Elemental identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and E&S regulatory permits and requirements. At the corporate level, Elemental has developed an environmental strategy and various policies in which the Company articulates its commitment to legal compliance, human rights, OHS awareness and performance, fair and non-discriminatory working conditions, environmental protection, resource efficiency and sustainability. As per ESAP#1, as part of the corporate-level E&S Management System (“ESMS”) to be developed under ESAP #2 below, Elemental will update and adopt an E&S Policy including its commitment to comply with IFC PSs with a clear statement regarding the applicability of these policies to cover all facilities of Elemental and its subsidiaries.
Currently, Elemental maintains plant-level ESMS. The plants in Poland have established and certified their ESMSs based on specifications of the environmental management standard ISO 14001, the OHS management system specification OHSAS 18001 and the ISO 9001 quality management system. At these plants, the ESMSs are used for the identification and management of environmental, social, OHS risks and impacts, emergency preparedness, and monitoring and reviewing EHS system performance. For other operating plants, the ESMS is established primarily to meet host country legislation which governs environmental and OHS aspects (such as provision of personal protective equipment (“PPE”), EHS training, recording of information related to waste disposal, and the like). Thus, management of E&S issues varies from plant to plant and from country to country.
Elemental is in the process of developing a corporate-level ESMS which will be trickled down to each subsidiary once established. Under the proposed investment and as per ESAP#2, Elemental will develop and implement a corporate-level ESMS commensurate with the level of risks and impacts associated with the Company’s business activities across jurisdictions in line with IFC PS 1. The ESMS will include, but not limited to, the following policies and procedures: (i) E&S policy (as per ESAP 1); (ii) procedure for corporate oversight for E&S and OHS related regulatory compliance; (iii) an E&S Assessment and Management Procedure, that will ensure that the company conducts a thorough E&S impact assessment and management process for all its future downstream developments prior to construction or E&S due diligence for M&A, including any historical pollution and retrenchment, in line with IFC’s PSs and adhere to Good International Industrial Practices (“GIIP”) in the project design and that any findings are merged into a consolidated Corrective Action Plan (“CAP”); (iv) ESHS Monitoring and Review Procedure; (v) OHS management; (vi) contractor E&S management; (vii) stormwater and waste management; (viii) life and fire safety and emergency preparedness and response plan; (ix) traffic/road safety; (x) security management; (xi) stakeholder engagement procedure including community grievance mechanism; and (xii) Supply-Chain Policy and Supplier’s Code of Conduct. Elemental’s internal audit committee will track non-compliant items for management/Board follow-up. In addition, the Company will ensure all operations implement systems and structures aligned with the corporate ESMS.
Furthermore, the planned downstream developments, considering the nature of its operation, will be designed and operated in accordance with best available techniques and best environmental practices to meet the requirements of the respective European Union (“EU”) directives and the local law and ensure compliance with IFC PS requirements. As per ESAP item # 3, Elemental will ensure that any future downstream projects are designed and operated by adhering to the requirements of GIIP and IFC’s PSs requirements.
Additionally, the Target Company is certified by ISO 9001 and ISO 14001. During the E&S appraisal, the Target Company was in the process of obtaining ISO 45001 for OHS management. The detailed requirements and procedures for E&S are described in the company’s EHS and HR management programs.
Elemental typically undertakes an initial E&S risk screening for the M&A target companies by mobilizing external qualified E&S consulting firms which perform E&S risk assessments in accordance with host country regulations. Based on the findings of the E&S risk screening, the Company develops and implements a timebound CAP. Moreover, Elemental conducts E&S risk screening for any expansions in its existing plants and downstream developments according to applicable local regulations and prepares an Environmental Impact Assessment (“EIA”) in line with host country regulations. Going forward, as part of ESAP#2 above, Elemental will implement a E&S Assessment and Management Procedure.
Elemental has environmental and OHS specialists which are responsible for managing plant-level EHS performance to the requirements of national legislations, as well as ensure the implementation of safety procedures and manage post-incident reporting and preparation of root-cause report which ultimately reports to the General Manager. Elemental’s current corporate E&S team is led by the Compliance Director supported by an environmental specialist, a Know Your Customer specialist and a compliance officer. At the time of IFC’s E&S due diligence, Elemental was in the process of establishing a corporate E&S and communication team which will be led by a dedicated and qualified E&S specialist and supported by Compliance and other relevant departments. As per ESAP #4, Elemental will finalize the recruitment process and ensure that corporate E&S team will have an EHS specialist/coordinator and supporting specialists with adequate technical knowledge of GIIP and defined roles and responsibilities at the corporate level, whose responsibilities will include but not limited to: developing and implementing corporate level relevant ESMS policies, procedures and plans; establishing processes and reporting lines to collect, conducting audits, analyze and report data and E&S related information. Additionally, the team will have the capacity to manage the E&S performance of any future waste remanufacturing projects and international operations, especially plants outside of the EU.
The Target Company has an environmental specialist at the corporate level responsible for managing the risks and impacts. The environmental specialist is supported by an outsourced OHS company. The plant managers and production managers are also involved in the E&S management process. The COO is responsible for supervising E&S and OHS activities of the Target Company. At both Elemental and the Target Company, regular E&S and OHS training programs are in place.
Elemental and the Target facilities have Emergency Preparedness and Response and Evacuation Plans (“EPRP”), approved by local environmental and safety authorities. As per ESAP # 2, Elemental will ensure that the planned downstream developments will have the EPRP in accordance with GIIP and IFC’s PSs once operational.
Currently, at Elemental, each plant has its own EHS monitoring system based on host country regulations. As part of the corporate-level ESMS to be developed under ESAP #2, Elemental will develop and implement a documented ESHS Monitoring and Review Procedure to ensure ESHS performance of all facilities are managed in line with GIIP to allow for benchmarking of performance between operations and for continuous improvement including regular internal/external audits. The plan will define benchmarks, specific key performance indicators, internal monitoring procedures, schedule, and standards, reporting procedures and review mechanisms to correct any identified gaps.
Elemental’s and the Target Company’s existing supply chain risk screening and management comprise of mainly legal, human rights, ethics and commercial/management aspects and led by compliance departments. Both companies conduct initial qualification review for any new suppliers and annual review of all existing suppliers to ensure compliance with local regulatory requirements and respective policies and procedures including child and forced labor. They are working with verified suppliers for all product streams. The suppliers are automatically disqualified if they cannot pass the initial or annual reviews. Elemental is currently working on developing a new supply chain policy and the implementation of Ecovadis platform to perform more systematic supplier assessments by evaluating performance of its suppliers under four themes: Environment, Labor & Human Rights, Ethics and Sustainable Procurement. To ensure a systematic evaluation process across its facilities, as per ESAP #5, Elemental will conduct a supply chain risk mapping & screening of labor and OHS conditions (e.g., inherent risk in country, region, sector) and develop a dedicated Supply-Chain Policy and Supplier’s Code of Conduct at corporate level articulating its commitment to comply with IFC PSs 1, 2 and 6 (ref. prohibition of use of child or forced labor, avoidance of significant OHS risks and risk of conversion of natural/critical habitats leading to biodiversity loss) which will apply immediately to all third-party primary suppliers and will include the periodical monitoring and audits requirements of labor and OHS aspects as stipulated in PS2. As a result of supply chain risk screening, if the Company identifies high risks related to forced or child labor in its supplier, it will assess labor conditions, monitor, and remedy it in collaboration with such supplier as stipulated in the Supply-Chain Policy and Supplier’s Code of Conduct. The corporate E&S and Compliance team will oversee the E&S aspects of the supply chain management, in line with IFC PS requirements.
