IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
Policy
EPM Group has several publicly disclosed policies applicable to its business activities through which EPM expresses its commitment to E&S sustainability. The overarching EPM Sustainability Policy approved by its Board of Directors commits the company to compliance with environmental legislation, comprehensive environmental management with a focus on continuous improvement, promoting and strengthening the environmental culture of relevant stakeholders, and strengthening the transparent and participative communication of environmental management with stakeholders (https://www.epm.com.co/content/dam/epm/institucional/documentos/todos/politica-sostenibilidad-grupo-epm.pdf). The Sustainability Policy is complemented by a Human Rights Policy covering aspects such as: labor rights; prohibition of child labor; use of security forces; respect for the rights of minority ethnic groups; supply chain; non-engagement with illegal entities; and promotion of gender equity (https://www.epm.com.co/content/dam/epm/institucional/documentos/todos/codigo-de-etica.pdf).
Identification of Risks and Impacts.
Colombia’s regulatory environmental licensing framework requires the preparation of detailed Environmental and Social Impact Studies (ESIAs) with their associated Environmental and Social Management Plans (ESMPs) for projects with significant E&S impacts. IFC’s financing will be limited to low and medium voltage power distribution networks which do not require environmental licensing due to their limited E&S risks, as they usually have limited footprint and occur within or adjacent the right of way (ROW) of existing road infrastructure or within the confines of power substations.
For these types of projects, EPM has developed a document titled “Environmental and Social Management Measures – Network Expansion, Reposition, and other works in electrical networks, in urban and rural areas of EPM’s Electric Power Distribution System” (“Medidas de Manejo Ambiental y Social” (MMAS)) which serves as a corporate E&S management plan and provides for a standardized risk identification and mitigation measure process. MMAS includes a comprehensive list of E&S regulatory requirements and a predefined matrix to help systematically identify risks and applicable mitigation measures. The matrix includes potential environmental impacts to terrestrial and aquatic ecosystems, soil, water resources, air quality, noise, waste management, increase in vehicular traffic and landscape aesthetics. Social aspects include potential economic, cultural, health, and public services impacts. For each installation, upgrade, or maintenance activity, and for each type of environmental or social impact, the matrix provides corresponding mitigation measures which must be incorporated into the project design and implementation documents including project specific EHS management plans. The incorporation of the MASS into the engineering planning and construction process is mandated by EPM’s internal “Business Rules”. Additionally, EPM uses a series of risk assessment tools and procedures to evaluate external risks to its operations including those posed by illegal groups (including armed groups) operating in rural areas of the Department of Antioquia.
Going forward, per ESAP item #1, EPM will develop and implement an Environmental and Social (E&S) Assessment Procedure applicable to all CAPEX items financed by IFC to confirm and document that the Expansion Projects of the T&D Management Department will apply the following criteria: They are not located in Legally Protected Areas (part of Colombia’s National System of Protected Areas) or Internationally Recognized Areas (as defined in IFC Performance Standard 6), including Key Biodiversity Areas (KBA), Alliance for Zero Extinction (AZE) sites, Important Bird and Biodiversity Areas (IBA), Ramsar sites, or UNESCO Man and the Biosphere Reserves. For replacement of cables and transformers at voltage levels 1, 2, and 3; Non-Technical Energy Loss Control (existing projects and normalization); and the Service Quality Improvement Plan projects, the E&S Assessment Procedure will apply the following criteria: They are not located in Alliance for Zero Extinction (AZE) sites, Ramsar sites, or UNESCO Man and the Biosphere Reserves. The E&S Assessment Procedure will identify Critical Habitat values (as defined in IFC Performance Standard 6) for all types of projects. When probable CH values are confirmed (including through specific studies), the client will avoid impacts and determine additional conservation programs in case of critical habitat values. The E&S Assessment Procedure applicable to all types of CAPEX items financed by IFC will also apply the following criteria: They do not require permanent land acquisition or restrictions on land resulting in physical displacement (relocation or loss of shelter) and/or economic displacement (loss of assets or access to assets that leads to loss of income sources or other means of livelihood) through an involuntary process where the affected persons or communities do not have the right to refuse such land acquisition or restrictions on land use; they do not require the application of the Colombian legal requirement of “Prior Consultation” or the IFC’s Free, Prior, and Informed Consent (FPIC) if located in areas legally designated as Indigenous Peoples’ territories; do not represent potential impacts on non-replicable and/or critical cultural heritage; or will not restrict access to cultural heritage or religious sites, including sacred sites.
Management Programs.
To implement the MMAS described in the preceding section at the project level, EPM’s Power Distribution Network Replacement and Expansion Unit, the operational department responsible for executing the Capex activities in the power distribution network, developed a procedure that project teams use to analyze potential E&S risks and identify applicable mitigations measures. The MMAS requires that contractors also complete a project-specific impact and management matrix which include environmental, social, and OHS aspects.
Implementation of the MMAS is further supported by EPM corporate plans and procedures covering aspects such as: ROW management; waste and hazardous materials (including PCBs and Sulfur hexafluoride -SF6); emergency and disaster preparedness and response; OHS; community relations; flora and fauna management; engagement with indigenous communities; prevention and response to gender-based violence; archeological chance find procedures; and contractor management. The application of the MMAS and supporting internal plans and procedures is made obligatory through EPM’s “Business Rules” which cover the following aspects: (a) financial budgeting and accounting of the implementation of the MMAS at the project level (including, for example, the cost of E&S studies; technical management of environmental procedures; management of E&S impacts; forest offsets; archaeology program; and management for relationships with communities and communications), and (b) accounting of working hours in accordance with employment terms and applicable labor laws.
Since a sizable portion of the distribution network’s construction and upgrades is conducted by contractors, EPM implements a series of directives and procedures to incorporate the above EHS requirements into contracts.
Organizational Capacity and Competency.
E&S, OHS, stakeholder engagement, and labor relations are each managed independently at the corporate strategic and operational levels. E&S risk management of the power Transmission and Distribution (T&D) Division is led by a Deputy Manager of E&S reporting to the General Manager. This deputy manager is supported by 61 environmental and social specialists. The staff of the OHS department includes two coordinators and six safety technicians. T&D operations are further supported by a cross-cutting labor and worker relationship department and various risk functions focusing on natural and security hazards. At the operational level, Colombia regulations require that projects be staffed by environmental, OHS, and community relations coordinators assigned by the project owner and by contractors. Per EPM contracting requirements, contractors must demonstrate that the E&S coordinators are qualified professionals.
Contractor E&S Management.
EPM’s power distribution business employs dozens of third-party companies for network maintenance and construction, technical and commercial services, right of way maintenance, and substation maintenance. EPM’s E&S corporate requirements and regulatory obligations are incorporated into the contracts with these service providers. E&S, OHS, and labor requirements applicable to contractors are defined in detailed EPM corporate “Specifications for E&S Management in Public Works Contracts” which prospective contractors must address in bidding documents. Among the EPM’s policies and procedures which are part of the contract are: the project MMAS; Disaster Risk Management Plan; Traffic Management Plan; Sustainability Policy; Human Rights Policy; EPM's corporate image manual; Instructions, templates and recommended formats for reports, field information collection, community relations, EPM's communications policy; Communications spokesperson guidelines; Guide to Relations with Ethnic Communities (for projects located in Indigenous People’s territories); and Contractor Code of Conduct. The Contractor Code of Conduct includes EPM requirements applicable to: Human Rights; Labor standards (including OHS); environmental protection; and prevention of fraud, corruption and bribery. EPM audits compliance of contractors against contract terms.
Monitoring and Review.
EPM has published corporate Sustainability Reports uninterruptedly since 1998 (https://www.epm.com.co/institucional/informes-sostenibilidad/). For the last few years, these reports have followed the Global Reporting Initiative (GRI) standard including E&S, OHS and labor indicators.
At the power T&D business level, EPM has a series of monitoring and internal auditing processes with an emphasis on monitoring contractors’ compliance with regulatory and EPM corporate requirements. EPM monitors and reports internally on key E&S, OHS, and labor aspects relevant to construction and operation of power T&D directly and through contractor reporting requirements. Environmental parameters depend on the specific project activity but generally include solid non-hazardous and hazardous waste, water consumption, vegetation removal, fuel consumption, and prevention and control of releases of insulating oils and gases. OHS parameters include lost-time accidents and findings from health and safety audits by the employer/workers joint committee on health and safety (COPASST).
Contractors are required to issue monthly reports on the implementation of E&S and OHS obligations. EPM has a procedure and guidance for quarterly monitoring and rating of contractor E&S performance as well as for unannounced spot inspections covering key activities such as management of solid wastes, storage and transport of hazardous materials, field activities, procedural compliance, and inspection of vehicles including those transporting hazardous materials.
Emergency Preparedness and Response.
The company has a corporate level “Contingency Plan” per national law that is cascaded to individual operations. The corporate level plan covers a long series of potential events which are classified by risk and severity and which include, for example: terrorist attacks and sabotage; cyber-attacks to company infrastructure; fires; damage due to seismic activity; loss of power supply to the network; etc. The corporate plan outlines preventive and response measures as well as the resources, organization and accountabilities. It requires individual operations to develop and implement a “Local Emergency Plan” which, in the case of the electricity distribution business are prepared for individual substations. Substation level “Emergency Plans” include a detailed site-specific assessment of risks that could lead to emergency situations, prevention measures, assignment of responsibilities, alarm systems, and emergency response measures.
The company performs emergency simulations to test alarm systems and worker understanding of response and emergency evacuation and response procedures. The simulations are documented with a brief written and photographic record of the workers’ understanding and effectiveness.
External Communications and Grievance Mechanism
EPM provides multiple means of communication for members of the public including general toll free and WhatsApp phone numbers, for a wide range of customer service-related matters including power service interruptions and road closures due to construction and maintenance activities (https://www.epm.com.co/clientesyusuarios/servicio-al-cliente/). EPM also provides a specific channel for Petitions, Complaints, Grievances, and Appeals (“Peticiones, Quejas, Reclamos y Recursos” or PQRR) which includes phone, email, on-line application, cell phone application, and in-person channels via the customer service offices located throughout the Department of Antioquia. EPM has a detailed procedure for the processing of complaints which can also be filed anonymously.
PS2: Labor and Working Conditions
EPM’s T&D division in Colombia has a total of approximately 1723 direct workers and 7776 indirect (contracted) workers who support the company’s on-going construction and operation and maintenance (O&M) activities. Of direct employees, 1426 are male and 247 are female and of contracted workers 7136 are male and 630 female. EPM’s T&D division also employs five employees with disabilities and 30 apprentices.
Human resources at EPM are managed by a cross-cutting solutions Human Talent Team comprised of approximately 208 people, responsible for workforce management and employee relations.
Human Resources Policies and Procedures
EPM is a 100% public entity, where contracting, personnel administration, employee/employer obligations, and disciplinary procedures, among others, are governed by constitutional provisions (Art. 128) and legal provisions such as Law 6 of 1945, Public Sector Compilation Decree 1083 of 2015, Decree 2127 of 1945, and Law 1952 of 2019 (General Disciplinary Code). Additional provisions are defined in the employment contract and in the collective bargaining agreement of unionized workers.
Working Conditions, Terms of Employment, and Freedom of Association
EPM’s approach to human resource management is dictated by Colombian labor law. A review of a sample of fixed term and open-ended employment contracts indicates that EPM clearly communicates aspects such as the scope of the job responsibilities, salary, working hours, place of work and other terms with reference to applicable labor laws. Working hours are further defined through an internal management approved circular detailing the working hours for public servants and other types of workers employed by EPM in Colombia. A business rule defines a mechanism to help ensure that working hours are properly recorded and validated to help prevent errors or omissions in the recording of regular hours and overtime.
There are six trade union organizations representing workers in the EPM group of companies. There are three collective agreements signed with the trade union organizations SINPRO, SINTRAEMSDES and SINTRAELECOL and two Arbitration Awards with the trade union organizations UNIGEEP and SINTRASERTIC. Workers receive information about their labor rights through the corporate induction program, where they are informed about the existence of trade union organizations and collective agreements. In this same induction process, a space is provided for most trade union organizations to inform workers about the benefits of joining their union organization.
Non-discrimination and Equal Opportunity
Through its Policy on Human Rights, EPM commits to applying the principles of non-discrimination to its employment practices. As part of its policy on equity and inclusion, EPM has developed a corporate “Protocol for the Care and Prevention of Gender Violence”. This protocol defines all types of harassment and the institutional mechanisms that have been designed to respond to its occurrence in the workplace. This includes the formation of a gender committee, a multidisciplinary team made up of the legal, psychosocial and gender perspective, and its role and responsibility for receiving and attending to the cases reported by employees of the organization or anyone associated with EPM, including contractors and members of the public. The protocol includes a requirement for training of human resources leaders to respond to or respond to cases in which incidents of sexual harassment occur and the administrative management tools available to respond to these situations. This includes instructions for the operation of the Labor Coexistence Committee.
EPM’s corporate commitment to Diversity, Equity, and Inclusion is prominently displayed in its external web portal - https://www.epm.com.co/institucional/linkedin/diversidad-e-inclusion-laboral/ and is monitored in its employment statistics for persons with disabilities.
Protecting the Workforce
EPM prohibits child labor in accordance with national labor laws. Minors with a relationship with the organization are internship students or apprentices who must be over 15 years of age and have the express and express authorization through informed consent for access to training sponsorships with EPM by their responsible guardian. EPM reports that this activity is carried out in accordance with current regulations and with the sole purpose of promoting training opportunities.
Workers’ Grievance Mechanism
In addition to the Workplace Coexistence Committee, EPM has various channels for handling complaints or reports not related to workplace harassment. These include the Transparent Contact Line, the Disciplinary Proceedings Instruction Department, the corporate mailbox (epm@epm.com.co), and monthly working sessions with labor union organizations. Additionally, the Transparent Contact Line allows EPM employees and contractors, as well as the public, to anonymously report any signs or incidents of possible misconduct by EPM public servants or other stakeholders. The Committee activates the Workplace Harassment protocol when the report clearly identifies the parties involved; otherwise, the case is forwarded to Human Talent and Organization Solutions to determine whether interventions are needed. The Committee also supports these interventions with legal and psychosocial awareness on workplace harassment. Channels for submitting reports through the Ethics Line – Transparent Contact include a toll-free national line (Colombia): 01 8000 522 955; EPM website; subsidiary websites; EPM mobile app (Estamos ahí, option Ethics Line – Transparent Contact); and Email: contactotransparente@epm.com.co.
Occupational Health and Safety
EPM’s management of OHS risks among its direct employees and contractors is based on Colombia’s OHS regulations which require the development and implementation of an OHS Management System (OHS-MS). In practice, the OHS-MS is supported by an OHS risk matrix which captures the main types of OHS risks – broadly classified as physical, chemical, biological, and radiological but with specific subcategories - present in power distribution networks construction and maintenance work.
This matrix serves as a reference to EPM and contractors in the preparation of project specifications and OHS plans and is turn supported by a series of specialized Technical Guidelines which include, for example, the following key ones applicable to power distribution network: work-in-heights and fall prevention; working with high voltage/lock-out-tag-out; confined spaces; hearing conservation; chemical hazards protection; biological hazards protection; hot work; hoisting and lifting equipment; and work over waterways. For the management of occupational exposures to electromagnetic hazards, EPM complies with Colombian legal requirements defined in the Technical Regulation for Electrical Installations (RETIE, amended in 2024) which include occupational exposure limits.
EPM has an annual OHS strategic plan organized around key performance indicators (KPIs) which for calendar year 2025 include: the reduction of lost time accident and incident rates by 20% with an overall target of zero accidents; monitoring 100% of OHS accidents and diseases to identify root causes and their resolution; training 100% of local emergency groups through the implementation of emergency plans; and training at least 80% of EPM's own staff in workplace harassment (Gender-based violence protocol).
As previously described above under the “Monitoring and Review” EPM audits contractors’ compliance with EPM’s OHS requirements against a rating system and conducts internal audits of its own operations and staff to assess the overall effectiveness of plans and procedures. EPM has procedures to record, classify and process accidents and incidents (near misses). Lost time and fatal accidents are investigated in detail following a specially designated corporate procedure. EPM also records and reports on lost time injury frequency rate (LTIFR) and fatality rates for workers employed by contractors. The findings of these investigations are reported and discussed with EPM corporate management.
Workers Engaged by Third Parties
As previously noted, contractors must agree to comply with local labor and OHS regulations and EPM internal standards as a contracting condition. Contractors are required to report on their compliance with E&S, OHS, and social obligations on projects which EPM also audits on a regular basis. [Note to EPM: please share with IFC examples of standard contracts with construction and O&M contractors].
PS3: Resource Efficiency and Pollution Prevention
Energy Efficiency
Given that the greatest opportunity for improvement in energy efficiency lies with the company’s reduction in technical losses and improved efficiency of end users (customers), EPM has historically planned and implemented programs to promote and invest in improvement of both areas which will continue going forward with many of the capital expenditures planned for the next few years.
Management of Waste Streams
EPM’s power distribution operations generate limited amounts of solid wastes mainly associated with vegetation from pruning and clearing of ROWs, metallic and non-metallic scrap materials from installation and maintenance of distribution lines and street lighting, substation repairs and expansions, and potentially hazardous wastes such as used oils from power substation repairs and fleet maintenance.
Most of the organic waste is chipped and recycled as fertilizer. Metallic scrap and used oils are also recycled by licensed contractors. EPM has also developed a corporate Hazardous and Non-Hazardous Waste Management Plan to help standardize mitigation and management measures at the project level.
Hazardous Materials Management
The main type of hazardous material in EPM’s power distribution network is PCB contaminated dielectric oils in transformers. Since 2008, EPM has been identifying and managing the removal of PCB contaminated oil. In 2016, EPM developed a comprehensive PCB Management Plan which defined the approach that EPM would take to comply with Colombia’s commitment to the Stockholm Convention in the prevention and control of persistent organic pollutants.
Over the years, EPM has been removing PCB contaminated transformers from service, eventually installing an inhouse dielectric oil dichlorination plant in Medellin to treat and recycle dielectric oil. Absorbent materials from the interior of decommissioned transformers are exported to internationally accredited treatment facilities while metallic components with PCB contamination below a certain regulatory threshold are sold for metal recycling. EPM has an “Instruction for Response to Dielectric Oil Spills” which details the procedures that EPM staff and contractors must follow in the event of a spill from equipment in operation or under repair and maintenance, including OHS protections, spill containment and remediation of contaminated media. EPM indicates that all electrical equipment containing PCBs has been removed from the electrical grid; therefore, there is currently no soil contaminated with PCBs and no risk of spills, interventions, and/or remediation in the field with PCB-contaminated oils.
EPM reports that it does not apply pesticide or herbicides in its power distribution operations. ROW and grounds maintenance include mechanical controls (i.e., vegetation trimming or suppression).
Greenhouse Gases (GHGs)
EPM’s T&D greenhouse gas emissions (GHG) for the most recent accounting period 2024 is 123,955 ton CO-eq for Scope 1 and 2. Emissions are primarily due to vehicle and equipment fuel, sulfur hexafluoride (SF6) recharge in power equipment, energy consumption in offices and substations and electricity distribution losses. The company has several energy efficiency initiatives, such as LED lighting upgrades on substations, SF6 management plans, and initiatives to reduce distribution technical losses through upgrades to the distribution network.
EPM has an SF6 Management Plan which is part of the Integrated Chemical Substances and Residues Management Plan. This plan includes instructions for the prevention and management of SF6 releases including procedures for the storage and handling of SF6 cylinders and testing and diagnosis of SF6 containing equipment.
PS4: Community Health and Safety
Infrastructure and Equipment Safety
EPM T&D has programs to educate communities about the hazards associated with accidental contact with electrical equipment in public areas. The company provides instructive information to communities in presentations at schools or at home, via brochures, or via the internet on such issues as the safe use of electricity in the home, safety distances from T&D cables, avoiding illegal access into the Company’s lines, and other general safety precautions around electric installations. The company monitors the total number of accidents and fatalities associated with interactions between the community and the distribution infrastructure. Due to presence of a significant service vehicle fleet and the potential risk of accidents and collisions while in transit or while parked on public roadways, EPM has developed a Strategic Road Safety Management Plan and supporting implementation procedures.
Security Personnel
The Department of Antioquia in Colombia, where IFC- financed activities will take place, include the presence of illegal armed groups which present a risk to people and assets in the operational areas of EPM’s T&D network. EPM has a Security Policy that commits the company to coordinate security arrangements with government actors in compliance with national regulations and with respect for Human Rights. The implementation of this policy is supported by a series of procedures for security assessments to identify the threats and the mitigation and prevention measures, particularly for installations in high security risk areas (such as substations). EPM has also developed a Methodological Guide for the Protection of People which provides guidance on security precautions when traveling through high-risk areas of the country. EPM’s implementation of its security policies and procedures requires coordination with government security forces as well as contracting with armed and unarmed private security services. In the contracting of security services, EPM conducts a criminal background check.
Going forward, as outlined in ESAP #3, EPM will update its Security Management Procedure applicable to IFC-financed activities to align it with IFC PS4 requirements to assess and document risks arising from the project’s use of government security personnel deployed to provide security services and including a grievance mechanism for Affected Communities to express concerns about the security arrangements and acts of security personnel.
PS6: Biodiversity Conservation and Natural Resources Management
Within the Antioquia Department of Colombia where EPM operates and where the expansion and upgrade of the distribution system will take place are multiple Ecoregions, including the Magdalena Valley montane forests Cauca Valley montane forests, Cauca Valley dry forests, Northwestern Andean montane forests, Chocó-Darién moist forests and the Magdalena-Urabá moist forests. These ecoregions are known for their high level of endemism and presence of threatened species and ecosystems (IUCN Red List of Species and IUCN Red List of Ecosystems). Within the Antioquia Department there are nine Alliance for Zero Extinction sites, one UNESCO Natural World Heritage Site, 1 Ramsar site,13 Key Biodiversity Areas and several Legally Protected Areas.
As per ESAP #1, EMP will enhance its biodiversity management through the adoption of a screening procedure applicable to all CAPEX items funded under the Project in order to exclude items located in Legally Protected and Internationally Recognized Areas and will also identify Critical Habitat values. Where likely CH values are confirmed (potentially through target surveys), these projects will not be eligible for IFC financing..
EPM’s construction and maintenance of power distribution networks require mostly limited removal of individual trees as well as periodic pruning due to direct contact of branches and foliage with aerial distribution lines. To minimize damage to tree species, EPM has developed a Technical Guide for Forest Management which details the appropriate techniques for pruning which EPM and its contractors use in the maintenance of the distribution network. When whole individual trees must be removed, either for construction of new distribution lines or during vegetation maintenance, Colombian regulations also require the reposition or offsetting of this impact, even if limited in nature, and some municipalities in the Department of Antioquia even require permits. EPM tracks the number of individual trees removed over a multi-year period and develops voluntary flora compensation plans, that take into account the number of individual trees and the types of biomes from which they have been removed.
Additionally, with the support from a specialized external biodiversity consultancy, EPM is implementing a manual of management measures for fauna species susceptible to electrocution specifically applicable to the distribution network. The manual identifies the potential presence of fauna sensitive to the risk of electrocution in the Department of Antioquia including sloths, small primates, and certain bird species. The manual also identifies the protection elements that must be installed in the different structures, such as poles, transformers, power lines, among others, to prevent, minimize and/or eliminate fauna electrocution risks. EPM’s Center for Technical Excellency has also developed an EPM corporate construction norm for T&D lines and substations with instructions on the use of designs and measures to prevent electrocution of fauna in these installations. As per ESAP #4, complementary to the “Construction Standard NC-RA6-041: Wildlife Protection in Electric Power Networks,” EPM will prepare an annex for the projects to be financed by the IFC. This annex will include a risk analysis for selecting areas with a high probability of electrocution events, in order to identify sites that require the installation of wildlife protection elements. This analysis will focus on bird species and prioritize key areas for biodiversity and avifauna, including landfills, coastal and riparian zones.
Finally, for IFC-financed Expansion and Replacement projects, and based on the network maintenance information systems, a baseline of electrocution events (number of events per unit of time) will be presented. This is intended to help prioritize the locations that require the installation of wildlife protection devices. Afterward, a tracking system will be implemented to identify the causes of network failures, filtering out those caused by wildlife electrocution, which will be compared to the baseline estimates (ESAP #5).
