Identification and Assessment of Risks and Impacts. Di’An Diagnostics identifies E&S risks and impacts associated with its facilities and operations through risk assessments in compliance with applicable national standards and E&S regulatory permitting requirements. The company commissions qualified third party institutes to undertake and prepare Environmental Impact Assessments (EIAs) for all its independent laboratory operations and production facilities and ensures that corrective actions defined in the EIA and associated E&S management and monitoring plans (ESMPs) are effectively implemented in a timely manner.

In relation to the potential new production facility in the outskirts of Hangzhou which the company is looking at setting up as part of this project, the company will: (1) include in its EHS manual a Land Acquisition and Involuntary Resettlement (“LAIR”) policy and associated requirements and procedures consistent with IFC PS5, to be applied to all future new facility land acquisition; (2) once a premise location has been selected for the new facility site near Hangzhou, based on (1), the company will conduct due diligence and document findings to verify the following (including under a Government-managed LAIR process) and to complement the LAIR outcome and process in case the following has not been fulfilled: (2.1) local community members who own land plots within the new facility footprints or who possess land-use-rights have been compensated for loss of land (and assets on/underneath such land plots) as per prevailing market values of land and assets plus transaction costs (2.2) for those community members whose loss of land and/or assets pose a significant impact on their livelihoods, there is an effective support program in place to help restore their lost incomes/livelihoods so that they are no worse off after having their land acquired (compared to before); (2.3) that the land acquisition process involves timely, transparent, and voluntary dissemination of information to affected community members, appropriate stakeholder engagement, and there are effective mechanisms in place for them to voice any potential grievances about acquisition of their land and assets, and all potential grievances including their resolutions are fully documented. Refer to the ESAP for details.

Policy, E&S Management System, Programs, and Monitoring. Di’An Diagnostics has in place a corporate level Environmental Health and Safety (EHS) management system underpinned by a detailed corporate-level EHS manual as a top-level document, which has been developed based on ISO 14001 (Environmental Management), ISO 45001 (Occupational Health and Safety or OHS), and ISO 15189:2012 (Medical Laboratories – Requirements for Quality and Competence) certification requirements, and which is applicable to all company ICLs and production facilities. The EHS manual and the company’s Code of Conduct document both contain EHS policy statements detailing the company’s position on EHS performance and compliance.

The EHS manual: (i) specifies a number of overall EHS related KPIs (see below); (ii) describes in detail departments and positions within the company with EHS responsibilities and their reporting relationships; (iii) specifies EHS risks associated with the nature of the company’s business operations as well as  how hazard points at company facilities need to be identified and risk rated; (iv) describes corresponding mitigations, and inspection and day-to-day monitoring requirements; (v) and how internal risk monitoring, reporting, and continuous improvement are to be carried out.

On the basis of the EHS manual, the company has developed and is implementing a set of standard operating procedures (SOPs) related to EHS risk identification and control (e.g. such as risks related to biological, radiological, and chemical hazards), and to medical waste management, OHS, emergency preparedness and response, etc. IFC’s review of the company’s EHS management system confirms that they are materially compliant with IFC Performance Standards and World Bank Group (WBG) EHS Guideline requirements.

At the facility level, each company ICL and production facility adapts corporate level SOPs into localized versions based on site-specific hazard point identification and analysis results and on local EHS regulatory requirements. These facility-level documents are then submitted to the Corporate Standardized Quality Control Process Department for comments. Once approved, such documents become formalized at a facility and the facility is expected to demonstrate their due implementation on a regular basis, and this is verified through regular site inspections and audits conducted by facility-level EHS/OHS personnel as well as by corporate-level EHS team members.

The company monitors all of its operations against four major EHS related KPIs: (i) zero incidence of wastewater discharge exceeding regulatory limits; (ii) zero OHS accidents; (iii) zero fire incidents; and (iv) zero workplace infection accident. Corporate EHS reviews, including life and fire safety (L&FS) and OHS audits are conducted on a monthly basis. Subsidiary EHS management committees organize facility-level day to day EHS inspections, monitoring, and corrective action implementation activities (where needed). Quarterly evaluations on thematic emergency preparedness scenarios (e.g. preparedness program to manage floods, fires, explosion events) are also carried out at each subsidiary. The above-mentioned internal audits are supplemented by external audits conducted every 2-3 years by qualified third-party institutes.

The EHS manual also covers contractor and third-party service providers. The company uses a set of EHS and operational criteria to screen for and select potential suppliers and contractors (e.g. screening and record-checking to ensure that labor agents have fulfilled national labor related regulatory requirements, such as ensuring that all workers are paid in full and on time, all workers are of legal working age, and that no identity documents are retained, etc), and it undertakes regular supervision of the activities of selected service providers, which includes EHS related qualification checks, and ensuring training at service providers. Appropriate EHS related requirements are built into legal agreements signed between the company and service providers.

Organizational Capacity. Di’An Diagnostics has a dedicated Environmental Health and Safety (EHS) Department at the Corporate level staffed by a dedicated EHS function and by 30 other EHS working group members from other operational departments. Each subsidiary has an EHS working group to implement EHS management and monitoring plans and monitor corporate level KPIs. The corporate EHS management system function provides technical guidance, organize cross-facility-and-departmental audits, promote peer learning among regional subsidiaries, and performs an overall internal audit and oversight function. Each regional subsidiary has a dedicated EHS internal auditor. Each Di’An subsidiary company also has a EHS management committee headed by the subsidiary person in charge and with members comprising operational managers from functional departments.

EHS Training. The company implements regular EHS skill transfer and knowledge building programs: (i) on-boarding of new employees and regular refresher training on various EHS topics, such as hazardous material management, biosafety, and L&FS. All staff including contractor employees are required to join on-boarding and ongoing training. Participants are required to meet a minimum test score post-training; (ii) Di’An’s internal EHS auditors regularly participate in external training and mobilize qualified/specialized technicians for continuous professional development and organizational capacity building; (iii) regional cross-facility knowledge sharing activities and cross-audits are conducted, and there is an on-line EHS and operational knowledge and good-practice sharing platform for staff to use; and (iv) throughout company premises, EHS good practice information and examples are posted on bulletin boards as another means to disseminate knowledge.

For new facilities which will be utilizing IFC financing, the company will provide: (1) Environmental design technical specifications of in-situ wastewater treatment plants, process air emissions treatment systems, occupational health and safety control systems, and hazardous material and waste control systems at each new facility, which will demonstrate that such design technical specifications comply with applicable World Bank Group (WBG) Environmental Health & Safety (EHS) Guidelines values; and (2) As part of new-facility EIAs, the E&S Risk Management and Monitoring Plans (ESMMP) for each new facility, the scope of which will cover construction and operational phases. Refer to the ESAP for details.

As of December 2020, Di’an employed about 9,300 employees. The company regularly monitors labor practices of its labor agents to ensure compliance with regulatory labor requirements. About 3879 employees work in front-line laboratory-operation positions, about 1947 in sales-related positions, about 1375 in logistics positions, and 2099 in other roles such as production, finance and administration. The workforce male to female ratio was 47:53 as at the end of 2020 which reflected the availability of talents in the diagnostics sector. Staff turnover ratios are consistent with industry averages with main causes being family and personal related (e.g. leaving a job to go back to school or to relocate back home).

Working Conditions and Management of Worker Relationship. Di’An Diagnostics has a corporate human resources (HR) policy and employee manual in place which is applicable to all subsidiaries and which is consistent with local labor laws and IFC PS2 requirements. The corporate HR policy includes requirements on ensuring equal opportunity and non-discrimination, as well as provisions to strictly forbid any forms of workplace harassment and any instances of child and forced labor practices. These principles are also written into the company’s code of conduct document and regularly communicated to all staff. Renumeration is determined based on job/skill specifications and prevailing market rates. All employees (full time or part time) are enrolled in the mandatory national social insurance scheme. Working hours including overtime adhere to national labor regulations. Di’An provides housing to about 1,000 staff and provides a rental subsidy for other staff who prefer to rent their own places to live in. The company has staff housing standards in place which it applies to company housing units to ensure their quality, hygiene, and safety conditions, which are consistent with IFC PS2 requirements on Workers’ Accommodation.

Freedom of association and grievance mechanisms. A labor union is in place at the company headquarter and at each subsidiary. Most employees are members of the labor unions and can join (or not join) which is a voluntary decision, with the company placing no restrictions on freedom of association. The company has worker grievance mechanisms (WGM) in place to regularly communicate with and seek and document feedback from full-time and parti-time staff (including any potential complaints or grievances). Such WGM channels include work-discussion forums within the company’s intranet, morning staff meetings during which staff can voice any ideas or concerns, supervisor-subordinate one-on-one meetings, direct email access to the HR department and to senior management, etc. The HR department maintains a log of all grievance cases and share grievance-handling outcomes with the original complainant (in the case of non-anonymous grievances) and its WGM has appropriate channels to handle anonymous and non-anonymous grievances. The company’s code of conduct document includes a whistleblower policy which is communicated to all staff.

Occupational Health and Safety. The company states that there have been no cases of fatalities, lost-time-accidents, near-miss incidents, in its operations in the past two years. As part of the company’s corporate EHS management system, all Di’An facilities conduct hazard point identification, analysis, and risk rating, leading to corresponding mitigations and daily OHS inspection checklists. All chemicals are clearly labelled and stored in designated storage places with access control. The company maintains a material safety data sheet (MSDS) manual at all chemical storage locations which all on-site operational staff are expected to strictly abide by. Chemicals are stored in different compartments within storage areas based on their physical and chemical characteristics. Emergency personal protective equipment (PPE), and eyewash facilities are installed in operational and storage areas where employees may be exposed to potential risks. Di’An regularly monitors indoor workplace air quality, with monitoring results posted at conspicuous locations within its facilities. The company arranges regular health check-ups for all staff including those working at higher-risk duty stations such as those with potential exposure to chemicals.

The company has implemented COVID-19 response measures as per national requirements at all subsidiaries including undertaking all necessary health and safety precautions in the workplace to minimize potential COVID-19 infections (e.g. temperature checks, frequent sanitization of company facilities, limiting the number of employee on-site at premises during peak COVID times, etc).  No staff have been made redundant, or placed on no-pay-leave, or had their salaries reduced due to COVID-19. The company has no plans for any major staff retrenchment.

Resource Efficiency (RE) and Greenhouse Gas Emissions (GHG). Most Di’An ICLs obtain their water from municipal water supply companies which is then filtrated and purified. Grid electricity is consumed at company facilities primarily to support facility HVAC systems, and the operation of laboratory equipment to a lesser extent. Main refrigerants utilized at company cold chain warehouses are R404A and R507 as per its refrigeration equipment setup, and the company is continually looking for financially and technically feasible ways to use replacement refrigerants with lower global warming potentials. Based on data provided by the company, GHG emissions attributable to this project is estimated at about 18,000 tons CO2e per year. IVD product operations at the company’s production facilities involve two main streams of activities i.e. assembly of semi-finished components into final products; and reagent production process during which purchased chemicals are diluted to a certain level, then filled into reagent bottles through an automated process. These production processes require limited heat input and other primary energy input and are not energy intensive. The company has implemented an overall resource efficiency and cost control program at its facilities, which involves measures such as the re-use of treated (non-hazardous) wastewater for gardening. Overall, since the company’s business operations are not resource intensive, there is limited scope for further reducing energy and water footprints. Many consumerables at company facilities (e.g. reagent bottles) cannot be re-used or recycled due to their being classified as medical wastes.

Pollution Abatement:

Wastewater and Air Emissions. Process wastewater (PWW) generated at all company laboratories enter an on-site primary disinfection and biochemical treatment facility. After verification that the treated WW has met the national medical service sector (GB18466-2005) standards, resulting WW is then discharged to local industrial park wastewater treatment plants (WWTP) for secondary treatment. Sanitary wastewater (SWW) is also treated on-site to meet the relevant national standard (GB/T31962-2015) before being discharged to the local industrial park WWTPs. Recent external WW monitoring results indicate material compliance with applicable national and World Bank Group (WBG) Environmental Health and Safety (EHS) Guidelines limits. Sanitary WW, process WW, and storm/rainwater are collected and transported in separate drainage systems on-site to avoid contamination and cross-contamination. At the company’s production facilities, wastewater arises mainly from the water purification process, which is treated as per applicable regulatory treatment requirements.

The company’s production facilities involve mainly assembly activities with limited process air emissions. Laboratory operations which involve the use of chemicals are implemented in a semi-enclosed or completely enclosed workstation operating under a negative air pressure setting and retrofitted with volatile organic compound (VOC) fume hoods. These are part of the laboratory’s overall heating, ventilation, and air-condition systems (HVAC) designed to ensure compliance with regulatory air emission requirements (e.g. the GB-50346-2011 national standard; GB1844-2005-2019; GB21905-2008) and with applicable bio-security design requirements, to enable tight control of potential process air emissions including VOCs. HVAC systems at all Di’An laboratories are designed to meet detailed technical specifications, to ensure meeting minimum air flow rates per minute, and which are fitted with industrial-scale high-efficiency-particulate-absorbing (HEPA), active-carbon, and charcoal filters for treatment before discharge to the ambient environment. IFC’s review finds that abovementioned standards are materially consistent with standards listed in the WBG EHS guidelines (General; and Health care facilities).

Di’An Diagnostic laboratories and production facilities conduct daily internal monitoring of air emissions and wastewater discharge, and with third party monitoring conducted on a quarterly basis. Local environmental authorities undertake unannounced ad-hoc monitoring on site.

Solid medical and hazardous wastes. The company’s laboratory operations generate solid wastes and waste chemicals which are categorized as hazardous and medical wastes, and as such, in accordance with national regulatory requirements, they are stored, labeled, handled, transported, and disposed of using specialized containers at designated secure locations within each company laboratory with access control maintained at all times. Licensed third party companies qualified to handle such wastes are engaged by the company to collect and transport them to designated disposal sites or facilities. The company keeps detailed audit trail records on waste generation, storage, and transfers. Chemical containers and other hazardous wastes are stored in spaces with anti-erosion setup, and with smoke and gas detectors installed. At company production facilities, key hazardous wastes generated are residual waste chemicals, which are stored at designated erosion proof rooms. All such chemical and hazardous waste and material storage spaces are built to meet anti-leakage and anti-explosion structural containment and reinforcement specifications as per applicable regulatory requirements. The company uses very limited quantities of radioactive material, which are strictly labeled, segregated from other materials, and stored in designated facilities. Waste radioactive material is segregated from other wastes and are handled and disposed of by qualified third-party companies. The company has been continually phasing out use of radioactive materials in laboratory operations.

Most Di’An Diagnostics laboratories and manufacturing facilities are located within industrial parks, with limited exposure to local communities given that such parks are typically set up to be at considerable distances from local residences and sensitive E&S receptor areas.  Company facilities are secured by unarmed security personnel. 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 implements them to ensure all drivers in its transport fleet abide by them at times. All laboratories are retrofitted to meet the national standard for bio-laboratory safety (GB50346-2011), with primary barriers and secondary barriers set up to prevent potential unexpected leakage of materials or wastes into the ambient environment. As part of its corporate level EHS management system and as per regulatory requirement, the company implements detailed life and fire safety (L&FS) and Emergency Preparedness and Response (EPR) SOPs, which require, among other things: (i) That as per building L&FS designs, mandatory hardware such as smoke detectors and automatic warning systems have been installed. The local fire department would then conduct post-construction site-audits to confirm that a Di’An facility has indeed been built to fulfill L&FS design specifications. Once confirmed, the fire department would issue a L&FS permit sign-off; (ii) That during the operational phase at a company facility, a qualified third party will annually review and check all L&FS equipment maintenance statuses to verify proper functioning; (iii) that EPR drills are regularly carried out to emulate all likely emergency scenarios such as potential chemical spillage incidents, and fire incidents; and to ensure that all staff actively participate in drills and are well prepared in case of emergency scenarios materializing. The company states that to date there have been no L&FS incidents at its premises.