The proposed subprojects included in the use of IFC proceeds are not expected to have impacts on biodiversity values and cultural heritage to be managed according to PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources and PS8: Cultural Heritage as the project sites are located in either urban or peri-urban areas or in modified habitats and there is no known cultural heritage within the vicinity that can be affected. In addition, no indigenous peoples or traditional communities will be affected by the project.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the PSs.                                       

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability, as the construction and operation of the subprojects to be financed by the proposed investment have limited adverse E&S risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures, by adhering to good international industry practice (GIIP) procedures, guidelines and design criteria, as described in the following sections. 

Key E&S issues reviewed at appraisal include: (i) adequacy of Sabesp’s E&S management system, including contractor management; (ii) labor and occupational health and safety (OHS) management, especially during construction; (iii) community safety, (iv) security management; (v) land access and acquisition and potential risks associated with permanent or temporary displacement; and (v) grievance mechanism and stakeholder engagement.                            

Environmental and Social Assessment and Management System

Sabesp has a corporate Environmental Management System that is based on two main principles: environmental compliance and changes in corporate environmental culture. To this end, various corporate programs have been implemented, including: i) management of greenhouse gases (GHG), ii) environmental education, iii) environmental permitting process and water right permits, and iv) E&S management system (ESMS) for water and WWTPs, among other management systems. Sabesp prioritizes the continuous implementation of the company’s ESMS for water and WWTPs which started in 2009. Sabesp’s ESMS is based on the ISO 14001 and aims at improving operations and processes for water and WWTPs to optimize efficiency, minimize risks, prevent accidents, and avoid environmental impacts. Currently, 36 treatment facilities are ISO 14001 certified and 558 follow Sabesp’s ESMS. The company’s goal is to implement the company’s management system in all water and WWTPs by December 2024.

Sabesp’s Environmental Policy is published on its website. The company states the following environmental commitments: prevention of water pollution and management of solid waste; development of people to promote continuous quality improvement; compliance with environmental requirements; adopt environmental criteria for the management of suppliers; fostering the development of technologies aimed at protecting, conserving, and restoring the environment.

Sabesp has adopted a Code of Conduct that is applicable to employees, contractors, and suppliers, which covers aspects related to the provision of environmental protection, safe work environment, integrity, and relationships with stakeholders. The Code of Conduct is available at: https://ri.sabesp.com.br/governanca-corporativa/codigo-de-conduta-e-integridade/.

Sabesp has developed corporate Risk Policy and Matrix as tools to support identification of risks and mitigations for the following key operational risks: climate change; pollution of water resources; water availability/scarcity; excess of water/flooding conditions; sea-level rise; and emergency preparedness.

For the operation of its facilities, Sabesp has developed corporate procedures, including: (i) wastewater management; (ii) solid waste management; (iii) management of chemical products; (iv) odors management; and (v) environmental noise management. Sabesp has also developed a corporate strategy with resilience and adaptation actions to address the risks associated with climate change to ensure water security for its operations.

The company follows the local environmental agency requirements to conduct E&S assessments, which are required for the construction of water and wastewater treatment plants. For projects that are not subject to the environmental permitting process, Sabesp aims at avoiding impacts on areas with vegetation cover and/or that are densely populated.  During construction, contractors are responsible for E&S compliance for the execution of the project.

The company will develop an E&S Assessment and Management System (ESAMS) to ensure that the subprojects to be financed by IFC are assessed, developed and managed in line with IFC PS and national E&S requirements.  The ESAMS will include an E&S Assessment Procedure aimed at ensuring that Sabesp conducts a process of E&S assessment and develop and implement subproject-level E&S management plans (ESMPs) in line with IFC PS and local requirements in a manner commensurate with the level of the subproject’s E&S risks and impacts. Sabesp will ensure that each contractor develops and implements more detailed sub-project level ESMPs based on the ESAMS, which should include the following plans and procedures: (i) Contractor Management Plan; (ii) Stakeholder Engagement Plan, (iii) Grievance mechanism for affected communities, (iv) Land Access and Acquisition Plan, (v) Emergency Preparedness and Response Plan, (vi) security risk assessment (SRA) and Security Management Plan (SMP); and (vii) Chance Finds Procedure.  (ESAP #1).

Organizational Capacity and Competency

As part of its ESMS, Sabesp has a corporate environmental division, in addition to the regional E&S staff at the Company's Business Units, which are hierarchically linked to the Company's corporate division and seek to guarantee the uniformity of procedures and information, as well as the dissemination of corporate programs to other units of the company. At the corporate level, E&S staff focus on strategic E&S issues and on the development of procedures, performance indicators, and monitoring of the performance of the various operating units. Sabesp has personnel specialized in i) human resources; ii) occupational health and safety; iii) environmental management and iv) quality control, including auditing, risk management and compliance.

The responsibility for the management of environmental matters is attributed to the operations and the development areas with support from the environmental corporate division and regional E&S staff. The implementation of social responsibility activities is supported, at the local level, through communications coordinators with the support of operational managers. At the corporate level, environmental management is the responsibility of the Environmental Management Superintendence. Sabesp has designated E&S employees at the corporate level and in the different divisions and regional offices responsible for implementing the company's corporate E&S policies, procedures, and systems.

For the subprojects included in the use of IFC proceeds, Sabesp will assign (i) one or more dedicated and capable environmental specialist(s) at the corporate level to oversee the implementation of the ESAMP and with contractor E&S management responsibilities and (ii) one or more qualified social specialist(s) at the corporate level to oversee the implementation of social management plans, including land acquisition aspects. The company will contractually require and supervise that each contractor will have designated E&S staff at the project site to ensure consistent implementation of ESMPs and E&S procedures and will periodically report on E&S performance and compliance of the subprojects, including on a set of E&S and OHS indicators defined as part of the contractor ESMP (ESAP #2).

Emergency Preparedness and Response

At the corporate level, SABESP 's OHS Management System includes the identification and analysis of risks and preparation of emergency preparedness and response as well as investigation of near misses and accidents at the workplace. In addition, Brazilian regulations also require emergency preparedness and response plans for water and sanitation facilities.

For each subproject included in the proposed investment, Sabesp will ensure that construction phase Emergency Preparedness and Response Plans (EPRP) are developed by the contractors, following an analysis of credible emergency scenarios specific to the subproject, including considerations relevant to proximity to communities, water bodies, sensitive habitats, etc. as described under ESAP #1. During operations, the company will implement the relevant plan and procedures developed as part of the ESMS, under ESAP #1.                                

Human Resources Policies and Procedures

As of February 2022, Sabesp directly employs approximately 12,500 workers, of which 80% are men and 20% are women. Employees are hired full-time, under permanent employment contracts.

The company’s human resources (HR) policies and procedures are aligned with the local regulations and PS2 requirements and are communicated to employees, third-party contractors, and interns through induction and training programs. The company’s HR policies and internal regulations cover recruitment, terms of employment, compensation and benefits, OHS, workers’ grievance mechanism, training, professional development, gender-based violence and harassment (GBVH), non-discrimination and equal opportunity, freedom of association, and prohibition of child or forced labor. The employment contracts define working hours, working days, holidays, duties, and job title; payment including overtime; insurance; grievance procedures; and termination of employment.

The company has implemented apprentice and internship programs and employs approximately 600 apprentices and interns as of February 2022. The apprentice program is a short-term program (maximum duration of 24 months) developed in partnership with National Industrial Apprentice Service – Sao Paulo (SENAI-SP) to provide opportunities of professional development to youth of between 14 and 22 years of age with a maximum of 20 hours of activities per week (4 hours of activities per day). The internship program aims at helping university students prepare for the job market. Both programs are implemented in line with national legislation to ensure that trainees are not involved in any hazardous work and that the program does not interfere with their education.

Workers’ Organizations

Brazilian labor law protects collective bargaining and the right for workers to associate. Approximately 65 percent of Sabesp’s employees are unionized and represented by five main unions for the different job categories. The company negotiates Collective Bargaining Agreements (CBAs) on an annual basis. CBAs include workers’ rights and benefits including minimum wage, overtime, additional bonus for hazardous activities, transportation vouchers, meal vouchers, vacation, and health care, among others.

Worker Grievance Mechanism

The company has an adequate workers’ grievance mechanism with systematic tracking and reporting in line with PS2.  Sabesp has an anonymous grievance channel (e.g., telephone and website) accessible to employees, trainees, and third-party contractors to raise concerns and grievances related to non-conformities to the Code of Conduct and internal procedures, without the risk of retaliation (https://www.contatoseguro.com.br/sabesp, http://faleconosco.sabesp.com.br/). The channel is disseminated through induction and training programs. This channel does not prevent complainants from accessing to judicial remedies set by Brazilian regulations.

Grievances are administered by an independent and specialized company (Contato Seguro). Once a complaint is received, Sabesp’s Internal Audit Department classifies it by risk level and liaises with the HR department to resolve grievances related to the HR aspects, and oversees them until closure, ensuring confidentiality and anonymity. The internal audit department reports the grievances and their status to the corporate Audit Committee on quarterly basis. Sabesp will enhance the management of grievances submitted by contractors in coordination with contractors of the subprojects, as specified in the ESAP #1.

As per local regulations, Sabesp has developed a formal and confidential grievance handling policy and a resolution procedure to address and resolve grievances related to sexual harassment, consistent with PS2 requirements and GIIP. Grievances related to sexual harassment can be lodged through an anonymous grievance channel, are reviewed by the Internal Audit Department, and transferred to the HR Department. Each grievance is investigated and resolved within 60 days by a sexual harassment investigation committee that includes three members from HR Department. The ethics committee reviews the investigation report issued by the investigation committee to determine the disciplinary measures. Committee’s members are required to go through specialized training to handle grievances in a safe manner, protecting the worker from the risk of retaliation.    

Occupational Health and Safety (OHS)

The company has an OHS Management System in accordance with the Business OHS Manual (PE-RH0001), which includes the identification and analysis of risks as well as procedures for activities performed by employees and contractors during construction and operation and maintenance (O&M). Key OHS procedures include: work at heights, excavation, electricity, inspection of cables and hoist, confined space, civil construction activities, and hazardous materials. The OHS Management System also includes procedures for work permits, training, composition of the OHS teams, and personal protective equipment (PPE) training program, among others. The company reports a 3.6 accident rate (per millions of hours worked) which is within the industry standard of 6.0 for sanitation companies.

Workers engaged by Third Parties

Sabesp secures the services of qualified companies to provide a wide range of services for construction and O&M. Sabesp’s contracts typically include the E&S and OHS requirements that the contractors must follow, and it transfers the responsibility of compliance to the contractors via contractual clauses. For the 11 subprojects included in IFC’s proposed investment, Sabesp will ensure that relevant aspects of their HR and OHS policies and procedures (i.e., compliance with local labor laws, non-discrimination, provisions to ensure timely payment of salaries, no child and forced labor, OHS plans and procedures, GBVH prevention, and access to grievance mechanism) are extended to cover the practices of contractors and their sub-contractors in compliance with this Performance Standard.

As per the ESAP #3, the company will implement its Contractor Management Plan for each financed subproject and monitor and report on performance of contractors, ensuring that labor and OHS conditions comply with local regulations, contractual requirements, and PS2 requirements. Specifically, the Contractor Management Plan will include the following monitoring requirements: (i) periodic internal and external OHS and labor audits conducted by company’s OHS team and external auditors; (ii) evidence of job safety analysis; (iii) adequacy and use of PPE and other preventive and protection measures for OHS (including hygiene) implemented by the contractor; (iv) OHS, first aid and emergency response training; (v) work permits at the construction sites; (vi) investigation, analyses and statistics of accidents and incidents, including injuries and illnesses; (vii) compliance with labor laws and company’s policies, including non-discrimination, working conditions, payment of salaries, benefits and insurance, (viii) trainings on grievance mechanism and prevention of GBVH; and (ix) record, status, and analysis of grievances (including GBVH-related grievances) submitted by contractor’s workers for each construction site.                         

The subprojects proposed for IFC’s financing are part of a series of programs implemented by the company to improve coverage and quality of water and sanitation services, meet legal requirements, and improve resource efficiency and pollution prevention.  Sabesp prioritizes the development and implementation of programs and initiatives to reduce water losses and to minimize untreated sewage discharge to rivers, especially the Tiete and Pinheiros Rivers in the Sao Paulo Metropolitan Area.

The main initiatives implemented by Sabesp to reduce water loss in its distribution system include monitoring of water pressure and installation of pressure reduction valves to prevent and detect leaks; immediate repairs of visible and non-visible leaks in the distribution network; replacement of older equipment; replacement or installation of water meters to obtain more precise information on water flows/volumes; and identification of irregular distribution of water.

In particular, the Novo Rio Pinheiros Program aims at reducing the volume of sewage, and therefore, the organic load released into the river through the collection and treatment of sewage from low-income neighbourhoods located along tributaries of the Pinheiros River in the Sao Paulo Metro Area. Since 2019, more than 538,000 households have been connected to Sabesp’s sewage system. The program will benefit more than 1,200,000 people with access to sanitation. Four subprojects included in IFC’s investment are part of the Novo Rio Pinheiros Program. The subprojects under the Clean Wave Program also aim at reducing pollution through the collection and treatment of sewage in coastal cities.

Solid Waste and Hazardous Material Management

Limited amounts of non-hazardous and hazardous wastes (used oils, waste/residual paint, oil/paint-soaked rags/material, filters, empty oil/paint/chemical containers, spent batteries, potentially contaminated soil, etc.) will be generated at the subprojects’ construction sites.

Hazardous materials that will be temporarily stored and used at the sites during construction include gas cylinders, diesel, lubricating oils, paints, batteries, and other chemicals. Hazardous material will be stored with the required measures in terms of segregation and containment; and handled/used with appropriate care and PPE.

Once constructed, the facilities (e.g., water storage, booster, and lifting stations) will be mostly automated and their operation will generate limited amount of waste which will be stored, collected, and disposed of according to the procedures developed under the subproject’s ESMP (ESAP #1) in compliance with PS3. As part of the Contractor Management Plan (ESAP #1), while a subproject is under construction, the contractor responsible for each subproject will be required to submit periodic reports on waste and hazardous waste management, including volume of the various types of waste generated and evidence of storage, handling, treatment, and disposal in compliance with local requirements and PS3.                          

The construction and operation of the subprojects included in the use of IFC proceeds are expected to have limited potential risks to community health and safety and will contribute to better sanitation and improved water quality and availability with direct positive effects on community health and reduce exposure to diseases linked to water pollution. The 11 subprojects will consist of facilities associated with water and sanitation distribution networks that, once constructed, will either be buried (e.g., water lines, sewage collection system) or consist of small facilities (e.g., water storage, booster, and lifting stations). The booster stations, lifting stations, and water storage facilities will be fenced to prevent access to the public. During construction, Sabesp will supervise that the relevant provisions of the Contractor Management Plan will be implemented with respect to adequate measures to prevent and mitigate community safety risks, specifically in terms of management of construction traffic, earthworks, excavations, and trenching, and with respect to emergency preparedness and response (as discussed under IFC’s PS1 above).

Since the subprojects proposed for IFC’s financing will include construction works in public roads/sidewalks and near households, Sabesp will supervise the works and ensure that, upon completion of civil construction and repairs, that road and affected areas are left in good condition by the contractors (ESAP #4).

Security Personnel

Security personnel is provided by private security companies. Security contractors include armed and unarmed staff based on site-specific security risk assessments (SRA) that are required to conduct as per the company’s security procedure. All the security contractors must be registered and comply with the Federal Police Decree 387/06 for the provision of these services. Security contractors are required to provide evidence of compliance with Brazilian law and they are vetted by the company with criminal background checks and evaluation. Security contractors are required to participate in trainings offered by security service providers, which includes code of conduct, human rights, and principles of proportionality as per the Brazilian legislation. Communities can express concerns or grievances related to security personnel through the company’s external grievance mechanism. 

Sabesp will ensure that a SRA and, as necessary, based on the results of the SRA, a Security Management Plan (SMP) is developed for each subproject as part of the subproject level ESMS, including engagement of security providers in terms of selection of security personnel, rules of engagement (including use of force), appropriate conduct toward workers and communities, training, equipment, facilities, working conditions, and grievance mechanism. The SMP will discuss: (i) security management objectives and targeted stakeholders, (ii) outcomes of the SRA, (iii) security arrangement employed in each project, (iv) details of coordination among contractors and local police (if applicable), (v) incident reporting, and (vi) key performance indicators (KPIs) for security management as described under ESAP #1). In addition, as s per ESAP #1, Sabesp will extend GBVH trainings to security contractors.