This is a Category B project according to IFC's Policy on Environmental and Social Sustainability. Key E&S issues associated with this Project include UQ's environmental, occupational health and safety, and HR policies and implementation of those in the existing production plants. The Company's manufacturing operations have impacts related to water and energy consumption; management of hazardous materials and wastes; air emissions from boilers and generators; and liquid effluents from cleaning processes. Other E&S issues include emergency preparedness and response; community engagement and security services; worker's access to grievance mechanisms; supply chain management; and road safety provision for manufacturing operations as well as for the sales workforce.                                                          

Environmental and Social Assessment and Management System, Identification of Risks and Impacts and Management Programs

Environmental and Social Assessment and Management System: UQ hold environmental, OHS and operational permits for its plants. All facilities are approved as per Good Manufacturing Practices (GMP) requirements of the Brazilian Health Regulatory Agency (Anvisa).

UQ has implemented environmental and social, occupational health and Safety (OHS) and human resources (HR) management systems in the existing operations. The Genom Plant is certified on ISO 14001 (international standard for environmental management system) and 45001 (international standard for OHS management system) and last third-party auditing took place on May/2022. The current management systems are operational, and the Company is in the process of reviewing the Integral Management System (SGI), that includes environmental, social, health and safety (EHS) provisions and a separate Social Responsibility (CSR) sub-system. Also, it has developed the related policies, standard operating procedures (SOPs) and work instructions. It was observed that the systems are functional; nevertheless, monitoring and reporting will be strengthened through further key performance indicators for EHS aspects and promotion of continuous improvement mechanisms throughout the operations (as discussed below per ESAP#1).

The Company's formal Integral and Quality Management System has been implemented in each plant, generally aligned with Good International Industry Practices (GIIP), mostly in the context of GMP applied in the pharma industry. The EHS management system is a part of the SGI, with elements and several monitoring programs, like, OHS, chemicals and hazardous materials handling and management, air and water emissions monitoring, and emergency planning, that are applied at site level. The Company, in parallel, is developing the corporate social responsibility CSR system, that together with the EHS portion of the SGI, will conform the operational Corporate Environmental and Social Management System (ESMS). 

UQ has an Environmental Health and Safety (EHS) policy that defines the E&S aspects and commitments of the organization including compliance with national environmental legislation, protecting, and conserving natural resources and biodiversity and reducing waste generation.

Further, based on its current policies and quality systems used at the plant level, UQ, as per the ESAP # 1, will develop a Corporate E&S Policy and Management Systems (ESMS), per the requirements of IFC Performance Standards within the operational EHS management systems of the plants. This will be based on a gap analysis to be performed by UQ and will include (but not limited to), (i) social risks and impacts identification, (ii) E&S screening, (iii) workers’ grievance management, (iv) contractor’s E&S risks management, (v) life and fire safety (L&FS), (vi) supply chain risk management, (vii) road safety and security management, (viii) hazardous material management and (ix) stakeholder and grievance management for external communities. The monitoring program of the ESMS will address the requirements of the World Bank Group (WBG) General EHS Guidelines and EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing.

Identification of Risks and Impacts and Management Programs: The proposed Project does not include any greenfield development; and according to UQ’s management, new Environmental and Social Impact Assessments (ESIA) will not be required. The Company has developed and implemented SOPs to manage the risks and impacts identified to upgrade factories and implementation of the new equipment. The SOPs incorporate OHS and environmental work instructions and cover issues such as effluents, emissions, solid waste, accident investigation and control of individual OHS risks (physical, chemical, and biological).

For the improvement projects, the Company, together with their consultants and design team, prepared an initial hazard identification and risk analysis, checked the required permits with compliance with applicable local environmental requirements (permits, etc.), and later the selected contractor provided additional detailed analysis on OHS provisions (personal protection equipment, work permits, safety inspectors, transportation safety), environmental protection, waste management, and management of hazardous materials.  

EHS issues are regularly assessed across all business units to identify and evaluate the magnitude of E&S risks through a formal and structured process of hazard identification, risk assessment and risk control. This is undertaken relative to applicable national standards and the Company’s own requirements.

Regarding the supply chain risk management, UQ has developed and implemented a Suppliers’ Code of Conduct applicable to vendors, brokers, merchants, distributors, contractors, and goods & service providers. It requires the compliance with legislations, regulations, and standards of Brazil in relation to prohibition of forced and child labor, respect for human rights aligned with the requirements of international standards, safe working conditions, such as reasonable salary payment, provision of social security, working hours, freedom of association, and prohibition of reprisals. For further details, please refer to “supply chain” under PS2.

Organizational Capacity and Competency:

UQ has EHS technicians and supervisors for each production plants as required by the local law, led by an EHS officer. The team reports to the respective Plant Managers. The environmental aspects are managed by an EHS officer in each plant, who also covers OHS, and is responsible for the day-to-day compliance oversight and for providing related technical support. 

UQ has local OHS committees (i.e., CIPA - Comissão Interna de Prevenção de Acidentes- in Portuguese), as required by the local law, whose role is to identify and support implementation of OHS aspects and environmental protection. In addition, emergency brigades are in place to respond in case of emergencies on each plant. There are medical doctors and nurses providing support to all employees in all production plants and main offices. Training is provided to the employees on EHS topics at all locations.  

To fully integrate the various production plants with the future corporate ESMS, per ESAP #2, the company will assign a Sustainability Manager or similar position at corporate level. Also, the UQ’s Board of Directors, will stablish a ESG Committee and the necessary lines of communications to monitor the status of EHS risks through a review of key management performance indicators on a regular basis. The ESG Committee will assist the Board in monitoring EHS performance and compliance with relevant national legislation.

At corporate level, HR Director located in the headquarters is responsible for corporate policies and it is supported by a local focal point and a HR manager in each production plant. Labor aspects are managed by the HR and Quality departments.

Monitoring and Review:

The Company monitors at each production plant a wide range of EHS related key performance standards (KPIs) including that related to solid and liquid waste quantities, water usage, waste, electricity consumption and injury rates amongst other.

UQ also undertakes annual external legal audits of all plants to assess compliance with associated to permits and/or national law requirements. 

Emergency Preparedness and Response

Uniao Quimica has developed detailed Emergency Preparedness and Response Plans (EPRP) for its operations, aligned with local legal requirements and GIIP. Training for emergency preparedness, response and first aid is provided to all employees. Fire, earthquake, spills, and personal accident-related emergency drills have been conducted more than twice a year in some facilities, based on risks identified. UQ's plants are normally located in a mixed used area with commercial communities nearby or are located in an industrial zone, with no residential communities in the nearby vicinity (except for Plant Genom in SP, which is in an urban area). Local EPRPs have considered the potential impacts on and from the communities.

The EPRP, for the facilities visited during the appraisal, were noted to cover relevant potential emergencies such as fires, medical emergencies, spillage, and confined space entry. Evacuation plans are displayed at the sites and included emergency contacts and details of relevant management team members. Emergency exits and assembly points are identified.

The visited facility had fire extinguishers, fire hydrant systems, fire hoses, fire alarms, sprinklers, and smoke detectors. Each facility also has an emergency brigade.

The Company complies with the Life and Fire Safety (LFS) requirements for the state where the facility is located and keeps records and copies of permits related to the LFS systems i.e., Auto de Vistoria do Corpo de Bombeiros - AVCB, issued after the design approval and inspection at the associated facility of the installed LFS systems.                                                   

As of May 2022, UQ directly employs around 7,650 employees in Brazil with around 7400 direct employees and 250 contractors. Employees working in administrative functions is 53% men and 47% women. Workers are also engaged through third parties in other activities, such as cleaning, security, and transportation services. The company has a sale workforce of 200 employees.

Human Resources Policies and Procedures, Working Conditions and Terms of Employment

UQ’s HR policy and procedures are established in a range of documents which are applicable to direct employees and contractors. The HR policy and procedures are being upgraded by the company as of June 2022. UQ’s Code of Ethics, which applies to all employees and contractors, cover issues such as the company’s mission, values, rules on relationship with customers, professional attitude, anti-corruption and anti-bribery practices and ombudsman channel, that is applicable to subcontractors and suppliers. UQ will develop and implement an overarching corporate policy on human resources, per PS2 requirements, including statements to make clear that all workers have freedom of association, and a process to define supply chain audits on labor and working conditions (ESAP # 3).

Company policies are regularly communicated to employees during training. The Code of Ethics is signed by employees at their onboarding training, on the main issues regarding these policies, is provided during their induction process.

Employment contracts include provisions related to the implementation of company policies and compliance with national labor standards. Regarding working hours, the employees’ contracts are aligned with the provisions of the Brazilian Labor Law which set out limits on working hours.

All employees of UQ in Brazil are hired as full-time employees with a formal contract in accordance with the Brazilian Labor Law (CLT).

Workers’ Organizations and collective bargaining

Employees interviewed reported that there is no record of any strikes having taken place in the company’s history and that there is a constructive relationship with the trade unions.

Non-discrimination and Equal Opportunity

UQ’s HR policy promotes the participation of: (i) gender; (ii) diversity; (iii) sexual orientation; and (iv) people with disabilities. The policy and its respective training consider the difficulties of each vulnerable group for the implementation of measures that will support equal opportunity in hiring and promotion in the company.

The company’s “Code of Ethics and Conduct” prohibits discrimination and sexual harassment. This document explicitly prohibits non-discrimination based on sex, ethnicity, race, religion, social class, age, sexual orientation, physical disability or any other physical or ideological attribute and have provisions which specifically address sexual harassment. Its implementation and application take place in parallel with the internal procedure of the code of ethics and the corporate policy of consequences, that provides the responsibilities of the committee of ethics. 

Labor Grievance Mechanism

Employees and third parties can raise grievances via the company’s integrated grievance mechanism (ombudsman), which is composed of a secure channel for complaints. Complaints can be made anonymously and there are procedures in place to ensure that confidentiality is maintained. The grievance mechanism is of easy access for all employees, available 24 hours a day with service in Portuguese. All complaints received through the integrated grievance mechanism managed by an independent third-party contractor (“Contacto Seguro” - https://www.contatoseguro.com.br/en/) are investigated and considered by the Committee of Ethics, that is managed by the Compliance Officer, and sporadic interventions of the Human Resources Director, the Legal Director or upper management.

All employees may report complaints to their managers and superiors - by e-mail or in person – irrespectively of their position in the company.

Employee grievances are typically related to employee’s dissatisfaction with managers, unreasonable demands, and moral harassment. Complaints received through the ombudsman, and their subsequent resolution, are recorded by the company in a grievance log. The procedure implemented by UQ to process grievances includes details for the response and resolution time and report to senior management.

Workers Engaged by Third Parties

The third-party contractors engaged by the company provide services such as cleaning, security, transport services and the supply of materials to UQ.

The company has processes and policies in place for pre-contractual tendering and due diligence in relation to third-part contractors. Each area responsible for a contract’s execution monitors its compliance.

Supply Chain

UQ has incorporated contractual clauses to ensure compliance with its Suppliers’ Code of Conduct for the Group, strictly prohibiting the use of child labor and forced labor and including OHS requirements in its own operations for employees, contractors, and suppliers. If a supplier breaches the code of conduct, UQ holds rights to terminate the contract. The company’s supply chain management team conducts assessment, monitoring and visits to the suppliers based on GMP followed by UQ in all plants; with a scope, focusing on technical, commercial, and EHS aspects.

The tender process considers the bidders’ human resources policy and track record on labor and working conditions via document requests. Contracts with third-party contractors establish an obligation to comply with national law and the company’s “Code of Ethics and Conduct for subcontractors and suppliers”, which includes labor provisions relevant to subcontracted workers.

The company’s “Code of Ethics and Conduct for subcontractors and suppliers”, including its grievance mechanism, is also applicable to the employees of all subcontracted companies.

As per ESAP #1, the company will develop a Corporate E&S Policy and ESMS, which will include supply chain risk management. This will cover development of (i) a supply chain risk mapping & assessment (e.g., inherent risk in country, region, sector - where it has been supplied) in relation to chemicals used for the production as well as machinery and equipment, and (ii) supply chain management procedures, including the periodical monitoring and audits requirements as stipulated in PS2.

Occupational Health and Safety (OHS)

UQ’s EHS policy includes a commitment to continuous improvement in OHS performance, compliance with all legal obligations and application of the management standards that related to preventing occupational illness and accidents at workplace and undertaking hazard identification and risk analysis.

OHS risk assessments conducted by the Company have identified the key risks, related to machine guarding, working at heights and in confined spaces, electrical shocks and chemicals handling. UQ implements the Laudo Técnico das Condições Ambientais do Trabalho (Technical Report for Environmental Conditions at Workplace), which requires specific monitoring activities for workplace conditions such as noise levels, temperature, illumination, and indoor air quality. Monitoring data indicate compliance with Brazilian national laws and the World Bank Group EHS Guidelines.

The Company follows applicable Brazilian Regulatory Norms – (referred to as NRs), including those related to the identification and monitoring of environmental hazardous agents through a Workplace Environmental Risk Prevention Program or PPRA (Programa de Prevenção de Riscos Ambientais), use of Personal Protective Equipment - PPE, emergency preparedness and response, and medical surveillance (PCMSO or Programa de Controle Médico de Saúde Ocupacional).  In compliance with internal normative and procedures, each unit has personnel dedicated to safety issues.

The legally required safety committees (CIPA), which include representatives from workers, are responsible for conducting preventive OHS inspections, reporting on health and safety issues, investigating and analyzing occupational accidents, incidents, and health issues and helping ensure that the OHS training activities are completed. Workers assigned to work in the production areas have the required training to perform their duties in a safe manner, per Brazilian OHS Regulatory Standards. Each facility also has program which identifies the required PPE for specific activities and includes training plans for workers to ensure the correct use of PPE.

UQ has its own maintenance team that conduct scheduled preventive maintenance work with a focus on maintaining safe working conditions for the staff. The Company also has an inventory of pressure vessels, technical specifications, and maintenance books in accordance with the relevant Brazilian safety standard (NR13).

Each facility develops and implements their own OHS programs and UQ does not have a formal corporate OHS management system. Thus, as per ESAP # 4, the Company will develop and implement a corporate OHS Management System in line with PS 2 requirements to facilitate consistency in practice across all facilities. Key focus areas, amongst other, will be (i) identification of potential hazards to workers; (ii) provision of preventive and protective measures, including modification, substitution or elimination of hazardous conditions or substances; (iii) worker training and awareness raising of existing policies and procedures; and (iv) reporting of occupational incidents and near misses and implementation of corrective actions. 

Management of COVID-19 Impacts.

Based on the nature of the company and governmental requirements during the first phases of the pandemic during years 2020 and 2021, UQ improved the corporate framework and programs in relation to biosecurity protocols to manage COVID-19. The company adopted several engineering controls and measures, such as the disinfection, social distancing (e.g., installation of signs and partitions in the showrooms), restricted maximum capacity for different areas and shops, to minimize the exposure. These programs included the follow up plan with infected employees and families, disinfection, monitoring of COVID-19 cases, provision of COVID19 kits, vaccination, stress management programs during remote work, and training program based on brief sessions and virtual meetings.                                                   

Resource Efficiency and Greenhouse Gas (GHG) Emissions

UQ tracks annual electricity usage at all manufacturing business units. Electricity is mainly sourced from the national grid. 

Water is used in the cleaning of equipment and facilities, for employee hygiene, steam generation and to maintain the required production conditions. Municipal water is the primary source of water supply, although, with approval from relevant authorities, groundwater is also used at some sites.

Effluents from the production plants are treated through physicochemical and biological treatments, in several locations. The water used for washing containers and production equipment during the manufacturing of medicines is locally filtered and treated to ensure that the liquid waste is free of active ingredients or other chemicals and neutralized, before it is sent to the WWTP's. The Company has implemented various measures to save water and support reuse where possible, for irrigation and other non-process uses, as further discussed under “pollution abatement” section below.

Uniao Quimica is requesting the GREEN SEAL (Brazilian Certification - aims to encourage the use of bioelectricity, powered by the sugar-energy sector) for several plants, such as (i) Pouso Alegre – MG; and (ii) INOVAT – Guarulhos. In addition, several of the UQ’s facilities will be certified in line with IFC’s EDGE system green building certification, expected to be achieved in years 2023 and 2024.

The Company calculates and tracks its direct and indirect GHG emissions in accordance with the GHG Protocol Corporate Accounting and Reporting Standard. The 2021 total carbon emissions have been estimated to be around 5,850 tons carbon dioxide equivalent per year. The UQ, in partnership with the Brazilian Navy which has land in this locality, and as part of a voluntary reforestation, carried out the voluntary planting of  trees, utilizing species that are typical of the areas of the reforestation.

Pollution Abatement:

Air emissions are mostly related to boilers operation, which use natural gas as fuel. High efficiency particulate air (HEPA) filters and local exhaust ventilation are provided as part of the heating ventilation and air conditioning (HVAC) system in all production plants. Air emissions in all production plants are generally in compliance with the local laws and WBG EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing. In addition, process filters have efficiencies of above 98% and they are periodically maintained or replaced to be operational.

High-performance filtering systems are provided for areas processing controlled substances. The filtered waste from the controlled areas is handled, removed, and stored in special locations, that are audited by the local authorities and disposed by state authorized certified contractors.

All manufacturing facilities have water treatment plants (reverse osmosis based), and the effluent water is reused after the WWTP for different process such as cooling, green area irrigations and cleaning (areas outside of the manufacturing). Wastewater quality is tested at the on-site laboratories, and according to the data provided, complies with the WBG EHS Guidelines for Pharmaceuticals and Biotechnology Manufacturing. 

Hazardous Materials and Wastes:

For hazardous material management, UQ has procedures for safe storage, handling and to prevent accidents/incidents. There is a Safety Data Sheets (SDS) database, at each laboratory or production area. UQ has implemented programs to manage hazardous substances, including access to safety information for incompatibility and emissions in case of emergency. Gas handling and related boilers controls include risk analysis along with worker training and emergency planning. All gas used by the Company is supplied by offsite providers via pipelines to the respective facilities.  

In Uniao Quimica more than 75% of the waste is classified as hazardous (e.g., lamps, batteries, expired product, industrial waste, among other). The Company has established and implemented a corporate waste management standard to manage both hazardous and non-hazardous waste in compliance with the applicable waste management legislation which includes monitoring measures. The Company uses specialized licensed waste management service providers to manage the transportation, treatment, and disposal of waste in accordance with contracted terms and relevant Brazilian legislation. The main disposal process is onsite incineration. The company performs incinerator air effluent testing and monitoring, and the results are within the Brazilian regulations limits and WBG General EHS Guidelines guidance values. The company, as part of ESAP # 5, will develop a plan aligned with local laws to monitor the air quality in the vicinities of the plants that use incinerators.                                                  

 Community health and safety risks and impacts associated with UQ’s facilities are expected to be limited, generally associated with traffic during commuting to and from the manufacturing facilities, and raw material/products transportation. The company owns 11 large trucks and 24 of smaller size transport vehicles, and the drivers are direct employees of UQ, who are trained in defensive driving. The trucks and company vehicles are maintained and inspected as per local regulations.

The production facilities are normally located in industrial parks and surrounding zones are rural and agricultural. There are no residential areas immediately surrounding the plants, except for Genom Plant in São Paulo that is located in a populated urban area of Sao Paulo. As discussed above, EPRP includes in and off-site emergencies, including plans for potential emergencies that relate to communities.

Security Personnel

UQ’s security personnel are hired through legal agreements with qualified and well-known companies that are regulated by the Federal Police Decree 387/06. Procedures to obtain authorization from the Federal Police include review of the candidate’s criminal background and psychological evaluation; and all candidates need to complete a training session delivered by the Federal Police.

The UQ’s contracted security personnel are armed in all facilities. The Company, as part of ESAP # 6, will undertake a security risk assessment (SRA) at each facility and will developed a security management plan (SMP). The SMP will be applicable for threats from and to the community and will develop appropriate policies and procedures (e.g., a corporate written security code of conduct; training; procedures in the event of any incident, community unrest, community requests, crime identification, etc.) for effective oversighting and accountability of the security personnel.

UQ will ensure that the SRA and SMP are developed for all the facilities, including the rationales for the number of armed security force and national police needed, rules of engagement, 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 facility, (iv) details of coordination with the contractor and national police, (v) incident reporting, and (vi) key performance indicators (KPIs) for security management.

The specialized security companies are periodically audited by the Company, local authorities, and federal government. According to UQ’s management, there have been no complaints associated with security personnel at UQ’s facilities.                                                  

One production plant (i.e., Bthek) s located in the Cerrado ecoregion (WWF classification), within a modified landscape with patches of remnant natural habitat.

Bthek Biotecnologia and the Uniao Quimica - Polo de Desenvolvimento JK facilities are located in the Legally Protected Area Área De Proteção Ambiental Do Planalto Central (The International Union for Conservation of Nature - IUCN Cat V). These two sites are within industrial areas, and the project does not entail any footprint expansion. No Net Loss requirements apply to these two facilities, and they are considered to be met. The client complies with Brazilian regulation and has developed an additional conservation plan to restore Brazilian ecosystems relevant to the location of its facilities, including those of the Cerrado within the Área De Proteção Ambiental Do Planalto Central. As per ESAP #7, UQ will engage with the Área De Proteção Ambiental Do Planalto Central managers and continue the implementation of the conservation activities.                                                   

Although there is no documented stakeholder mapping process and corporate level stakeholder engagement framework, the Company, for several of the manufacturing plants, has a procedure for communication with both internal and external stakeholders, including authorities and parties relevant to its operations.

UQ will develop a Stakeholder Engagement Plan, applicable to the facilities including a process for; (i) stakeholder identification, analysis and planning; (ii) disclosure and dissemination of information; (iii) development of a community grievance redress mechanism (GRM), and (iv) ongoing reporting to affected communities, aligned with IFC’s PS1 requirements (ESAP # 8).

Grievance Mechanism for Nearby Communities

UQ has confidential channels to receive concerns and suggestion from nearby communities made directly in the main reception desk of the plants (e.g., letters or direct verbal notice), webpage or email.  Requests and grievances received are documented and transferred to respective plant managers to be addressed and responded. The department monitors the resolution process until the closure.

As per ESAP#1 the company shall update the external grievance mechanism to receive anonymous concerns and grievances from communities nearby the company’s operations and implement it through the updated corporate stakeholder engagement plan. The grievance mechanism will; (i) specify and allow the anonymous channels, (ii) disseminate communication channels to communities, (iii) receive, register, and handle all inquiries and grievances in timely manner, (vi) provide a resolution and feedback to communities, and (v) analyze its trends and take corrective actions, including KPIs to measure its effectiveness.                    

Contact Person: Fernando de Souza – Financial Manager.

Company Name: Uniao Quimica

Address: Av Magalhaes de Castro, 4800 – SP, Brazil. 

Email: fersouza@uniaoquimica.com.br