa used 0.23 kg of Imidacloprid per hectare. Imidacloprid, a neonicotinoid, is a WHO Class II moderately toxic pesticide but it is currently banned in Europe due to its effect on bees.

Traps are distributed in the fields and are regularly checked to monitor the presence of rats. Baits (corn) with rodenticide are applied in areas where the number of traps with rats is above 10 percent. The rodenticides used in the past were Flocumafen (WHO Ia extremely hazardous) and Coumatetralyl (Racumin – WHO Ib highly hazardous). Since 2017, Monte Rosa has eliminated the use of Flocumafen (WHO Ia extremely hazardous). Only trained personnel are allowed to handle these pesticides. While the use of WHO Ia and Ib pesticides are not allowed by IFC Performance Standards and Bonsucro, Bonsucro is allowing Ib pesticides while working on a plan to reduce the use of these in the region until less hazardous products become available in the region. Monte Rosa will implement an integrated pest management program including the use of cultural, mechanical and biological control practices to further reduce the use of Coumatetralyl (Racumin – WHO Ib highly hazardous). Monte Rosa will also be vigilant for new rodenticides that are less hazardous.   Rodenticides will only be applied using tamper-proof bait stations in areas accessible to the public and applied to the base of the plant in our plantations. Second generation rodenticides, which are more persistent and extremely toxic to wildlife, will not be used. Measures will be implemented to prevent the poisoning of predators.  (ESAP #4)

Most pesticides used by Monte Rosa are herbicides including glyphosate, ametryn, 2,4-d, and diuron. Glyphosate is classified by the WHO as a Class III slightly hazardous pesticide, but in 2015 the International Agency for Research on Cancer (IARC) included glyphosate as a “probably carcinogenic” substance. Glyphosate is currently used as a ripener and applied through aerial application. Monte Rosa has mapped 50-meter buffers around sensitive receptors and airplanes are equipped with GPS; spray nozzles automatically shut off when the airplane is on the buffer area. Through its precision agriculture system, Monte Rosa can determine the exact area where the glyphosate has been applied. Nevertheless, depending on weather conditions and droplet size, pesticide drift can move beyond 50 meters. This is a risk to communities surrounded by plantations, in particular for narrow linear villages occupying the right-of-way of roads along plantations. Monte Rosa will retain external expertise to assess the risk of pesticide drift and the level of risk to the health of communities located in its area of influence. Risk exposure to pesticide drift will be included in the updated assessment of risks and impacts to the health and safety of Affected Communities (see PS1 Identification of Risks and Impacts - ESAP #1 above).     

Community Health and Safety

Transportation. Monte Rosa has a large fleet of owned and contracted trucks and buses for the transportation of sugar cane, finished products (sugar, molasses) and personnel. Monte Rosa has about 100 trucks for transporting sugar cane from plantations to the mill. The average distance is 24 km and trucks complete an average of 3.5 trips per day. Similarly, about 100 trucks per day transport finished products on distances that range from 30 to 300 km. Monte Rosa has adopted transportation safety procedures and measures: (i) all owned and contracted trucks are inspected monthly; (ii) contractor management system with pre-requisites for logistics companies/drivers/trucks; (iii) traffic signalers for sugar cane trucks at dangerous intersections; and most critical (iv) construction of internal roads (rutas caneras). Additional improvements have been implemented after two fatal accidents by contractors in 2019 and 2020: (i) route planning completed for all trips; (ii) war room with real time GPS monitoring capability; (iii) pre-selection of experienced drivers for dangerous routes; (iv) record of working hours by drivers (logbook) to monitor overtime. Nevertheless, Monte Rosa will hire a safe fleet expert with experience in logistics and transportation to identify any risks that are still unmanaged and gaps of Monte Rosa’s transport safety procedures with ISO 39000 (Road Safety Management System). Based on the audit results, Monte Rosa will implement additional corrective actions, including, among others, to reinforce sensitization and orientation informative talks with communities, schools and municipalities. Risk of vehicular accidents will be included in the updated assessment of risks and impacts to the health and safety of Affected Communities (see PS1 Identification of Risks and Impacts - ESAP #1 above).

Fires. Monte Rosa has two adequately trained and equipped fire brigades of ten workers each in charge of emergency response and controlled fires for manual harvesting. Monte Rosa fire-fighting system includes regular patrols, radio communication, three 24/7 manned towers, and four firefighting trucks in strategic locations. In the last three seasons, an average of 1,500 ha (about 5% of the total supply area) has been affected every year by fires. Fires tend to be frequent (about 10-20 events per month) but small in size (from 0.5 to 20 ha). Unintentional fires will be included in the updated assessment of risks and impacts to the health and safety of Affected Communities (see PS1 Identification of Risks and Impacts - ESAP #1 above).

Security Personnel. Pantaleon does not have corporate policies regarding physical security. Security functions in Monte Rosa are subcontracted to a licensed private security company. About 200 security guards control access to the industrial site and secure irrigation equipment in the farms. All security guards carry firearms. Monte Rosa has a security officer responsible for overseeing security guards and informing management of any incidents. Nicaragua has strict pre-requisites to obtain a license to carry arms, including certifications on no criminal records or processes (including for domestic violence) against the applicant. As a requirement of the company’s previous engagement with IFC, Monte Rosa prepared a security risk assessment and management plan. A Security Expert engaged by IFC will provide assistance to Monte Rosa to ensure the security risk assessment and security management plan developed by the company considers the protection of the local community as well as Monte Rosa’s own personnel and property, the presence of armed security is justified against the assessed level of risk, and that Monte Rosa oversight and accountability for armed guard force is in line with the requirements of PS4.

Monte Rosa’s area of primary production (sugar cane and timber) lies within the ecoregion of the Pacific Volcanic Lowlands of the Central American Isthmus. The area of influence includes three protected areas: Estero Real Nature Reserve, Estero Padre Ramos, and Complejo Volcánico San Cristobal Casitas Nature Reserve. Two of the protected areas (Estero Real and San Cristobal Casitas) are also designated as Important Bird Areas. The project footprint itself is in an agricultural zone with some forestry plantations. It is Modified Habitat with fragmented areas of Natural Habitat.

Monte Rosa’s supply of sugar cane originates on land owned by the company (5,300 ha), land leased (8,700 ha), and land of independent third-party suppliers (15,000 ha). The company also owns 1,500 ha of eucalyptus plantations used to feed the biomass boilers, and leases 640 ha of additional eucalyptus plantation. The proposed project contemplates continued use of existing agricultural and forestry land with no additional land use conversion. Monte Rosa is devesting from timber plantations and will not renew the eucalyptus plantations once harvested.

Some existing production lands are located within protected areas: 1,300 ha (300 ha leased and 1,000 ha supplier-owned). Others are within protected area buffer zones: 3,500 ha (1,900 ha leased and 1,600 ha supplier-owned). Both protected areas were zoned in 2006 after the establishment of economic land uses and their management plans make provisions for continued economic land use, although no further expansion is allowed.

The core biodiversity mitigation strategy is to avoid any new adverse impacts. This will be accomplished via existing controls and additional controls required in the ESAP.

Existing controls include: (i) full traceability of all primary production (sugar cane and timber) on company-owned lands, leased lands operated by the company, and third-party suppliers; (ii) exclusion of lands where High Conservation Value (HCV) habitats were converted after January 1, 2008 (the cutoff date for Bonsucro certification); and (iii) Bonsucro certification of sugar cane production on company-owned and leased lands.

Additional controls will include:

(a) update procedure for selection of new production units to exclude (i) lands (own/leased/suppliers) that require conversion of Natural Habitat; (ii) acquisition of production land within protected areas; and (iii) leases of production land or supply arrangements for production from areas within protected areas that are not within areas zoned for agriculture or forestry in their management plans  (i.e. farms in protected areas converted to agriculture or timber plantations after the approval of the protected areas’ management plans – Estero Real in January 2006, Padre Ramos in 2006, and San Cristobal in 2006) (ESAP  #2); and

(b) Expand Bonsucro certification to all sugar cane farms in land owned and leased by Monte Rosa. The same management practices that comply with the Bonsucro certification will be implemented in areas that cannot be certified because they are located in areas defined internationally or nationally as legally protected or because converted to sugar cane after the 2008 cutoff date (ESAP #5).       

Stakeholder Engagement Plan

Monte Rosa has identified 53 communities within its area of influence (municipalities of Chinandega, Puerto Morazán and El Viejo). According to a social survey conducted by Monte Rosa in 2016, only 27% of the communities have access to potable water systems and 98% use pit latrines which can result in groundwater pollution. Since 2014, Monte Rosa has built improved boreholes with water storage and disinfection systems in 13 communities, as part of its CSR program. Likewise, Monte Rosa has built a hospital and two educational centers (elementary school and day care center) free of charge to children of employees and offering a limited number of spaces for children of nearby communities. 

Monte Rosa has categorized communities as high, medium and low priority for engagement using criteria heavily oriented towards the risks to the company.  The level of vulnerability of these communities was not considered as part of this prioritization. For 2020, Monte Rosa has focused its stakeholder engagement and CSR activities on 8 communities categorized as high priority and 17 as medium. The current Stakeholder Engagement Plan (SEP) requires improvements due to Monte Rosa's large area of influence and considering the various impacts from its operations (e.g. traffic, malicious fires, pesticide aerial application). The information disclosed to communities is primarily oriented towards CSR programs and in limited occasions, includes information on the company's potential impacts on the health and safety of communities and its mitigation measures.

External Communications and Grievance Mechanisms

Monte Rosa has implemented since 2015 an external grievance mechanism (EGM) under responsibility of the Community Development Department.  The EGM can be accessed via phone, in person (at Monte Rosa mill) or directly approaching each production unit administration in Monte Rosa farms. Most grievances are presented in person as communication by phone is challenging. Therefore, difficulties to present grievances is likely faced by claimants in distant communities. In 2019, 24 complaints have been received, 17 were resolved in less than 72 hours and 7 were rejected as the company considered they were not related to their operations. However, a social survey conducted by Monte Rosa concluded that only 17% of complaints were filed to the EGM, the rest were issued to the municipalities, police or health centers in the area. Claims related to sugar cane suppliers are not included nor supervised. Minor grievances which are resolved immediately in the field are frequently not recorded.

Monte Rosa will supplement its SEP to develop a yearly-updated document to support the prevention and mitigation of the impacts derived from the company’s operations. The SEP will (i) update the socioeconomic baseline and recategorize communities prioritizing the most impacted and vulnerable; (ii) implement tailored and specific engagement techniques and methods to disseminate information and collect feedback/comments adapted to the circumstances; and (iii) define social performance indicators for monitoring. As part of the SEP, Monte Rosa will  update and improve its External Grievance Mechanism (EGM) in alignment with the requirements of PS1 by implementing (i) alternative instruments to ensure access to the EGM by vulnerable groups, illiterate individuals, ex-seasonal workers (potentially affected by CKDu) and women; (ii) channels for receiving confidential and anonymous complaints; and (iii) the  accountability, register, tracking and supervision of community complaints related to sugar cane suppliers and contractors. (ESAP #6)                                                  

Contact Person: Dalia Jimenez – HR Manager

Company Name: Monte Rosa, S. A.

Address: El Viejo, Chinandega, Km. 148.5 Carretera El Viejo-Potosí.

Email: djimenez@pantaleon.com