Environmental and Social Policies. Pro-active management of sustainability issues is at the core of Apeel’s governance framework, business strategy and decision-making processes. Apeel has adopted corporate level policies for environment, occupational health and safety, human resources, and food safety. The corporate standards apply to all its global operations, including its food manufacturing site and in its customer sites where Apeel’s staff is co-located to operate its processes and equipment. Based on this policy review, IFC confirmed the alignment and consistency of Apeel’s sustainability policy framework applying to its operations with the requirement of IFC Performance Standards.
Environmental and Social Risk Assessment. Apeel has defined an EHS risk assessment process applying to its food facility-controlled site. Apeel undergoes comprehensive inspection of its operations from the California Department of Public Health (Food and Drug Branch – CDPH-FDB). Apeel follows current Good Manufacturing Practices (cGMP), which covers document control (Standard Operating Procedure, Form, Guidance Document, Index, and Specification Sheet), mandatory employee training (principles of food hygiene and food safety), and traceability/consumer safety. Due to the limited impacts of its facilities, E&S Impact Assessment (ESIA) Studies are not legally required.
Apeel has a consolidated legal and regulatory registry for applicable EHS requirements for its operation. Copies of operational permits and licenses for its food manufacturing facility have been provided (e.g. organic process product registration, US Environmental Protection Agency’s license, pest control, air emissions for water boilers (gas-fired), storage of hazardous material storage (ref. stationery diesel-fired emergency stand-by engine), industrial wastewater discharge permit). Apeel has not incurred any penalties or fines for legal, economic, environmental and social issues over the last three years.
EHS Management System and Programs. To operationalize its Environment, OHS and Food Safety Policies mentioned above, Apeel is in the process of establishing a specific EHS management system consistent with ISO 14001 and ISO 45001, including Standard Operating Procedures (SOPs) and programs at its controlled facility. Performance-based EHS requirements of this system are based on the compliance with the EHS legal and regulatory requirements mentioned above. Going forward, Apeel is in the process of further strengthening the structure of its EHS management system, in compliance with IFC Performance Standards. Apeel has provided its two-year implementation plan for the development of these systems. Existing EHS procedures and a training plan developed by Apeel include, among others, environmental protection and waste management training, hazardous waste management training, hazardous waste segregation and disposal process, operations’ waste management process, regulatory register and compliance program and federal/state reporting process. Corporate EHS targets, including reduction in GHG emissions, will be defined at the end of 2021, when the implementation of its EHS management system will have progressed. Based on the above, Apeel’ EHS management system and programs are well under implementation in its food facility in California (USA). IFC’s appraisal concluded that the design and implementation of Apeel’s EHS management practices for its operations are well aligned with global best practice.
Apeel has developed a food safety management system for its California’s operation, which covers manufacturing of all products. Apeel has also been certified by the Oregon Tilth Certified Organic (OTCO) - https://tilth.org/certification/ for a product formulation intended for the organic produce market. To support its Sustainability guiding principle, as manifested in its vision, mission, products and daily operations, Apeel undertook a comprehensive life cycle assessment (LCA) study in 2019 to measure the environmental footprint of fresh produce with and without the Apeel coating. The study is available at https://apeelsciences.com/LCA/uploads/2019/11/Apeel-LCA_Webpage.pdf.
EHS Organizational structure and competency. Under the leadership of its CEO, Apeel has a cross-functional sustainability / EHS team, composed of the following teams: Sustainability (4 professionals), EH&S (3 professionals), and Regulatory Compliance & Quality Assurance (9 professionals). Specifically, the senior EHS manager (Team Leader) supports global program development, including OHS standards, emergency response, and incident reporting and investigation. An environmental compliance specialist leads the global EHS compliance program and established standards for environmental compliance in all regions. A Field Operation Manager supports the global portfolio of field operations and maintains local site compliance with Apeel’s EHS standards. Based on quality of responses provided during the virtual meetings and supportive documentation, IFC’s review concluded that Apeel has assigned competent technical resources to successfully implement its corporate and plant-level EHS management system and programs.
EHS Training. Apeel’s management team has developed, based on approved corporate policies/charters, SOPs, and workplace risk assessment and performance (e.g., OHS statistics), a comprehensive and structured EHS and HR training curriculum which any new staff is required to follow, relative to their role and risk encountered in the course of their work. As a baseline, all employees receive training in incident reporting, emergency response procedures, hazard communication, and on Apeel’s illness and injury prevention, fire prevention, and chemical hygiene plans. Further training is provided based on risk and need. Most roles in the company require additional training in lab safety, warehouse safety, ergonomics, etc. Apeel provided during IFC appraisal a detailed EHS training plan for its workforce. The training is provided to all Apeel’s permanent, temporary and seasonal workers, contractors and service providers.
Emergency Preparedness and Response. Apeel has undertaken emergency preparedness and response planning for its operations, which includes the development of its HQ evacuation procedures, Emergency Response scenarios and active shooter prevention guidelines. It is based on best safety standards, engineering design and risk management practices. Periodic emergency preparedness training (annual) refresher and fire drill (semester) is provided to the personnel, including the participation of the Local Fire Department. Three evacuation team leaders have been assigned for effective implementation of this plan.
The local fire department inspects Apeel HQ in Goleta, California annually. In addition, Apeel tests the fire detection system and the deluge (sprinkler) system get periodic inspections and maintenance in line with the local building codes. Apeel team members are trained on the Apeel Fire Prevention Plan on an annual basis.
COVID-19 Impact. As the US Presidential Policy Directive 21 (PPD-21) has designated the food and agriculture sector as a critical infrastructure sector whose assets, systems, and networks are considered vital, Apeel’s operations have not stopped due to COVID-19. Apeel has taken numerous contingency measures to ensure the well-being of its workforce, including a very specific selection of its employees being allowed to return to its office based on business criticality. All employees without on-site essential work have been instructed to work from home. Apeel has been developing SOP on safety and health of its workforce, has communicated formal companywide COVID-19 update twice a week, and is strictly enforcing precautionary measures (temperature check twice daily, mask wearing, social distancing and increased sanitation measures). Before returning to the office or packing houses, all employees are required to complete an in-depth training on Apeel new COVID-19 policies and procedures.
EHS Monitoring and Reporting. Apeel has defined sustainability metrics for its HQ facility, including Scope 1 (direct emission from owned or controlled sources), Scope 2 (indirect emission from the generation of purchased energy) carbon emissions, and annual water and energy usage. Optimization of Apeel’s resource efficiency since 2018 for all metrics is largely attributed to the increase in production as the company scales commercially. While the metrics provided are presented on a per production basis, the utilities at its HQ facility are used for various functions, including Research and Development (R&D). The metrics for Apeel’s commercial offices has not had one full year of data collection yet. As such, baseline has not yet been established. As indicated in the PS2 - OHS section of this review summary, Apeel has implemented a comprehensive set of leading and lagging OHS indicators.
Supply Chain Risk Assessment and Management. Apeel maintains a Supplier Responsibility Program (SRP). The objective of this Program is to grow and maintain a supply chain in alignment with Apeel’s values, to ensure that all suppliers operate legally, safely, and sustainably. Apeel has established a comprehensive set of documentation to evaluate current and potential raw material suppliers against Apeel’s SRP, including a Supplier Code of Conduct. Apeel currently has 6 Tier I raw materials suppliers which are all based in the USA or Europe. Additional Tier 1 suppliers from Europe may be added soon. Applicable minimum requirements of this Code encompass: (i) Law and Code compliance; any supplier that collaborates with Apeel Sciences complies with all the regional and national laws in which they operate; (ii) Voluntary work: no forced labor is used in producing or applying Apeel’s products. Any acts of human trafficking are also prohibited; (iii) Appropriate Age: no child labor is used in producing or applying Apeel’s products. The supplier must employ workers in compliance with the age requirements by the nation where the supplier operates; (iv) Fair wage: the supplier shall pay wages which equal or exceed the minimum wage required by law in the supplier’s residence; (iv) Health and safety: the supplier shall provide employees with a safe and health workplace to prevent accidents and injuries that could arise from their facilities’ operations; (vi) Harassment / Discrimination Free Environment: the supplier must treat all employees with absolute respect. No employee shall be subjected to any physical, sexual, psychological, or verbal harassment (ILO 111); (vii) Land Management: all land where Apeel’s products are created or applied has been obtained by the supplier legally. Any future land expansion by the supplier shall be obtained legally; (viii) Product quality and Food safety: the supplier must provide Apeel with high-quality products, ingredients, and services to meet all applicable quality and food safety laws. The supplier must demonstrate that they have robust food-safety and quality management systems; (ix) Bribery (anti-Corruption): the supplier must be compliant with the United Nations Convention Against Corruption and the U.S. Foreign Corrupt Practices Act; (x) Confidentiality: the supplier must protect any Apeel private and confidential information that is in their possession and use it only per instructions directed by Apeel. This requirement continues after the end of the business relationship. Additional best practices applying to Apeel’s third-party suppliers include: no induced deforestation, water and energy use monitoring and reporting, waste management, emissions tracking, integrated pest management, freedom of association and collective bargaining, hours of work/overtime wages, sub-contracting and traceability. Key reference documents used for Apeel’s Supplier Code of Conduct included International Labor Organization, UN Global Compact, the OECD-FAO Guidance for Responsible Agricultural Supply Chain, Starbucks CAFÉ Practices, etc.
A comprehensive set of SOPs has been developed for the implementation of the Supplier Code of Conduct (e.g. Supplier Evaluation Framework, Supplier Profile Template, Supplier Evaluation form, Specific Audit Questionnaire, training presentation, training records, corrective action plan, etc.). Apeel’s SRP is implemented by a multi-functional team composed of 9 professionals. In 2019, Apeel contracted a consultancy firm to conduct an independent assessment of Apeel’s SRP and to assure effective implementation of its Supplier Code of Conduct. The audit findings confirmed that Apeel conducts its sourcing operations in a sustainable way, based on a set of values and guidelines for action and behavior that protect people and the planet. Apeel evaluated current and potential raw material suppliers in accordance with its Supplier Code of Conduct. To ensure that raw materials used in Apeel’s products are sourced sustainably, Apeel is auditing its first, second and third tier suppliers representing 95% of current raw materials and 90% of raw materials planned for future production. Apeel strives to continuously maintain a supply chain in alignment with the company’s own values and has taken steps to improve compliance and auditing practices that enable a robust supplier evaluation program. As Apeel expands its operations and customer base, the company will require additional raw material suppliers to meet the growing product demand. Apeel may be no longer able to assess thoroughly each supplier as is currently possible. In anticipation of this future constraint, Apeel is developing a Supplier Risk Mitigation Plan, which will assign suppliers a risk category (e.g. low, medium or high). Based on assigned supplier risk category, the Plan has defined a well-structured course of action how to proceed in auditing the supplier.
Social risks associated with sourcing of Apeel raw materials is limited as all its Tier I suppliers are in the USA and Europe, and Apeel partners with Tier 1 suppliers to audit its upstream supply chain in accordance with the aforementioned Apeel Supplier Code of Conduct.