This is a Category B project as per IFC’s Policy on Environmental and Social Sustainability. Key E&S risks and issues associated with this project include: the company’s E&S management system (ESMS); assurance of fair, safe and healthy working conditions including systems to address gender based violence and harassment (GBVH) risks in compliance with local regulatory and PS2 requirements; potential for short term labour retrenchment due to COVID-19 crisis; occupational health and safety; resource efficiency; management of wastes and emissions, greenhouse gases (GHG) and hazardous materials and waste management in compliance with IFC PS 3 requirements, The World Bank Group (WBG) EHS General Guidelines and WBG EHS Guidelines for Textile Manufacturing; emergency preparedness and response, including life and fire safety management systems; and community health, safety and security issues.

The company has formulated and implemented an ESMS at each of its business divisions in a decentralized manner appropriate to the scale and nature of business operations and commensurate with the varying E&S risks and impacts in the divisions, ranging from low risk (cut and sew facilities) to high risk (wet processing facilities, dyeing/printing process using hazardous chemicals). The ESMS implemented at divisional and manufacturing facility levels are being progressively accredited and certified to good international industry practice (GIIP) standards such as ISO 14001; OHSAS 18001; ISO 50001; OekoTex 100; Global recycling standards (GRS); and Global Organic Textile Standards (GoTS). The company plans to complete the GIIP standard accreditation process covering most of its facilities by fiscal year (FY) 2022. The company's key clients (viz. Marks and Spencer, PVH, Calvin Klein, Speedo, Victoria’s Secret, Lululemon and Nike) independently verify and annually audit the E&S performance of the divisions and facilities as part of their respective supply chain management requirements.

As part of the ESMS, the company has formulated E&S related policies that are applicable across all business divisions and has permitted the divisional management to formulate additional E&S related policies, procedures and manuals to suit their respective business operations and aligned with the company's E&S policy, sustainability strategy and management programs. The company identifies and manages E&S risks and impacts through straightforward application of environmental siting, pollution standards and regulatory requirements promulgated by different regulatory authorities. A legal register is maintained at the facility level and updated every 6 months to reflect the amendments in regulations, if any.

Every division has implemented a management program comprising of operational procedures and manuals that are developed in alignment with corporate/divisional level E&S policies and local regulatory requirements. In 2016, the company formulated and disclosed (Refer to: https://www.masholdings.com/sustainability-environmental.html#sustainability-environmental-overview) its Sustainability Strategy. Using 2010 as baseline year, the company has identified 12 goals under the strategy titled MAS Plan for Change under the three areas of focus viz. – “products changed for good”; “lives changed for good” and “our planet changed for good”. The company has set a target year of 2025 to complete these 12 goals with measurable key performance indicator (KPI) defined for each of these goals. More details about the goals and respective KPIs are presented under PS3.

E&S organization has been instituted at all three levels - company/group corporate; division and facility. The E&S organization comprises of: Sustainability Advisory Council (SAC) reporting to company apparel board and a central sustainability department at corporate level; Divisional Heads Council (DHC); and environmental sustainability (ES) and strategic sustainability (SS) teams at divisional and facility level. Across all levels, about 150 staff with environmental sustainability (ES); strategic or social sustainability (SS); women empowerment; product sustainability and sustainability communications related education and experience have been fielded to operate the E&S organization.

At divisional level, disaster management policy, plan and manual that is appropriate to the nature of business operations in the division has been formulated. Each facility prepares a site-specific, onsite disaster management plan (DMP) aligned with the divisional policy and that is reviewed and approved by the divisional team for implementation. Both divisional and facility level DMP policy and plan documents are periodically reviewed and updated to comply with local regulations.

The company has set-up training management systems, monitoring, auditing, reporting and senior management review systems that are compliant to legal requirements, ISO standards, IFC PS 1 requirements and its customer’s supply chain specifications.  Monitoring and review systems comprise of multiple elements such as: annual or quarterly environmental quality monitoring including workplace monitoring; internal auditing using MAS Calibration Tool; external auditing by GIIP standard accreditation agencies, customers and regulators; Eco Tracker tool based reporting across all facilities; use of Higg FEM (Facility Environment Module), Higg FSLM (Facility Social and Labor Module) and Higg Index for uploading its E&S performance and sharing it with its key clients, customers and stakeholders as part of its initiative with Sustainable Apparel Coalition (https://apparelcoalition.org/).

Globally, 61 facilities have employed over 93,000 on-roll staff out of which Sri Lanka based operations account for 41 facilities with a headcount of over 70,000. Women on-roll staff account for 71% in the global workforce. The company has formulated and implemented a mature set of human resource (HR) policy and procedure documents that are comprehensive in their construction and consideration, inclusive in their approach and gender inclusive in their language. The HR policies and procedures are managed centrally and rolled out to the in-country operations across the 17 countries in which the company operates. The company engages local law firms to ensure that the HR policy document is compliant with the host country labour laws. The policies and procedures are effectively communicated to the employee base through multiple mediums. Employees are engaged on individual contracts and there are no collective bargaining agreements in place. The minimum starting salary levels for garment workers are compliant and above the Sri Lankan Wages Board Ordinance.  For office-based staff salary levels are set through external salary benchmarking. Working hours, leaves, shift patterns and breaks in duty hours are compliant with Sri Lankan labour law

The approach adopted by the company to manage COVID-19 pandemic has been planned and proactive due to which only a limited number of staff from among the large workforce was affected. The total number of associates that have tested positive for COVID-19 is 277 in Sri Lanka and 1392 overseas as at 18th November 2020. There have been no deaths due to COVID-19 among MAS associates. The company continues to adhere to all local government protocols. The company has set up a “Care Center” approved and run by the Government to care for associates who are COVID-19 positive. When the pandemic began to unfold, the company communicated with their employees regularly on its COVID control policy and have continued to do so throughout the course of the pandemic. During COVID-19 pandemic, the company had launched a voluntary separation scheme which was taken up by 0.4% of the staff. The scheme was comparable to the offering of other companies and in compliance with the applicable law. There were no complaints or grievances received from those who opted for the separation scheme.

The company has no migrant workers on the factory floor in Sri Lanka, but globally where there are migrant workers the company provides accommodation and free meals to them. The accommodation is audited by the company and its customers twice a year. The company has an internal workers organization – “The Joint Consultation Committee (JCC)”.  The JCC is comprised of elected employee representatives, who serve on the JCC for 1 year.  More than 50% of the JCC representatives are women.  The JCC facilitates staff commentary and concerns with MAS management through a monthly scheduled meeting. While there is no recognized external trade union in the company, as per the company’s freedom of association position through its policies, enables the employees to join an external union should they wish to do so.

The company has a proactive, pro-women innovative program in place called “Women Go Beyond”. Established in 2003 and funded by all the companies in the group, this program focuses on initiatives across career development, skill development, women leadership and female entrepreneurship, addressing GBV and women’s health program. On gender diversity and non-discrimination, the company has an established approach to supporting employees affected by domestic violence. The company has also benefited from support through a donor-funded ‘She Works’ program across several companies in Sri Lanka which focused on women workforce empowerment.

The company has an internal generic grievance mechanism covering any type of complaint. In Sri Lanka, counsellors are available at each location to support anyone in distress, according to consent and confidentiality guidelines. The company has developed a management framework (consequence grid) to respond to complaints accordingly and proportionately. Over and above the in-person grievance raising avenues, an outsourced third-party service provider has also been operational since 2018. All complaints processed by the external service provider are then shared with an internal MAS ‘DNA Team’ which has oversight for grievances.

The company recruitment policies are in line with the respective labour laws in each location. The company’s recruitment policy provides for equal employment opportunity and non-discrimination in its recruitment procedures and is compliant to PS2 requirements. There is no record in the complaints register or the consequence management grid, of any complaint about the company withholding wages, not paying overtime, or the inability of workers to take breaks and/or leave.

The company has instituted occupational health and safety (OHS) management systems across all the facilities and more than a third of those are certified to OHSAS 18001 standards. Each facility records all safety related incidents and events and annual HSE statistics are compiled at corporate level for senior management review.

The engagement of third-party workers and supply chain aspects are addressed in the MAS vendor code of conduct that outlines the compliance standards expected of its suppliers and vendors. Operationally, the Division head sights all the compliance documentation, supported by the HR team who carry out additional checks on compliance with working hours, payment of salaries, statutory contributions.

Electricity is sourced from national grid for facility operations. In addition, fuels such as: diesel (for standby diesel generator sets), furnace oil, natural gas and kerosene (for operating boilers, thermic fluid heaters), petrol (vehicles) and liquefied petroleum gas (for process and kitchen) is used as needed. As discussed under PS1, the company unveiled its Sustainability Strategy in 2016 with 12 specific E&S related goals and measurable targets to be achieved by Year 2025.  Some of the goals under “our planet changed for good” aspect and progress achieved by 2019 include:

• generate more renewable energy than consumption (52% of MAS runs on renewables – biomass and solar rooftops);
• value enhance non-hazardous wastes (47% value enhancement achieved);
• be zero toxic in products and process (75% of chemicals are at Level 1 status and all wet processing aligned to zero discharge of hazardous chemicals (ZDHC) wastewater guidelines);
• reduce water usage intensity by 75% (37% reduction in water use per kilo of textile produced); and
• restore biodiversity in 25000 acres (1703 acres of land habitat restored).

The company has formulated and implemented a water usage and wastewater management policy to achieve water conservation in its operations. Across the company facilities, almost 82% of water demand is sourced from urban water utility agencies while about 10% is sourced from groundwater. About 3% of the water demand is sourced through water tanker services and 5% water demand is met through recycling of treated wastewater.

About 80% of daily raw water consumption ends up as wastewater from process and domestic streams. Facilities that have wet processing operations have installed in-house effluent treatment plants (ETP) to treat the wastewater to preliminary levels acceptable to common effluent treatment plant (CETP) influent quality norms in the industrial zone. About 95% treated wastewater is discharged to CETP for further secondary/ tertiary treatment. As mentioned above, about 5% of treated wastewater is being recycled and reused within the company facilities.

Across its facilities the company has implemented appropriate air emission control equipment’s/ technology and wastewater treatment plants to meet the local pollution standards. Environmental quality monitoring procedure is in place in line with local regulations and permit conditions. 

The company manages over 20 types of non-hazardous waste streams out of which about 8000 tons of fabric waste generated per year is the largest waste stream. Other waste streams include foam, cardboard, paper, polythene, and food wastes.  In line with the sustainability strategy, value enhancement of waste streams has been achieved. The entire ETP sludge is sent for energy recovery and over 90% of waste chemical containers are washed and reused while the remaining ones are incinerated by authorized vendors. In June 2020, a waste management policy has been rolled out that is applicable to all MAS Capital's local and global facilities and MAS Fabric Park. Under waste management aspect, MAS wanted to achieve zero waste to landfill of all types between 2018 and 2020.

As part of its sustainability strategy and pertaining to hazardous chemical management, the company envisions to make MAS and its products free of toxic chemicals by 2020. To implement the vision, the company has set up a MAS Chemical Management Team at its corporate office as part of the environmental sustainability team. The company has formulated MAS Chemical Management Strategy and a Chemical Management Policy. Chemical management policy is applicable to all facilities that use chemicals for dyeing, stain remover, printing, ETPs, pesticides and janitorial purposes. The policy implementation is ensured through 3 manuals to achieve ZDHC - MAS Chemical Management Manual; MAS RSL Compliance Manual; and Calibrated Tool Version for Chemical Management Manual.

The company facilities store and use as many as 10 different types of hazardous chemicals. The hazardous materials are managed in compliance with local regulatory and consistent with good industry practices. The company has adopted ZDHC Standards (https://www.roadmaptozero.com/input) - a global multi-stakeholder GIIP initiative within the fashion and footwear industry and has become a value chain affiliate member of ZDHC.  More than 75% of chemicals used in MAS facilities are compliant to the ZDHC Manufacturing Restricted Substances List (ZDHC Chemical Gateway Level 1 or above) and all wet processing facilities meet the ZDHC Wastewater Guideline since 2017. The company wants to achieve the ZDHC Level 3 (highest level of conformance to ZDHC Standards) by 2025 for all chemicals used in its facilities. All chemicals including pesticides and janitorial chemicals are subjected to ZDHC standards. The company has also implemented CLEANCHAIN (Refer: https://www.cleanchain.com/about-us/) in 14 of its facilities in Sri Lanka and partnered with Scivera (Refer: https://www.scivera.com/) to achieve its chemical management related goals by 2025. The company has been partnering with its chemical suppliers, raw material suppliers and sub-contractors regarding ZDHC Standards.

The company quantifies direct and indirect GHG emissions from its wholly managed facilities, using independent third-party agency (M/s TUV Nord) according to ISO 14064-3 standards. In 2018, the GHG emissions from the company’s 46 facilities under its management control were evaluated for Scope 1 and Scope 2 emissions and estimated to be about 15,400 tCO2e and 107,000 tCO2e respectively. In the last 3 years, scope 1 GHG emissions have shown a declining trend and has reduced by 18% since 2016.

Majority of the facilities are located within well managed industrial zones and 18 Apparel Manufacturing Facilities (15 facilities in Sri Lanka and 1 each in India, Indonesia and Jordan) are located outside the designated industrial zones. The facilities located outside industrial zones are cut and sew or apparel manufacturing and do not involve wet processing. The company has established processes to ensure highest consideration for environmental norms of the operating locality. The risks and impacts to community health, safety, and security that may arise from project related activities are thus limited.

Nevertheless, every facility undertakes annual infrastructure and equipment safety inspections or audits by chartered engineers and government approved inspectors in line with local regulatory requirements. Annual testing includes structural stability of the buildings, integrity testing of pressure vessels and safe load bearing capacity of overhead lifting equipment. All the facilities, whether inside or outside the industrial estates, have adequate road network access and have enough vehicular parking spaces earmarked inside the facility premises. Every facility undertakes road safety awareness and defensive driving related training programs as part of training management systems.

All facilities have appropriate life and fire safety (L&FS) infrastructure, management systems and L&FS organizational structure in place commensurate to the risks and impacts. Facility buildings are constructed in keeping with the host country regulations and customer specific compliance requirements. Among the L&FS infrastructure provided at facility level, the critical ones include: central distributed fire control panel; fire water tanks; multiple and alternate fire hydrant pumping system; horizontal and vertical compartmentalization of buildings; and L&FS infrastructure managed through computerized, real-time building management systems (BMS) etc. L&FS management systems comprises of detailed operational procedures including training and fire evacuation drills.

Security at the company is provided by well trained and professional unarmed guards deployed by outsourced third party security vendors. For engaging with women workers at every facility, women security officers and guards are deployed as part of the security team. Security team is trained on emergency response plan, community engagement and grievance redress, gender aspects, labor regulations, first aid and mock drills.

Aligned with its Sustainability Policy the group delivers its approach to corporate and social responsibility (CSR) through a robust community engagement program, including its “Lives changed for good” initiative. It has defined methodology, planning and monitoring mechanisms for community engagement, with emphasis on community empowerment. A Sustainability Committee considers and approves all community projects and expenditure. Project management includes live dashboards and reporting tools including a methodology to ‘feel the pulse’ of a community to determine impact and prioritization.

The company provides special emphasis to vulnerable groups inclusive of women organizations, vulnerable children, and persons with disabilities as its key stakeholders for its CSR programs. Notably, the company has selected ten Supported Employment Officers whose task is to support person with disabilities (PWD) and trained by MAS. At present, the company has 381 persons with disabilities working in Sri Lanka. The company has engaged directly with the National Disability Centre in Sri Lanka to further its upstream engagement with key stakeholders in the area of disability services. The company has a community engagement program called ‘Local Connect’ for implementing smaller, ad hoc projects. The company encourages corporate citizenship and employees are encouraged to volunteer in the Local Connect initiative.

The company has been a participant member of UN Global Compact since 2003 and has been annually reporting on its performance (Refer to 2018 report here: https://www.unglobalcompact.org/participation/report/cop/create-and-submit/active/430123). To further strengthen and formalize its stakeholder engagement, as per ESAP#1, the company shall formulate a documented community grievance mechanism in line with PS 1 requirements for addressing community grievances arising out of company’s industrial operations and local community development projects (CSR). Community concerns and grievances about the company’s E&S performance including gender-based violence & harassment aspects shall be resolved using such mechanism.

The company will locally disclose the social and environmental information for the project at the following locations:

Any queries and/or comments about the project may be directed to: