This is a Category B project according to IFC’s 2012 Policy on Environmental and Social Sustainability. E&S risks and impacts from Category B project are limited, site-specific, and can be readily addressed through generally accepted mitigation measures described in this document and the attached Environmental and Social Action Plan (ESAP). This categorization is aligned with similar type of projects within this sub-sector.

Identification of E&S Risks and Impacts. The company identifies and manages E&S risks and impacts associated with its operations through compliance with applicable Chinese standards and E&S regulatory permits. Performance-based requirements also include applicable IFC Performance Standards and WBG EHS Guidelines (General and Mammalian Livestock Production). Environmental Social Impact Assessment (ESIA) and public consultations are conducted by qualified agency as required by local regulatory requirements. The company received approvals from the local Environmental Protection Agency (EPA) for this project in December 2018.

E&S policy and management programs. GXYX has adopted and implemented a set of EHS policies and an ESMS (Environmental and Social Management System) at the corporate level which is then applied to all its subsidiaries and contract farms. This is in compliance with agreed upon ESAP from IFC previous investment (2017). The company has been certified with ISO 9001 (Quality management) and ISO 14001 (Environment management) since 2017. This is one of the earliest Chinese feed mill companies that have obtained both ISO certifications. The company also received Chinese Good Agricultural Practice (GAP) certificate since 2014 for its pig farming operations. The corporate ESMS includes the EHS policies and Manual of Standard Operations Procedures (SOPs), including among others: (i) Environmental and Occupational, Health and Safety (OHS) risk identification and assessment, including biosecurity; (ii) emergency preparedness and response; (iii) monitoring, analysis and reporting; (iv) internal audit mechanism. All EHS and HR policies and procedures are available on the company’s IT based information system and accessible to all employees and applicable to contract farms. The company’s E&S performance continues to be satisfactory and aligned with IFC Performance Standards since 2017.

Organizational capacity and competency. The company has established an Environmental Protection Unit (EPU) composed of 70 staffs, including 10 managers, which is in charge of the effective implementation of the corporate EHS risk management and quality control at all operations, including contract farms. Each pig farm has at least one dedicated EHS officer in charge and more EHS officers are allocated depending on the size of the farm. Its role includes the promotion and implementation of an ESMS, overseeing effective implementation of EHS aspects during construction (applicable to contractors) and operation phase, including the wastewater treatment (WWT) plants and providing EHS training to construction’ contractors and employees. The EPU ensures that the new project buildings implement their specific procedures in line with corporate EHS policy requirements. Based on the effective ESAP implementation from IFC 2017 investment, the EHS function perform to IFC expectations.

Emergency Preparedness and Response. As part of its corporate EHS risk management, GXYX has developed an emergency preparedness and response procedures and plans for different scenarios including fire, explosions, vehicle collision, accidents related to work, describing processes and decisions. The roles and responsibilities for various teams responsible for evacuation, rescue, first-aid etc. are clearly defined. Similar procedures for pig farming operation are also in place, covering emergencies related to fire, physical injuries/fatalities, food safety and contagious disease outbreaks. Fire drills and safety training are conducted, as required per regulations, and implemented at every project site, including construction.

COVID-19 Impact. There has been no significant health/human resource impact due to COVID-19 on the workforce at the feed mills and/or farms. The detailed information described under the relevant sections of PS2: Labor and Working Conditions.

EHS Monitoring & Reporting. The company has established Key Performance Indicators (KPIs) – e.g. accidents, labor compliance (working hours, overtime payment, grievances), energy and water efficiency, effluent quality, waste management, animal welfare – and monitors all its operations against these, during construction and operation. KPI targets are set against each of these parameters against regulatory limits, applicable IFC Performance Standards and WBG EHS Guidelines and are reviewed monthly by the EPU at corporate and operation-level. All incidents are summarized and discussed in the monthly meeting and the EPU analyses the root causes and implements corrective actions. Annual environmental monitoring report is submitted to local environmental protection bureaus. Periodical audits also take place. Monitoring parameters and frequencies are set out in the approved ESIA for the duration of the operation of the facilities.  The company also conducts a third-party audit in relation to worker’s occupational safety protection.

Supply Chain Risk Assessment and Management. The Company’s pig farms are supplied from its own feed mill products. These feed mills source corn, soybean meal (primarily sourced from domestic supply) and other feed grains, from a variety of local and international suppliers. The company has service and supply procurement control procedures and performs a comprehensive assessment of the suppliers, including their raw materials source, quality control systems and some OHS risks. However, the assessment does not include E&S related screenings, e.g. verification of harmful child/forced labor or potential conversion of natural/critical habitats. As set forth in ESAP#1, GXYX shall evaluate the primary supply chain and if significant PS2 or PS6 related risks are identified, introduce procedures and mitigation measures to ensure that primary suppliers within the supply chain implement measures to prevent or to correct these.

The company had 7400 employees, as of July 2020, at corporate level and across all its operations. The gender split of staff is 70% male and 30% female. All the workers in GXYX are directly employed by the company. Around 200 workers are outsourced (cleaning staffs, loading staffs) through service providers.

HR Policies and Procedures, Non-discrimination and Equal Opportunity. GXYX has implemented a set of human resources (HR) policies and procedures in 2017 which include employee benefits, working hours and occupational health safety, social insurance etc. in line with applicable regulations and this PS2 requirements. The company has a hiring policy which stipulates that the minimum hiring age is 18. The company has a non-discrimination and equal opportunity policy, including the prohibition of child and forced labor. The same policies applied to contractors, including contract farms. However, it is noted that anti-sexual harassment is not described in the document. As part of ESAP#2, the company will update its corporate HR related policy to include specific policies on prevention of sexual harassment and a grievance mechanism for purposes of sexual harassment in line with PS2.

Working Conditions and Terms of Employment. Assuming the company is satisfied with professional performance, employees are given a permanent or a fixed term position after the probation period, with written appointment letters which explain their employment terms and conditions. Salaries paid are higher than the minimum wage and overtime payment are aligned with the requirements of national labor regulation. Overtime work is not commonly required, and it needs prior agreement with each unit manager. All employees receive social insurances on top of their regular salaries. The company provides free accommodations with modern amenities including internet access at the farms and free meals provided in the canteen. The company did not conduct nor plan lay-offs of any workers due to the COVID-19 pandemic, and no reduction on salary has been planned nor implemented previously.

Workers’ Organization & Grievance Mechanism. The company does not restrict workers from freedom of association. The representatives of workers hold monthly meeting with managements mainly focusing on the corporate policies updates, such as employee benefits, attendance recording, trainings and to confirm their agreement by signing on the documents. There is no collective bargaining agreement (CBA) and no major labor disputes with the assigned representatives to date.

The company has a corporate grievance handling procedure which has been updated as part of the agreed upon ESAP from previous IFC investment. As per the procedure, all employees can raise grievance through following channels: i) direct communication to department head; ii) express concern to HR department during semi-annual interviews through regular face-to-face meetings; and iii) through company hotline with mobile application tool to reach designated personnel. No significant grievances, court cases were noted by the company. There is an anonymous grievance mechanism functional via IT based reporting system.

Occupational health and safety. The company has developed corporate OHS policy and procedures stating key operating principles and requirements that related to general safety management applicable to all GXYX operations, including among others, safe driving, electricity usage, life and fire safety management. Each farm/plant manager at pig farm and feed mill is directly responsible for daily OHS supervision. Safety meetings are organized on a monthly basis at all operation units. OHS trainings are mandatory to all workers, including life and fire safety. The electric engineer team investigates all the systems and verified procedures for all electric devices and periodical safety inspections are conducted. All employees undergo annual health checks.  The company has strict disease prevention and control system and pig farm workers are required to follow strict quarantine procedures when accessing the farms to comply with bio-security procedures. OHS statistics (fatalities, incidents records) are monitored at least monthly by the corporate Environmental Protection Unit (EPU) and HR department. No major injuries have occurred over the past three years. The company has implemented several COVID-19 response measures for its operations including: social distancing, provision of masks, cleaning and disinfecting in line with governmental public health requirements. There has been no significant health impact thus far due to the pandemic and no recorded cases of COVID-19 among its workforce.

Workers Engaged by Third Parties. The company hires third-party workers through construction’ contractors and for loading staffs for finished feed packages at the feed mills. The company established policies and procedures for managing and monitoring the performance of third-party employers in relation to the OHS/labor management. Corporate development center oversees managing contractors including interviewing and addressing their complaints, providing hotline to contract farms. GXYX has detailed procedures on safety management at construction sites.  Construction’ contractors are selected based on their previous safety records. Safety management requirements are included in the construction contract. The GXYX safety management team and development center conducts periodical monitoring, including monthly inspection. The site safety management is also supervised by safety management personnel from the construction company. The company did not cancel any contract due to the COVID 19.

Resource efficiency (water/energy). The company assesses its operations to ensure they align with the corporate level KPIs mentioned above, especially energy and water efficiency target which are reviewed and updated every year. Based on latest information, energy and water efficiency has been continuously improving over the last years. The EPU monthly monitors electricity and water consumption at each breeding farm and feed mill and continuously looks for resource efficiency / cleaner production opportunities. Some of the resource efficiency initiatives implemented so far include, among others, the installation of temperature controlling system with water circulation and floor heating, effective ventilation and air exchange, water recycling to clean pig house flooring which will be applied to the new buildings.

GHG Emissions. Based on these numbers and other data from the company’s project feasibility study report for the proposed expansion considered under this investment, the expected GHG emissions are approximately 30,000 tons CO2 equivalent per year.

Air Emissions and Odor. Electricity is sourced from the national public grid for all farms and feed mills, and no major air pollutant emission occurs from the operations. A standard back-up genset system is installed in case of power outage. Diesel generator sets are also installed at breeding farms, but their use is not common. The farms utilize ventilation system for odor control at the pig breeding buildings, allowing purified air to flow into the building to maintain clean air condition and released from top of the buildings through odor treatment system. The proposed greenfield breeding buildings are also designed to filter the air with similar mechanisms.

Water Consumption. For the pig farming operations in Yaji mountain area, water is drawn from two reservoirs and treated through a water purification system. The water quality testing center inspects water quality after the treatment and the results have been found to be compliant with applicable permit conditions. Drinking water for employees is provided by public water supply system.

Wastewater. Wastewater including animal manure from the pig farm operation is collected and pumped into the on-site WWT plants through pipelines. After the separation of solids, the wastewater is treated into different processes for anaerobic, anoxic and aerobic digestions, in line with Chinese regulations. The treated wastewater is tested against permitted water quality parameters and discharged to adjacent artificial water pond lined with geotextile and HDPE layer at the bottom. Treated wastewater is used for irrigation in the neighboring forest area through pipelines, the volume of treated water has been kept within the local regulatory requirement (6 tons per ha). The solid part of wastewater (sludge) is transferred to an organic fertilizer plant adjacent to the WWT plant for further treatment. The company has enough capacity of WWT plants for its current operation but is planning to install new WWT plants for the proposed three new pig farms with similar treatment procedures. The EPU regularly monitors effluent parameters from WWT plants. The testing results in CY2019 were noted to be in compliance with the Chinese national standards and WBG EHS guidelines. Local environmental protection agencies regularly verify that the effluent discharge requirements are met.

Waste (hazardous / non-hazardous waste). GXYX has waste management procedures, including animal carcasses, and used syringes with a system of appropriate handling, storage and disposal. This is consistent with the applicable legal requirements. Animal carcasses are disposed through the company’s own incinerator. At the contract farms, they are treated by own incinerator or by specialized agency depending on the farm size. Used syringes are collected and disposed of by qualified third-party waste disposal agency. Used packaging materials at feed mills are collected and sold to waste collection companies for reuse/recycle.

Hazardous Materials and Pesticide Use Management. All hazardous materials are properly labelled and stored in the designated room in the sites. The diesel storage has secondary containment. The company uses professional pest control companies for pest control at its farms and feed mills mainly for rodents and fly. For contract farms, market-available pesticides are provided by the company. There is no use of World Health Organization (WHO) Class Ia or Ib chemical products.

Security. A small number of security officers are employed to control access to farms. These officers are not armed. There have been no known security incidents in the last three years. The breeding farms and contract farms in Yaji mountain area are isolated from major settlements and structurally designed to prevent African Swine Fever (ASF), including separate entrance of pig and workers. The company has built its own access roads to pig farming facilities due to bio-security and to minimize the impact to local communities.

Life and Fire Safety Management. GXYX has developed and implemented a set of fire safety procedures describing actions to be taken at pig farms and feed mills, mechanisms for fire detection and prevention, such as sprinkler, fire alarms, fire extinguishers, evacuation procedures including emergency lines, emergency exit signs, and roles and responsibilities of the various staff. These are reviewed regularly. The company conducts fire drills and trainings, as per regulatory requirements. The local fire safety authority inspects fire-fighting system on an annually basis. The corporate engineer team also investigates fire-fighting system regularly.

Traffic safety management. The company has developed and implemented a road safety management system as part of the transport of the animals and feed. The company does not own a transportation fleet but requires third-party truck operators to comply with the corporate requirements, including that related to road and driving safety procedures as well as confirming driver’s licenses and driving records. Biosecurity and animal welfare are provisioned in transport of pigs. The company has standard procedures for drivers during pig transportation, including disinfection, transport route setting, not allowing direct contact with pigs, etc. The transportation company has a fleet with built-in air conditioner to maintain sufficient environment during the transportation. Day to day safety performance is monitored and no major traffic incidents or complaints from local people in the past three years have been reported.

In accordance with the IFC Good Practice Note (GPN) on Improving Animal Welfare in Livestock Operations (2014), IFC’s scope of appraisal included verification of compliance of GXTX’s animal welfare management practices with OIE (World Organization for Animal Health) Guidelines. Based on a completed animal welfare survey during the appraisal, GXYX complies with these guidelines. GXYX has applied for local certification (China GAP) for certifying its animal husbandry practices, including provisions of adequate nutrition and water; living environment condition control; diseases prevention control; staff trainings on animal welfare; and internal auditing. Going forward, as set forth in ESAP#3, the company will certify its animal husbandry/welfare management practices against a credible certification for its 3 new multi-story pig farm buildings.

As per the environmental permitting process, the draft project EIA is being shared for public consultation and stakeholders, including public/local community, can raise concerns during the process. The company has a stakeholder engagement policy, including community grievance mechanism and communicate with local communities by visiting regularly. There has been no material complaints received over the last three years.

 Contact Person: Mr. Qing Xu

Company Name: Guangxi Yangxiang Co., Ltd

Address: Yangxiang Headquarters, Jiangnan Industrial Park, Gangnan District, Guigang 537100, China

Email: star-xu@139.com