Environmental and Social Management Systems: Scatec has developed a comprehensive corporate Environmental and Social Management System (ESMS) to guide the company's environmental and social activities. This corporate ESMS encompasses policies, procedures, and tools designed to identify and manage the company's exposure to environmental and social (E&S) risks associated with its projects, as well as the activities of its contractors and subcontractors.
The ESMS outlines the E&S principles for business conduct, the procedures for identifying and managing E&S risks and impacts, and the organizational requirements for operating the ESMS. Furthermore, Scatec's policy commitments (see next section – ‘Policy’) ensures that all its business activities are carried out in accordance with international standards, including the IFC's Performance Standards, the Equator Principles, and the World Bank Group (WBG) Environmental Health and Safety (EHS) Guidelines. Scatec's corporate ESMS is also ISO certified (ISO 9001, ISO 14001, and ISO 45001). In 2022, Scatec revised its ESMS, integrating biodiversity aspects into all its activities. An independent ISO certification auditor conducts annual intermittent monitoring audits and recertification every three years to confirm the company's alignment with industry best practices.
In addition to the corporate ESMS, Scatec requires the development of project-specific ESMSs to address risks identified in project Environmental and Social Impact Assessments (ESIAs) and any risks found during Scatec's internal risk assessment process. A Release ESMS inclusive of Scatec's corporate requirements will be developed per ESAP #1b. The Release ESMS will inherit corporate requirements and be tailored to meet the specific needs of the Release business, ensuring compliance with the reference framework requirements, namely Scatec requirements, the Performance Standards, WBG EHS Guidelines, and national legislative requirements.
Policy: Scatec has developed corporate policy statements demonstrating its commitment to environmental and social (E&S) management, which are published on its corporate website. Amongst others, policy statements include: i) sustainability policy, ii) Code of Conduct, iii) health, safety, security, and environment (HSSE) policy, iv) human rights policy, v) human resources policy, vi) diversity and inclusion policy, and vii) a global labor policy for site personnel. In 2021, Scatec published an environmental policy that includes a commitment not to develop projects in areas where a threat to critically endangered species cannot be mitigated and an aim to achieve no net loss in all projects. As part of IFC's financing, Release will review and formally adopt the corporate policies in their entirety at the Release level and apply them to the business per ESAP #1a. This process will ensure that the Release's E&S management system is consistent with Scatec's established standards and adheres to the requirements of Performance Standard 1.
Identification of Risks and Impacts: Scatec's corporate management system establishes a process for identifying risks and impacts for all site developments and has been applied to the Release vehicle thus far. As part of Release's ESMS development [ESAP #1b], and to ensure compliance with Performance Standard 1, the client will adopt existing corporate screening requirements and enhance the site selection screening process to ensure that: i) risks associated with PS5-8 are effectively screened out at the site selection stage, and ii) provisions for reviewing Lessee's Environmental and Social Impact Assessment (ESIA) terms of reference are incorporated and any required ESIAs are evaluated as part of project installation risk controls identified in the ESIAs. These controls will be incorporated into the investee's installation E&S management plans. Furthermore, as part of Release's ESMS [ESAP #1b] development, Release will provide support to the Lessee to develop a Land Acquisition and Resettlement framework/procedure aligned with IFC PS5 requirements which shall be applied to the Lessee on a reasonable endeavors basis (ESAP #1b).
The ESMS [ESAP #1b] will define and require each project installation develops and implements a project risk register to evaluate risks specific to each project phase, including an assessment of E&S risks. The risk register should be updated regularly and provided to Release corporate senior management for periodic updates [ESAP #4a]. Additionally, the ESMS [ESAP #1b] shall define project legal register/permitting plan requirements to be developed and capture all required and potentially necessary permits/licenses for each project installation, ensuring systematic tracking and flagging of expiring permits that the Lessee will need to renew.
Management Programs: Scatec’s corporate ESMS states that a set of E&S management plans, required for the project, must be identified as an outcome of a project risk assessment, and an EIA carried out for the project. Release, as part of its ESMS [ESAP #1b] development and in compliance with Performance Standard 1, will define project installation requirements for comprehensive management programs to address the identified risks and impacts associated with its projects. These management programs will be designed to ensure effective mitigation, monitoring, and reporting of environmental and social risks throughout the project lifecycle, from planning and installation to operation and decommissioning. Specifically, the ESMS [ESAP #1b] will define requirements for the development of appropriate plans, including:
i) Environmental and Social Management Plans (ESMPs): The ESMS [ESAP #1b] will require each project installation to develop and implement an ESMP that outlines the specific mitigation measures, monitoring protocols, and reporting requirements to address the potential environmental and social risks identified during the risk assessment process. The ESMPs will be tailored to the unique characteristics of each project and its surrounding environment and will be aligned with the requirements of the IFC Performance Standards, World Bank Group EHS Guidelines, and applicable national legislation.
ii) Contractor and Subcontractor Management Plans: The ESMS [ESAP #1b] will define requirements for each installation to develop a robust contractor management plan to ensure that all contractors and subcontractors involved in the projects adhere to the same environmental and social standards as defined in the Release ESMS [ESAP #1b]. This will involve the inclusion of specific E&S requirements in contracts, as defined in a Release E&S Requirements' document and included within the ESMS [ESAP #1b], undertaking regular monitoring and reporting of contractor performance (see Monitoring & Review section below), and capacity-building activities to improve contractor E&S performance.
Monitoring and Review: Scatec's corporate ESMS outlines the monitoring and review requirements for project activities, emphasizing the need for regular monitoring of environmental and social (E&S) management plans. The corporate ESMS mandates internal audits by the Scatec corporate Health, Safety, Security, and Environment (HSSE) and Human Resources (HR) teams to ensure compliance with loan agreement requirements and local regulatory frameworks. The E&S manager is responsible for ensuring regular site visits to project sites are conducted to perform inspections, audits, and provide training sessions to strengthen the capacity of site teams.
As noted previously, the current investment will require the development of a Release-level ESMS [ESAP #1b]. In line with Performance Standard 1 and Scatec's corporate ESMS, Release will establish a robust monitoring and review process within its ESMS [ESAP #1b] to track the effectiveness of its environmental and social management programs and ensure continuous improvement in its E&S performance. This process will be aligned with Scatec's existing monitoring and review requirements and will involve the following key components:
i) Monitoring Indicators: Release will develop project installation-specific Key Performance Indicators (KPIs) based on the identified environmental and social risks and impacts associated with each project [ESAP #4b]. These KPIs will serve as quantifiable measures of the effectiveness of the implemented management programs and will be aligned with the requirements of the IFC Performance Standards, World Bank Group EHS Guidelines, and applicable national legislation.
ii) Regular Monitoring and Reporting: Release will establish a regular monitoring and reporting schedule for each project installation, which will include periodic on-site inspections, audits, and assessments to evaluate compliance with the ESMPs and contractor and subcontractor management plans. The monitoring data will be recorded, analyzed, and used to generate periodic performance reports that will be shared with Scatec corporate senior management, relevant stakeholders, and the IFC, as required.
iii) Adaptive Management: Release's ESMS [ESAP #1b] will define adaptive management requirements, using monitoring data and performance reports to identify any gaps or areas for improvement in its E&S management programs. Where monitoring data reveals that the implemented mitigation measures are not achieving the desired outcomes, Release will revise the management programs pertaining to its scope and implement corrective actions as necessary to address these issues.
Organizational Capacity and Competency: Scatec has established a strong organizational structure and capacity to manage its environmental and social (E&S) risks and impacts, in line with the requirements of Performance Standard 1. The sustainability team, which includes specialists and support teams, reports to the global headquarters and ultimately to the Executive Vice President of Sustainable Business and HSSE, who is part of the Management team reporting directly to the Board of Directors.
The Release-level ESMS [ESAP #1b] will define requirements for appropriate staffing and training for the Release business and its installation projects. This will be achieved by leveraging Scatec's existing E&S personnel and resources, and undertaking specific staffing plans on both country and project installation levels. Release will allocate sufficient resources, including budget and personnel, to effectively implement its E&S management programs and achieve its E&S objectives, following Scatec's resource allocation practices.
Emergency Preparedness and Response: Scatec's corporate ESMS mandates that emergency response plans are developed for each of its projects, taking into consideration potential incidents that may impact the environment and/or surrounding communities during a project's development, construction, and/or operations. In line with this requirement and to further enhance emergency preparedness and response, the Release-level ESMS [ESAP #1b] will define specific emergency response plan requirements for project installations. This will ensure that all project installations develop appropriately scaled and tailored emergency response plans that effectively address the unique risks and challenges associated with each project installation.
Gender Based Violence: The contextual risk for Gender-Based Violence (GBV) in the region of current and potential operations is considered high. Factors such as the influx of project workers and job-seekers into the area with access to disposable income may increase GBV risks during project installation. To address these risks, the Release-level ESMS [ESAP #1b] will define appropriately scaled GBV risk assessment requirements for each project installation, in line with ESAP #1b. This will include mapping GBV services and response providers available to GBV survivors in the installation projects' area of influence.
Based on the findings of these assessments, and as required, the Release ESMS [ESAP #1b] will define GBV prevention and response action plan requirements, ensuring that recommended measures are implemented ahead of any project installation commencing. This proactive approach to addressing GBV risks demonstrates Release's commitment to promoting a safe and inclusive environment for all stakeholders, mitigating potential negative impacts related to project operations.