Identification of Risks and Impacts:

The company identifies and manages E&S risks and impacts in  its operations by ensuring that Environmental Impact Assessments (EIAs) are prepared by qualified third party institutes for all its operations and facilities (including the greenfield facilities), and by ensuring that actions in the EIA E&S management plans have been effectively implemented. As part of the above, the company also discloses its ongoing annual environmental performance results: http://permit.mee.gov.cn/permitExt/syssb/wysb/hpsp/hpsp-company-sewage!showImage.action?dataid=174950a50dd04206ab2fba11d9fb2cd6

Policy, and Management Programs:

Blue Sail has developed and is regularly implementing its corporate policies and procedures including those related to OHS, life and fire safety (LFS), hazard analysis critical control point supply (HACCP), supplier management, EPC and construction contractor management, waste and hazardous waste management, and equipment and facility maintenance. The company has attained management certifications as per ISO 9001 (Quality management) and ISO 13485 (Medical devices quality management).

Monitoring and Review:

The company has developed policies and procedures which include the following: (i) disclosure of annual environmental performance results air emissions, wastewater, and noise level monitoring results; and (ii) a set of emergency preparedness and response (EPR), and reporting procedures including mechanisms to regularly undertake emergency and LFS drills. Annual internal and external audits, as well as daily, weekly, and monthly site inspections (using site inspection checklists based on identified operational risks and hazard points) are conducted by company’s EHS and OHS personnel to ensure compliance of day-to-day operations with company policies and procedures at all areas within company facilities.

Organizational Capacity:

Blue Sail has a corporate level EHS committee with all department heads as members. The EHS department at the company headquarters (HQ) leads all EHS related work and reports to the General manager. All production bases have a facility-level EHS department staffed by qualified EHS and OHS officers. In addition to line reporting to the HQ EHS department, they are also horizontally accountable to heads of facilities. At the company HQ, an Audit and Evaluation Unit (reporting to the corporate public safety department) undertakes scheduled and unannounced site inspections at all facilities throughout the year.

The EHS department sets Key Performance Indicators (KPI) and KPI targets (e.g. zero fatality; EHS training and EPR drill staff participation and pass rates) for different operation departments, based on which KPIs for each role and employee are further developed. EHS KPIs are reviewed quarterly and connected to the performance review of each staff member and department.

E&S performance monitoring results are consolidated by the HQ EHS department into summary reports and submitted to the corporate level EHS committee for review, with results discussed as needed during regular operational meetings at different levels of the company. Where non-compliances are identified, the KPI monitoring and reporting system requires assigning responsibilities to specific staff members for swift follow-up corrective actions and verification that such actions have resolved non-compliances. Lessons learned and improvement opportunities are captured and discussed in operational and EHS meetings.

All EHS training sessions end with tests and examinations to ensure practical knowledge uptake by participants who are expected to attain certain achievement levels. Internal EHS competitions are organized by the company as an additional means to foster EHS knowledge uptake and to promote a sense of common ownership of EHS compliance among staff.

Emergency Preparedness and Response:

The company has in place detailed EPR plans based on hazard point analysis of each likely emergency scenario which may arise, with corresponding mitigation measures, and clearly defined roles and responsibilities including EPR chains of command. Detailed response action plans addressing different emergency scenarios such as fire, explosions, and other potential OHS incidents are in place. EPR drills are conducted on a quarterly basis with full participation from staff and in coordination with local fire brigades.

Key LFS measures in place at company facilities are: (i) detailed electrical safety procedures being followed; (ii) smoke detectors and sprinklers installed in all major sections of each facility, connected to a central fire control panel room managed by staff 24/7; (iii) dedicated LFS water tank of adequate capacity installed at every major production area within a facility; (iv) EPR drills and worst-case-fire- scenarios planning carried out jointly with local fire brigades.

Working Conditions and Management of Worker Relationships:

The company has a headcount of 4,042 workers – all direct hires - of whom 1,844 are in operational and frontline roles. The male-to-female ratio is 37%:67% for operational staff and 49%:51% for other staff, which reflect the availability of talents and graduates in the sector in which the company operates.

The company benchmarks market salary levels for different positions as a basis for determining remuneration and reported that most staff received above-market-level wages, as well as seasonal and night-shift subsidies where these applied. Overtime pay follows national labor law requirements. Turnover percentage has been in the low single digits in the past 2 years, and there is no planned retrenchment by the company since it is expanding.

A virtual tour of the existing facility confirmed working conditions to be highly automated, safe, clean, and organized. Most staff are local hires who prefer to either live at home or rent accommodation nearby and therefore very few of them reside in staff quarters.

Blue Sail has a set of human resource (HR) policies and procedures which are consistent with national labor requirements and IFC PS2. These describe recruitment policy, attendance record management, social insurance, remuneration and overtime policies, benefits, training and development, leave arrangements, performance evaluation, and rewards and disciplinary procedures. Hiring and employment practices recognize merit based, non-discrimination, and equal opportunity principles.

Workers’ Organization and Grievance Mechanisms:

Most staff are members of the labor union at the company with membership being completely voluntary. The company does not place any restrictions on freedom of association of its staff. The labor union functions as a channel to collect suggestions to improve the overall working environment e.g. on canteen food quality, staff benefits, etc., and also as one of several important employee grievance redress channels. Other anonymous and non-anonymous channels are: through the HR department; through the company WeChat (social media app) account; drop boxes; and the CEO email address publicized to all staff. No labor related litigations transpired in the past 2 years. Grievance logs are maintained by the HR department.

Protecting the Workforce:

There is no evidence of child or forced labor in the company’s workforce. The company has clear hiring procedures and requirements on minimum age (18 years) for employment. Maximum working hours as per China’s labor laws are observed. Blue Sail requires its EPC construction contractors to abide by all aspects of the PRC labor laws and the company’s HR and OHS requirements, with compliance verified through random and regular site inspections.

All contractor workers involved in high risk operations or duty stations (e.g. electricians) are required to present valid technical qualifications and to attend ongoing OHS related training. Construction OHS and L&FS training is provided by the EHS department to all contractor construction workers.

Occupational Health and Safety:

Blue Sail reported that there has been 1 lost time injury resulting in 10 lost workdays in the past 2 years at its facilities. The company’s OHS management system is defined in detail in its H&S management procedural manual and in its EPR procedures. This system requires: (i) description of various potential OHS scenarios (e.g. mechanical and electrical injuries), classifying them into four levels in terms of severity, developing and implementing required mitigations under each scenario, and undertaking pre-emptive measures to minimize risk events before they transpire; (ii) detailed incident reporting and root cause analysis in the case of an incident; (iii) recording of near-misses (and number of unsafe work behaviors observed in the workplace) by responsible personnel and with personnel and departments assigned to manage follow-up actions; and (iv) monitoring of indoor noise and temperature levels, corresponding mitigations (e.g. ensuring the use of personal protective equipment such as ear plugs and installation of air-conditioners in high-temperature sections), and providing for annual health checkups for all staff.

The company conducts daily and weekly OHS site inspections to identify potential improvement actions. The above system reflects a focus not only on lagging but also on leading OHS indicators and is oriented towards preventative actions.

COVID-19 Pandemic:

No staff have been made redundant due to COVID-19 and the company has no plans to do so.  There have been no salary cuts or no-pay-leave arrangements put in place. No third-party construction contracts have been cancelled or suspended due to COVID-19 which might have otherwise resulted in construction redundancies. The company has implemented COVID-19 response measures at its operations including: health declaration, stringent temperature checks, regular cleaning and disinfection, handing out hand sanitizers to all staff, etc. These COVID-19 response measures are also applied at all construction sites.

Energy Consumption and Greenhouse Gas (GHG) Emissions:

The glove production process at the two greenfield Blue Sail facilities is expected to require an estimated 2.0 million tons of steam for cleaning, hot rinsing and hot drying. Electricity will be consumed at the two greenfield plants to power air blowers and other equipment, estimated at about 170 GWh/annum.

The greenfield facilities aim to procure electricity and steam required for their operation from a local coal-fired Central Heating Plant (CHP or co-generation power plant). The CHP – independently owned by a third-party entity and which is located close to Blue Sail facilities - serves as a public utility in the local Zibo area and supplies electricity and steam to local residential houses, factories, and other businesses.

The CHP is now under retrofit to meet local heating demand based on local Government energy planning requirements, and in order to improve energy efficiency and achieve low air emission levels - comparable to that in natural gas fired combustion units. As per the company, after retrofit completion, the two greenfield Blue Sail facilities are expected to consume less than 20% of the power and 30% of the maximum steam generation capacity of the CHP.

Accordingly, the estimated annual GHG emissions (scope 2) from operation of the two greenfield Blue Sail facilities (attributable primarily to utilization of steam and electricity from the CHP) are estimated at a combined 378,800 tCO2-eq. As such, the company will annually quantify and report on the project’s GHG emissions based on an internationally recognized methodology.

Water efficiency:

The existing Blue Sail facility at Zibo procures water from the municipal water company primarily for the purpose of surface-cleaning the mold, hot water rinsing, and water cooling and chlorine-washing of the finished glove products. To improve water efficiency, the company has set up a water recycling facility at its existing production base, which reuses about 53% of water, including cooling water and rinsing water utilized in production. The company is looking into technically and financially feasible design options to achieve a similarly high level of wastewater recycling at the two new production bases.

The company is in discussions with the CHP to procure cooling water from the latter (currently discharged as wastewater) to meet the cooling needs of the two greenfield Blue Sail plants. In doing so, CHP cooling water would then serve as a major water supply to the two plants, supplemented by fresh water from the public water supply company, and procurement of demineralized water from the CHP for production material preparation.

The Company will assess and compare Greenhouse Gas (GHG) emission levels of various steam, electricity, and piped-cooling-water procurement scenarios/options for this project. Based on assessment findings, the company will adopt a technically and financially viable low-GHG option among one or a combination of scenarios/options. Refer to the ESAP for details.

Pollution Prevention: 

The project will have separate rainwater and wastewater collection and discharge systems, and storm water will be collected and temporarily stored in a buffer water pool for emergency use.

Wastewater to be generated from the greenfield facilities will comprise four main sources: cooling water, wastewater from production washing process (acid and alkali-based cleaning and disinfection), alkali wastewater from acid fugitive emission, other rinsing water, and sanitation water. All wastewater will initially enter into the on-site wastewater treatment facility (WWTP), which comprises a biological aerated filter stage, septic tanks, then a triple sedimentation process, and a further filter stage. The WWTP-treated wastewater will then be diverted to an on-site water recycling and desalination system (based on multi-stage reverse osmosis and mechanical vapor compression desalinization technologies), which is expected to achieve a significant level of water re-use similar to that at the existing Blue Sail facility in Zibo.

Wastewater which cannot be re-used will be treated to meet applicable national regulatory standards (see below), then discharged to the industrial park wastewater treatment plant (IPWWTP) for secondary treatment. As per project design specifications, wastewater to be discharged from the two greenfield facilities to the IPWWTP they will meet the national standard for rubber industry (Regulation GB27632-2011). The IPWWTP will further treat incoming wastewater to the GB27623-2011 standard before final discharge to ambient waterways as per local regulatory requirements.

Air pollutants arising from the company’s operations (and treatment methods) include: Particulate Matter (PM – captured and treated by bag filters), Nitrogen Oxides (NOx), chlorine, hydrogen chloride fugitive emission from acid and alkali cleaning (treated by alkali liquid spray absorption), VOCs from the drying process (active carbon absorption), ammonia, and hydrogen sulfide (biological deodorization) from the wastewater treatment process.

After treatment to meet applicable national and industry standards, these emissions are emitted via 25m stacks.  Air emission design specifications for the greenfield facilities as described in the project EIAs indicate that these parameters will be treated to levels meeting national/industry regulatory standards (e.g. GB16297-1996, DB37/2801.6-2018) and once treated to such levels will also be materially compliant with applicable WBG EHS Guidelines.

Solid and hazardous wastes:

The company stores and recycles non-hazardous solid wastes (defined as non-hazardous as per national classification systems) such as discarded ceramic hand molds and waste filters as per relevant company standard operating procedures. The residual acids and alkali, unused lubricating oil, and unused resin are classified as hazardous wastes according to national law; as is sludge as a byproduct of wastewater treatment - subject to further confirmation after commencement of operations and until (potential) re-classification the company will therefore manage sludge as per hazardous waste regulatory requirements.

All hazardous wastes will be stored separately from non-hazardous wastes in dedicated locations, as per requirements in the national standard for hazardous waste pollution control standard (GB18597-2001), and their transfer and safe handling to and from Blue Sail facilities will be managed by licensed third parties, with detailed audit trails to be maintained.

Other hazardous input materials utilized at Blue Sail facilities are Chlorine (see PS4 section for details), hydrochloric acid, nitric acid, and solvents. The company has detailed management procedures and implements risk control mechanisms on the storage, transport, utilization, and containment of these materials, as per stringent regulatory requirements. Hazardous materials such as chlorine, HCL, and HNO3 will be stored in designated access-controlled rooms.

IFC’s virtual appraisal included a visit to the chlorine storage facility of the company’s operating plant in Zibo - which had functional double access controls, automated sensors, alkaline pools (for neutralization purposes in leakage situations), as well as other safety measures in place. Chemicals are fed into the production process via automated controlled pipeline. All chemicals procured for Blue Sail operations are utilized in a manner to minimize wastage and any unnecessary excess storage on site, with small quantities of post-treatment chemicals entering the wastewater stream. There are no incinerators at the existing Blue Sail facilities and none will be installed at the proposed greenfield facilities.

The two greenfield projects are located in an industrial park, with all local communities (except one – see below) located between 700m and 5km in distance from the two sites and are therefore outside the radius of sensitive receptor locations. One community is located at 70m away from the eastern boundary of one of the facilities, where the WWTP will be constructed. As per the requirements stipulated in the E&S management plan of the greenfield facility EIAs, Blue Sail will take necessary actions to mitigate potential risks to community health and safety.

Blue Sail employs unarmed security guards to secure its premises, and there have been no security or fire incidents since the start of operations at its existing facility.

As confirmed during IFC’s virtual appraisal, all materials on site at the existing company facility including those classified as hazardous, are managed as per stringent national regulations: (i) materials safety data sheets are available and posted at conspicuous locations where each material is used or stored; (ii) storage areas are access-controlled and structurally reinforced against potential explosion and leakage risks for those materials assessed to be subject to such risks (e.g. chlorine gas); (iii) transport is handled by licensed third party logistics providers; (iv) full audit trails are maintained; and (v) measures applied to 100ppm liquid Chlorine and gaseous Chlorine (utilized in the glove mold chlorination-disinfection step of the production process) include: strict control of quantity of Chlorine stored on site; dedicated chlorine storage room equipped with sensors connected to a centrally controlled alarm system which initiates shutdown should the chlorine gas level exceed a pre-set threshold; chlorine collection/trapping compartments installed at the perimeter inside the chlorine room and with corresponding ventilation system to direct excess chlorine gas to those compartments in case of potential leakage; and an alkaline pool within the chlorine storage room to neutralize excess chlorine in case of exceedance. Analysis of the use/storage/handling of each hazardous material and required mitigations (hardware and day-to-day controls) are described in detail in project EIAs.