PS5 does not apply as the land required for project expansion is either already owned by the company (e.g. broiler farms, feed mill, and abattoir) and being used for existing operations (i.e. new project facilities and/or equipment will be built within the footprint of existing assets) or is being, or will be, leased in a willing-lessor, willing-lessee arrangement. Refer to PS1, policy section below, for further details on land acquisition/leasing policy and due diligence process going forward. PS 7 does not apply as there are no indigenous peoples in the project area. PS 8 on cultural heritage does not apply as the operations are located in consolidated agriculture areas.     

This is a Category B project based on IFC’s 2012 Environmental and Social Sustainability Policy. The E&S risks and impacts associated with this project are limited, site-specific, and can be readily addressed through generally accepted mitigation measures described in this document. HMH Rainbow is committed to sustainably manage its feed mill, farms, and abattoir in compliance with Ugandan legal and regulatory requirements, IFC’s Performance Standards (PSs), World Bank Group (WBG) EHS Guidelines (General and Poultry Production/Processing) and credible voluntary standards (ref. animal welfare).

Key E&S risks and issues identified with this investment relate mainly to (i) existence of E&S risk assessments studies and environmental licenses and permits for all current and proposed facilities (ii) development and implementation of an effective environmental, human resource, health and safety (ESMS) management system, including EHS management plans and SOPs; (iii) existence of EHS organizational function and capacity to implement, monitor, and report on the company’s ESMS performance, including Key Performance Indicators (e.g. lost time injury frequency rate, incidents, air emissions, energy use); (iv) existence of emergency preparedness and response procedure, including Life and Fire Safety (L&FS) system; (v) waste management practices, including storage and disposal; (vi) effluent treatment and monitoring; (vii) existence of water abstraction permits for all boreholes at facilities, including meeting monitoring and reporting requirements; (viii) traffic management and community impacts; (ix) stakeholder engagement and community grievance mechanism; and, (x) supply chain risk assessment and management for procurement of local maize                                                   

Environmental and Social Policies. HMH Rainbow has not yet adopted an overarching E&S policy with objectives and principles that guide HMH Rainbow’s operations. HMH Rainbow has policies relevant to PS 1, namely biosecurity policy, food safety policy, and occupational safety and health (OHS) policy. In addition, the HR manual contains several policies including safety, security, sexual harassment, HIV/AIDs and a Code of Conduct. Going forward, as set forth in ESAP#1, HMH Rainbow will develop and implement a corporate E&S policy applicable to all its operations. This policy will commit HMH Rainbow in meeting performance-based requirements, such as IFC PSs, WBG EHS Guidelines, applicable legal and regulatory requirements in Uganda, and voluntary animal welfare standards. In addition, HMH Rainbow will develop and implement a land acquisition/leasing policy to ensure that due diligence process for the proposed operations will be in accordance with risks associated PS 5 (Land Acquisition and Involuntary Resettlement), PS 7 (Indigenous Peoples) and PS 8 (Cultural Heritage). HMH Rainbow will then develop and implement a communication plan to socialize such policies’ requirements with its employees, contractors, service providers, third-party suppliers, will ensure local translation and display at HMH Rainbow’s operation facilities, and briefing at staff orientation workshop.  Effective implementation of the EHS policies will be monitored and reported quarterly to HMH Rainbow Board of Directors. IFC was informed during this appraisal that OPEX/CAPEX has been approved for the implementation of the above-mentioned E&S and land acquisition policy in 2020-21. Annual audit of these policies’ implementation effectiveness will be carried out.

Human Resources Policies and Procedures. At the time of the appraisal in February 2021, HMH Rainbow employed 625 employees. All are permanent employees, employed on renewable 2-year contracts. In terms of gender breakdown, 511 were male and 114 females. HMH Rainbow has developed and approved by its Board of Directors an HR manual containing policies on Safety, Security, Sexual Harassment, HIV/AIDs, and a Code of Conduct related to managing the workforce. The HR Manual references Ugandan law and regulations and ILO conventions (on which PS2 requirements are based) and commits to abide by ILO Code of Practice on HIV/AIDS. HMH Rainbow had no labour infraction or court case for the last three years. The HR manual objectives are considered aligned with the six objectives of PS2 objectives, addressing a range of topics indicated in the section below. The HR department has 2 HR managers supported by additional HR officers at the operational level. The HR department’s main responsibility is managing the workforce as per the HR manual, in addition to the standard functions such as recruitment, payroll management, performance appraisal, and training on HR manual topics. The HR manual has a sexual harassment policy that can be further socialized to the workforce to be responsive to the medium-risk result of IFC GBV risk-screening. This will be included as part of the training plan addressed by ESAP #4.

Working Conditions and Terms of Employment. The HR manual includes matters related to the HR function itself, recruitment, appointments, probation, job description, working hours, salaries, benefits and allowances, bonuses, leave, performance management, employee development and education, employee welfare, safety and security, non-discrimination, equal opportunity, discipline and Code of Conduct. The company provides food for its workers at its abattoir. Showers and other facilities are provided to workers; all facilities are separated based on gender. HMH Rainbow’s least salary is 25% above the minimum wage in Uganda (the minimum wage of 7,500 UGX  per month set in 1984, approximately 2 USD on today’s equivalent), HR reported the biggest challenge is worker turnover; this is possibly exacerbated due to economic development taking place in the region, providing alternatives to those wanting to work. Staff turnover is an indicator tracked at a Board level and reviewed by the board at quarterly board meetings, with appropriate actions being undertaken when increased turnover is identified. According to the HR Manual, all HMH Rainbow’s staff are subject to annual salary adjustment based on performance review. During the appraisal, HMH Rainbow’s management indicated the salary scale is comparable to the market peers and will be responsive to factors such as country inflation and the company’s financial performance. Additionally, HMH Rainbow provides complementary benefits to the employees such as health insurance, life insurance, and transportation. As part of the EHS monitoring (ESAP#4), staff turn-over indicators will be tracked to identify areas for improved workforce management and retention.  

Worker’s Organizations. There are no unions present within the company’s operations, however, as per the labor laws of the country and HMH Rainbow’s HR Manual, they are not prevented from forming if they are wanted by workers. There is no history of recent labour strikes. 

Non-discrimination and equal opportunity. The HR manual explicitly specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All hiring and promotions are merit-based. There is no difference in terms of salary for female and male employees with the same experience for the same type of jobs. HMH Rainbow has a Code of Conduct on respectful workplace and relations between the company and its employees and among employees, including, adequate sexual harassment policy.

Worker/Contractor Grievance Mechanism. The HR manual describes the grievance procedure in place at the company. The procedure includes how a complaint is to be dealt with and by whom. In addition to that written procedure, during conversations with the HR manager, reference was made to suggestion boxes as a means for a grievance to be lodged anonymously. However, the grievance procedure does not address third-party workers and shows areas for improvement. Areas to enhance and effectively implement the procedure include (a) improve disclosure of the mechanism and training to direct workers (permanent and temporary) and third-party workers; (b) train broiler farms, feed mill and abattoir managers, and supervisors to effectively implement the procedure; (c) develop guidance for resolution and response, including appropriate methods to handle grievances or concerns related to sexual harassment and gender-based violence; (d) periodic monitoring of the grievances with defined KPIs. Awareness of this procedure will be included during the orientation session of new hires (ESAP#9). 

Protecting the workforce. The company requires prospective employees to provide a national identity card that shows their date of birth. No one under the age of 18 is employed by the company. No documentation or any other identification is required to be submitted to the company or retained as a condition of employment, thereby ensuring that employment is at will.

Fire and Life Safety: HMH Rainbow’s facilities with relatively high fire risk potentials are the feed mill and the abattoir. Both facilities have a firefighting system licensed by Uganda’s authority. In addition, both facilities are provided with fire extinguishers, inspected, and maintained by a service provider. 

Workers engaged by third parties. The construction of the new broiler farms will be performed by contractors. As with the completed broiler farms, the company will hire a contractor for the civil and erection works and another for the mechanical, electrical, and plumbing works and systems integration. The company has no policy or procedure to address OHS and labor requirements for workers engaged by third parties. The IFC considers contractors retained by the company to be under its direct control and should operate in a manner consistent with the requirements of IFC PSs. This is addressed in ESAP#10.

Occupational Health and Safety.  OHS management is spearheaded by the operations team. The overall management of OHS lies with the SHEQ committee and the QA Manager. The SHEQ committee departmental representatives are responsible to identify OHS hazards in respective departments and conveying them to the SHEQ committee. The SHEQ committee opines on the identified hazards and defines safety measures, which are then relayed to management by the SHEQ chairperson should any special action be required. In addition, the SHEQ committee conducts regular departmental visits to check OHS status, especially at the high-risk locations (feed mill and abattoir). HMH Rainbow has an on-site clinic staffed by a full-time nurse at its Farm #1 complex.

Based on IFC review, the standard OHS management measures are addressed such as the provision of adequate PPE. This was noted by the visual records made available. However, OHS management practices and function require further improvement, especially in terms of performance monitoring, operational controls, and oversight. For example, there is no well-documented work hazard risk assessment for each section of HMH Rainbow’s facilities; the OHS management practices should include a monthly OHS KPIs or status report with leading and lagging indicators to measure the occupational health and safety performance over time; major accidents should have formal incident investigation reports to identify root-cause, corrective measures, and preventive measures. Overall, the focus of OHS management should be reviewed to include proactive EHS inspections to ensure EHS compliance. The inspection should cover all operations and ancillary facilities supporting the operations such as the refueling area on site, waste management area, operation of boilers, etc. Further analysis by the IFC on the company’s OHS performance was restricted due to the limited extent of OHS information tracked. The OHS management areas for improvement are addressed in the requirement to develop and implement the EHS MS, noted above in ESAP#4.

Supply Chain. Refers to PS1 supply chain above.

Resource (Energy and Water) Efficiency. HMH Rainbow obtains the electrical energy from the national grid. Close to 80% of Uganda’s electricity comes from hydropower. The IFC resource efficiency team completed a preliminary analysis of HMH Rainbow’s energy and water consumption performance, measuring them against the advisory experiences in the region. The analysis showed the consumption of the abattoir within the 10% range of a regional benchmark, and water consumption is favourably 20% lower, whilst the broiler farms show potential for energy and water reduction. Technical adjustments to broiler farms require to concur with quality and FSMS requirements; the resource efficiency potential of broiler farms is an area that can be addressed by HMH Rainbow under the EHS management system (ESAP#4).

Greenhouse Gases. IFC’s climate team assessed HMH Rainbow’s GHG emission based on scope 1 and 2, the GHG emission by electricity and fuels consumption for all its operations. The GHG emission is estimated at 25,000 tons CO2e/year. Based on HMH Rainbow’s planned expansion, such GHG emissions will be approx. 45,000 tons CO2e/year. According to a GHG benchmarking tool developed by the FAO (GLEAM), the regional benchmark of GHG emission per kg of carcass weight is 7.11 kg CO2e/year and the planned expansion is accompanied with improved housing and feed management, which will result in GHG avoidance by at least 7%. This will reach approximately 4.9 kg CO2e/year per kg of carcass weight. HMH Rainbow will report annually the GHG emissions in IFC’s annual monitoring report (AMR).

Water Consumption. Water for the company’s operations in farm #1 complex is sourced from three boreholes. The highest water consumption occurs in the abattoir for the broiler cleaning and facility cleaning. The three boreholes supply overhead six storage tanks, with a total capacity of 60,000 litres. The 2012 ESIA assessed the quality of the raw water and was found of good quality, in accordance with national norms. The company has a current water abstraction permit issued by the Directorate of Water Resources Management (DWRM) for a borehole at the abattoir site; information was not available for the rest of the boreholes that are servicing all other broiler farms, aside farm 1 complex. The available water abstraction permit stipulates the water draw limit from the borehole at 24 cubic meters per day and requires daily monitoring of water volume abstracted, weekly monitoring of groundwater level, and reporting of these data quarterly to DWRM, which is not currently practiced. The water abstraction permits and monitoring requirements are found in ESAP#11. The water abstracted from the borehole is also used as potable water for human consumption. A water microbial test is conducted monthly to ensure it meets the hygiene standards for the abattoir operation; to confirm the water quality for human consumption according to the Ugandan regulation or the World Health Organization (WHO), the test should expand to include physical parameters such as color, cloudiness, and particulate matter, and chemical parameters such as hardness, chlorine, and aluminium (ESAP#11).

Boilers are used to provide hot water and hot air; they are wood fuelled and subject to Supplier Code (ref. ESAP#7). Cooling is provided using evaporative coolers.

Air emissions monitoring and Ambient air quality. The main sources of air emissions are the operation within feed mill (fine grain dust), generators, and boilers. Generators are only used as a backup for power outage (limited occurrence) and boilers undergo preventive and corrective maintenance; none of these equipment reported exceedance of air quality emissions. HMH Rainbow undertakes annual EA that includes air quality and noise measurement. The latest EA (2021) showed some sections in the farm 1 complex has high level of dust concentration, triggering exceedance in particulate matters 2.5 and 10 according to Uganda’s regulatory requirement. The air quality management will be addressed as part of the EHS MS (ESAP#4) and continue to be monitored annually as part of the EA.

Noise The main noise sources occur at the feed mill and the abattoir, which are caused by the machines’ operation. The most recent noise measurement conducted as part of the EA 2021 showed the noise levels within the broiler farms are below the permissible level except for few locations at the feed mill and abattoir due to the machines. Workers are provided with earmuffs at these high noise level areas as reported by the EA report and confirmed by management during appraisal. Adherence of PPE use represent a typical challenge in an industrial facility, also reported by the EA, which will be addressed as part the EHS MS implementation (ESAP#4).

Wastewater treatment. The abattoir generates effluent which is channeled to the on-site effluent treatment plant (ETP). The abattoir facility is designed such that there is no cross-connection between the effluent and sewage system. The effluent is treated by undergoing screening, settling, chlorination, and oxidation prior to being land applied, i.e. there is no discharge to surface waters. As such, the limits within the industry specific WBG/IFC EHS Guidelines do not apply. The planned investment CAPEX includes upgrades to the ETP to accommodate the increased birds processing capacity. The upgrades will include increasing the number of settling chambers and improving the chlorination and oxidation capacities. The effluent treatment practice described in the ESIA was confirmed during the appraisal to still be in effect. National regulation requires such a wastewater treatment plant to be licensed; in addition, there are regulations regarding the land application of treated effluent along with monthly monitoring requirements. HMH Rainbow presented a current discharge permit of treated effluent during IFC appraisal and it undertakes monthly water analysis of treated effluent, addressing Uganda’s regulatory requirements; the chemical oxygen demand is tested at the facility, and other parameters are tested at approved laboratories. A sample provided indicated compliance of the treated effluent for land discharge; the 2021 EA recommended the wastewater monitoring parameters outside of the acceptable standards should be corrected, indicating the need to have an effluent analysis register, or its equivalent, for each monthly water analysis to determine performance and required operational control. The above enhancements to the management of effluent are addressed as part of ESAP#12.

Solid and hazardous waste. HMH Rainbow’ operations produce solid waste, effluent from the abattoir, and sewage waste. Solid waste produced are organic waste, non-organic waste, and hazardous waste; organic waste represents the larger portion of generated waste. The company has a waste management procedure; however, it should be enhanced to ensure it identifies all types of generated waste from HMH Rainbow’s operations, including hazardous waste, measures to manage and store each stream, and records of final disposal at licensed facilities (including due diligence of service providers). A waste register to monitor the approximate quantities of waste of each stream, handling, destinations, and traceability mechanism i.e. signee/consignee record should be developed as part of this enhancement.

The organic wastes produced are mainly biowaste from the abattoir operation and animal feed. The biowastes from the abattoir are blood, feathers, lungs, and unprocessed poultry carcasses. This waste is collected daily from the abattoir by a waste contractor, who operates pigs’ farms. The collected biowaste is cooked and fed to the pigs. Animal feed waste is generated from the broiler farms and consists mainly of manure and bedding materials, which are handled by a waste contractor. Non-organic wastes generated include packaging waste, plastic wastes, crates, cardboards, used ventilation filters, empty containers of chemicals and detergent materials used, administrative office waste, etc. Hazardous waste includes used oil, chemical solvents, and electronic waste. Enhancement measures for the current waste management of non-organic and hazardous waste are required for on-site storage and final disposal (ESAP#12).

Storage of Hazardous Materials. HMH Rainbow has a refueling area that consists of a single fuel pump and underground storage tank for diesel. The storage tank is made of concrete with a capacity of 5,000 liters. The refueling area is used to refuel the company vehicles, run the boiler at the feed mill and abattoir, and run the standby generator, whenever needed. The 2021 EA report indicates the refueling area emergency preparedness shows areas for improvement such as the provision of spill kit and exhibiting safety signages (ref to the updated EPRP - ESAP#5).

Pesticide Use and Management. Pest control application related to chemical fumigation at the feed mill (silos). This is undertaken by staff specifically trained on the safe application of such chemicals. They are also provided with appropriate PPE. Likewise, disinfectants are used during broiler house cleaning and preparation processes between flocks. These are mainly lime, formalin, potassium permanganate, and Zagro Ultracide which contains glutaraldehyde and quaternary ammonia compounds. All are approved/designed for use as disinfectants and fungicides in animal husbandry, and staff who handle the products are trained and provided with appropriate PPE.

Road Traffic Safety. HMH Rainbow has its own transportation fleet to move the birds from broiler farms to the abattoir. The traffic load is expected to increase to the abattoir and broiler farms due to the planned expansion, which may result in an adverse impact on the community, such as road accidents and excessive dust generation. The 2019 EA described a concern raised by local community members residing close to a broiler farm regarding dust generation from speeding trucks and vehicles accessing the farm. The company did address this concern by lying a marram layer on the road. Going forward, HMH Rainbow shall develop a traffic management plan to address the possible traffic impacts of its enlarged operations (ESAP#13).

Food Safety Management System. Based on IFC review, HMH Rainbow has established a comprehensive FSMS, which is internationally accredited against FSSC 22000. The next surveillance audit - against the new FSSC 22000 version 5.1 standard - is scheduled for June 2021. HMH Rainbow is an approved KFC supplier and is therefore subjected to an annual food safety integrity audit to maintain compliance with that scheme. Products are 100% batch traceable, back to the DOCs at the farm. The FSMS in place requires ongoing engagement with customers as part of the management system, including the receipt and management of complaints/grievances regarding products. For HMH Rainbow to fully engage with all relevant stakeholders in a timely manner, and to address issues raised that may not be captured by the existing FSMS, HMH Rainbow will develop a stakeholder engagement plan as addressed in ESAP #8.

Security Personnel. The company has 6 security guards that are employed to control access to company operations.  They are not armed and to date, there has been no issue raised over their use                                                   

Sustainable Management of Living Natural Resources. In accordance with the IFC Good Practice Note (GPN) on Improving Animal Welfare in Livestock Operations (2014), IFC’s scope of appraisal included verification of compliance of HMH Rainbow’s animal welfare management practices with the OIE (World Organization for Animal Health) Guidelines. Based on a completed animal welfare survey, appraisal findings confirm that HMH Rainbow’s is compliant with OIE guidelines and generally in line with IFC’s GPN on Animal Welfare. HMH Rainbow has a well-structured management system across all broiler farms that addresses BAWA issues (Biosecurity, animal welfare, and antibiotics). Management of BAWA standards and procedures is the responsibility of HMH Rainbow veterinarian, with support from QA Manager. Manuals, documents, and procedures related to BAWA made available to the IFC are found mostly adequate for broiler operations. There is a structure for internal auditing with no external auditing conducted. With regards to animal health and biosecurity, Uganda is exposed to most poultry endemic diseases, therefore poultry health management is being a critical part of operations. HMH Rainbow has animal health planning procedures that are the responsibility of the veterinarian with external support from the company’s joint venture partner, RCL’s specialist poultry veterinarian, and the Mekerere University Veterinary School in Kampala. Going forward, as set forth in ESAP#14, HMH Rainbow will undergo a comprehensive IFC’s HACCP-methodology based Biosecurity, Animal Welfare and Use of Antibiotics (BAWA) Audit Protocol leading to the further development of a BAWA management system at corporate and farm-level. HMH Rainbow will certify its animal husbandry/welfare management practices against a recognized certification standard benchmarked against GIIP for all farms going forward (e.g. Global Gap for Livestock).

With regards to supply chain assessment and possible risk of conversion of natural and/or critical habitat that may be associated with its sourcing of raw materials (e.g. soy, maize) for its feed mill, as indicated above, IFC used the GMAP and IBAT tools as well as the Global Forest Change application. These tools were used to view whether such maize production areas coincided with KBAs or areas of recent forest loss/land conversion. The assessment determined that these production areas are not associated with such impacts. These areas are consolidated, large-scale agricultural areas, away from areas of high biodiversity value. Incidental, localized conversion could be observed in some areas near to these agricultural landscapes, but it was not possible to determine what activity was behind such change. As such, this risk is seen to be minimal; however, the development and implementation of the Supplier Code  as required by ESAP#7, will ensure that this issue continues to be reviewed by the company, in its procurement dealings with tier 1 and 2 suppliers, and that if the issue is seen to occur, it can be avoided by the supplier in compliance to the requirements of that Supplier Code.