The proposed greenfield particle board and lamination manufacturing plant is located within a notified Naidupeta Industrial Park, the land acquisition for which was completed before 2010. There is no private land acquisition nor any involuntary resettlement required under this project. The project is not expected to have any adverse impacts on Indigenous People (IP) or cultural property. Accordingly, PS5 - Land Acquisition and Involuntary Resettlement; PS7- Indigenous People; and PS8 - Cultural Heritage are not considered applicable to the Project.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the Performance Standards

 This is a Category B project according to IFC’s 2012 Policy on Environmental and Social Sustainability. The key E&S risks associated with the construction and operation phase of the project are related to the construction management, emissions to air, land, and water, labor, and working conditions, including occupational health and safety, plant’ resource efficiency, movement of material and supply chain. The construction and operation risks and impacts associated with the project are expected to be localized and limited and can be minimized and mitigated through proactive E&S management plans and mitigation measures adhering to IFC’s PSs requirements and WBG EHS guidelines. The review of the supply chain for the particle board indicates a wide coverage of the wood sourcing activity mainly from existing agroforestry development within a 100-150 km radius in a modified landscape, where risks and impacts can be managed with adequate supply chain screening and verification system.

Greenlam Industries has externally verified ISO 14001 and ISO 45001 management systems in place for its existing assets, including achieving substantial progress in OHS performance, energy and water consumption, and other aspects in alignment with WBG General EHS guidelines. It is committed to applying and extending these management systems to the Naidupeta asset.

 Environmental and Social Policy. The parent company has implemented a wide range of stand-alone corporate policies covering various E&S aspects. It has adopted an Integrated Management System (IMS) for the management of EHS risks and impacts anchored in the Quality, Environmental, Health and Safety (QEHS) policy in its operating plants. This QEHS policy approved by the President - Plant Operations focuses primarily on plant-level Environment, Health, and Safety (EHS) issues and articulates the key objectives of occupational health and safety, protection of the environment, and minimization of groundwater extraction. In 2019, Greenlam’s Board of Directors also adopted a separate Business Responsibility Policy which includes key principles on safety and sustainability of goods; well-being of employees; protection of stakeholder's interests; protection of human rights; protection and restoration of the environment; and inclusive and equitable development. Further, it has developed a Corporate Social Responsibility (CSR) policy for community engagement to meet the requirement under the national CSR rules. Its Human Resources policies include anti-sexual harassment, human rights, employees' grievance redressal, and remuneration. All these policies seek to achieve applicable national and local standards and regulations. In addition, the parent company has a Supplier Code of Conduct policy and guidelines for subcontractors which include EHS provisions, though not fully aligned with the IFC requirements . It also has adopted a Forest Stewardship Council (FSC) policy in April 2021 to meet the occasional demand for FSC-certified product supply. It has obtained green certifications such as GreenGuard, GreenGuard Gold, and GreenLabel for certain products  conforming to emission norms for Volatile Organic Compounds (VOCs) that ensure product safety for consumers. It has obtained certification for ISO 9001, ISO 14001, ISO 45001 standards, and Promoting Sustainable Forest Management (PEFC) for all its operational plants. Greenlam is committed to extending the policies, systems, and certifications to all greenfield operations, including the proposed Naidupeta asset under GSL.

Though the existing E&S Management System (ESMS) covers a broad range of relevant E&S issues, there are gaps between the existing system which is aligned with India's legal and regulatory requirements and IFC Performance Standards requirements as well as WBG EHS Guidelines. Some of these gaps include (and not limited to): a) Greenlam's IMS system is primarily referring to the Indian laws as the applicable performance-based  standards; b) inadequate coverage of social aspects, including social impacts, community health and safety, and stakeholder engagement; c) inadequate coverage of impacts and risks of their supply chain activities which are outside their factory premises, such as community health and safety risk in transportation of hazardous materials; and, d) inadequate coverage of biodiversity and ecosystem services and E&S risk screening for wood sourcing. GSL will develop and implement an ESMS that is appropriate to the scale of its operations and scope of risks and aligns with IFC PSs and relevant sections of the WBG EHS Guidelines (ESAP#1). The system will provide for policy and procedures to identify and assess the E&S risks and impacts for its direct and sourcing operations and integrate E&S considerations in all the business operations and decision-making processes.   

Identification of Risks and Impacts. The Company has undertaken an Environmental Impact Assessment (EIA) for the proposed captive resin plant in the Naidupeta for the high-pressured laminate and wood-based particle board manufacturing plant in accordance with national regulatory requirements and received environmental clearance in January 2022. The EIA does not cover the entire scope of the project operations and the impact assessment, Environmental Management Plan and Emergency Preparedness and Response (EPR) outlined in the EIA are limited to the resin manufacturing activity. The review indicates the gaps in the assessment and management of impacts from the particle board processing operations, wood supply chain, and the social aspects related to PS2 and PS4 requirements in the project. Going forward,  the Company will update the existing EIA for Naidupeta into an IFC-compliant ESIA and ESMP to cover the entire scope of the project, including the wood supply chain and EHS audit of completed construction works that meet the requirements of the IFC PSs and WBG General and sector-specific EHS Guidelines (ESAP#2). The ESIA for the construction, operations as well as closure of the plant will be based on the Detailed Project Report for agroforestry plantation and sustainable wood sourcing, including the baseline assessment which the Company is planning to undertake. The ESMP will be implemented in a time bound manner with adequate resources provided for its implementation and monitoring.

The review of ESMS for risk identification for existing operational assets indicates that the parent company has a procedure for hazard identification and risk assessment, and impact analysis as part of the IMS. It follows an audit-driven and compliance-driven approach for impact identification and mitigation. However, the identification of risks and impacts is limited to manufacturing operations within the plant premises while the risks and impacts from the supply chain are not covered adequately. The parent company undertakes internal and external audits (as per ISO 14001 and 45001 certifications) of its operational plants. The appraisal indicates that the Greenlam’s operating plants follow national regulations and standards for the industry. The GSL shall implement and maintain the legal EHS register and undertake a periodic of compliance periodically as a part of the IMS audits (refer ESAP #1).

Management Programs. Greenlam has developed management procedures for waste management, incident management, change management, emergency preparedness and response, COVID protection, and safe shutdown of the plants which identifies the roles and responsibilities and actions to ensure the compliance with the national and local regulations. However, the current set of procedures does not cover management aspects, such as hazardous material storage and handling plan; chemical spill contingency plan; stormwater management plan; workplace air pollution control, and management plan; traffic and road safety plan; and community health and safety plan. Although the management programs and practices at the plant level were observed to be effective, there is a need to further develop and strengthen management plans for all the major relevant areas of E&S risks and impacts in the plant operations and its supply chain, identify the mitigation and performance measures, and establish corrective action plans for the proposed Naidupeta plant. This would include inter alia the development of a sustainable supply chain plan for wood-based products, including a traceable and risk screening platform, a sustainable agroforestry plan, a stakeholder engagement plan, a grievance redressal plan for the community, etc. Accordingly, as included in ESAP #2, the Company will develop a  detailed ESMP as a part of the ESIA, supplemented by a comprehensive set of Standard Operating Procedures (SOPs) covering all aspects outlined above, incorporating the IFC PSs and applicable WBG EHS Guidelines as performance-based requirements for the proposed investment.

Organizational Capacity and Competencies. The parent company has a formal E&S function at its manufacturing facilities, however a formal E&S function at the corporate level to strategize and oversee the E&S performance is proposed to be setup. Greenlam has recently set up a Green Strategy Group at the corporate level with representatives from various departments for developing, implementing, and monitoring green initiatives across the organization including resource efficiency, cleaner production and inventorying and subsequently reducing GHG emissions as examples. However, it is yet to establish the structured goals and targets for its ESG performance and monitoring and reporting systems between Greenlam Industries and its plants and subsidiaries.

The EHS, HR and sourcing organizational function  for the implementation of ESMS in GSL is not in place yet. In Greenlam’s operational plants, the overall responsibility of ESMS implementation is with General Manager - QA supported by plant level Deputy Managers – responsible for IMS development and implementation. The Company has recently hired a senior-level experienced forestry expert to design and manage the agro-wood supply chain for particle board and plywood operations. The construction contractor is responsible for EHS during the construction phase and is managed by an EHS team of three qualified persons. GSL is yet to hire a dedicated qualified EHS resource for monitoring and oversighting of the EHS performance of the EPC contractor.  This appraisal of the parent company's organizational capability indicates the need to further strengthen the organizational capacity for E&S management both at a strategic level and operational levels. Going forward,  the Company will appoint a qualified EHS Manager to lead and drive the sustainability efforts, develop, and implement the ESMS system, ensure the integration of E&S in the business operations and decision-making process, ensure implementation of IFC ESAP, ESMP, and compliance with IFC PSs and WBG EHG Guidelines (ref. ESAP#1). The EHS Manager will be supported by an adequate team for the development and  implementation of IMS and for EHS monitoring of sourcing operations.

Emergency Preparedness and Response. The parent company has established the emergency preparedness and response (EPR) system for all its existing plants to respond to accidents and emergencies, such as fire, explosions, and OHS safety. The same system will need to be developed for the Naidupeta plant, duly updated to close the gaps identified in the current operations.  For example, Greenlam maintains the emergency response infrastructure like fire extinguishers, hydrants, and an ambulance and undertakes regular mock drills and training programs for staff at the plant level and to some extent at warehouses. The EPR plans for existing plants are not yet equipped to respond to climate change and other emergencies, such as flooding and/or accidents and chemical spills during the transportation of hazardous chemicals. The Company will develop and implement EPR for the Naidupeta plant to include responses to climate change and supply chain risks, including during the transportation of hazardous materials and wood logs (ESAP#3).

Monitoring and Review. Greenlam has well-established monitoring and review procedure to monitor the compliance of the EHS management programs and for continuous improvement. The IMS department plans and conducts annual internal and external audits and management reviews. It also carries out a third-party evaluation of the environmental parameters at periodic intervals for regulatory reporting in accordance with the regulatory requirements. Since the IMS audit is majorly focused on documentation compliance, the Company will redefine the EHS Key Performance Indicators (KPI) for continuous improvement and conduct an EHS audit annually of the Naidupeta asset to monitor and review its EHS performance with respect to IFC PSs requirements and WBG EHS Guidelines (ESAP#4)

 HR Policies, Procedures and Working Conditions. In addition to the Human Rights Policy aligned with the Indian Labor Law, the Greenlam has an Employee Benefits Handbook that covers the various benefits to which employee is entitled. It does not have a comprehensive Employee Manual that puts together in one place the various provisions of the law applicable to the employee, the policies, working conditions, benefits as well as provisions to safeguard harassment at the workplace and their employee grievance mechanism. GSL will develop a Human Resources Manual that will cover all the above, as well as the extension of the relevant policies and benefits to the contractor and their workforce and align it to IFC PS 2 requirements (ESAP#7). This Manual will be made available to all employees and contractors. The Company will ensure that the working conditions of the laborers, including the working hours, compensation, social security, etc. comply with IFC PS2 requirements and statutory national laws and regulations.

Grievance Mechanism. Greenlam’s employee grievance redressal policy applies primarily to permanent employees. The operating plants have an HR channel that receives grievances from employees and contract workers. An HR personnel is responsible for maintaining the register and responding to the complainant or aggrieved party. However, the current system does not show how these grievances are categorized, addressed and response communicated back to the respective complainants. It has very recently developed a comprehensive Grievance Procedure as a part of its IMS but this is yet to be implemented. GSL will prepare and implement the Grievance Redressal Procedure for its employees including contract workers and ensures the procedure addresses grievances and communicates back to the people in a timely manner (ESAP#6). The grievance process will have a database that records and updates the status of all categories of grievances and provides a regular report to the plant management.

Occupational Health and Safety. The review of the OHS risk system of Greenlam Industries indicates adequate safety procedures and systems in place. It has instituted an occupational health and safety policy, adopted zero accident and zero fatality goals, constituted safety committees at operating plants, and invested in the safety of equipment and processes. It has implemented an ISO 45001 certification for all its existing manufacturing facilities to provide safe and healthy workplaces. The safety committee, safe operating procedures, safety inductions, training, toolbox talks, for the permanent and contract labors, safety infrastructure, safety audit, and incidence management system that includes accident reporting, investigation, and corrective actions are key components of the OHS management system. Greenlam is committed to applying the OHS system to the proposed Naidupeta facility. For this, GSL will update the hazard and risk analysis for the entire scope of the project which is currently limited to the resin unit (ref. ESAP#2). It will put in place the OHS risk management system based on a safety risk mitigation hierarchy (engineering -management-process-training hierarchy) and leading and lagging OHS indicators to ensure OHS and limit the exposure to VOCs and dust (ESAP#7).

The E&S review team site visit to Naidupeta indicated the adequate EHS practices, such as the usage of PPEs and signages at the construction site, but inadequate drainage and toilets at the labor camp for construction workers in the nearby village and workers resorting to open defecation. As included in ESAP#7, the Company will contractually require, monitor, and report that the EPC contractor provides accommodation, transportation, and basic services including water, cooking fuel, sanitation, and medical care for the workers, in accordance with PS2 requirements and in line with Part II of the IFC EBRD Guidance Note on Workers’ Accommodations and which will be further verified as part of EHSS audit to be carried out for the on-going construction as a part of IFC-compliant ESIA (ref. ESAP#2).

Supply Chain. The proposed particle board manufacturing entails the wood supply chain from the local farmers which may involve aggregators and consolidators. Most of the wood supply chain would be based on open-source augmentation of fast rotation plantation activity within a 100-150 km radius. The Company may have limited management control over working conditions as per the open market approach for wood plantations from third-party suppliers. The informal structure of the supply chain lends itself to risks associated with the use of child labor and/or forced labor under some conditions. This risk is unknown due to unavailability of relevant data on wood supply chain.  The parent company has a Supplier Code of Conduct which includes provisions for the prohibition of child labor and the EHS practices and qualifies the suppliers based on the assessment of various parameters, including sustainability. In ESAP#7 GSL will extend the code of conduct for the wood supply chain and assess the related labor and OHS risks therein. Also, in ESAP#7, GS will implement procurement procedures that give priority to those suppliers that can reasonably demonstrate the ability to comply with PS2 and applicable labor regulations. GSL will also monitor supplier risks on an ongoing basis and take appropriate steps to remedy changes in labor and safety risks as necessary.

 Resource Consumption. Wood panel manufacturing is a water and energy-intensive industry. The total water requirement for the proposed Naidupeta plant is estimated to be 365.3 Kilo liter per day (KLD) consisting of 276.1 KLD of fresh water and 89.2 KLD of recycled water, which will be met from APIIC supplies from the Telugu Ganga canal. The power requirement is estimated to be 9000 KVA which will be met from AP TRANSCO supplies to the industrial park. The water balance assessment for the sustainability of water supply will be undertaken as a part of IFC-compliant ESIA (ref. ESAP #2).

The parent company has implemented several resource efficiency measures in its operational plants to reduce water and electricity consumption, which it proposes adopting and integrating into the design and operations of the Naidupeta plant. GSL adopted Indian Green Building Council (IGBC) gold-rated green building design. The plant has provided the state of the art, energy-efficient continuous press system technology to produce particle board that will reduce sanding requirements and wastage of raw material.

Greenhouse Gases emissions. There is adequate potential in the proposed project to reduce GHG emissions. The Company’s equipment (i.e., boilers) are designed for dual feedstock relying solely on agri-waste including wood, wood waste and wood-based biomass during normal operations. In case of temporary shortages of usable biomass during exigencies, use of coal may be necessary for a limited period of time. Use of coal will be restricted and only if agri-waste is not available and will be reported to IFC on an annual basis in the AMR. The Company will build a GHG inventory, quantify the GHG emissions, and consider cost-effective options to reduce the GHG emissions in the plant operations and sustainable agroforestry management (ESAP#8). It will undertake an IGBC assessment and energy model to assess energy and water savings and obtain ISO 50001 (Energy management system) certificate.

Air Emission and Control and Waste Management. The air emissions from particle board and laminate operations include particulate matter (PM), volatile organic compounds (VOCs), and combustion products, such as carbon monoxide (CO), carbon dioxide (CO2), and nitrogen oxides (NOx) from sources like the hot presses, dryers, boilers, and DG genset. The dryers and hot press are significant sources of VOC emissions. GSL will prepare the procedures for air emission control, management, and monitoring (including continuous VOC monitoring in the veneer dryer, hot press operations, and other relevant places) and comply with the emission standards specified in WBG General and sector-specific EHS Guidelines for Board and Particle-Based Products (ESAP#4).

The waste management procedure of Greenlam Industries aims to achieve zero discharge with treated effluent to be used for toilet flushing, gardening, and cooling towers which is expected to be extended to the group companies including GSL. The procedure seeks to meet the national discharge standards and does not include monitoring of effluent formaldehyde levels. GSL will monitor the formaldehyde levels in the effluents as per WBG EHS Guidelines.

Hazardous Material Management. The adhesive resins used in manufacturing such as phenol-formaldehyde, melamine formaldehyde, urea formaldehyde, and melamine urea formaldehyde are considered toxic. The hazard analysis has been conducted for the resin manufacturing unit at Naidupeta as part of the EIA study and the mitigation and safety plan developed provides adequate mitigation measures. The Company will extend the hazard analysis to the entire scope of operations at the Naidupeta plant as a part of the IFC-compliant ESIA update study (ref. ESAP#2).

Pesticide Use and Management. The manufacturing of particle boards and laminates involves the usage of pesticides and biocides. As included in ESAP#9, the Company will not use WHO Class Ia and  Ib products in its processing operations and will prepare a Pesticide Use and Management Plan to reduce and mitigate the impact of pesticide use. It will include adequate provisions, such as PPEs including face masks, rotation of labor, and regular medical checkups (including cholinesterase). The Company will ensure that the requirement of the Pesticide Use and Management Plan is also applicable to third-party wood suppliers and included in the Suppliers' Code of Conduct.

 Community Health and Safety Risk Management. The proposed plant is located within Naidupeta industrial estate and the nearest community is at a distance of 1.5 km from the plant boundaries. The risk to community health and safety is from vehicular traffic due to transportation of large volumes of  raw material (wood), hazardous materials, and finished products to and from the plants. Since most of the vehicles are part of the Company's supply chain which would also be spread out, they have limited capacity to manage the risks. As included in ESAP#3, the Company will assess the risks and impacts of its business operations on the proximate community and develop and implement a community health and safety plan to minimize the health and safety risks to the community from its processing and sourcing operations. It will engage with the community on EPR on an ongoing basis, including a communication plan for the affected people. It will include the provisions related to community health and safety in the code of conduct for suppliers, service providers, and subcontractors.

 The proposed particle board project is based on agro plantation activity for the core wood and proposes to use 100% hardwood of eucalyptus species. It plans to promote agroforestry amongst farmers in the catchment area within a 100-150 km radius of the manufacturing locations through extension services. A site inspection and review of satellite imagery indicated that the supply chain contractors within India are located within a modified landscape with no natural habitat values present. The rates of deforestation within this area of India are also considered very low, indicating that ongoing risks for natural habitat conversion are negligible. The FSC certification is currently not sought for the Indian farm agroforestry activity and is done based on need and commercial considerations. The Company envisages evolving the strategy for certification based on the market demand and customer needs. To meet the IFC PS6 requirements for the supply chain, the project would need to periodically check wood sourcing risks to conversion of natural and critical habitats. As included in ESAP#10, the Company will be required to undertake periodic audits on a three (3) yearly basis. The Company will also be required not to introduce any genetically modified clones in its plantation operations. These requirements will be communicated to all employees and third-party suppliers.

 Stakeholder Engagement, External Communication and Grievance Mechanism. Greenlam community engagement is limited to CSR activities in education, healthcare, and women empowerment. As the Greenlam diversifies its operations into wood-based products and envisages direct procurement of wood materials from farmers, it needs to step up its efforts in more strategic community engagement that includes consultations on an ongoing basis, dissemination of information, and documentation. The Company, as included in ESAP#5, will prepare, and implement a stakeholder engagement plan (SEP) for that would meet the requirement of IFC PS1 requirements. With regards to Community Grievance Mechanism, it has an operational procedure for receiving and responding to communities’ complaints. The legal complaint against one of its operating assets by a local resident indicates the need to improve and strengthen the Greenlam’s communication and responsiveness to the stakeholders, especially the neighboring community. GSL, as included in ESAP#6, will develop, and maintain procedures for internal as well as external grievance across all stakeholders including its workforce and the community that will be able to register and track external grievances, assess the risks, and respond as necessary. The grievance mechanism will ensure that grievances from affected communities and external communications from other stakeholders are responded to and managed appropriately.                                                  

  The Company will make publicly available this ESRS and ESAP together with updated IFC-compliant ESIA,  Stakeholder Engagement Plan (SEP), and the Grievance Redressal Mechanism (GRM)  at its direct and sourcing operations and will keep a copy available at the Corporate and Site office. 

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

Company: Greenlam South Limited 

Point of Contact: Samarth Agarwal 

Title: Assistant Vice President, Finance and Account 

Telephone Number: +91-11-42791399 

Email: samarth.agarwal@greenlam.com

Mailing Address: 2nd Floor, West Wing, Worldmark 1, Aerocity IGI Airport Hospitality District, New Delhi – 110 037

Website:www.greenlamindustries.com