The proposed project components are not expected to require land acquisition nor to significantly impact any: 1) natural or critical habitat or ecologically sensitive areas; 2) lands and resources on which communities of indigenous people are dependent and have collective attachment; and 3) cultural heritage sites. As such, project will not result in E&S risks and impacts that will be required to be managed in accordance with the requirements of PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS7: Indigenous Peoples (IPs); and PS8: Cultural Heritage.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the PSs.                                

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability, as the project proposed to be financed has limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures, by adhering to good international industry practice (GIIP) procedures, guidelines and design criteria, as described in the following sections.

Environmental and Social Assessment and Management System

Viveo’s environmental, sustainability, and OHS management team reports to the Human Resources Director.  The company has a sustainability policy that states commitment with the environment, society and sustainable principles, including the Sustainable Development Goals (SDG). The company has recently changed its name from Grupo Mafra to Viveo and most policies and procedures are undergoing revision to reflect the current operations and incorporate operations of companies acquired in the past 3 years as well as to reflect the new brand name.

Consequently, the company’s environmental and social management system (ESMS) is undergoing changes to integrate companies that make up the group. Moving forward, Viveo will continue to improve and consolidate the corporate ESMS in alignment with the requirements of IFC PS1 to ensure consistent E&S performance across all the companies and develop key E&S performance indicators that will be regularly reported to top management and will be audited on an annual basis. The monitoring and review will include assessment of compliance with any related legal and/or contractual obligations and regulatory requirements.

Identification of Risks and Impacts

The company has a policy on risk management that includes social and environmental risks (impacts on people and the environment) as well as regulatory risks associated with the licenses and permits that could result in fines or suspension of operations. Viveo has new initiatives related to long-term reduction of greenhouse gases (GHG) and water efficiency and other SDG principles.

During mergers and acquisitions of new business units, Viveo contracts a third-party consultant to perform due diligence including EHS matters. Going forward, Viveo will develop a documented procedure / standard terms of reference for the third party consultants for conducting E&S due diligence for all future developments/acquisitions to assess key E&S risks and impacts vis-à-vis application national regulations and IFC Performance Standards. Based on the outcomes of this due diligence, the company will (i) not acquire / invest in those assets, which present significant E&S related risks and impacts which cannot be remedied; or (ii) develop a corrective action plan; in order to achieve compliance with IFC Performance Standards in a reasonable period of time (ESAP #1).

Viveo will also revise and update its E&S and OHS policies and procedures to cover: assessment of potential contamination from past operations, waste management, community safety, drivers’ management (ESAP #2). This action is aligned with the company’s E&S initiatives which are being developed with the Support of external E&S consultants.

Management Programs

Viveo has management programs on human resources (HR), occupational risk assessment, emergency response, waste management, noise levels, air emission, health and safety training environmental monitoring, hazards identification, and risk assessment. The programs and procedures are managed via internal control systems. Viveo has established performance indicators for HR, occupational health and safety, and environment. Waste generation (solid and wastewater), water consumption, and energy consumption are monitored in most of the manufacturing facilities. Viveo is in the process of implementing similar programs in other companies of the group. Viveo performs external audits on HR and ISO 9001 (quality management system). The Company also carries out the internal EHS audits.

All newly acquired businesses are expected to adhere to Viveo E&S policies and procedures. The company will develop a consistent schedule and plan for consistent implementation of corporate E&S policies and procedures at all the newly acquired companies.

Organizational Capacity and Competency

Currently, the environmental, sustainability and occupational health and safety (OHS) personnel report to the HR manager. Because manufacturing operations, especially textile plants, require more identification and management of environmental, health and safety risks (EHS) within Viveo, more EHS resources are allocated to the manufacturing facilities, with four dedicated EHS personnel, one for each manufacturing facility. The other operations (laboratories, distribution centers, cross-docking) do not have dedicated staff and monthly visits are conducted to these facilities by eight regional EHS staff.

The E&S, OHS, and HR staff were noted to be suitably qualified and experienced. As part of this investment, Viveo will create a corporate sustainability committee that will integrate the E&S, sustainability and OHS teams and will report directly to the CEO.  (ESAP #3).

Emergency Preparedness and Response

Viveo has site specific emergency preparedness and response plans to respond in the event of fires and explosions, oil and chemical spills, worker’s chemical exposure, electrical accidents, among others emergency scenarios. The emergency preparedness and response plans also include emergency communication procedures within the company. The roles and responsibilities for various teams responsible for exit control, rescue, firefighting, first-aid, security, and core supporting team are defined in these plans. An emergency brigade is established in the main manufacturing sites. Local fire department are located within short distances of the main manufacturing facilities and can be called upon major emergencies. Evacuation routes, emergency exits, and assembly points are identified in the emergency plans. Regarding L&FS, the virtually visited facilities were noted to have fire detection and fire-fighting systems including centralized smoke detection and alarm, fire hydrant, fire extinguishers, and emergency lighting.

Response to COVID-19 Emergency

Because of the growth experienced by Viveo, the company did not have any staff reduction due to the impacts of the COVID-19 pandemic. On the contrary, with high demand for medical supplies and medicine, Viveo expanded business and acquired six companies in 2020. In line with good practices recommended by the World Health Organization, Viveo adopted various measures to prevent the spread of the virus. Administrative workers who could work from home adopted home-based work while in the manufacturing facilities and distribution centers, the company reduced the number of workers to maintain safe distances between employees. Viveo provided masks and sanitizers in all working areas, increased the distance between chairs in the cafeterias. In addition, temperatures are taken at the beginning of each shift. The company stated that there were no fatalities within workforce and few cases reported.

Monitoring and Review

Viveo has established procedures to monitor compliance with its legal, E&S, OHS requirements and contractual obligations. The monitoring system is based on a digital platform for document control (VIGIX) and system to control procedures and process including EHS processes (SeSuite). Records of incidents and accidents are recorded in the monitoring system as well as training activities. All staff are provided with a mobile application to manage trainings and alerts. Moving forward, the company will develop additional key E&S performance indicators consistent with WBG EHS Guidelines, including air emission levels for textile industry, effluent levels for textile industry, particulate matter in the workplace, noise levels which will include management review (ESAP # 4).                                  

Human Resources (HR) Policies and Procedures

Viveo has a comprehensive set of procedures covering recruitment, compensation and benefits, performance evaluation, transfers, training and career development and grievance redressal, which are applicable to all employees and reflects the Brazilian labor code (known as the Consolidação das Leis de Trabalho, or CLT). The company offers its workers all basic benefits guaranteed by Brazilian law, which is prescriptive and consistent with PS2, a compensation package agreed in the collective bargain agreements (CBAs) with the labor unions, and additional benefits in order to attract and retain high-performing staff, including a compensation system based on performance and results. All employees working in administrative functions participate in performance assessments, which are in the process of being extended to operational functions. The company prioritizes in-house recruitment.

Additionally, Viveo has a Code of Conduct, through which the group commits to compliance with applicable legislation and principles of ethical behavior determined in the Code; prohibition of any type of harassment and abuse; non-discrimination and equal opportunity; freedom of association; health and safety; and environmental compliance. The Code of Conduct is communicated to all new employees during the induction process, and specific training programs are conducted throughout the year. Viveo has a confidential grievance mechanism to address complaints associated with compliance with the code of conduct (see below under “Grievance Mechanism” for more information). A Compliance Committee has the overall responsibility for the implementation of the code and for properly addressing such complaints.

Viveo has a well-structured HR team with more than 50 members including analysts, apprentices, coordinators, and managers responsible for labor and working conditions at all operations.

Viveo conducts worker engagement surveys covering all employees who choose to participate voluntarily and anonymously. The engagement survey, which defines engagement as the degree to which employees think, feel and act in ways that represent high levels of enthusiasm and commitment to the organization, reached an engagement rate of 82 percent in 2020.

Working Conditions and Terms of Employment

As of February 2021, Viveo employed 4,017 direct employees and 182 third-party workers. Of the total staff 47.68 percent are women, including 34 percent of coordinators, supervisors and managers. Out of total 4,017 direct employees, Viveo employs 183 professional drivers and 39 drivers' assistants operating the company’s own fleet.

A contract is signed with every worker at the time of employment. The contract describes the working conditions and terms of employment. In addition, an induction training is provided to explain human resources policies and procedures, working conditions, wage calculation, benefits, leave period, basics OHS, among other contents. The policies and procedures, applicable to all operations, are also displayed at the companies’ intranet available to all employees. Overtime hours at the facilities are within the legal limits and overtime is paid as per the legal requirements. No accommodation is provided to workers at the existing facilities.

Workers’ Organization/Freedom of Association

As per the Brazilian labor code and as determined in the company’s Code of Conduct, Viveo recognizes workers’ right to freedom of association and there is no restriction to collective bargaining. At Viveo, six workers are engaged in management roles at a labor union (Union of Employees of the Textile Industries of Blumenau) and 700 workers are affiliated to different unions (Viveo’s employees are represented by more than 60 different unions throughout the country). The company abides by the CBAs in terms of salaries and benefits negotiated through collective bargaining.

Non-discrimination and Equal Opportunity

Viveo’s Code of Conduct emphasizes the company’s commitment to non- discrimination based on gender, race, religion, social status, and disability. Viveo currently employs 87 people with disabilities amongst its workforce and has an action plan in place for additional hires, as required by the Federal Law 8.213/91. In 2020 the company launched an inclusion and diversity program (namely IDEM - Inclusion, Diversity, Equality and Multiplicity) to foster and enhance a diverse environment within the organization where people can feel included and respected. The program is focused in four pillars: LGBTQIA+, gender, race, and people with disabilities, and has a working plan to be implemented in 2021 which includes structuring a committee and training on non-discrimination, equal opportunities, and measures to prevent and address sexual and moral harassment.

Child and Forced Labor

Viveo abides by all legal prohibitions against under-age employment, forced labor, or any kind of irregular work. Minimum age of employment at the company is 18 years old, except for apprentices, who can range from 14 to 24 years of age according to Federal Decree 5.598/2005. To prevent use of child labor, age proof documentation (e.g., copy of National Identity Card) is collected at the time of recruitment of the worker. As set forth under ESAP #5, Viveo will revise its Code of Conduct to ensure explicit reference to prohibition of child labor and forced labor and reference that prohibits employees and contractors from engaging in sexual exploitation and abuse.

Grievance Mechanism

Viveo has a confidential grievance mechanism in place, through which staff members, including third-party workers may raise concerns and/or any misconduct associated with the Code of Conduct. Grievances can be registered through a toll-free number, email, or the company’s website https://ethicspeakup.com.br/viveo/, available 24 hours/7 days a week. The mechanism allows for anonymous complaints related to non-conformities to the Code of Conduct (e.g. corruption, sexual and moral harassments), without retaliation. Grievances are received and classified by a third-party contractor and channeled to Viveo’s assigned team and Compliance Committee who administers the grievance mechanism.

As set forth under ESAP #6, Viveo will formalize its workers grievance mechanism in a documented procedures to include (a) methods/guidelines for assessment and resolution of grievances, including sexual harassment and gender-based violence; (b) guidelines for response to grievances; (c) responsible personnel in charge of resolution; and (d) periodic monitoring of grievances processing. Similar requirements will apply to the company’s external grievance mechanism. Employees who are tasked with conducting investigations associated with allegations of sexual harassment internally will receive specialized training. The procedures should define disciplinary consequences, including for perpetrators of sexual harassment in the workplace.

Occupational Health and Safety

Viveo has a corporate OHS department, led by an environmental, health and safety manager who reports to the corporate Human Resources Manager. The EHS manager is supported by 12 EHS technicians. Risk assessments conducted to date have identified the greatest OHS risks as those associated with machinery trapping, working at height, working in confined spaces, trip and fall, electric shock and chemicals handling. Viveo has an OHS Management System and the overall goal of achieving and maintaining zero accidents with lost time.

Viveo implements the LTCAT (Laudo Técnico das Condições Ambientais do Trabalho - Technical Report of the Environmental Conditions in the Workplace), which requires the monitoring of workplace conditions such as noise levels, and indoor air quality. Indoor air Quality indicate exceedances in particulate matter associated with cotton. Thus, moving forward, Viveo will assess technical alternatives based on engineering controls, and implement mitigation to reduce occupational risks, at a minimal, for removal of cotton and plaster dust (ESAP #7).

Regarding occupational accidents, Viveo reported a total of 14 accidents with lost time and the Lost Time Injury Frequency Rate (LTIFR) in 2020, resulting in a LTIFR of 4.1 per 1 million worked hours, which is considered acceptable and comparable to industry benchmarks. 

Workers Engaged by Third Parties

Viveo has about 180 third-party workers at its facilities working on cleaning services at the administrative buildings, security, reception, and restaurants. The company’s contracts with these contractors require full compliance with Brazilian regulations. Third-party workers go through OHS and other appropriate training during an induction session. The department responsible for hiring third-party workers periodically reviews evidence that companies responsible for third-party workers operate in compliance the Brazilian labor laws. 

In addition, Viveo outsources 35 percent of its transportation services (outsourced fleet). All outsourced transportation companies are screened to verify compliance with national requirements. All third-party employees can submit a grievance through Viveo’s grievance mechanism.

Supply Chain

Viveo’s primary supply chain includes production of cotton and latex, both sourced within Brazil. For cotton, Viveo requires that key cotton suppliers submit evidence of Better Cotton Initiative (BCI) Certification. For latex, Viveo purchases this product from a single producer located in the State of Sao Paulo. 

Viveo has defined procedures to identify, register, and evaluate its suppliers and the company is in the process of reviewing its procurement procedures as part of its recent “Sustainable Procurement Program”. As part of this program, the company has developed sustainability / E&S related requirements for the supplies (such as BCI certification); it checks the relevant documentation of suppliers and a questionnaire (responded by the supplier) that includes questions associated with OHS and child labor. The monitoring of the suppliers (mainly through supplier visits) are generally focused on the quality aspects and can be improved by including KPIs related to Sustainable Procurement Program in the checklist for site visit. These procedures will be implemented at all operations and new acquisitions, including Flexicotton which was acquired in late 2020.                                                

Resource Efficiency and Greenhouse Gas (GHG) Emissions

Viveo is developing new initiatives based on the Sustainable Development Goals (SDG) and the company states its commitment to reducing energy and water consumption. The sustainability strategy includes updating/replacing manufacturing technology/equipment with more resource efficient and sustainable alternative sources. Recently, the large textile manufacturing facility replaced older gas boilers with renewable biomass (woodchips) boilers. The company also upgraded emission control technology to retain particulate matter from the combustion of woodchips to comply with air emission standards. Distribution centers are expected to install solar panels on the roof of the large warehouses. To reduce water consumption, Viveo conducts periodic inspections of their facilities to detect leaks. Rainwater is collected and used for sanitary purposes in the main manufacturing facilities. Viveo provides awareness training to staff and contractors on the efficient use of energy and water.

Manufacturing facilities and large distribution centers maintain diesel and gas emergency generators in the event of power disruption in the grid. The Scope 1 and Scope 2 GHG emissions associated with combustion of fossil fuels (diesel and gas generators), electricity from the national grid or independent power producers (IPPs), for the current operations were about 180,000 ton CO2eq in 2020. The company will monitor and report GHG emissions on an annual basis. The company also has initiatives to improve energy efficiency and reduce GHG emissions.

Wastewater Management and Air Emissions

Industrial effluents produced in the manufacturing facilities are treated onsite by wastewater treatment plants (WWTP) prior to discharging to the environment. WWTPs at the textile and adhesive facilities include physico-chemical and biological treatments targeting 96% reduction of pollutant load. The textile manufacturing process includes solvent recovery units to recover and reuse methyl chloride, methanol, and benzene. Viveo conducts treated effluent quality monitoring in accordance with Brazilian requirements and monitoring results confirmed the compliance with those.

Air emissions from the biomass boiler are controlled via filters to reduce particles. Viveo performs monitoring of air emission. Monitoring results indicate compliance with Brazilian standards and WBG General EHS Guidelines.

Waste Management

Solid waste generated by Viveo includes waste packaging (e.g., cartons, paper, and plastic) waste raw materials, sludge from wastewater treatment plant, hazardous waste, and empty chemical containers. Viveo has a Solid Waste Management Plan which registers generated waste on a monthly basis and describes procedures for proper storage, handling and disposal of different waste types, in accordingly with national regulations.  Solid waste is segregated and packaged at each facility and stored in temporary storage areas. Accredited waste disposal companies collet, transport, and manage the disposal of each type of waste. Empty chemical containers are collected by the supplier companies. The Solid Waste Management Plan keeps a register of manifests. Opportunities for improvement in solid waste management were observed during the virtual visit. Thus, as part of this investment, Viveo will conduct internal audits of solid waste storage areas, especially those designated for hazardous wastes, and implement improvements for full compliance with Brazilian regulations and with IFC EHS General Guidelines.

Management of Hazardous Materials

Viveo has fuel and chemical storage tanks at its facilities. Storage tanks are made of resistant materials (stainless steel, carbon steel) and most of them are protected by secondary containments. For underground storage tanks, Viveo reported that there are sensors to detect potential leaks. The textile manufacturing facility has experienced soil and groundwater contamination in the past and the site was subject to remediation in accordance with national requirements.                         

Community health and safety risks and impacts associated with Viveo’s facilities are limited and generally associated with traffic to and from the manufacturing facilities and distribution centers. Overall, manufacturing facilities and distribution centers are located in peri-urban and urban settings. Some manufacturing and distribution centers are located within industrial parks, away from residential area. However, some manufacturing facilities are located in close proximity to residential areas, which may be exposed to traffic of hazardous materials, noise levels or odor. All facilities are fenced and do not allow access to members of local communities.

The logistics operations employ direct drivers for the company’s own fleet of 200 vehicles and third-party drivers. Moving forward, Viveo will develop and implement a procedure for safe and defensive driving, to be adopted for direct employees as well as third-party contractors (outsourced fleet) (ESAP #8).  

Security Personnel

Viveo’s security personnel are secured under contracts with qualified security companies. Security personnel are unarmed.  Companies that provide security personnel are regulated by the Federal Police Decree 387/06. According to Decree 387/06, all security personnel are required to be approved by an agency authorized by the Federal Police. Procedures to obtain authorization from the Federal Police include review of the candidate’s criminal background and psychological evaluation. The candidate must pass a course administered by the Federal Police, which includes basic training on human rights and the use of force. The license is valid for two years.

Moving forward, as part of this investment, Viveo will develop (ESAP #9) a Security Management Plan (SMP) consistent with the requirements of PS 4 and incorporating the relevant guidelines of the Voluntary Principles on Security and Human Rights, and shall include provisions for security providers in terms of selection of security personnel, rules of engagement (including use of force), appropriate conduct toward workers and communities, training, equipment, facilities, working conditions, and the integrated grievance mechanism (ESAP #6), which receives internal and external grievances. Viveo’s upgraded integrated grievance mechanism will allow affected communities to express concerns about the security arrangements and acts of security personnel.