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.
PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
DGV and LC have established corporate E&S policies that guide day-to-day operations. Both companies have developed a code of ethics and policies related to OHS, human resources, and supply chain management, which are applied across their operations. DGV and LC implement ESMSs broadly aligned with ISO14001 on environmental management systems.
As per ESAP #1, once established, NewCo will develop a group-level ESMS consistent with IFC PSs, WBG EHS Guidelines (General and Telecommunications), and local regulations. DGV and LC will implement it, retaining their operational-level structures. The new ESMS will include an overarching E&S policy and plans/procedures, including but not limited to, biodiversity management, pollution prevention (including EMF), GHG accounting and reporting, waste management, emergency preparedness and response (including security incidents), transport and traffic management, land acquisition and resettlement, security management, contractor management, supply chain, community health & safety, and stakeholder engagement. Once NewCo’s ESMS is established, the NewCo will hire a suitably qualified and experienced independent consultant to undertake a gap analysis comparing DGV and LC's existing ESMS to that established by NewCo and IFC PSs. A respective action plan will be developed, if applicable, to be implemented by both entities to address any identified gap (ESAP#2).
As per ESAP#3, NewCo will appoint a suitably qualified corporate E&S manager/coordinator to oversee the development and implementation of a group-level ESMS aligned with local requirements, IFC PS and WBG EHS Guidelines (General and Telecommunications), and assign sufficient resources to provide adequate E&S oversight for each Group entity. In addition, DGV and LC will appoint an E&S coordinator to oversee their respective business activities.
National regulations in Ukraine do not require Environmental Impact Assessments (EIA) to develop communication infrastructure. However, as per ESAP#4, as part of the new ESMS, NewCo will develop and implement an E&S Assessment and Management Procedure (ESAMP) in line with IFC PS and WBG EHS Guidelines. The ESAMP will include a mechanism to screen the E&S sensitivity of future asset locations. The procedure will ensure that locations of higher environmental, biodiversity, cultural heritage, or other social value for local communities (including land acquisition) are identified and avoided, or where avoidance is not possible, risks and impacts are assessed and mitigated as per IFC PSs. The screening process will consider risks to legally protected, internationally recognized areas and other priority biodiversity features as per IFC PS6. The procedure will include corporate procedures applicable to all entities and reflect and address the specific requirements of each entity.
NewCo will develop a Contractor Management Procedure as part of the ESMS to guide all contractors regarding compliance with its ESMS and IFC PS (ESAP#1) in line with the guidance provided in IFC’s Good Practice Note Managing Contractors’ E&S Performance.
If the development of project infrastructure will require the acquisition or lease of land or of existing built structures, the potential locations will be screened per the requirements of the ESAMP (ESAP#4), which include land acquisition considerations. Upon site selection, land acquisition or lease procedures will be governed by the Land Acquisition Procedure, which will be included in the NewCo ESMS (ESAP #1).
PS 2 – Labor and Working Conditions
The Group expects to employ approximately 5,000 staff distributed across the Group, including both office-based and field-based staff. In addition, contract workers are anticipated to be required to support some operational functions.
As per ESAP#5, NewCo will develop and implement human resources (HR) policies and procedures to be implemented by each entity of the Group in accordance with IFC PS2 and Ukrainian labor code, which will be applicable to all workers (including contracted/sub-contracted workers). The HR policies will define NewCo’s commitments concerning labor and working conditions, equal opportunities and non-discrimination, gender-based violence and sexual harassment (GBVH), prohibition of child and forced labor, freedom of association, workers’ grievance redress, and collective bargaining. As part of the HR policies, NewCo will further develop an enforceable Worker Code of Conduct applicable to all workers (which will specifically include mitigants related to GBVH). All workers will receive regular training on the project's human resources policies, including mandatory training on the Worker Code of Conduct.
NewCo does not anticipate a significant reduction in staff during the merger process; however, some staff optimization may occur. As per ESAP#6, as part of the HR Policy, NewCo will develop a Retrenchment Policy fully aligned with national requirements and IFC PS2 to be applied in case any retrenchment is required. At least 2 months prior to any future retrenchment, the NewCo will prepare and implement a Retrenchment Plan, meeting national and IFC PS2 requirements, in consultation with workers and their representatives.
Lifecell operates its retail stores through a franchise model in which the franchisee is responsible for the human resource function, including recruitment and working conditions. As per ESAP#7, NewCo will develop procedures for employees at franchise-operated retail stores to standardize the management of this workforce in relation to the requirements of local labor law and IFC PS2. This procedure will also include a program to monitor all franchise-operated stores.
NewCo will develop and implement a worker's grievance mechanism (WGM), in accordance with IFC's PS2 and local requirements. The WGM will be made available to all workers, including contractors/sub-contractors and franchise workers, irrespective of their employment status. NewCo will disseminate information about its use to the workforce (in a language the workers understand). The WGM is to include specific considerations related to GBVH-related grievances, for which an adequately trained grievance officer will be assigned (ESAP#8).
NewCo will develop an OHS Procedure (ESAP#9) covering the whole Group, which will be implemented by LC and DGV, that will include (i) the identification of potential hazards to workers, (ii) provision of preventive and protective measures; (iii) training of workers, (iv) documentation and reporting of occupational accidents, diseases, and incidents. The OHS procedure will also include specific threats to female employees. The OHS procedure will be consistent with national requirements and the relevant sections of the WBG EHS Guidelines.
PS 3 – Resource Efficiency and Pollution Prevention
Electricity is predominantly sourced from the public grid for existing assets, with diesel (petrol) generators being relied upon when grid power is unreliable. As soon as the security and energy situation in Ukraine allows the Group plans to gradually replace diesel (petrol)-fueled backup generators and lead-acid batteries with solar systems and lithium-ion batteries, for which NewCo will apply the Supply Chain Management Procedure included under ESAP#1. IFC estimates that GHG emissions associated with NewCo’s operations are 103,894 tonnes of GHG per year. As per ESAP#1, NewCo will implement a GHG accounting and reporting system based on internationally recognized methods to consolidate GHG accounting and reporting associated with the operations of the newly established company after a full year of operation.
Potential pollution risks from NewCo’s operations will be associated with using backup generators. Such risks will include potentially elevated noise levels and ambient air pollution. NewCo is not required, under national regulations, to conduct any environmental monitoring unless a complaint is received (e.g., elevated noise), at which time monitoring is required to be conducted. In addition, fuel handling and storage for the generators may be a source of soil and/or groundwater contamination in case of spill or loss of containment. The only hazardous wastes anticipated from the project are used lubricant oils from diesel generators, lithium and lead acid batteries, and contaminated soils where spillages may occur. E-waste generation may include servers and networking equipment, computers, and other electronic equipment used in datacenters and offices. Where possible, NewCo will prioritize waste recycling and where not feasible, will utilize registered waste collectors to collect and manage the disposal at authorized disposal sites. The environmental plans/procedures developed as part of the ESMS (ESAP#1) will address key IFC PS3 aspects such as waste and hazardous material management (including e-waste), noise emissions, and potential impacts from EMF.
PS 4 – Community Health, Safety, and Security
The primary community health and safety risks associated with this proposed investment include life and fire safety (L&FS) of publicly accessible buildings, i.e., retail stores, potential risks from electric and magnetic fields, preventing unauthorized access to fixed telecommunication assets, and traffic and road safety.
DGV and LC’s retail stores align with the national fire code, which includes fire prevention, fire protection, and emergency planning requirements. As per ESAP#10, NewCo will engage a suitably qualified professional to implement a risk-based L&FS inspection program of its retail stores (including franchise stores) to ensure compliance with local requirements and against internationally recognized standards. If non-compliances are identified, required corrective actions will be implemented.
National legislation requires all telecom operators to comply with electromagnetic and sanitary-hazardous safety requirements related to base stations and telecom towers. The NewCo will ensure that all required regulatory setbacks are reviewed and ensure that the siting guidelines under local regulation and the World Bank Group EHS Guidelines for Telecommunications are applied in future site selection processes. Additionally, the ESAMP (ESAP#4) will consider other potential community impacts (noise, visual, public access, etc.) during site selection, construction, and operation.
As per ESAP#11, NewCo will inspect all telecom towers as part of its future asset inspection program to ensure their structural integrity and that appropriate measures have been implemented to prevent unauthorized access. If non-compliances are identified, an action plan will be developed and implemented in a timely manner.
As part of its ESMS (ESAP#1), NewCo will develop an Emergency Preparedness and Response Plan (EPRP) to be implemented by DGV and LC, aligned with national requirements and IFC PS. The plan will define how staff and local communities will be equipped to deal with potential emergencies related to NewCo infrastructure (e.g., fire, explosion/attacks, flood, etc.).
As part of its ESMS (ESAP#1), NewCo will develop a Traffic and Road Safety Management Plan aligned with national requirements and IFC PS4 to be applied by DGV and LC. This plan will be extended to all contractors and subcontractors.
As part of the ESMS (ESAP#1), NewCo will develop a security management plan aligned with IFC PS4, which will applied across all the group’s assets.
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
The portfolio of existing assets includes infrastructure, some of which are located in Legally Protected and Internationally Recognized Areas across the country, predominantly within existing urban centers. Hence, impacts on biodiversity values associated with Protected Areas are not anticipated. For future infrastructure locations, NewCo will develop and implement an ESAMP as per ESAP#4, which will screen the biodiversity sensitivity of new asset locations. In line with the IFC PS mitigation hierarchy, NewCo will assess the feasibility of avoiding the construction of infrastructure within Protected Areas, including both Legally Protected and Internationally Recognized Areas. Where avoidance is not possible and infrastructure is located within Protected Areas, project sites will be developed in alignment with IFC PS6 requirements, notably with respect to stakeholder consultation. No assets will be built on sites classified as Alliance for Zero Extension or UNESCO World Heritage Sites.
