IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS1 – Assessment and Management of Environmental and Social Risks and Impacts
Environmental and Social Policies: CBL Group adopted an E&S policy (2018). This policy commits CBL to manage the E&S risks and impacts associated with its operations through compliance with applicable national laws and regulations and CBL E&S programs and Standard Operating Procedures approved by their Board of Directors. Specifically, CBL Group corporate E&S commitments are defined in their Sustainability Framework, Safety, Health, Environment, and Quality (SHEQ) policy, Environmental Management policy, and the CBL Group Code of Conduct. CBL Group E&S policies also apply to all its subsidiaries, including those operations targeted by this proposed investment in Ghana and Indonesia. As part of this proposed investment, CBL will upgrade its EHS policy to align its E&S performance against IFC PS requirements for the targeted subsidiaries by the use of proceeds (ESAP#1). Upon approving this upgraded policy, CBL will define an Implementation Plan with Group-level and plant-level EHS Key Performance Indicators (KPIs).
Identification of Risks and Impacts. CBL will undertake a E&S Due Diligence (ESDD) of the proposed coconut processing plant in Indonesia (ESAP#2 A). In addition, CBL will undertake a ESDD of the Ghana expansion against the applicable legal and regulatory requirements and the IFC Performance Standard (PS) (ESAP #2 B). The ESDD will assess E&S performance of the Ghana and Indonesia subsidiaries for compliance with national employment and labor law, grievance mechanisms, OHS controls, emissions and discharge standards among others. CBL will implement the recommendations of this ESDD report in a time-bound manner with assigned capex and/or opex to ensure compliance with national E&S requirements and IFC Performance Standards.
E&S Management System and Programs: CBL E&S policy commitments are operationalized through a series of programs, procedures, and tools covering among others hazard and risk identification, waste management and stakeholder engagement. Several of CBL existing operations have management systems that are certified according to the following international standards: ISO 14001 / ISO 45001, ISO 9001-2015 QMS, ISO 22000-2018 Food Safety MS, FSSC 22000 –V5.1 (Food Safety System Certification). CBL Group E&S policies, management plans/programs and corporate EHS procedures apply to all subsidiary companies. ESAP#3 and for this proposed investment, include (i) undertake a gap analysis of its EHS SOPs for its food processing operations against IFC PS requirements, applicable and relevant section of the WBG EHS Guidelines (General and Sector-Specific – Food and Beverage Production) and (ii) develop a corrective action plan to close gaps identified, including the implementation of any relevant update of its procedures and any relevant mitigation measures at its operations; (iii) develop and implement a PS-1 compliant ESMS for Ghana and Indonesia subsidiaries.
Organizational Capacity and Competency: The CBL Group Managing Director leads the Group Sustainability Committee that meets quarterly to discuss Group sustainability performance and to assess their alignment with the commitments adopted in their Sustainability Framework. Day to day E&S management responsibilities, including E&S program and SOPs implementation, monitoring and review, are vested with the various Heads of Departments (e.g. engineering, production, procurement) - supported by the corporate level Safety, Health, and Environment (SHE) department. Oversight of contractors is also done through the respective Heads of Departments, in cooperation with the Group-level SHE department. As part of this investment, CBL will recruit and/or assign an E&S manager at the Ghana subsidiary/plant level. This manager will be responsible to develop/implement the PS-compliant ESMS, including the resource efficiency management plan, the Supply Chain management system, Stakeholder Engagement Plan and Community Grievance Mechanism (ESAP#4).
Emergency Preparedness and Response. CBL Group have facility specific Emergency Preparedness and Response (EPR) Plans that identify appropriate procedures, contacts, and roles and responsibilities to prevent and respond to accidental and emergency situations. IFC site visits provided evidence of CBL EPR implementation with emergency exits clearly identified, fire suppression equipment available, and emergency contact numbers for the police, hospital, and fire department posted prominently. Safety, Health, Environment, and Quality (SHEQ) instructions are also prominently displayed at CBL facilities. These displays reinforce key messages delivered during induction and in-depth thematic trainings provided on a regular basis. The roles and responsibilities for various team members responsible for the implementation of the emergency response procedures are well defined, and training is provided to relevant staff. The EPR plans will be implemented at the Ghana and Indonesia subsidiaries targeted by this proposed investment.
Monitoring and Review: CBL monitors its E&S performance as per the (Terms and Conditions) T&Cs of its environmental licenses at each production facility. In addition, CBL Group reviews its E&S policies and EHS SOPs for continuous performance improvement. E&S monitoring indicators include incidents and accidents, energy and water consumption and efficiency, solid waste and air emissions, among others. CBL conducts internal and external annual ISO management audits to assess compliance with its Group-level/subsidiaries’ ESMS and identify areas for improvement. CBL also reports on its E&S performance to stakeholders through its annual sustainability report.
Supply Chain Management System: CBL will source coconuts for the soon-to-be-acquired Indonesia processing operation from local small holders and aggregators from existing coconut plantations in Gorontalo province. As indicated above, IFC undertook a high-level biodiversity risk screening during this appraisal to assess the presence of recently converted natural habitats in that province. The results were negative. This purchasing agreement with all coconut suppliers will be annually audited and certified according to Fairtrade International’s standards. CBL Environmental officers regularly assess coconut farmers compliance with Fairtrade environmental & social requirements. FairTrade risk assessment guidelines prioritize salient environmental and human rights risks that include: climate, deforestation, biodiversity loss, water, living incomes and living wages, working conditions, health, freedom of association and collective bargaining, forced labour, child protection and child rights, gender rights, non-discrimination, self-determination, freedom of speech, freedom of thought and public participation and privacy.
CBL audit all their suppliers at least once every two-years. Supplier performance is assessed according to the company’s sustainability standards, including if any major environmental/ food safety issue has been brought against the supplier. CBL Ghana subsidiary sources agro commodities, such as palm oil, sugar, soybeans, milk powder, nuts/dried fruits and cocoa powder from national and international suppliers, including Wilmar, Cargil, and BRAC. These traders source these commodities globally, including palm oil from Indonesia and Malaysia, soybeans from Brazil and sugar from India. More information on supply chains is included in the relevant sections of PS2 and PS6 below.
PS2 – Labor and Working Conditions
Human Resources (HR) Policies and Procedures: CBL Group adopted labor and working policies and programs found to be aligned with PS2 requirements, especially those pertaining to Occupational Health and Safety (OHS). All direct employees are onboarded on CBL Group’s Code of Conduct & Ethics and key HR documentation, payroll systems, and EHS requirements at induction. However, PS2 gaps have been identified based on the review of CBL Human Resources (HR) policies and procedures. For example, CBL Group Talent Acquisition Policy specifies the company’s commitment to non-discrimination and equal opportunity in employment decision making. However, CBL does not currently have comparable commitments to respect workers organizations’ rights to freedom of association and collective bargaining, and to prevent child and forced labor. CBL Group will revise its Code of Conduct and relevant HR policies and then develop and roll-out the updated HR provisions through induction/training materials (ESAP#5). Similarly, CBL Group Grievance Handling Policy provides an effective mechanism for handling employee grievances. However, the grievance mechanism does not guarantee anonymity, prohibit retaliation, or apply to workers engaged by third parties (contracted workers). As part of this proposed investment, CBL Group will revise its Grievance Handling Policy to incorporate these changes in scope, uptake, and accessibility (ESAP#6).
Working Conditions and Terms of Employment. The proposed financing to CBL for the targeted subsidiary in Ghana and Indonesia will increase production capacity and delivery networks to third-party distributors. With modern trade vendors like supermarkets, CBL delivers directly to their central warehouses and/or individual outlets. While CBL Group PS2-related policies, procedures and programs are applicable to all subsidiary companies, the familiarity and consistency with which these programs are managed at each subsidiary depends on additional factors such as variable national legal frameworks, the professional skills and experiences of local HR and OHS managers, and the work culture and expectations of the local workers. The ESDDs conducted as part of ESAP#2 described above will assess these subsidiary’s compliance with IFC PS2 requirements, including national employment and labor law, grievance mechanisms, and OHS controls, among others.
Occupational Health and Safety: CBL Group manages the Occupational Health and Safety (OHS) risks of its food processing operations through a combination of policies, procedures, resource allocations, and capacity building. The CBL Hazard and Risk Identification File identifies hazards and appropriate controls applicable to all workplace operations from de-shelling coconuts (high risk) to sweeping dry floors (low risk). The CBL Hazard and Risk Identification process covers all manner of hazards and risks that could occur at their business operations including: Fire, Electricity, Extreme Temperatures, Confined Space, Working at height, Stored Energy, Work Equipment, Load handling Equipment, Noise, Vibration, Manual Handling, Ergonomics, Health and welfare, Slips and Trips, Vehicle and traffic, Work Related driving, Chemical Hazardous substance, Biological hazardous substances, Work Environment, Lone working, Work Related Violence and Bullying, and Substance Abuse. The Group have a strong safety record, reporting a ratio of just 0.05 injuries / total number of workers in fiscal year 2024. Worker’s induction session and annual training on OHS SOPs, working system and golden rules are provided to permanent employees and contractors. Annually, CBL update their hazard risk register. In addition, ergonomic risk assessment is conducted at each working station. All employees have access to gender-disaggregated locker rooms with good hygiene conditions and are provided with meals at on-site cafeterias.
Day to day E&S management responsibilities, including E&S program and SOPs implementation, monitoring and review, are vested with the various Heads of Departments (e.g. engineering, production, procurement) - supported by the corporate level Safety, Health, and Environment (SHE) department. Oversight of contractors is also done through the respective Heads of Departments, in cooperation with the Group-level SHE department. CBL Group are expected to manage all other labor and working conditions aspects of the proposed project consistent with PS2.
Supply Chain: CBL Group rely on many third-party suppliers for the agricultural goods and materials essential to their core business activities, including coconut, cocoa powder, palm oil, sugar, etc. For its existing food processing operations in Sri Lanka, CBL managed its third-party suppliers through internal procurement policies, and international FAIRTRADE certifications. FAIRTRADE risk assessment guidelines prioritize salient environmental and human rights risks that include: climate, deforestation, biodiversity loss, water, living incomes and living wages, working conditions, health, freedom of association and collective bargaining, forced labor, child protection and child rights, gender rights, non-discrimination, self-determination, freedom of speech, freedom of thought and public participation and privacy.
CBL procurement policies commit that ethical standards are observed by contracting service providers, contractors, and suppliers. For example, the company signs mutual agreements with suppliers to grow and sell crops under company specifications, including organic certification. These agreements include contractual clauses requiring compliance with child labor, forced labor prohibition and environmental requirements. CBL then certifies these lands and monitors their suppliers through its Agri-officers. CBL Group propose to implement the same supply chain policies and risk screening procedures at the targeted subsidiary in Ghana and Indonesia. At the time of this appraisal, limited supportive evidence of progress on implementation of these supply chain management practices, especially against IFC PS2 and PS6 supply chain risks) were available for the targeted subsidiaries. Going forward, CBL will implement procedures on supply chain management for its primary suppliers and include specific requirements on EHS including compliance with applicable legal requirements, prevention of child labor, forced labor and ensuring safety of workers in the contracts/agreements (refer ESAP#7).
PS3 – Resource Efficiency and Pollution Prevention
Resource Efficiency. The Group’s main source of energy for its operations is electricity from national grids. [Energy efficiencies are monitored, and performance is tracked against CBL’s Board established annual sustainability goals. The company also provides staff with regular training on resource efficiency and pollution prevention actions to support reaching these goals.
Greenhouse Gas (GHG) Emissions. Annual GHG emissions from the proposed project are expected to be less than 20 MT CO2 equivalent. For these reasons, CBL Group are expected to manage all resource efficiency and pollution prevention parameters of the proposed project consistent with PS3.
Pollution Prevention: CBL Group food production processes do not generate significant quantities of waste or emissions. Water is sourced from local utility supply companies, and industrial process water is treated prior to discharge to storm drains. Treated effluent is tested regularly and reported to be within the limits specified in the WBG Environmental Health and Safety (EHS) Guidelines for Food and Beverage Production (2007). Portion of discarded coconut shells are used as feedstock for inhouse biomass-boiler operations and rest is sold for activated carbon production. Other wastes such as cardboard, plastic, and organic materials are segregated prior to storage. These materials are then disposed of by authorized collectors.
PS4 – Community Health, Safety, and Security
Infrastructure and Equipment Design and Safety. The proposed project is expected to have limited impacts on the health, safety, and security of any communities. This is largely because the proposed acquisition and expansions of food production and distribution involve existing facilities in peri-urban and industrial areas with limited proximity to any residential areas or public services. CBL takes measures to ensure the health, safety, and security of the communities in which it operates. This includes implementing safety protocols at its facilities, conducting regular safety drills, and providing health and safety training for employees and contractors. The company also engages with local communities to address any concerns related to its operations. For example, CBL supports farmer community resilience by promoting drought resistant crops, soil conservation techniques, capacity building and providing community development facilities. To further enhance community engagement, CBL will develop and implement a Stakeholder Engagement Plan for the Ghana and Indonesia subsidiaries and an external grievance mechanism (ref. ESAP#8 below).
Food Safety Management. CBL Group adopted several food safety and quality measures across its operations, such as BRC AA+ certification and FSSC 22000-V5.1 (Food Safety System Certification). CBL's manufacturing processes also comply with international standards and regulations, including the Global Standard Food Safety (Issue 9).
CBL Group recognize that the movements of their delivery and distribution vehicles present potential collision risks to others who use the same public roads and walkways. CBL avoid and minimize these risks through a combination of driver training and supervision measures, vehicle safety inspections, road crossing demarcations, increasing the width of walking paths, upgrading speed limit markers, enhanced lighting, among others. Driver training includes familiarity with the relevant location-based CBL Group Emergency Response Plan. Finally, the proposed E&S due diligence under ESAP#2 and ESAP#3 will further assess any transportation risks to community health and safety related to the use of IFC investment proceeds.
Security Personnel. CBL Group employ private security contractors to protect their staff and property. These security guards do not have access to firearms. For these reasons, CBL Group are expected to manage all community health, safety, and security dimensions of the proposed project consistent with PS4.
PS6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
Supply Chain. The supply chain of CBL Group includes various agro commodities as described above. IFC conducted a supply chain risk assessment for all commodities and identified possible risks of deforestation in relation to coconut supply in Indonesia. The supply of soybeans and palm oil is from reputational suppliers with commitments on deforestation consistent with PS6. The supply of other commodities carries low risks of deforestation; however further analysis of cocoa and milk powder supply will be required once supply recommences. To reduce risks, CBL Group has a Procurement Manual that includes Vendor Registration Process that in turn requires suppliers to comply with various certifications, including FAIRTRADE. There are gaps however with the deforestation commitments with current certifications (such as FAIRTRADE) and the requirements of IFC PS6. CBL Group will (i) assess its’ primary suppliers’ exposure to risks of child labor and conversion of natural/critical habitat and adopt IFC PS consistent remedies including updates of the Procurement Manual to include a Supplier Code of Conduct (CoC) including commitments on “no-deforestation”; (ii) implement procedures on supply chain management (refer to PS 2); and (iii)undertake regular verification of the supply chains and identify alternative suppliers if non-compliances are identified (ESAP#7). The scope of this supply chain assessment will also include the project subsidiaries associated raw materials sourcing – especially for coconut, cocoa, sugar and palm oil sourcing.
