This is a Category B project according to IFC's Policy on Environmental and Social Sustainability. The key E&S risks and issues for this investment, include: Ayala Health's capacity, systems and procedures to assess and manage E&S risks associated with the future development and acquisition of hospitals, provision of fair and safe working conditions, including managing the COVID-19 impacts, infection control, emergency preparedness and response including life and fire safety; biomedical waste management; community health, safety and security; and stakeholder engagement.

Policy

The Group discloses its group-wide policies related to E&S, occupational, health and safety (OHS) and corporate governance at https://ayala.com/sustainability/eesg. These policies cover aspect such as environmental protection, Human Resources (HR), anticorruption and whistleblower protection. In addition, the Group commits to improve its business impact on the environment and society by aligning its sustainability objectives with the United Nations Sustainable Development Goals which guide day-to-day operations and management of E&S issues.

Under the group-wide policies, all the Group companies, including the AC Health Subsidiaries, are expected to improve the economic value while managing the impact on the environment and society, practice good governance and remain responsive to stakeholders' inputs and expectations on sustainability and pursue opportunities to improve operating efficiencies and further satisfy shareholder requirements.

Identification of Risks and Impacts

The AC Health Group identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and E&S regulatory permits and requirements. It screens and assesses risks and impacts when a new business opportunity is presented for consideration. This typically involves due diligence covering legal compliance, policies and procedures, certifications and accreditations, land use history as a component of legal due diligence, reputational risk (in case of acquisition of existing facility), life and fire safety as component of technical due diligence, organizational structure, among others.

Depending upon the nature of activities and applicable local regulatory requirements, formal E&S impact assessment (ESIA) studies may or may not be necessary. The AC Health Group will prepare all the necessary documentation as required for the regulatory permitting process that are necessary for the development of the Cancer Hospital.

Management Programs

Management of E&S risks is decentralized within AC Health to its business units and is currently part of the business process with a focus on compliance with regulatory requirements, AC Health's corporate E&S approaches as well as its local development partners.

For example, one of the business units of AC Health with several hundred retail stores across the Philippines has standard operating procedures (SOPs) to manage E&S risks in its operations. It has established sets of policies which stipulate basic practices such as fire safety, workplace safety or hazardous waste management as required by the local regulations. SOPs are cascaded down across its facilities via a store manual, emails, online discussions, memorandums, posting of announcements, and any other communication platforms in order to ensure safety at workplace.

Going forward, the Cancer Hospital, through AC Health, shall undertake ESIA (where applicable) or equivalent process to screen, assess and manage E&S risks & impacts for greenfield hospital construction in accordance with the regulatory requirement in the Philippines as well as the IFC PS requirements, and obtain regulatory approvals and permissions as required (ESAP 1).

Building upon the assessment of ESAP 1, the Cancer Hospital shall develop Environmental, Social, Health and Safety (ESHS) Policies and standard operating procedures (SOPs) for the E&S management of the Cancer Hospital operation (ESAP 2).

In addition, as per ESAP 3, Healthway, through AC Health, shall review and update ESHS policies and Environmental and Social Management System (ESMS) of Healthway to meet the IFC Performance Standards requirements.

Organizational Capacity and Competency 

AC Health's Chief Risk Officer also has the responsibility of managing and overseeing day-to-day E&S related issues at the corporate level, and ensuring that the operations at the business unit level are in line with its policy requirements, and to assess and ensure that new businesses or acquisitions of existing facilities are in compliance with regulatory requirements with support from other internal teams.

At the business unit level, Healthway, which has a nationwide clinic network, has a Chief Risk Officer who has the responsibility of managing and overseeing day-to-day E&S related issues and ensuring that the operations at the business unit level are in line with its policy requirements. Healthway also has a safety officer and safety committee headed by the Chief Medical Officer based in the head office who have undergone trainings and accreditation. The safety committees, which is comprised of safety officers from each Healthway clinic, oversees the day-to-day activities and ensures that those follow the policies including implementation of safety procedures such as use of Personal Protective Equipment (PPE) and biochemical and hazardous management control.

As an example, a subsidiary of AC Health has a Health and Safety Committee, based in its distribution center, which is responsible for operations pertaining to safety and health. Primary duties of this Committee include developing policies pertaining to safety and health, developing accident prevention programs, review of inspection and incident reports, supervising safety trainings, and ensuring compliance with the regulatory requirements.

The Cancer Hospital will establish organizational structure as per the Group's corporate ESHS policies and requirements, following the precedents already in place in other business units.

Monitoring and Review 

AC Health's senior management receives reports from business units covering various operational and E&S key performance indicators (KPIs). The KPIs reported from each business unit to AC Health include those required by the Global Reporting Initiatives (GRI) and Sustainability Accounting Standards Board (SASB) Standards which the Group uses as framework to assess and initiate the group's sustainability activities. Monitoring and review activities are implemented by each business units within AC Health focusing on compliance with environmental licensing requirements as well as the Group's requirements. Strategy Team in AC Health collects and compiles information on performance of business units which will then be reported to the Group level to be included in its annual sustainability report.

Healthway and the Cancer Hospital will also be integrated into this monitoring and review system by adopting relevant practices already in place at others business units.

Emergency Preparedness and Response 

In AC Health, Enterprise Wise Risk Management team is in place which is responsible for handling risk and emergency situations including implementations of fire drills. Emergency preparedness and response is decentralized to each business unit depending on nature of business. Plans typically cover preparedness and response to medical emergencies including infections, construction emergency, equipment failure, extreme weather and environment conditions, transport accidents, and others.

The Cancer Hospital will develop its emergency preparedness and response plan in compliance with regulatory requirement once the rules and guidelines are issued by the competent authority. Emergency preparedness and response plan of Healthway will be reviewed as part of ESAP 3 (i.e., review and update of ESHS policies and ESMS) and necessary measures shall be implemented to bridge the gap, if any.

Working Conditions and Management of Worker Relationship 

As at end-2020, AC Health corporate office employed 20 regular employees and 10 temporary / third party employees, with about 80% being female. At the business unit level, collectively employed a total of 1,803 regular and 342 temporary or third-party workers with about 73% female employees. Among them, Healthway employs 796 regular and 144 temporary or third-party workers with about 85% female employees. The Cancer Hospital is expected to hire approximately 250 medical and administrative staffs for operation once it is developed.

Human Resources Policies and Procedures

The Group has overarching HR vision and policies aligned with international good practices disclosed at https://ayala.com/sustainability/governance. HR vision and policies include the Code of Conduct which applies to all the employees regardless of employment status, position or title. It articulates the values and principles of HR management, and serves as a guideline to all employees in their relationship with each other, with the company's customers, shareholders and business partners as well as the with government and the public. Other HR vision and policies include legal compliance, terms of employment, non-discrimination and preventions of sexual harassment, retrenchment, occupational health and safety, prevention of child labor and forced labor, indigenous people, and others.

While AC Health has several policies of its own such as Whistleblower and Code of Conduct, it also relies on the Group's overarching HR vision and policies as well as regulatory requirements in managing employees. Its HR manual articulates articulate working conditions such as working hours, performance appraisal, leave, duration of probation, recruitment, promotion (required competencies and qualifications for promotion), overtime/ locum policy, staff development and others.

The Cancer Hospital will develop HR policies and procedures in line with the Group's overarching policies and procedures. Healthway is also expected to review and update policies and procedures to meet the IFC Performance Standards requirements.

Freedom of Association

Freedom of association and the right to collective bargaining are fundamental rights for workers and employers to freely establish and join organizations of their own choosing, without fear of reprisal in the Philippines. This applicable national law allows employees in AC Health and its business units to form and register trade unions. Although AC Health and its business units do not restrict freedom of association or formation of trade unions, currently there are not staff unions.

Non-discrimination and Equal Opportunity

Non-discrimination is clearly articulated in the Group's policy and employers do not discriminate gender, sexual orientation, race, ethnicity, color, religion age, martials status, disability, economic status or political affiliation throughout the Group.

Grievance Mechanism 

The Group has formal and established grievance mechanism which provides all employees with the opportunity regardless of employment status to anonymously raise issues by using reporting channel at https://ayala.com/sustainability/governance. Any issues can be raised including unethical practices, corruption, environmental, health and people, product and process safety, violations and issues, any form of discrimination and sexual harassment, breaches of human rights and retaliation.

AC Health has established whistleblower policies and procedures which provide all employees with the opportunity regardless of employment status to anonymously raise and issues such as unethical practices, discrimination, sexual harassment and others. Employees are protected from reprisal, harassment or disciplinary action or victimization for whistleblowing.

Protecting the Workforce

The Group has a Policy on Child Labor and Forced or Compulsory Labor in which a “child” is defined as an individual who is below 18 years of age, and “forced or compulsory labor” is any service exacted from a person who is unwilling, under the threat of penalty or menace. The Group clearly states that it does not tolerate the use of child labor or forced labor. In addition, given the Group's commitment to the principles of SDGs, the Group considers the suppliers' compliance with human rights, specifically in ensuring that neither child labor nor forced labor is present in any part of their supply chain.

Occupational Health and Safety

Depending on the nature of business, each business unit has OHS procedures and/or OHS committees in place. For example, Healthway, a clinic business arm of AC Health, has established policy and manual on radiation safety for adequate implementation of radiation safety program in imaging department which stipulates such aspect as step-by-step safe workflow, use of person monitoring equipment and organizational structure. Training courses are provided to medical staff such as Basic Occupational Safety and Health (BOSH) and Basic Life Support (BLS) training for nurses. Manual and training are accredited by Food and Drug Administration Philippines and Tuv Rheinland. Following such precedents AC Health will implement adequate OHS management systems and procedures for the Cancer Hospital, as applicable.

Workers Engaged by Third Parties

Recruitment and staffing for the Cancer Hospital construction is the responsibility of AC Health. Project managers hired by AC Health are directly responsible for overseeing the construction contractor and other service providers regarding compliance with labor laws including payment of minimum wages, social benefits, OHS training and provision of PPEs, workers' accommodations (if provided) and contractor adherence to minimum age of employment (18 years).

Impact of COVID-19 Pandemic on Workforce

For COVID-19 pandemic, AC Health leads the design and implementation of the Group's COVID-19 programs in line with “4T Framework” (Triage, Testing, Treatment, Tracking) coordinating with facilities on daily basis. Throughout the pandemic, the Ayala Group has endeavored to keep clinics (e.g., Healthway) open and pharmacy stores (e.g., Generika) has ensured access to essential medicines and supplies. Treatments have also been provided to patients at qualified COVID-19 referral hospitals.

Apart from the operational consequences of the purchase by Healthway of certain primary care clinics, the AC Health Group did not implement any significant changes in terms of reduction of personnel, salary and benefit cuts, or changes to vendor contracts. Support is provided to employees by providing paid leaves, transportation and meal allowance, shuttle service, work-from-home setup, and rapid COVID-19 testing. Employees are provided with necessary PPEs such as masks, gloves and sanitizers at their respective workplace.

As the Department of Health has not yet issued the rules and guidelines specific to specialty hospitals, regulatory requirements for the Cancer Hospital are unknown at this stage. However, the Cancer Hospital is committed to meet all the environmental and other regulatory requirements which typically include; Environmental Clearance Certificate; Hazardous Waste Generator Certificate; Treatment, Storage, Disposal (TSD) Registration Certificate; Transporter Registration Certificate; Discharge Permit; Permit to Operate; and Pollution Control Officer Accreditation Certificate. Pollution prevention and resource efficiency measures will be developed and adopted in line with the relevant environmental permits and certificates once the rules and guidelines are issued.

Resource Efficiency 

To cascade resources efficiency practice in line with the Group's sustainability target, AC Health as well as other subsidiaries under the Group implement various resource efficiency measures. These include shifting to LED lights, install solar photo-voltaic panels, inverter air-conditioning units, optimization of water supply and wastewater operations, and others. These resource efficiency measures are thoroughly being analyzed by AC Health to incorporate them into the Cancer Hospital to the possible extent.

Energy Supply and Air Emissions

Electricity is sourced from the public grid for all facilities under AC Health's business units. As standard back-up systems for grid failure, diesel generator sets will be provided in the Cancer Hospital while portable, low-powered diesel generator (DG) sets are available in three Healthway clinics. The Cancer Hospital will monitor stack emissions on a regular basis in line with relevant environmental permits and certificates to be compliant with the regulatory requirements and the standards.

GHG Emissions

Ayala accounts and for Scope 1 and 2 emissions using the Greenhouse Gas Protocol. Based on current calculations, AC Health’s GHG emissions are primarily from electricity consumption, or Scope 2. Total annual Scope 2 emissions for AC Health’s operational business units were approximately 1,700, 2,800, and 1,900 tonnes CO2E in 2018, 2019 and 2020, respectively. Furthermore, AC Health reported only 33.5 tonnes CO2E of Scope 1 emissions in 2020. GHG emissions for the Cancer Hospital will be calculated as it becomes operational as part of AC Health. With these figures in mind, proper benchmarking will be undertaken to ensure that GHG emissions associated with the investments will be properly mitigated and kept within acceptable levels.

Water and Wastewater

Water for facilities under business units is generally sourced from public water supply system and is regularly subjected to water analysis for potability. Wastewater treatment is the responsibility of the mall or building owners or lessors for the Healthway clinics. Water consumption is monitored at facility level based on billing which are ultimately reported to the Group level to be included in its annual sustainability report.

The Cancer Hospital will have its own sewage treatment plant (STP) which will remove hazardous healthcare wastes from the sewage and produce treated wastewater before this is released to the environment.  The Cancer Hospital will submit self-monitoring reports of wastewater discharge to the Laguna Lake Development Authority (LLDA) on a quarterly basis.

Waste Management

Healthway, a business unit of AC Health focusing on primary and multi-specialty clinics business, has policies and practices on waste management in compliance with regulatory requirements, including hazardous, clinical, and pharmaceutical wastes. The practices stipulate waste management procedures including the system of appropriate sorting, labeling, handling, storage and disposal and is consistent with the applicable legal requirements. These also include use of personal protective equipment as well as use of checklist for regular inspection. Recyclable waste is disposed through authorized agency or recycler.

Healthway submits self-monitoring reports of water discharge and waste generations to the Department of Environment and Natural Resources (DENR) on a semi-monthly basis, recent example of which shows compliance with relevant standards and guidelines.

Risks to safety of the community associated with the Cancer Hospital development typically consists of traffic and pedestrian safety during the construction and exposure to infectious disease during operation. 

Traffic and pedestrian safety derive from transport of construction materials, equipment and workers to and from the construction site and potential structural damage to local housing adjacent to transport routes. AC Health requires contractors to evaluate the potential impacts from transport activities and perform limited access route to ensure safety.

With regard to disease exposure, business units of clinics and hospitals have infection control programs and procedures to prevent infections for patients and visitors as required by the local regulatory requirements. The procedures include prevention, cleaning, disinfection and sterilization, sanitation, and accident management. The Cancer Hospital is also expected to establish its infection control procedures.

Life and Fire Safety Management

Management of life and fire safety (L&FS) is delegated to each business unit within AC Health. For example, one of the subsidiaries of the AC Health Group complies with the requirements of local municipalities on fire safety requirements as they vary depending on municipalities. It has fire safety procedures which include actions to be taken in the event of fire, mechanism for fire detection and prevention, evacuation procedures, roles and responsibilities of staffs, etc. Facilities annually receive inspections of the Bureau of Fire Protection, inspection items of which include building design, occupancy lighting & signs (e.g., exit signs, warning/safety signs), equipment installation (e.g., alarm, firewall), and others. In addition, as one of the screening procedures when expanding its network, such subsidiary thoroughly considers the plan/design of L&FS, ensuring that the existing facilities are in accordance with local fire safety regulations or the Fire Code of the Philippines 2008. 

L&FS plan for the Cancer Hospital has been incorporated in the masterplan in compliance with building construction requirements in accordance with the National Building Code, standards set by the Department of Health for hospitals, and the IFC requirements on L&FS design for greenfield hospital development. The design should meet both local requirements and international L&FS codes (such as NFPA101 of the National Fire Protection Association).

As per ESAP 4, the Cancer Hospital, through AC Health, shall hire a suitably qualified expert in international L&FS standards acceptable to IFC who will prepare the L&FS master plan for the Cancer Hospital, providing guidance and/or design criteria to ensure compliance with the requirements of the L&FS Section of the WBG General EHS Guidelines.

Similarly, as per ESAP 5, Cancer Hospital, through AC Health, shall ensure that the qualified L&FS experts provide certification confirming that the Cancer Hospital has been built as per the master plan and that it is in compliance with the requirements of the L&FS Section of the WBG General EHS Guidelines.

In addition, as per ESAP 6, Healthway, through AC Health, shall engage a suitably qualified L&FS expert acceptable to IFC to conduct risk-based L&FS review of a representative number of clinics covering the elements of the Section 3.3 of the WBG General EHS Guidelines, such as means of egress, detection and alarm systems compartmentation, fire suppression and control, fire prevention and operation & maintenance. Finding of this review shall be used to set a time-bound action plan to be implemented and agreed with AC Health or Healthway and to introduce systematic improvements on L&FS management, as needed.

Security Personnel

Use of security is delegated to each business unit where unarmed security guards are employed for offices and branches from licensed security service company. AC Health expects that the Cancer Hospital will also to be secured by unarmed guards sourced from security service company both during construction and operation.