Identification and Assessment of Risks and Impacts:

Goertek Vietnam complies with the national regulatory process for the identification and assessment of E&S risks and impacts for new projects.  Environmental Impact Assessments (EIA) as required by national laws of Vietnam have been conducted for the expansion Bac Ninh (“BN”) and greenfield Nghe An (“NA”) facilities, with official EIA approvals issued by the Ministry of Natural Resources and Environment (MONRE) and signed off by the Que Vo and WHA 1 Nghe An Industrial Park Management Boards respectively. Key risks, impacts, and mitigation measures for pre-construction, construction and operational stages of the Project are defined in the EIA reports.

The Company, in addition to abovementioned regulatory EIA processes, has conducted detailed hazard point analyses, to identify and risk-rate each potential hazard point (which are each linked to individual work process locations/stages throughout the facility), with a description of likely causes of each potential hazard, consequences, and with required engineering/hardware and management/procedural mitigations and implementation department responsible for such articulated in order to minimize each hazard.

Goertek Vietnam will engage qualified, independent personnel, to update/reinforce the existing NA EIA (so as to align this with IFC Performance Standards/PS, and applicable World Bank Group/WBG Environmental Health and Safety/EHS Guidelines requirements) by adding the following aspects to the existing document; refer to the ESAP for details:

(i) Construction/operations and linked influx related impacts;

(ii) Quality of and impacts associated with construction workers accommodation;

(iii) Management of construction wastes, including that associated with construction materials and wastes transport and worker accommodation;

(iv) Construction noise and vibration impacts;

(v) Cumulative impact assessment; and

(vi) Mitigation measures for the impacts as detailed above.

E&S Policy:

Goertek Inc.’s Environment, Health, Safety, and Social (EHSS) Policy is described in detail in its 2020 Corporate Social Responsibility Report which is based on ISO26000 (Social Responsibility) reporting guidelines. The EHSS policy describes Goertek’s overall policy intentions, as well as examples of measures undertaken, in relation to waste and hazardous wastes/materials management, stakeholder engagement, labor and working conditions and employee care, occupational health and safety (OHS), and energy and water consumption efficiencies.

Managements System and Programs:

At the Project level, based on the overarching Goertek Inc. EHSS policy, Goertek Vietnam put in place a set of detailed environmental (e.g. zero environmental incidents; a target percentage reduction in energy and water consumption from the previous calendar year) and OHS (e.g. zero electrical incidents) key performance indicators (KPI) and annual KPI targets, applied to Goertek Vietnam as annual goals. The Company annually updates these KPIs and targets as needed, to reflect changing operational and risk contexts.

From the above, a set of standard operating procedures (SOP) (e.g. related to: wastewater abatement and treatment; hazardous materials and chemicals management; OHS; emergency preparedness and response (EPR); life and fire safety management; approval of and managing high-risk operations; working at heights; requirements for work tasks involving fire and ignitions, etc.) have been developed which support meeting annual KPI targets. These procedures are updated continually to ensure compliance with: (i) national EHS regulatory requirements in Vietnam – detailed lists of various EHSS laws and regulations were prepared by Goertek Vietnam and shared with IFC; (ii) certification and ongoing auditing requirements of several voluntary management certifications which Goertek Vietnam have attained i.e. ISO 14001 (Environmental Management Systems) and ISO 45001 (OHS); and (iii) facility-level hazard point analyses results (see previous section).

The Company annually submits abovementioned KPIs and SOPs to Goertek Inc. for review, with the approved version thereafter being implemented by Goertek Vietnam’s Bac Ninh facility in its day-to-day operations. This approach will similarly apply to the new facilities under this Project.

Continuing from the ESAP action described in the previous section in relation to the Project EIA and to further enhance E&S management for the Project in alignment with IFC PSs, Goertek Vietnam will further:

(1) Update the KPIs and SOPs, and develop construction site-inspection checklists, which reflect new construction-phase content to be included in the updated project EIA report;

(2) Contractually require construction contractors and their sub-contractors to develop and implement E&S management and reporting/monitoring plans which are consistent with Goertek Vietnam’s updated requirements per No. 1 above;

(3) Design and implement training for staff and contractors/sub-contractors to ensure they are equipped to effectively carry out construction-phase E&S monitoring; and

(4) Provide semi-annual E&S compliance results to IFC during construction for the Project activities, prepared by a qualified independent consultant.

Monitoring and Reporting:

Goertek Vietnam undertakes an annual EHS work planning process, which leads to EHS work and monitoring plans. IFC reviewed the 2021 EHS Work Implementation Plan, prepared by Company EHS teams as an output from an annual planning meeting held in December 2020. During that meeting, participants discussed and summarized the overall EHSS performance of the Company during 2020, and on that basis, developed a detailed work plan for 2021, which contains the following key elements:

(i) EPR drill schedules and plans;

(ii) Developing a list of EHS risk assessments and evaluations to be undertaken during 2021;

(iii) Agreeing on a list of fire safety, medical and first aid, and overall health and safety equipment and facilities which need to be checked, maintained, and restocked;

(iv) Scheduling regular EHS/OHS review meetings at each business unit and sub-department;

(v) Setting up regular wastewater and air emissions monitoring regimes;

(vi) Setting up a work plan for monitoring the transport, storage, and transfer of non-hazardous solid wastes including sludge, and hazardous wastes and materials, by company personnel and by licensed external waste handlers;

(vii) Agreeing on thematic EHS learning activities and EHS training plans;

(viii) Agreeing on the content and format of recurring, unannounced spot checks at OHS hazard points throughout the facility;

(ix) Discussing arrangement to accommodate quarterly audits by external EHS auditors appointed by some of Goertek Vietnam’s major clients;

(x) Organizing internal audits to the Company’s major suppliers;

(xi) Developing a list of required personal protective equipment (PPE) and a plan to distribute this to employees and workstations; and

(xii) Agreeing on an overall EHS budget required to carry out the 2021 work plan.

From the above, a 2021 EHS implementation status chart was developed, which lists 51 specific EHS related tasks (or required reports and documentation which serve as indicators of task completion) to be undertaken or produced each month by assigned departments. This then became the overarching EHSS performance monitoring template utilized at the Company.

Based on the above, detailed site inspection checklists were subsequently developed, the design of which were also informed by the following: (i) the Company’s overall environmental and OHS KPIs and targets, and results from facility-level hazard point analyses (refer to earlier sections); and (ii) ISO 14000:2015 and ISO 45001:2018 auditing requirements.

Utilizing these checklists and templates, EHSS team members carry out daily site-inspections, as well as in-depth quarterly internal audits, a recent copy of which was shared with IFC. These are supplemented by unannounced spot checks to various operational areas (e.g. on-site wastewater treatment plant, confined spaces, etc), to verify the compliance status. Annual external audits are also conducted, by provincial environmental and labor regulators, or E&S consultants assigned by the regulators. Goertek Vietnam is also subject to quarterly EHS audits by external auditors appointed by some of the Company’s major clients, with the utilized audit report templates designed to follow Responsible Business Alliance/RBA (https://www.responsiblebusiness.org) standards, a set of sustainability standards subscribed to by electronics, retail, and auto companies around the world.

EHSS performance is discussed during monthly, quarterly, semi-annual, and annual work meetings at differing levels in the company with reporting thereon largely done on an exception basis (i.e. when non-compliances arise). As per the ESAP, the Company will develop a summary reporting template (including a table which contains various essential EHSS performance data from the previous quarter), and will utilize this template to regularly report (i.e. whether or not there were non-compliances) on EHSS performance every quarter to senior management and the Board of Directors of the Company, as well as to Goertek Inc. EHSS departments.

Organizational Capacity:

Goertek Vietnam has in place a three-tier EHS organizational structure. The first tier consists of an overall Vietnam Goertek Safety Committee (VGSC), comprising 25 senior management representatives whose role is described as “the discussion forum with overall safety management responsibilities in the areas of production safety, environmental management, OHS, security, fire safety, traffic and transport management, health and vaccination, production equipment management, special equipment management, and power equipment management”.

Under the VGSC, there is a Safety and Environment Committee (S&EC), comprising 4 managerial staff who are supported by 80 full time EHS staff members spread across various functional departments. The S&EC is the leading unit in terms of day-to-day implementation of evaluation, risk management, monitoring and auditing tasks, which includes: coordination and commissioning of EIAs; EHS/OHS monitoring; organizing site inspections and audits; organizing water quality testing; management waste and hazardous waste monitoring and management; chemicals management; designing EHSS/EPR training; and keeping abreast of evolving EHS/OHS national regulatory requirements, contractor EHS management, etc.

The S&EC also coordinates EHSS work by other departments at Goertek Vietnam including:

(i) Administrative Assurance Department (infrastructure and equipment maintenance including fire safety and HVAC systems, management and distribution of PPE, etc.)

(ii) Power and Facility Management Department (energy and water consumption and efficiencies)

(iii) Fire Safety Department (EPR and life and fire safety drills; overall life and safety management); and

(iv) Employee Health and Safety Department (employee health checks; COVID risk management)

At the production line level there are 300 staff who also have EHS responsibilities (e.g. production foremen who act as safety inspectors in his/her work area). Thus, there are 380 staff members with EHS responsibilities, as well as those from the above mentioned 4 departments, all of whom receive ongoing EHS training from the S&EC. The 300 production level staff are tasked with daily EHS inspections in their respective work sections, and report daily findings to the S&EC in case of non-compliances. The S&EC utilizes such daily findings (including non-compliances) and other information including their own site observations to prepare a summary report, and hold monthly meetings to discuss the report findings and corrective actions as applicable.

To further reinforce EHSS related capacities in day-to-day operations as defined in the ESAP, the Company will:

(i) Provide an updated EHSS organizational chart along with a narrative document, which together will describe in detail:

(a) the EHSS roles and responsibilities of the VGSC, the S&EC, and all other related departments and teams with EHSS responsibilities;

(b) key positions within each department and team with EHSS responsibilities and the role & responsibility of each;

(c) that personnel are in place to ensure appropriate consultation with female employees when decisions are to be taken which may impact their rights and interests;

(d) working and reporting relationships between the abovementioned committees, teams, and departments; and

(e) the types of EHSS decisions to be made at the CEO/COO level of the Company, and the EHSS data and information to be submitted to the CEO/COO offices which would inform such decisions.

(ii) Based on and as part of the above updated EHSS roles and responsibilities, recruit/appoint the following suitably qualified and dedicated EHSS personnel, all with a direct reporting line to the COO/CEO of Vietnam Goertek:

(a) EHSS manager (supported by a team of qualified personnel with relevant experience), to manage the implementation of all day-to-day EHSS operations including both environmental, social, and safety aspects.

(b) Stakeholder Engagement Manager, to manage stakeholder engagement, grievance redress, and livelihood restoration/community development related work.

(c) OHS manager (supported by a team of qualified personnel with relevant experience such as industrial hygienists).

(iii) Appoint at least one site EHSS manager at the Nghe An greenfield construction site for overall EHSS management, supported by a two-person EHS team for day-to-day supervision and monitoring of implementation of the construction phase E&S Management & Monitoring Plans (ESMMP), which will be part of the Nghe An updated EIA.

Overview:

As of September 2021, Goertek Vietnam had about 35,000 employees, including around 1,220 foreign employees. All 1,220 foreign employees are Chinese nationals, initially hired by Goertek Inc. and who underwent a period of orientation training in China, before being transferred to Goertek Vietnam’s business units. In addition, about 150 service department employees (e.g. security guards, and those working at Company canteens) are hired and assigned by third-party service providers to work at the Company.

It should be noted that the ensuing paragraphs of the PS2 section contain various ESAP actions, which are applicable to the current workforce and HR practices of the existing Goertek BN facility, as well as to that of the planned expansion Bac Ninh facility and greenfield Nghe An facility.

Human Resources (HR) Policies and Procedures:

Goertek Vietnam has a written code of ethics (or HR) manual which governs HR functions in the Company. HR policies apply to all employees of Goertek Vietnam, including foreign employees. Major responsibilities of the HR department include recruitment, employee health checks, orientation programs, skill training arrangements, and HR policy-related training. Payroll functions are also managed by the HR department. Goertek Vietnam performs HR functions independently from Goertek Inc, and their HR team reports to the General Manager of the Goertek Vietnam business units. The HR department has a headcount of 51 staff, with additional HR staff under sub-departments and business units.

Policy statements in the HR manual cover a wide range of topics that correlate with IFC PS2 requirements. It includes areas such as avoidance of child labor, working hours, prohibition of harassment, freedom of association, avoidance of any form of discrimination, health-and-safety, working environment, company ethics, company responsibilities and enforcement of policies, prohibition of forced labor or debt bondage, and grievance handling procedures.

Goertek Vietnam engages several local recruitment agents to hire front-line production employees. Around 60% of the current workforce were sourced through such agents. Employees sign direct employment contracts with Goertek Vietnam. The recruitment agents’ role is limited to helping the Company source employees, and they receive a service fee from Goertek Vietnam for each employee supplied.

All employees sign an employment contract with Goertek Vietnam at the time of joining. Employment contracts outline basic terms of engagement, including salary and other benefits. Employees are briefed about company policies during orientation training. There is also a Company handbook that outlines all Company rules and policy statements which is shared with managerial-level staff. The Company will ensure that the handbook in Vietnamese language is shared with all employees including front-line employees (refer to ESAP).

Hiring of the 1,220 foreign employees at the Company was undertaken directly by Goertek China office without involving any recruitment agency, and employment contracts are signed with Goertek Vietnam. The Company will update its HR policy and manual to include a specific policy on foreign employee placement and work permitting in Vietnam and ensure that all foreign employees receive work permits in Vietnam (refer to ESAP).

Working Conditions and Terms of Employment:

Wages: The compensation package to frontline production employees comprises a basic wage, overtime payment, several allowances, incentives, and bonuses (e.g. seniority bonus, responsibility bonus, productivity bonus, housing, and transportation allowance). In terms of the basic wage, in view of labor market conditions in the Que Vo industrial park area, the Company provides a higher minimum wage than what is legally applicable for the area and has formally filed a declaration of this higher basic wage level to the local labor department. All production employees are entitled to this higher basic wage which is written into their employment contracts. The Company has been ensuring continued employment for employees through the Covid-19 pandemic. During a recent lockdown period (May 28 to July 1, 2021), some employees were unable to get to work due to travel restrictions and received compensation based on the lower local minimum wage level rather than the level specified in their contracts. Refer to ESAP for mitigative actions.

All incentive payments are paid to employees via their bank accounts, except one item (production-based incentive payment at production-line level) which is paid in cash. The Company will ensure that in future, all pay-slips also record this cash payment (refer to ESAP).

Contract renewal status: In line with local labor law requirements, the Company’s policy is that all employees are initially offered a 2-year fixed-term contract and thereafter a second 2-year fixed-term contract is issued if both parties mutually agree to an extension. After serving four years on two consecutive 2-year fixed-term contracts, employees are issued an indefinite-term permanent contract. Due to having been transferred from one Goertek Vietnam legal entity to another, a number of employees are currently on their third 2-year fixed contract at the new Goertek Vietnam legal entity. Going forward, the Company will ensure that all employees renewing after their second contract and/or those employees who have reached 4 years of service at Goertek Vietnam entities are issued a permanent contract (refer to ESAP).

Working hours: Due to production pressure particularly during the busy season of each year (which is commonly faced by many manufacturers in various sectors in Vietnam and not just by Goertek Vietnam as per this Project’s labor assessment findings), from time to time there were instances of extra overtime or working on rest days (i.e. Sundays) at Goertek Bac Ninh. The Company will take appropriate actions based on a phased approach to address working hours related labor assessment findings (Refer to ESAP).

Workers’ Organizations:

Employee union: The company does not discourage formation or joining of unions by employees and there is an employee union and a collective bargaining agreement (CBA) in place at the Company. This union is affiliated with the Vietnam General Confederation of Labour (VGCL), as is the case for most unions in Vietnam. All local employees are automatically made members of the union at the time of joining. The union management comprises 42 employee representatives, who together select 15 commissioners, and the commissioners then select a President and two Deputy Presidents. This process to select a new union secretariat takes place once every 5 years, and the union secretariat positions are held by Director level managerial staff. The Company will demonstrate broad-based and meaningful involvement of and participation by frontline employees (i.e. including the ability for front line employees to elect labor union employee representatives from worker ranks without impediment) in the selection of its labor union representatives, commissioners, union leaders, and union office bearers (refer to ESAP).

Unionization by foreign employees: In line with local labor law requirements, foreign employees of the Company cannot join existing employee unions, nor can they form a separate union. The revised Labor Code of Vietnam, effective from January 2021, allows for workers (including foreign employees) to form or join an independent Worker Representative Organization (WRO) of their choosing and which does not have to be associated with VGCL. The Company will develop a plan and advertise it internally to ensure that all foreign employees are fully aware that they can feel comfortable forming or joining an independent WRO of their choosing (Refer to ESAP).

OHS committee: There is an OHS committee at Goertek Vietnam which holds meetings every quarter. Its current roster of 24 members are Manager or Director level staff of the company. The Company will broaden membership of this committee to include adequate (i.e. >40% of which at least half will be female frontline employees) representation from front-line production employees (Refer to ESAP).

Non-Discrimination and Equal Opportunity:

The Company has a written policy on non-discrimination, prohibiting any form of discrimination based on nationality, gender, ethnicity, disability, religion, political affiliation, marital status, social status or race. Female employees make up 52% of the workforce, in line with general gender representation in the manufacturing sector in the country. Goertek offers an additional cash allowance to female employees to encourage female participation in the workforce.

In line with local law requirements, pregnant employees are not requested to work overtime hours, and are offered six months of paid (at basic wage level) maternity leave, and they are assured of coming back to work after the leave period. As part of hiring new employees, the Company requires that all employees go through a medical test arranged at Company premises by authorized test laboratory personnel, which include urine tests. Since urine testing can identify pregnancy, to remove any potential doubts that such results could form part of hiring and HR decisions, the Company will define and implement a worker health check and medical screening policy consistent with applicable national occupational health and safety laws. The policy shall explicitly identify medical tests associated with occupational health risks in the workplace, and where urine test is required, the testing shall not constitute any forms of pregnancy and proxy-pregnancy-tests (Refer to ESAP).

Employee Grievance Mechanism:

Goertek Vietnam has a written policy on employee grievance handling mechanisms, which outlines the process of investigating each complaint, and which classifies different types of grievances. Available channels for lodging grievances are open to all categories of employees including third-party employees and foreign employees, and a grievance register is maintained and updated. There are three primary employee grievance channels: suggestion boxes located in different areas of the facility (not located near CCTVs so that employees feel comfortable using those boxes); by email; and a locally popular messaging app platform named Zalo. Employees can lodge anonymous grievances via suggestion boxes or email, and un-named grievances are investigated with similar rigor by Company management. Resolution to any grievance is communicated via the Company’s public-announcement system. The Company’s employee grievance policy also outlines a whistle-blower procedure.

Protecting the Workforce:

Child labor: Goertek has a written policy on prohibition of child labor (defined legally as those under 15 years of age). Although the written policy does not outline the lowest qualifying age of employees, Goertek Vietnam does not hire anyone below 18 years of age. As such, Goertek Vietnam also does not employ young/juvenile/adolescent employees (defined as those between 15-18 years of age). There is a process of verifying the age of all local employees.

Forced labor: Goertek has a policy prohibiting forced labor, which states as an overall principle that no employee will be physically or emotionally forced to carry out any task. It also states that employees will not be working under any pressure by means of loans given to them by the Company. Any overtime work and work on a weekly rest-day are also voluntary as per Company policy. Employees generally take up overtime and rest-day work to maximize their earnings. There are no signs of local or foreign employees working under any debt or bondage arrangements. Recruitment fees, fees related to work permits, and airfare are all borne by the Company, and foreign employees did not have to pay any fee to any labor agent in order to be hired, since hiring was undertaken directly by Goertek China headquarters. Passports of all foreign employees are kept by themselves, and interviewed foreign employees mentioned that they could leave their job whenever they want if they do not wish to continue.

Free meals are provided at Company canteens. It is not compulsory that employees eat in the canteen and they are free to bring their own food. Employees can only exit the company premises during their 60-minute lunch break after going through major paperwork. The Company will take actions to address this (Refer to ESAP).

Anti-harassment: Goertek has a policy on prohibition of all forms of harassment in the workplace including verbal, physical, psychological, and sexual harassment. Based on employee interview feedback, no concerns were raised about any form of harassment in the workplace. The recent grievance log also confirmed no reported cases of harassment. All new recruits are briefed about Company policy on anti-harassment. Production employees mentioned that their supervisors are generally even keeled and there is no shouting or scolding during work or due to mistakes at work.

Workforce COVID management:

Day-to-day Covid management: Goertek Vietnam has mandated wearing masks in the workplace since the start of the Covid-19 pandemic. The Company has strictly followed all local government directives such as the one route policy where employees could only travel between their homes and the factory. Also, the mask mandate and social distancing measures were implemented strictly in the workplace. In canteen areas, transparent dividers have been installed. Also, seating capacity in the canteen has been reduced to ensure further social distancing. Security guards also check the body temperature of all employees at the entrance. The Company also carries out rapid Covid tests of a 20% random sample of employees 3 times a month.

Temporary in-factory accommodation during Covid lockdown and Employee Accommodation: During the recent Covid-19 lockdown in Vietnam from May 28 to July 1, 2021, following a local government directive, Goertek Vietnam had arranged in-campus accommodation for around 15% of its employees i.e. about 7,000 employees. Tents and beds were arranged in some of the empty production floor areas inside the factory premises. As of mid-October 2021, around 300 employees were still staying at the factory but in bunk-bed rooms. The Company has arranged temporary shower areas for the employees who are staying in this accommodation, as well as separate male/female accommodation areas. Should the 300 employees continue to stay at the factory, or another COVID lockdown necessitates the Company to re-enact such a temporary living arrangement for more employees, the Company will ensure that the arrangement is consistent with requirements stated in the “Workers’ Accommodation: Processes and Standards – A Guidance Note by IFC and EBRD” (“IFC/EBRD Guidelines”) document dated September 2009, jointly published by IFC and the European Bank for Reconstruction and Development (EBRD) (Refer to ESAP).

The WHA 1 Nghe An Industrial Park developer may potentially construct housing units near the IP, and the Company may possibly rent some of those units for its employees to live in (timing and details to be confirmed). In relation to this, Goertek Vietnam will ensure that any future employee accommodation, including rented units near its facilities, are consistent with “IFC/EBRD Guidelines” (Refer to ESAP).

Retrenchment:

There is no plan for any collective unilateral cessation of employment contracts (“Cessation”) in the near or medium term by Goertek Vietnam. Depending on production needs, its workforce is supplemented during parts of each calendar year by bringing in additional employees. In the unanticipated event of Cessation, the Company will develop written procedures which will describe implementation procedures and other details in accordance with national labor laws and IFC PS2 requirements, and will ensure all employees are fully informed of these within a reasonable timeframe before commencement of a cessation event (Refer to ESAP).

Occupational Health and Safety:

As per information provided by the Company, in 2020, there were 3 fatalities (due to illness which as per the Company were not work-related), 5 traffic related fatalities (not work-related as per the Company), zero lost time accidents (LTA), zero lost workdays, 9 instances of near misses, and 4 cases of traffic/vehicle incidents. Based on the above data (and calculations and assumptions to arrive at total working hours), the 2020 Lost Time Incident Frequency Rate (LTIFR) and Lost Time Incident Severity Rate (LTISR) at Goertek Vietnam are both calculated as zero, since the number of lost time accidents and number of lost workdays (numerators in the LTIFR/LTISR calculation formulae) are reported as zero. In addition, the Company stated there has been 1 non-work-related fatality thus far in 2021 (due to illness).

The Company’s procedural document “Goertek Vietnam Occupational Health Management Procedures” (i) describes OHS related requirements and assigned departmental responsibilities; and (ii) lists indoor workplace limits for noise, silicon and non-silicon-containing particulate matter. The Company has also shared documents (i.e. operating procedures and monthly incident recording/analysis templates and reports) which indicates that it tracks near-miss OHS incidents and traffic incidents. The Company has also shared its 2020 labor health and safety working report (an annex of Vietnam regulation 07/2016/TT-BLDTBXH i.e. the document template for OHS reporting to the authorities), and 2020 Labor Incident Report (as per 39/2016/ND-CP), which were submitted to local labor departments.

The Company will:

(i) Provide detailed OHS data/statistics for the years 2019-2021 on each of the following incident categories: work fatalities; lost-time-accidents (LTA); major/serious OHS incidents; minor OHS incidents; traffic/vehicle incidents; unsafe work behaviors; near-misses; recordable incidents; and reportable incidents (together “incident categories”).

(ii) Provide incident analysis reports based on a root-cause-analysis (RCA) methodology of each incident from 2019-2021.

(iii) Based on findings from (ii), agree with IFC on a time-based corrective action plan to address root causes of those incidents and take actions to minimize/avoid similar incidents in future at Goertek Vietnam facilities and sites (Refer to ESAP).

On the basis of its existing OHS policy and SOPs, the Company will engage a highly qualified and experienced OHS consultant, supported by certified industrial hygienists, to support Goertek’s efforts to design and implement a comprehensive OHS Management Program which should include detailed work plans, procedures, indicators of completion, means of verification, and detailed personnel and team setups and with roles and responsibilities clearly defined. The Program will include but not be limited to:

(i) Detailed definitions of what constitutes each incident category; detailed procedures and case studies on how to measure/record/report/manage/minimize each incident category.

(ii) Inclusion of a complete industrial hygiene (IH) program to manage and monitor indoor air quality, noise, lighting, temperature, other monitoring metrics, and notable/likely health hazard factors (at various areas of each facility) which will be measured in future - such as but not limited to particulate matter/dust level, noise level, potential exposure to n-Hexane and/or Benzene, solvents, volatile organic compounds, etc. The program will commence with a comprehensive IH assessment, results of which will inform the IH program to be developed and implemented.

(iii) Detailed monitoring templates which cover all of the above incident categories and workplace quality and health hazard factor monitoring metrics, as well as all findings and recommendations from the IH assessment.

On the basis of (i)-(iii) listed above, the Company will provide:

(iv) OHS monitoring reports/results based on templates referred to in (iii).

(v) Detailed sample (anonymous) employee health check-up / test reports, which demonstrate that abovementioned health hazard factors and potential chronic health conditions which may arise due to exposure to such hazard factors have been included.

(vi) Incident analysis reports of each OHS incident (as per incident categories) based on an RCA methodology.

(vii) Calculation results of Goertek Vietnam’s LTIFR/LTISR, and other relevant leading/lagging OHS metrics, and results from benchmarking these against recognized national, industry, and international benchmark statistics.

(viii) OHS mitigation measures and improvement actions based on results from (iv)-(vii) and on other relevant information (Refer to ESAP).

Supply Chain:

The Company sources materials and semi-finished parts for its major product lines from a number of Vietnam-based suppliers directly; and also from another group of global suppliers who have been appointed by the Company’s major global and regional clients. For the second group, the Company’s clients appoint third party EHS and labor auditors to carry out annual compliance audits on those appointed suppliers, with the Company relying on the strength of those third-party audit findings.

For Vietnam-based direct suppliers, Goertek Vietnam has a Supplier Quality & Engineering (SQE) team of about 45 internal auditors, dedicated to identification and screening of potential suppliers, and recurring quality and compliance assurance of selected suppliers (including EHSS aspects). In relation to EHSS aspects and in particular labor and working conditions:

(i) all new suppliers, once selected, are required to sign a “Supplier Social Responsibility Commitment” letter with Goertek Vietnam, which includes a stated requirement for suppliers to not be engaged in child and forced labor practices, and which states that suppliers should adopt elements of recognized OHS management schemes such as OHSAS18001 to manage and minimize OHS risks in their workplaces;

(ii) the Company’s new supplier selection criteria and procedural document states that it will not consider any potential new suppliers found to have child labor practices;

(iii) the same document also states that the Company will carry out a Social Responsibility Audit of each new potential supplier;

(iv) from document reviews and discussions with the Company, it is not clear to what level of detail the Social Responsibility Audit assesses and verifies no instances of child labor, forced labor practices, and also the OHS conditions at a potential new supplier, and sample supplier audit reports shared with IFC also do not contain further details on these aspects particularly how verification is achieved.

In relation to primary suppliers that Goertek Vietnam directly sources from, the Company will provide completed potential new primary supplier assessments and detailed supporting evidence (Refer to ESAP).

Resource Efficiency and Greenhouse Gas Emissions:

The operating Goertek Vietnam Bac Ninh facility utilized grid-supplied electricity (About 117.3 million kWh in 2020) and LPG (732 tons in 2020) as the only energy sources, with no other fuels consumed and no purchase of piped steam or heat. The same is expected for the two new facilities under this Project given a similar production process setup. Water consumption in 2020 was reported to be 881,000 cubic meters and is expected to be about 1.4M m3 per year post-expansion under this Project, to be supplied by industrial park water utility companies. Based on these and other data provided by the Company, the Project’s Greenhouse Gas (GHG) emissions is estimated at 109,900 tons CO2 equivalent. Given that this exceeds the 25,000 tons CO2eq per year threshold as per PS3, the company will annually quantify and report on the Project’s GHG emissions based on an internationally recognized methodology.

A detailed energy audit was undertaken in 2020 by a technical institute commissioned by Goertek Vietnam. Based on assessment recommendations, the Company set annual electricity-savings targets, and has adopted various measures towards reaching resource efficiency targets e.g. installation of sub-meters throughout different sections of the Bac Ninh facility and frequency-variators in water pumps and other equipment which enables monitoring and reduction of electricity usage; reinforced insulation and regular maintenance of outer insulated wrappings of water pipes; timers installed in lights and fans to enable shut down after a certain duration; etc.

Pollution Prevention (Air Emissions):

Given that the existing and expansion facilities will only consume grid-electricity and limited quantities of LPG, energy related air emission impacts from this Project are expected to be limited. In relation to process organic and inorganic air emissions, detailed recent monitoring reports were shared by the Company: (i) Monitoring is conducted on a number of process air pollutants (e.g. CO, Toulene, Xylene, SO2, NOx, Silicon dust, Tin, Bisphenol-A Epoxy Resin, Ethanol); (ii) Monitoring is conducted annually by qualified external technical institutes (some of whom are commissioned by some of the Company’s major clients who require such monitoring); (iii) Recent results for above-mentioned parameters were zero or non-detectable (within the test sensitivity limits for each parameter); and (iv) As such, results were compliant with the national sector limits applicable to Goertek Vietnam (as detailed in the QCNV 19:2009 and QBNV 20:2009 National Technical Regulation on Industrial Emission of Inorganic/Organic Substances and Dusts) and with limits specified in the WBG EHS Guidelines for Semiconductors and Other Electronics Manufacturing (Table 2. Process air emission levels). Process air emissions mainly arise from welding operations, adhesive evaporation, and cleaning chemical evaporation. Mitigation measures include installation of required HVAC (Heating, Ventilation, and Air Conditioning) systems at workshops, HEPA filters, and evaporative condensation collection and treatment systems.

Pollution Prevention (Wastewater):

Recent quarterly wastewater monitoring results from the existing Bac Ninh facility (for parameters such as COD, BOD5, TSS, Oil and Grease, Phosphorous) are compliant with applicable national (i.e. QCVN 40:2011/BTNMT) and WBG EHS Guidelines standards. The facilities are designed to ensure separation of wastewater and stormwater streams, and the Company commissions qualified third party technicians to conduct monitoring on stormwater quality. Detailed designs of the expansion Bac Ninh facility and greenfield Nghe An facility both include an on-site wastewater treatment plant (WWTP). For Bac Ninh, this will have a total capacity of 3320 m3pd, sufficient to treat an estimated daily discharge volume of 2,733m3pd of sanitary wastewater and 35m3pd of industrial wastewater (non-contact cooling water and process wastewater) during plant operation.  As per facility design, most of the cooling water will be recycled.  The Nghe An facility is expected to generate about 3,000 m3pd of WW from similar internal sources as Bac Ninh. At both expansion facilities, sanitary and process wastewater collected from production areas, canteens, and from sanitary WW sources will be treated at the on-site WWTP before being transported to the Industrial Park central WWTP for secondary treatment.

Pollution Prevention (Solid and Hazardous Wastes):

During operation of the expansion Bac Ninh factory, 45 tons of domestic solid waste are expected to be generated each day (90 tons per day for Nghe An), comprising 75% organic wastes (excess foods, etc. from facility canteens) and 25% inorganic waste (paper, nylon bags, cans, glass, etc). Process/industrial solid wastes (e.g. plastic rolls, cleaning containers, etc.) are collected by licensed waste service providers and recycled/re-sold where possible. The Company provided a list of recycling agents with whom it is working. Management of hazardous and non-hazardous waste is governed by permitting conditions and SOPs that detail the procedures for handling, storage, transport, and disposal of wastes.

In its production processes, the Company utilizes 49 different kinds of materials classified as per local laws as hazardous materials: (i) Corrosive substances (Annual usage quantity of about 2 tons e.g. Glue 9061F Uv; Super X No. 8008L Black Neo, Dymax 29995 Uv); (ii) Flammable solids (Annual quantity of about 10 tons e.g. Adhesive Lx83); (iii) Flammable liquids (i.e. Annual quantity of 240L of Ethanol and 19.35 tons of Isopropanol); (iv) Miscellaneous hazardous materials (Annual quantity of about 30 tons e.g. Indium 8.9Hf Flux carrier Mixed Alloy, Solder Mask 10, Adhesive N-Sil 8518, Conformal Coating 160988N, Alpha Tin Wire, 3M Electronic Grade Coating Agent).

Hazardous materials utilized and wastes generated (e.g. unused ink, spent batteries, electronic equipment, glues and adhesives of which there are about 30 types, defective electronic circuit boards, chemicals such as unused ethanol, isopropanol, electronic grade coating agents, welding slag, waste paints and oils, and solvents) are kept on site in access-controlled containers which are labelled clearly. The Company engages legally licensed third-party companies to transport and dispose of unused hazardous materials and hazardous wastes at designated disposal/treatment sites and facilities and has shared sample third party licenses to this end. The S&EC team conducts monthly and quarterly verification checks to confirm that such materials and wastes have indeed been transported and disposed of by licensed third parties according to established procedures and requirements. Company operations require daily usage of hazardous chemicals that are toxic, flammable and corrosive and their management is governed by respective permitting conditions for safe management, storage, handling and labelling of chemicals. SOPs require that each hazardous chemical procured has: accurate material data safety sheet (MSDS) provided by the supplier, storage of chemicals in designated storage shed with ventilation, leak detection systems, and secondary containment. The Company’s Chemicals Management SOP, and related documents (e.g. chemicals storage daily inspection checklist, chemicals tracking logs) detail various procedures applicable to management and handling of hazardous materials. Only staff members who possess the required chemicals and hazardous materials work permit are allowed to work with such materials and are annually retrained to ensure competence. Only third-party transport providers with the required chemicals transport permits are retained to transport hazardous chemicals to and from Goertek facilities. Also refer to ESAP actions under PS2/OHS section in which the Company will develop a comprehensive OHS management program and industrial hygiene management system.

Both Project facilities will be located within industrial parks surrounded by similar types of companies. The industrial estates have adequate access roads and are located close to highways with basic infrastructure available for attending to emergency scenarios. Goertek Vietnam facilities are designed and constructed to meet global client expectations and high standards of engineering, and the sourcing of process, manufacturing, and utility related equipment’s will be from reputable suppliers. Facilities will be periodically tested by independent chartered engineers and safety experts for building and equipment safety in compliance of factory regulations. The Company has transport and traffic safety requirements and procedures in place (e.g. on strictly following speed limits, on ensuring that vehicles are maintained in serviceable conditions, etc.) and requires that all third party transport/trucking service providers demonstrate compliance with these at all times, by for example, asking service providers to provide traffic safety related summary GPS data collected remotely from truck fleets. The Company states that there have been no known security incidents at its operating Bac Ninh facility. Unarmed security personnel are deployed. The Company briefs security personnel about Company policies and provides training on basic safety, first-aid, fire safety, and emergency response.

Life and Fire Safety and Emergency Preparedness and Response:

Goertek Vietnam designs and constructs its projects in accordance with the Vietnamese building code requirements. Fire-prevention measures and designs take into account combustibles and ignition sources, and consist of fire-detection and automatic alarm systems; fire-fighting systems (e.g. sprinklers in kitchen areas, extinguishers, etc); double evacuation exits and corridor widths, building and floor load and occupancy factors, as well as the need for clear signage; and compartmentation and smoke and fire control. Design and construction compliance verification is carried out by the local fire department as per Vietnamese regulations. Goertek Vietnam has site-based fire control teams throughout its facility who are part of the Company’s overall EPR team, and who receive regular refresher training. The operating plant in Bac Ninh has in place a firefighting and rescue plan based on the local government regulatory requirements. Reports on fire prevention and response are prepared twice a year and submitted to the local Government fire department for review and assessment.

Goertek Vietnam has formalized EPR procedures in place including risk assessment of likely emergency scenarios which can have significant impacts on company operations (e.g. chemical spills, fire incidents, etc), required EPR procedures, drill schedules, and assigned responsibilities to personnel (e.g. fire wardens). Based on risk assessments, control procedures are defined for all type of incidents that may occur at site. Roles and responsibilities are defined in the procedures for responding to any significant accidents and emergency. Regular training is imparted to all employees mainly in the mock drills which are conducted to check the effectiveness of emergency response plans and necessary changes are made to EPR plans based on the outcome of each drill.  Each unit is equipped with appropriate life and fire safety infrastructure, and process safety equipment’s. Detailed EPR drill records have been shared with IFC.

Influx during Construction:

The Company’s policy requires its EPC contractor to maximize local hiring, and currently there are about 500-600 workers at the Nghe An plant site undertaking construction activities. To minimize the risk of increased incidence of communicable diseases (including COVID-19), construction workers are requested to live on site in container accommodation, health check-ups of all workers are undertaken, and access to medical facilities are provided. All workers are registered with the local authorities. The construction site is about 1.5km from nearby residential areas. As described under PS1 / Stakeholder Engagement, and in the ESAP, the Company will require contractors to develop and implement construction ESMMPs, and the Company will reinforce its Stakeholder Grievance Redress Mechanisms to ensure their accessibility to public stakeholders including local communities so that grievances, if any, can be lodged effectively.