PS5 does not apply as land legacy impacts for the current milling facilities were not identified during this appraisal and the proposed investment will not involve any land acquisition activities; PS7 and PS8 do not apply as no milling and/or sourcing risks were identified by the proposed investment on Indigenous Peoples or Cultural Heritage                                                

This is a Category B project as per IFC's 2012 Policy on Environmental and Social Sustainability.

 Key E&S issues associated with this investment include (a) supply chain risk assessment and management including traceability and verification of coffee sourcing in relation to CL, OHS on agrochemicals application and use of pesticides, and biodiversity risks; (b) sustainable production of coffee, including promotion of Good Agricultural Practices (GAPs) and certification; (c) company’s Environmental and Social Management System (ESMS) for the coffee sourcing, processing, and storage operations, including water/energy efficiency, management of effluents, air emissions, and solid/hazardous waste from the milling operations in line with WBG EHS Guidelines; (d) road traffic safety of coffee transportation (e) security risk assessment and management.

 Environmental and Social Policies. ED&F Man Group, as the parent organization, has an environmental policy, health and safety policy, quality and food safety policy, supplier code of conduct, CSR policy, and standards of business conduct that apply to all Volcafe operations.

These policies and codes, last revised in 2020 and 2021 as part of the process of continual improvement implemented by the company, respectively include commitments to the protection of the environment; health and safety risk assessment, hazard controls, and provision of training; compliance with national legal and regulatory environmental, social, health and safety requirements; sustainable and responsible operations; suppliers operations to avoid deforestation, non-conversion of natural and critical habitat, biodiversity conservation,  and the prohibition of the use of child and forced labor. The environmental, health and safety, and quality and food safety policies include a description of the organizational responsibilities, commitment to continuous improvement, and at a minimum annual compliance audit to owned and operated assets. The commitment and performance-based requirements exhibited in these policies and codes are largely aligned with IFC PSs objectives.

ED&F Man policies set strategic objectives and commitments, in which Volcafe current activities can be further strengthened to meet them. For example, the environmental policy requires the business to identify and meet the applicable environmental legislation, address deforestation and land-use change by operating a responsible sourcing procedure, among others. Going forward, Volcafe will reinforce the effective implementation of ED&F Man policies and codes’ commitments in alignment with the Volcafe organization’s strategic direction by expanding its existing continuous improvement action plan for Kenya, Tanzania, and Uganda and addressing environmental management, health and safety management, quality and food safety, biodiversity management, and sustainable supply chain management with objectives, targets, key performance indicators, and CAPEX/OPEX allocations. The continual improvement action plan, which will be part of the corporate ESMS (described below), will annually be set and drawn from Volcafe strategic direction, E&S monitoring, and audit activities (ESAP#1a).

Identification of E&S Risks and Impacts. Volcafe completed environmental impact assessments (EIA) for the dry and wet milling assets in Uganda and Tanzania and secured the respective regulatory approvals. The most recent environmental approvals provided for some assets in Uganda indicated the need for attention regarding periodic renewal and full demonstration of compliance with the permit conditions, alongside other requirements, such as the wastewater discharge permit and water abstraction permit (ref.  PS3 section below). As set forth in ESAP#1b, Volcafe will establish a regulatory and permit requirements tracking register for the (i) applicable EHS and labor requirements in Kenya, Tanzania, and Uganda and (ii) permits for physical assets operated therein. The register will identify, track, and be used to demonstrate Volcafe operations comply with all applicable national EHS and labor regulations, and maintain a permits tracking register for each of its owned assets, such as dry and wet mills and warehouses.

Volcafe completed a hazard identification, risk assessment and control (HIRAC) review for its milling/warehousing operations, subject to annual review in accordance with the ED&F Man health and safety policy, and made available samples available for IFC review. The wet mills, dry mills, and warehouses are the assets that are considered to be associated with the highest health and safety hazards, and road traffic safety risks from coffee shipments. Going forward, Volcafe will complete and/or update occupational health and safety (OHS) risk assessments for all its mills in East Africa and network of owned/leased warehouses by competent personnel. The OHS risk assessment will include a clear hazard identification; risk assessment methodology and risk criteria; define controls that prioritize the OHS hierarchy of risk control, namely elimination, substitution, engineering controls, administrative controls, and personal protective equipment; define time-bound action, responsibility center, and cost (ESAP#1c). Road traffic safety risk management is addressed under PS4 road traffic safety section.

EHS Management System and Programs. Volcafe has an EHS management framework consisting of ED&F Man Group policies and codes applicable to Volcafe and some procedures supporting the implementation of these policies and code commitments. Whereas these policies and commitments align with the objectives of this Performance Standard, some of the policies and procedures still require further implementation. As set forth in ESAP#1d, Volcafe will strengthen its existing EHS framework to develop and implement an integrated environmental and social management system (ESMS) in accordance with the requirements of PS1 and IFC ESMS Implementation Handbook that will be extended, specific to and suitably scaled to its business activities in Uganda, Tanzania, and Kenya.

The ESMS requirements will be applicable to Volcafe direct (mills and warehouse) and indirect operations (i.e., contractors/services providers) and include management programs addressing (i) supply chain risk assessment and management (ii) OHS management of the milling operations and warehouses including safe system of works, OHS master list of standard operating procedures (SOPs) and/or work instructions, OHS training requirements, workplace inspection, audit, and reporting requirements (iii) environmental management of the milling operations addressing air emissions, noise, energy, waste, water, wastewater including ambient and point-source emission/effluent measurements, and hazardous materials storage and management (iv) contractor E&S management including due diligence, oversight, and monitoring requirements (v) EHS/social organizational capacity and training (vi) community health and safety (vii) stakeholder engagement and community grievance mechanism (viii) emergency preparedness and response (ix) security management (x) E&S monitoring, audit, and reporting requirements including Key Performance Indicators (KPIs) to assess overall E&S compliance and performance.

EHS Organizational Capacity and Competency. ED&F Man Group has several business units, one of which is the coffee business. At the Group level, ED&F Man has a Corporate Social Responsibility (CSR) & Health, Safety, Environment and Quality (HSEQ) manager, who reports to the Chief Executive Officer (CEO). The Group CSR and HSEQ manager has direct reports and is supported by CSR & HSEQ functions at the business unit level, including coffee.

Volcafe has a global sustainability team, whose director reports to Volcafe’s CEO. In East Africa, the regional manager (of East Africa operations) is ultimately responsible for EHS and CSR performance and is supported by (i) General Managers in Uganda, Tanzania, and Kenya, ii) regional HR head and HR managers in Uganda and Tanzania, (iii) HSEQ risk manager (for mills and warehouses) in Uganda, Operations Managers with HSEQ responsibilities in Tanzania and Kenya and a Safety Officer in Tanzania and (iv) a large sustainability team headed by a sustainability manager (for coffee sourcing) in Uganda; and a sustainability team in Tanzania. To support timely development and implementation of the ESMS management programs, Volcafe will assign additional qualified resources or consultant, as set forth in ESAP#1e. 

EHS Training. Volcafe provides a mandatory induction program and on-job training to new employees relevant to their area of work, and it administers annual health and safety training program for Volcafe direct employees and casual workers, which had been interrupted due to COVID-19 restrictions. Going forward and integral to the ESMS, Volcafe will codify a mandatory EHS/social training curriculum, including an annual plan for new hires, current employees, and operation-specific EHS training e.g., silos cleaning for the coffee milling and defensive driving for the transportation operations. The EHS training program will address Volcafe direct employees and indirect employees i.e., casual, seasonal, contractor workers. The minimum mandatory training topics to be provided to all direct and indirect employees will include Volcafe EHS/social policies, a refresher on the worker grievance mechanism, code of conduct, sexual harassment, emergency preparedness and response, and as relevant to the job, on-job hazard communication and prevention, mandatory safety training (e.g., confined space, working at height; defensive driving), use of PPE at mills, and site-specific EHS/social management plans (ref. ESMS development under ESAP#1d).

Emergency Preparedness and Response. Volcafe has emergency response plans at mills and guidelines which include fire protection provisions for Volcafe warehouses, such as the requirement to have fire detection equipment, establishing a firefighting response protocol, training on firefighting procedure, firefighting equipment maintenance, and distribution. Volcafe assets are insured, which includes a periodic third-party review of the firefighting arrangement. The sample of emergency response plans reviewed shows areas of improvement, such as risk identification, preparedness and response, performance provisions, among others, to be considered aligned with PS1 requirements. As set in ESAP#1f, Volcafe will develop overarching emergency preparedness and response plan (EPRP) complemented by facility-specific emergency preparedness and response plans for the assets in East Africa. The overarching EPRP will support the development of facility-specific EPRP in accordance with Good International Industry Practice (GIIP) and address minimum requirements and standardized risk identification and response procedure; emergency communication; emergency response equipment including firefighting arrangement; training and drills; inspection and equipment maintenance; KPIs; standard templates/reports.

The facility-specific EPRP will include information on the emergency response team;  site layout showing evacuation routes and assembly/muster points; inventory of emergency equipment showing type, quantity, and locations such as fire extinguishers, fire alarm, portable siren, smoke detector, first aid box, spill kit, etc.; specific firefighting provisions for combustible sources (fuel tanks, husk, coffee bags); communication equipment used to communicate an incident; list of certified first aiders and trained fire marshals; location of the closest medical facility to receive injured persons; internal and external emergency contacts (e.g., ambulance/hospital); minimum emergency drill frequency; coordination or approval of EPRP with the local authority and/or third parties.

EHS Monitoring and Reporting. Volcafe maintains a monthly HSE performance register for the East African countries showing KPIs on workforce number and worked hours; accidents and lost time accidents; electricity and fuel consumption; water consumption and effluent generated; carbon emissions; waste generated; quantities of processed coffee. The HSE performance register aggregates the data into a monthly HSE report for senior management that covers all the regions for the coffee business unit. The HSE monthly report further highlights high-level activities under four buckets: health and safety, quality and food safety, environment, and CSR and sustainability, and outlines challenges and key forthcoming actions. Volcafe undertakes annually extensive HSE, quality and food safety audits, which include contractors and sub-contractors activities. On sustainability reporting, Volcafe sustainability performance is included as part of ED&F Man Group reporting on the CDP disclosure platform (https://edfman.com/wp-content/uploads/2021/09/EDF-MAN_ANNUAL-REPORT-2020.pdf).

As part of the ESMS (ref. to ESAP#1d), to improve EHS/social performance oversight and monitoring, particularly at the asset-level (milling and warehouses), Volcafe will codify the organization’s EHS/social monitoring, audit, reporting requirements and frequency including for contractors and subcontractors, and  augment the HSE performance register by expanding the HSE KPIs to include leading and lagging OHS indicators, such as workplace inspections, number of safety committee meeting, first aid cases, etc.; trainings delivered to permanent and casual workers and training man-hour; including information on social performance such as workers grievances log, overtime, number of voluntary and non-voluntary work terminations, and gender-split workforce data; reporting a log on resource efficiency (water/energy), environmental measurements on ambient air quality and wastewater, OHS measurements such as noise; including a waste log showing waste typologies, generation, and disposal approach; including a site non-conformities and corrective action plan log.

Supply Chain.  Coffee sourcing operations are different in each of the 3 East African countries targeted by this investment. This is due to the variety of country regulatory structures in place for coffee sourcing. For example, in Uganda the upstream involvement of the coffee buyer at the farm gate is permissible. In Kenya and Tanzania, cooperatives mainly assume the role and coordination function of receiving coffee harvest from farmers, milling, marketing, and exporting coffee through an auction system, with the availability of a direct sale window that is growing in adaption to regulatory developments. Most of the coffee in Kenya and Tanzania is exported through an auction system. Despite these structural differences, coffee production in the three countries is dominated by smallholder farmers, where the range of coffee farm size is between 1 hectare to 2.5 hectares in Uganda and Tanzania, and an average of 0.17 hectares in Kenya. . In Uganda, the buyer has high traceability to the farm gate. In Kenya and Tanzania, due to the coffee-specific regulatory structure, the coffee buyer has mainly traceability up to the producing cooperative and milling stations, with sustainability assurance varying depending on the cooperative capacity, requirements, and supply chain route.

The majority of coffee sourced by Volcafe East Africa is from Uganda, followed by Tanzania. Less than 10% is sourced from Kenya. Such supply chains contain both Arabica and Robusta coffee. With respect to possible association of coffee production with supply chain risks as envisaged by the Performance Standards (in particular that with respect to biodiversity values), IFC focused its review efforts on the Arabica supply chain. Arabica is grown at higher elevations than Robusta and in areas with higher biodiversity values. For example, during appraisal, IFC reviewed and assessed the company’s Arabica sourcing origins (by geo-referencing origin data points against areas of known high biodiversity values) in both Uganda and Tanzania (for that percentage of the company’s certified supply chain – which is dominated by Arabica coffee. Mapping in Kenya was limited to use of the GMAP and iBAT tools and general areas of production due to the use of co-operatives and aggregators and the fact that the coffee is obtained by the company at auction (i.e., there are no geo-referenced points indicating exact origins.) See the section under PS 6 for more details on the results of the assessments and a description of ESAP items designed to complete the supply chain assessment based on the level of risk associated with the remaining portion of uncertified Arabica and the conventional Robusta supply chains.   

Volcafe has been implementing a farmer-centric sustainable agriculture program called the “Volcafe Way” (VW), largely overlapping with its certified coffee supply chain in its coffee sourcing areas. With the support of over 135 agronomists & extension workers in East Africa, Volcafe Way works with farmers to improve farm profitability and sustainable agriculture practices by implementing standards that address environmental, social, and agro-economic requirements. VW standards address the promotion of regenerative agricultural practices and business planning; conservation and improvement of natural ecosystems and water resources; fair treatment and good conditions for workers, which includes CL and FL provisions; and occupational health and safety. Adjacent to the VW program, Volcafe works with farmers to be certified to credible third-party certifications on sustainable coffee production, namely Starbucks C.A.F.E. Practices, Nespresso AAA Program, Rainforest Alliance, 4C, and USDA Organic Coffee. Sustainably sourced coffee, defined as “VW plus a third-party certification”, covers tens of thousands of farmers in Uganda, Tanzania, and Kenya, collectively representing more than 50,000 hectares of sustainable coffee production in East Africa. 

In Uganda and Tanzania, Volcafe developed an Internal Management System (IMS) Manual to support the implementation of the VW program and third-party certification requirements on sustainable coffee production. Each coffee sourcing region has a dedicated IMS with specifications on the areas of operation, farm characteristics, implementing staff, and common requirements, standard procedures, and templates addressing environmental, social, agronomy aspects; integrated pest management; traceability; chain of custody; OHS procedures; grievance and complaint mechanism; among others.

In Uganda, a continuous improvement management plan has been developed for the period of 2020 – 2023 which captures the sustainability activities implemented, findings, challenges, and improvement programs. 10 continuous improvement programs have been defined, which include digital monitoring and evaluation; integrated soil fertility management and erosion control; integrated pest management; gender and youth; occupational health and safety; green growth targeting ecosystem services, biodiversity, climate change resilient coffee farming, protection of water bodies; water and energy conservation; waste. On IMS monitoring oversight, Volcafe undertakes, at a minimum, annual inspections of the certified coffee farms and receives annually third-party certification audits; gaps identified are assigned time-bound corrective actions. IFC reviewed a sample of inspection and audit reports; these reports did show recurrent gaps associated with CL, waste management, fertilizer and pest management, and OHS management (this issue is addressed under ESAP item 1f).

As acknowledged under the “Overview of IFC’s Scope of Review” section, coffee production is inherently associated with high CL risk in the three east African countries, and high risk on natural, protected, or unique biodiversity areas. Please refer to PS6 section below for details on biodiversity risk assessment and management. In regions where high-risk of CL are identified based on reported monitoring and audit findings, Volcafe works with partners to develop CL projects/approaches with various stakeholders such as NGOs, certification bodies, local government, coffee roasters and/or donors. A flagship project undertaken by Volcafe is the CL free zone approach in Uganda (https://vimeo.com/310335843/728b2680ea), which is a community-based approach involving certifying a coffee community and coalition with multiple stakeholders, including local governmental units, schools, and civil societies to prevent CL practices.

Volcafe has a Supplier Code of Conduct, which addresses aspects on CL, FL, OHS, IP, and biodiversity risks and is in process of developing a supplier evaluation system. To improve the effective implementation of its Supplier Code, particularly for coffee sourcing in the East African countries, going forward (ESAP#1g) Volcafe will develop a phased supply chain risk assessment and management plan for the three east African countries, building on and leveraging its existing risk management strategies and suitable to the coffee-specific regulatory structure in each country. This phased plan will prioritize Arabia coffee sourcing in all origins, followed by Robusta coffee, and include (i) PS2 risk assessment including CL and forced labor, resulting in profiling the risk characteristic and likelihood per sourcing area (ii) biodiversity risk screening in accordance with IFC PS6 requirements to characterize risks on natural habitat/critical habitat in the coffees sourcing areas, such as habitat conversion (iii) ground truthing depending the outcome of the risk assessments to validate initial findings for PS2/PS6 high-risk areas (iv) de-risking strategy on PS2 such as CL monitoring and use of communication techniques visible to suppliers to underscore CL prohibition in coffee production at the wet and dry mills, and PS6 de-risking strategy for conventional and certified coffee value chain including measures to prevent impacts to the AZE values by suppliers and/or shift its sourcing to suppliers not associated with impacts on AZE values (v) supply chain management plan with a set of SOPs including supplier evaluation framework, evaluation form, profile template, E&S contractual provisions, audit questionnaire, training materials, and corrective action plan (vi) monitoring and audit requirements (vii) a consolidated incidents tracker for each production area showing recurrent incidents and trends as identified by inspections and third-party certification, and define area-focused management approach to address the recurrent incidents and trends.  

Stakeholder Engagement Plan and Community Grievance Mechanism. Volcafe has active stakeholder engagement activities, as part of several multi-stakeholder initiatives in the coffee sector, including World Coffee Research (WCR), International Coffee Organization (ICO), Global Coffee Platform (GCP), and in partnership with other stakeholders, such as NGOs and coffee roasters, undertakes projects addressing specific themes such as gender, youth, and sustainable farming. Going forward, Volcafe will further codify and implement a corporate Stakeholder Engagement Plan (SEP) for the East African countries aligned with IFC PS1 and Stakeholder Engagement Good Practice Handbook for Companies Doing Business in Emerging Markets, which includes stakeholder engagement approach for different groups (including those involved in the oversight and management of high biodiversity value areas such as AZEs), internal and external stakeholder analysis and engagement planning, information disclosure and dissemination approaches, and community grievance mechanism. Volcafe will appoint a suitably qualified staff member to implement the SEP (ESAP#1h).    

 As of February 2022, Volcafe employs approximately 350 employees in the three East African countries of which approximately 25% of these employees are female. The reported workforce includes fixed term/permanent employees and seasonal employees. Casual workers are also retained depending on the workload/seasonality (e.g., rises during harvest and falls afterward).

Human Resources Policies and Procedures.Volcafe has an HR policy, standard employment contract, and employee handbook for Uganda, Kenya, and Tanzania, which collectively address adequately working hours, overtime, leaves, performance management, disciplinary procedures, OHS requirements, sexual harassment, grievance procedure, among others. Based on IFC review, the suite of HR documents, are generally consistent with national labor requirement and with the PS2 objectives, such as non-discrimination and equal opportunity employer. Volcafe as part of ED&F Man Group has a Business Code of Conduct that applies to its employees. The Business Code of Conduct address topics such as conflict of interest, corruption, dealing with suppliers and customers, involvement in the political process, harassment, anti-discrimination, among others.

Working Conditions and Terms of Employment. Standard working hours in Volcafe operations is 8 hours a day excluding a 1-hour break and 48 hours per week, overtime compensation stipulated in an employment contract is in accordance with laborregulations for Uganda, Tanzania, and Kenya. All employees are entitled to annual leaves in line with national employment act, maternity/paternity leave, annual salary increment and bonus review, social security contributions as per country regulations, medical cover provision for employees, worker's compensation cover in line with the national regulations, transport buses to and from work (Namanve only in Uganda due to a remote location from town), access to an online learning and performance platform called MyCareer, among others. The minimum monthly salary provided to Volcafe employees is above the statutory minimum wage of the respective country. Volcafe is committed to providing competitive compensation, reviews salaries on an annual basis, and is currently carrying out a living wage self-assessment to inform its market competitiveness.

Third-party certification audits in Uganda identified gaps in the overtime system in terms of reporting and compensation. Volcafe has put in place measures such as rolling out overtime policy and mapping out roles and working hours need to adhere to the relevant national regulations. Going forward, Volcafe will update the employee handbook with HR overtime requirements, further reinforce a mechanism for overtime recording, reporting, and compensation, and undertake an overtime compensation audit during a coffee harvesting season to confirm the effective implementation of the overtime policy (ESAP#2).

Worker's Organizations. None of Volcafeoperations are unionized; it is voluntary for the workforce. Volcafe HR policies make no statement on freedom of association/unions, however, the employment contract includes a provision that employees have the right to join or form unions/workers' groups with no consequence of any retaliation or discrimination.

Retrenchment. The company's Uganda subsidiary underwent some restructuring and retrenchment in 2021 as guided by local law. The employee handbook outlines the company's retrenchment policies which include the commitment to be objective, transparent, issuance of notices of intention to retrench followed by a period of consultation of at least 2 weeks of consultations and to review and consider alternative vacancies within the organization prior to any final decisions being made on restructuring and retrenchment. The handbook also outlines the factors influencing the retrenchment criteria and payment of final salaries and notices. For alignment with PS2, Volcafe will review and where needed update the country level employee handbooks' termination policies to include the retrenchment policies with clear statements on non-discrimination to further inform the retrenchment selection criteria should the need for retrenchment arise. The update will also incorporate a periodic review by each subsidiary in line with national labor law and PS2 requirements. Based on this review the company will update applicable contract templates and related annexes to provide a clear and succinct summary of the terminal dues that would apply in the event of retrenchment, with a clear reference to the applicable local law (ESAP#3).

Non-discrimination and Equal Opportunity.Volcafe HR policies explicitly specify non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory; hiring and promotions aremerit-based. The gender pay gap is tracked globally at the group level and it is understood the compensation is according to functional competency.

Worker Grievance Mechanism.Volcafe has a documented grievance policy and a grievance procedure, including a grievance form template and register addressing Volcafe employees, seasonal, casual, and contractor workers and certified coffee farmers. The HR department manages Volcafegrievance & complaint mechanism and established grievance reporting mechanism including a complaint, posted and suggestion boxes at the milling stations, a toll-free hotlineto the HR office, and an email account that is only accessible to the Regional HR Manager and the Regional Director. Within the certified coffee value chain, the promoter farmer committees serve as a channel for farmers to make a grievance and handle it, particularly about member farmers or Volcafe field staff, and escalate to the HR department, if required. A promoter farmer is an intermediary aggregating coffee from certified farms.

To align with PS2, going forward,Volcafe will update the worker grievance mechanism procedureandcodify the worker grievance access channelsand requirements on socializing it to different groups including annual refresher at a minimum; establish a mechanism to register anonymous grievances; incorporate gender-specific handling protocol for gender based violence and harassment cases;include a monitoring and reporting requirements; include a requirement to be part of annual training administered toVolcafe direct employees, employees engaged by third parties, and representatives from farmer groups (ESAP#4).

Life and Fire Safety. Volcafe assets have a firefighting arrangement in place aligned with Volcafe internal policies, insurance provider, and local regulations. As described above (ref. PS1, Emergency Preparedness and Response section), the firefighting arrangement and response will be reviewed, improved, and aligned with GIIP (please refer to ESAP#1f).

Workers Engaged by Third Parties. Volcafe uses contractors, such as transport companies, security providers, and labor providers for activities such as stevedoring. To ensure the contractors are complying with applicable laws, Volcafe policies, and PS2 requirements, particularly in relation to excessive working hours, decent working conditions, fraudulent or coercive recruiting practices, OHS hazard exposure and control, Volcafe will develop E&S standards document for contractors, defining requirements as articulated in the corporate ESMS for the contractors, including KPIs and auditable criteria; include the contractor E&S standards document and provisions as part of a contractual agreement; undertake labor and OHS due-diligence prior work commencement, particularly in relation to fraudulent or coercive recruiting practices, working hours and working conditions, provision of worker's legal benefits, timely payment of wages, OHS training, OHS hazard exposure and control in line with GIIP including the provision of personal protective equipment (PPE); implement inspection and audit routine, and evaluation of contractors' E&S performance (ESAP#5).

Occupational Health and Safety.Volcafe has HSE procedures, which as defined in (ESAP#1d), will be further strengthened into OHS management of the milling operations and warehouses including a safe system of works, OHS master list of standard operating procedures (SOPs) and/or work instructions, OHS training requirements, workplace inspection, audit, and reporting requirements, and continual performance improvement.Volcafe operations resulted in no fatality cases in the past 3 years, and the number of lost time accidents per 100 workers for FY19/20 for Kenya, Tanzania, and Uganda is 3.33, 0, and 0, which is considered low and virtually acceptable OHS lagging indicator.

COVID-19 Impact and Contingency Measures.Volcafe has developed SOPs in accordance to each country's health regulations and included work from home during full lockdown; reduced number of shift for the production facilities; temperature checks on entry at all sites; use of face mask; communicating governmental updates on COVID-19; seating arrangement and lunch shifts that minimises numbers in the dining areas and minimal number of people waiting allowed in reception; providing additional transport buses in Uganda to enable social distancing; a specific SOP for COVID-19 positive cases, addressing direct employees and casual workers, and provision of free testing for them and their family household members, testing all their direct contacts at work and would remain at home until results received, providing support whilst recovering in terms of paid sick leave and treatment support. No significant health impacts has been reported among Volcafe workforce due to the pandemic, and the contingency measures are considered adequate.

Supply Chain. Refer to PS1 supply chain above for overall risk assessment and management practices. In addition, measures are in place that will be leveraged, as far as structural issues in the organization of the supply chain in the 3 different countries allows, as part of the finalization of the risk assessment of the unconventional coffee supply chain. For example, during the visit to farming operations in Tanzania, it was made clear to IFC that each village has a village executive officer (VEO) appointed by the local authority to ensure children attend schools and no harmful child labor is allowed in the village/locality among other undertakingsand (ii) that cooperatives Volcafe work to underscore the importance of no child labor (such signs, posters, and other methods employed (e.g., radio broadcasts) were seen/discussed during a visit to a typical co-operative office.

  Resource (Energy and Water) Efficiency. Wet and dry milling operations are considered the energy-intensive operations within the coffee value chain due to the de-pulping, washing, drying, and de-hulling processes. Most of the milling assets are grid connected, with the use of diesel-run backup generators and coffee husks (biomass for use in fueling dryers), with the exception of some wet mills in Mt Elgon that relies exclusively on small generators as the main energy source. To reduce energy consumption, Volcafe has implemented a number of measures including processing of coffee cherries immediately after picking, to prevent hardening of the cherry skin; operating processing machinery at full capacity; sun drying of coffees; use of energy saving bulbs, and utilization of coffee husks as feedstock for the mechanical coffee driers. Energy consumptions are tracked as part of Volcafe monthly HSEQ reporting.

The wet mills require raw water inputs and are seasonally operated by Volcafe, approximately 3 to 4 months a year. All the wet mills are in Uganda, and mainly source raw water from rivers/ streams. Volcafe has secured water abstraction permits for these respective mills. To conserve water consumption, Volcafe integrated a number of measures at the wet mills including utilization of eco-pulpers at all the wet milling assets; re-cycling of water during processing; limiting wet fermentation of coffee; and, intermittent processing of ‘honey’ coffee, which is a coffee that requires no washing prior to drying. Water efficiency varied between mills, largely dependent upon the age of the mill and the equipment therein. For example, the larger of the mills visited used about 1liter per 1kg of cherry processed – in line with GIIP. In other mills, the water consumption per month was noted to exceed the daily permitted water withdrawal of the water abstraction permits. Going forward, Volcafe will implement management measures for all the wet mills including water sourcing assessment and management plan, design retrofits, assignment of CAPEX, to meet the permitted water withdrawal limit, and will liaise with the local authority to obtain the respective permits (ESAP#6). As already described above and integrated into ESAP#1b (reference to regulatory and permits tracking register), Volcafe will track and implement the water abstraction permit conditions as part of its operations .

Greenhouse Gases. Volcafe tracks GHG emission as part of the monthly HSEQ reports, reports it annually on the CDP disclosure platform, and has retained a climate consultant to guide the development of internal emission reporting with a focus in 2022 to standardize scope 1 and scope 2 emissions reporting across all Volcafe companies. The total GHG emissions (scope 1 and scope 2) for 2020/21 for Uganda, Tanzania, and Kenya is estimated to be 12,000 tons per annum of CO2 equivalent. Volcafe has started Scope 3 emission mapping in various coffee origins and plans in the future to report full scope 3 emissions after defining tools & methodologies suitable for its operations. Volcafe has engaged external consultants to support in setting corporate GHG reduction targets and progress measures and will report on its GHG emissions annually as part of its sustainability reporting on the CDP disclosure platform.

Air emissions and Noise. The cleaning and dry milling processes generates significant amount of dust. Point source air emissions are mainly generated from the generators and dryers, the capacity of employed generators is less than 1 MW. Noise emissions are mainly associated with the equipment operation, including milling and drying. As encapsulated in the ESMS environmental management program (ref. ESAP#1d above), Volcafe will define an air quality and noise management plan which will address air quality measurements (at a minimum SO2, NO2, PM10, PM2.5, total suspended particles), and OHS noise measurements to demonstrate compliance with applicable regulation or WBG/EHS Guidelines limits (whichever most stringent).

Solid and Hazardous Waste. Volcafe operations generate large quantities of organic waste, namely, coffee pulps and coffee husks. The former is composted and used as a fertilizer on the coffee farms and the latter is used in mills as feedstock for the dryers. Other domestic wastes and hazardous waste (oil, grease, paint waste, etc.,) are disposed of by certified waste management service providers. At the certified coffee farms, inorganic waste (e.g., plastics and empty agrochemical containers) are generated, which is hazardous waste. The empty agrochemical containers are centrally collected through the promoter farmers and disposed of with the local authority. As part of the ESMS environmental management program (refer to ESAP#1d), Volcafe will codify a waste management procedure for its direct operations, including chain of custody requirements for traceability and final disposal of solid/hazardous waste, KPIs, monitoring and reporting requirements.

Wastewater Treatment. During harvest/processing seasons, the wet mills generate wastewater. These are channeled to on-site treatment systems which consist of physical screening, sedimentation tanks, retention basins, then into a soak pit (leach pit). Analysis of wastewater, undertaken by Volcafe, is characterized by a high organic load (high BOD), acidity (low pH), high total suspended solids. Volcafe has secured wastewater discharge permits for the wet mills, and it is noted the permits’ conditions require further integration, such as expanding the wastewater analyzed parameters and periodic reporting to the authority, which will be addressed in ESAP#1b (reference to regulatory and permits tracking register).

To definitely assess the compliance of wastewater quality discharged through the soak pit, the sampling procedure and points will require considering the wastewater system physical arrangement to obtain a representative sample for analysis. Going forward (ESAP#7), Volcafe will complete management measures for the wastewater treatment system (as already defined in an internal improvement plan) to meet applicable wastewater discharge permit requirements, including those for land application and those WBG EHS Guidelines for Wastewater and Ambient Water Quality with consideration for land application. The wastewater treatment system will integrate upstream design measures as reasonable practical and downstream measures for the wastewater to be safely disposed of and adequately handled by the soak pits, and include soak pits management plan with design requirements (wastewater soaking quality; volume rate handling per capacity; soil conditions for infiltration; groundwater table; minimum distance from wells/surface water; among others), maintenance requirements, KPIs, wastewater analysis procedure, monitoring and reporting requirements.

Storage of Hazardous Materials. Hazardous materials used in Volcafe operations are mainly fuel for generators, oil and lubrications, and agrochemicals materials stored in limited quantities. Fuels and hazardous materials are stored in locked areas with spill control. As part of the ESMS management program (ref. ESAP#1d), Volcafe will codify hazardous materials management procedure and plan aligned with WBG EHS Guidelines, including hazardous materials identification, communication, control measures at storage with a requirement to have secondary containment for all hazardous materials storage tanks and containers, and handling requirements.

Pesticide Use and Management. As part of the Integrated Management System Manual for sustainable coffee production and certifications, Volcafe has an Integrated Pest Management (IPM) program, which includes supporting coffee farmers in the selection and use of fertilizers and pesticides. The IPM approach is pest-specific, prioritizing preventive measures followed by treatment. The types of applied pesticides are regulated by the third-party certification systems and audits to ensure no prohibited pesticides are applied, such as World Health Organization (WHO) Class Ia and Ib. In the coffee sourcing areas, Volcafe has trained local specialized agrochemical application personnel, the coffee youth teams, that provide commercial pesticide spraying services to coffee farms, and for the few group members that directly apply agrochemicals, Specific training on handling and application of these hazardous agrochemicals, including use of Personal Protective Equipment, has been delivered. Processed coffee products are fumigated for pest control using aluminum phosphide by licensed service providers and in compliance with the local regulatory requirements. RA acknowledges aluminum phosphide as a highly hazardous pesticide and under exceptional use policy where no alternatives are available until June 30, 2024. As part of the sustainable coffee certification requirements, Volcafe is committed to adopting aluminum phosphide alternatives as permitted by the industry’s good practices and RA.

 Road Traffic Safety. Volcafe uses transport companies to move coffee beans between the milling assets, warehouses, and ports. ED&F Man has a procedure on road safety and Volcafe is in process of translating this to a regional road traffic safety policy and is currently implementing measures addressing its own fleet, such as discouraging night driving; ensuring vehicles are equipped with first aid kits and a fire extinguisher and are regularly serviced and maintained; fitting Volcafe vehicles in Uganda with a tracker to aid in movement and speed monitoring, among others. Going forward, Volcafe will continue to develop a road traffic safety management procedure and plan addressing Volcafe’s own fleet and transport companies' vehicles and provide the necessary resources to operationalize it (ESAP#8). The plan will include fleet management; driver qualifications; driver training; vehicle inspection and preventive maintenance; storing and dispensing of fuels; journey management including route hazard mapping or journey plans, pre-trip debriefs of drivers, in-vehicle monitoring system such as speed tracker/cameras installed in vehicles/third-party audits observing the movement of vehicles; access to grievance mechanism for the communities along the route; fleet management register to track and monitor the plan KPIs such defensive driving training, number of driving violations, rewarded/penalized drivers and number of vehicle collisions.

Security Personnel.  Volcafe has not experienced major security events in the past years; events have been limited to instances of petty theft. The security arrangement employed by Volcafe comprises mainly fences and gates for access control, unarmed security guards that are Volcafe direct employees, and security companies providing armed security guards. The level of security differs per location that increases during harvest time while all sites are attended by 24/7 security guards. Volcafe works with the security company to assess the risk level and draw a security plan. Volcafe has not yet codified a corporate-level security management procedure and plan to guide the security arrangement and requirements of its operations and assets. Going forward, Volcafe will develop a corporate-level security management plan for the operations in East Africa to guide the security arrangement and security companies in accordance with the IFC Good Practice Handbook - Use of Security Forces: Assessing and Managing Risks and Impacts and provide annual training/refresher on the Voluntary Principles on Security and Human Rights (VPSHR) to its assigned employees (ESAP#9

  Sustainable Management of Living Natural Resources. Risks associated with the sustainable supply chain of the coffee production and certification are described under PS1 supply chain section, and risks related to biodiversity conservation are addressed below.

Supply Chain. Volcafe sources coffee from three origins: Kenya, Tanzania, and Uganda. For Kenya and Tanzania, coffee is mainly sourced via government auctions with an increasing direct sale window in Tanzania. In Kenya, coffee production occurs in some landscapes that are largely consolidated agricultural areas, but the remaining habitat in these areas contain high biodiversity value. In some of the landscapes, there is evidence of recent habitat conversion, but it is not possible to confirm with the available information whether recently converted sites are supplying the project or that the conversion is actually due to coffee production. Therefore, further expansion of production that entails habitat conversion in these origins presents a risk to biodiversity until shown otherwise through producer verification. In Tanzania, coffee production is in agricultural areas, with the wider surrounding region including habitats of high biodiversity value. Based on the reviewed information, appraisal activities, and withholding limitations on available data, initial findings show no natural habitat/critical habitat conversion risks were identified in Tanzania coffee sourcing areas, and coffee sourcing from AZE sites in the three countries is only confirmed in Mt Elgon, Uganda. In Tanzania and Kenya, traceability is permissible up to the cooperatives and milling assets in both countries, and biodiversity screening at the cooperative level serving respective areas/localities will be addressed by Volcafe as part of the supply chain risk assessment and management (ref. ESAP#1f).

For Uganda, coffee is sourced from individual growers, where approximately 25% of these farms are certified under multiple schemes (e.g., Rainforest Alliance, C.A.F.E. Practices). These certified farms include measures to avoid significant loss of high biodiversity values. Regions of specific concern are the Mt Elgon and Rwenzori, where risk of significant loss of Natural and/or Critical Habitat is possible. Some farms, and a wet milling station, are located in the Mt Elgon Alliance for Zero Extinction (AZE) site, Mt Elgon AZE site which was defined in the 2015-2018 AZE assessment. These farms, and the milling station, are located outside the associated protected area but within the boundaries currently recognized by the AZE Secretariat. All coffee sourced in Mt Elgon is 100% certified, traceable, and production condition verified. Risk of Natural and/or Critical Habitat conversion is low because coffee trees appear mature (20+ years) and level of traceability is high. The wet mill located at the AZE site boundary was established in 2008, before the AZE site was defined, and will meet resource efficiency and pollution prevention requirements as described in PS3 section above. As part of its activities in this area, Volcafe is developing a forest restoration program in the Mt Elgon landscape with the potential to support conservation objectives. 

As part of the project supply chain risk assessment and management (ESAP#1f), the project will be required to demonstrate that its sourcing from all origins (i.e., both the certified and conventional value chains) is not associated with recent (5 years) or new conversion of Natural/Critical Habitats. For activities in the Mt. Elgon AZE site, which would be categorized as Critical Habitat, additional requirements will apply as per PS6 Guidance Note 55. Consultation with the AZE Secretariat and associated conservation stakeholders is ongoing. In addition to requirements under ESAP #1g, Volcafe will be required, as part of sourcing from Mt Elgon AZE site, to demonstrate (i) that their sustainable sourcing scheme and proposed conservation programs have been designed to contribute to conservation objectives of the AZE site; and (ii) confirm no significant impacts to AZE values (e.g., via surveys or other justifications) and confirm AZE values do not occur within coffee sourcing areas. If this cannot be demonstrated, Volcafe will be required to implement measures to prevent such impacts to the AZE values by suppliers and/or shift its sourcing to suppliers not associated with impacts on AZE values. ESAP#10 will apply to any other AZE sites that may be identified as part of supply chain risk assessment and management.