PS7 (Indigenous Peoples) was not considered relevant for the review of this Project because no ancestral or traditionally used lands by Indigenous Peoples were identified in the Project area. PS8 (Cultural Heritage) was also not applicable because no tangible cultural heritage was identified during project appraisal.

PS1: Assessment and Management of Environmental and Social Risks and Impacts

Many of the components of an E&S Management System (ESMS) exist as described in the sections below. However, there is not yet a consolidated ESMS aligned with IFC PS requirements. BACAO will develop and implement an E&S management system aligned with IFC PS requirements for its plantations, post-harvest facility and sourcing operations (ESAP#1). The ESMS will incorporate the following elements: (i) policy; (ii) identification of risks and impacts; (iii) management programs; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review. Evidence of ESMS development will be the ESMS Manual describing the abovementioned elements and providing the links to the main procedures and documents to make the ESMS operational. 

Policy. BACAO has adopted environmental, occupational health and safety, community relations and labor policies. As part of ESAP#1, BACAO will update its E&S Policies to include the relevant objectives of IFC PS and a commitment to the prevention of gender-based violence and harassment (GBVH) in the workplace and hosting communities.

Identification of Risks and Impacts. BACAO has prepared an OHS legal matrix and a list of required environmental permits to monitor regulatory compliance. In addition, BACAO has a documented procedure for the preparation OHS Hazard Identification and Risk Assessment (HIRA) matrices. Notwithstanding, the company does not have a procedure for the identification and assessment of E&S risks associated to its operations. As part of ESAP#1, BACAO will prepare an E&S Risk Identification and Assessment Procedure, and a consolidated E&S Risk Registry based on the updated procedure.

Management Programs. BACAO has a Good Agricultural Practices (GAP) certification from the Colombian Agricultural and Livestock Institute (“ICA” for its Spanish acronym). The company has also documented programs for OHS, a waste management plan, and a chemical handling procedure. As part of ESAP#1, BACAO will prepare an E&S Management Program with the appropriate programs, plans and procedures to address every significant risk identified in the E&S Risk Registry.

Organizational Capacity and Competency. BACAO has a dedicated EHS team headed by an EHS Director based in Bogota, and an EHS Supervisor and two OHS and Environmental Assistants in Cabuyaro. BACAO relies on a specialized service provider for the management of social activities and stakeholder engagement in the project’s area of influence. As per legal requirement, BACAO has in place joint committees for health and safety and work environment (convivencia laboral, in Spanish), and emergency brigades for fire and first aid.  The Director of Impulsa Bacao (https://impulsabacao.com/) is responsible for the relationship with cocoa bean suppliers.

Emergency Preparedness and Response. BACAO has an emergency response plan for its operations in Los Espejuelos, which includes a risk assessment of the potential emergency scenarios. Only flooding was assessed as high, and traffic accidents and fire were assessed as medium. Nevertheless, the plan only includes general response procedures for fire and other emergency scenarios that were assessed as not significant. As part of ESAP#1, BACAO will revise the Emergency Plan to include response procedures for flooding and traffic accidents. The plan will also include the identification of the areas where these emergencies are likely to occur, and a list and location of the required emergency response equipment. The plan will include specific fire response procedures for the plantation, post-harvesting facility, offices and storage areas.

Monitoring and Review. BACAO monitors the consumption of energy, water, agrochemicals, and the generation of wastes, and keeps records of OHS leading/lagging statistics for employees and contracted workers. As part of its OHS management system, BACAO has also prepared inspection checklists and an audit program. As part of ESAP#1, BACAO will prepare inspection checklists for environmental aspects, and will establish an EHS inspection program. Results of the inspections will be analyzed to identify areas where substandard practices are recurrent. In addition, BACAO will select Key Performance Indicators (KPIs), and develop and implement an E&S internal audit program to ensure that E&S policies and procedures are properly implemented. Audits will be performed at least annually. KPI and audits results will be reported regularly to senior management.

Supply Chain. BACAO currently acquires fresh cacao beans from 209 farms in Colombia while projection for 2023 are between 290 and 390 farms. This third-party sourcing still represents a small percentage (less than 5%) of the total volume of cacao processed in Cabuyaro’s post harvesting facility. Potentially, 200 additional suppliers could be integrated into BACAO’s supply chain in Cabuyaro. Integrating local suppliers in its supply chain is a key part of BACAO’s community development commitment in Cabuyaro. BACAO provides technical assistance and training and plans to facilitate access to financing through collaboration with microfinance institutions. BACAO has also documented a Supplier Code of Conduct, which must be signed by suppliers. The Supplier Code of Conduct is aligned with IFC PS2 and PS6 requirements for Supply Chain.

PS2: Labor and Working Conditions

BACAO currently employs approximately 360 workers, including approximately 350 at the plantations and 10 at the post-harvest facility. About one quarter are direct employees, half are indirect employees hired through a temporary staffing agency, and the remaining are workers contracted through third-party service providers. Both direct and indirect employment contracts are aligned with Colombian labor legislation. As of June 2022, 38% of workers were women.

Human Resources Policies and Procedures. BACAO has HR policies and procedures consistent with Colombian labor legislation and PS2 requirements, including HR management function, internal work regulations, workplace harassment prevention, and the prohibition of forced and child labor. BACAO has an induction and refresher training program on HR policies and procedures for workers.

Working Conditions. BACAO's working conditions are documented in the internal works regulations and contracts, which establish the terms of employment, such as wages and benefits, working hours, overtime compensation, holidays and paid leave. BACAO guarantees access to clear and understandable information regarding their labor rights to its workers. Additionally, BACAO and their workers have signed a collective agreement that grants additional benefits, including life insurance, food assistance, and recreational activities. This collective agreement is a voluntary negotiation between BACAO and its employees and does not require workers to be unionized. 

Workers’ Organizations. In line with Colombian labor legislation, BACAO’s HR policies include the right to freedom of association. Nevertheless, none of its employees are currently part of associations or unions.

Non-discrimination and Equal Opportunities. BACAO's recruitment and selection policies include non-discrimination and equal opportunity measures to avoid discrimination based on race, color, sex, age, marital status, union membership, religion, political opinion, national origin, disability, sexual orientation, or social origin.

Workers’ Grievance Mechanism (WGM). BACAO has a grievance mechanism for workers. Grievances are received in writing (email, in person, suggestion box) or verbally, recorded and redirected to the relevant department for resolution. To fully align with IFC PS2, as per ESAP#2, BACAO will (i) include additional channels that allow for submission of confidential and anonymous grievances; (ii) update the grievance procedure to document how confidential and anonymous grievances will be handled; (iii) train personnel to address gender-based violence and harassment (GBVH) grievances with a survivor-centered approach; and (iv) record the resolutions. Grievances will be analyzed regularly to identify and address systemic problems. The WGM will be also accessible to indirect employees hired through the temporary staffing agency, and workers contracted through third-party service providers.

Occupational Health and Safety. BACAO has an OHS management system aligned to national legal requirements. The system includes (i) hazard identification, risk assessment, and determination of controls (HIRAC); (ii) medical surveillance program; (iii) OHS inspection program (facilities, tools, personal protective equipment (PPE); (iv) records of occupational injuries and illnesses; (v) root-cause analysis; and (vi) joint OHS committee. Nevertheless, the lost time injury frequency rate (LTIFR) is above industry benchmark, and opportunities for improvement were observed. As per ESAP#3, BACAO will ensure that agricultural workers have (i) access to potable water in sufficient quantity; (ii) clean, well-ventilated toilets and wash basins with running water and soap, or portable toilets and washing facilities for workers working away from base; and (iii) a place to rest and eat meals. Separate toilets will be available for men and women. As per ESAP#4, BACAO will install emergency showers and eye wash stations in pesticide handling areas, washing machines for washing the uniforms of pesticide applicators, and showers so that any person in contact with pesticides showers at the end of the work shift. Separate showers will be available for men and women.

Workers Engaged by Third Parties. BACAO has an EHS Contractor Manual which requires third parties to comply with the company’s EHS and labor policies and regulatory requirements. As per ESAP#6, BACAO will include relevant PS2 requirements in contractual agreements with the temporary staffing agency and third-party service providers, and develop and implement a procedure for monitoring compliance.

Supply Chain. BACAO has a documented Supplier Code of Conduct, which must be signed by suppliers. The Supplier Code of Conduct is aligned with IFC PS2 requirements for Supply Chain regarding the prohibition of child and forced labor, and the prevention of significant OHS risks. IFC’s Advisory Services has engaged with BACAO since 2019 to support the development of cacao supply chains with smallholders in Cabuyaro and other regions of Colombia. Control of OHS risks is addressed by Cabuyaro through its technical assistance program delivered by BACAO’s agronomic team. Risk of child labor among suppliers is considered low as, according to socioeconomic data collected by BACAO, all children of suppliers currently attend school.

PS3: Resource Efficiency and Pollution Prevention

Resource Efficiency.

The primary sources of energy consumption and GHG emissions stem from diesel-powered pumps for the irrigation system and diesel-powered generators in post harvesting facilities. A feasibility study is being currently carried out for the installation of solar panels to partially replace diesel-powered generators, and the use of buffaloes for the replacement of tractors is being tested. Additionally, BACAO has prepared a pre-feasibility study for the construction of a biodigester to use cocoa pod husks as a renewable energy source. IFC’s Advisory Services has engaged with BACAO since 2019 to support the implementation of energy efficiency projects in Cabuyaro. Management practices implemented by BACAO to increase fertilizer efficiency include the use of fertigation and the application of fertilizers based on the phenological stage of the plant.

Water Consumption. According to Think Hazard (www.thinkhazard.org), water scarcity in the region of Cabuyaro is low.  Water for irrigation of the Espejuelos and La Primavera farms is abstracted from the Rio Upia through an irrigation canal. BACAO has obtained the required permits for this water abstraction. During the dry season, occurring from December to March, plantations are irrigated based on water requirement at a rate of 30 to 60 m3 per ha per day. This represents approximately 0.25 to 1% of the river flow for the irrigation of 1,000 ha. Water is delivered through micro sprinklers.

Pollution Prevention

Wastewater and Water Quality. The preparation of cocoa beans is a dry process and therefore its doesn’t need water; no industrial effluents are therefore expected. Domestic effluents are treated through a system composed of grease trap, septic tank, Upflow Anaerobic Filter (UFAF), and infiltration field. In the plantations, BACAO has built a network of drainage canals to evacuate storm runoff during the rainy season. This runoff, which could be mixed with agrochemical residues and other pollutants, enters the main irrigation canal and is transported downstream. As per ESAP#7, BACAO will develop and implement a monitoring program to ensure that management practices prevent the runoff of soil, nutrients and chemicals.

Waste Management. BACAO segregates wastes at source. Cacao by-products are reincorporated into the soil to increase the content of organic material. Plastic, glass, paper and cardboard are delivered to recycling companies. Non-hazardous non-recyclable wastes are collected by the municipality and disposed off in a sanitary landfill. BACAO relies on licensed companies to collect, treat and/or dispose of hazardous wastes, mainly consisting of used oil (ECOLCIN) and triple-rinsed and perforated empty agrochemical containers (Bioentorno Foundation).

Hazardous Materials Management. No secondary containment to contain spills and leakages was observed in areas storing hazardous materials (e.g., fuels, lubricants, agrochemicals). As per ESAP#8, BACAO will develop and implement a Spill Prevention and Response Program to prevent and control spillages of hazardous materials, including the construction of secondary containment where necessary.

Pesticide Use and Management. BACAO does not use any pesticide categorized as WHO Class Ia (extremely hazardous) and Ib (highly hazardous). BACAO is in the process of developing an Integrated Pest Management (IPM) program. Currently, information on the presence of pests is captured through smartphones and analyzed to generate heat maps to support operational decisions. As per ESAP#9, BACAO will complete the development of its IPM program, determining thresholds for action for each specific pest along with available control methods. Use of WHO Ia and Ib pesticides will be expressively prohibited in BACAO policy framework. Chemical pesticides will be used as last resort to prevent economically significant pest damage. BACAO will select chemical pesticides that are low in human toxicity, are known to be effective against target species, and have minimal effects on non-target species and the environment.

PS4: Community Health, Safety, and Security

Project-induced In-migration. BACAO needs to increase its workforce by around 300 workers. As there is full employment in Cabuyaro, these workers will come from other municipalities. The Municipality of Cabuyaro has about 5,000 inhabitants; the arrival of 300 workers and their families could increase its population by 20%. As per ESAP#10, BACAO will retain external expertise to develop and implement an influx management plan that adequately handles the in-migration of workers with their families without affecting the dynamics of the Municipality of Cabuyaro. The influx management plan will include: (i) a diagnosis of the hosting community, including socioeconomic aspects, public services availability, and political and security conditions; (ii) an estimate of the induced in-migration, including the number of workers and their families; (iii) assessment of the risks and impacts of the influx process; (iv) influx management alternatives to mitigate the risks and impacts; (v) influx management plan including strategies, programs, monitoring, and budget; and (vi) stakeholder engagement and community grievance mechanism.

Transportation. BACAO has a Safe Driving Procedure to prevent vehicular accidents. The OHS department guarantees that training on the procedure is carried out for all drivers. BACAO uses a fleet of buses to transport about half of its workforce. The remaining half use their own motorcycles, some of them in an inadequate condition, with a commute time between half to one hour on roads in poor condition that may increment the risks of accidents. As per ESAP#5, BACAO will develop and implement a road safety program that ensures safety during the transportation of its employees, particularly for those who travel on motorcycles and roads in poor condition.

Security Forces. BACAO currently relies on the services of a private security contractor to control access to the farms. The security contractor provides uniforms, equipment (including firearms), and regular training to its security personnel including interpersonal relations, professional ethics, legal requirements, security techniques, prevention of alcohol and drug use, management and resolution of conflicts, and management of human relations. Security personnel is vetted by the security contractor who verifies that they have clean police records and have undergone medical and psychophysical examinations to ensure they are fit for the job. BACAO is member of ASOHUMEA, a water users association established in the 90’s. Currently, ASOHUMEA provides multiple services to its 30 members beyond the administration of the irrigation district. This includes the control of police records of job applicants, installation of security cameras and 24/7 monitoring services, and coordination with public security forces (including provision of fuel and vehicle maintenance for patrolling). As per ESAP#11, BACAO will develop a Corporate Security Policy and a Security Risk Assessment and Management Plan in line with PS4. BACAO will communicate its Corporate Security Policy and provide Human Rights training to security personnel at induction and every six months.

PS5: Land Acquisition and Resettlement

BACAO has purchased four farms totaling 5,200 hectares. The land acquisition process included a cadaster and title review to verify a clean land title history. Land acquisition was conducted through willing-buyer willing-seller transactions. The transactions were negotiated, sellers were provided with fair compensation based on prevailing market values, and there was no threat of expropriation. For these reasons, PS5 does not apply to landowners in these land transactions. However, no information was collected about people without legal rights (e.g., caretakers, sharecroppers, tenants) that may have used and occupied the land at the time of acquisition. As per ESAP#12, BACAO will prepare a Land Acquisition Policy and Procedure in line with the objectives of PS5. The procedure will include social criteria to avoid and minimize physical or economic displacement from land acquisition. The procedure will describe how the following steps will be implemented in the event of physical or economic displacement: (i) assess the magnitude of impacts; (ii) collect socio-economic information of affected household(s); (iii) develop mitigation measures to replace access to housing and restore livelihoods considering the vulnerability of the affected household and the magnitude of impacts (community development activities such as preferential employment, financial and technical support to farmers can be part of the livelihood restoration measures); and (iv) monitor the process to ensure impacts are mitigated and livelihoods are restored. As per ESAP#13, for past land acquisition, BACAO will contact previous landowners to identify if people without legal rights were living on, or their livelihoods depended on the acquired land. BACAO will on a best-effort basis, contact these people, and prepare an Abbreviated Resettlement/Livelihood Restoration Plan based on the Land Acquisition Procedure developed under ESAP#12.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

Protection and Conservation of Biodiversity. The Bacao Project is located in Colombia within the Llanos Tropical and subtropical grasslands, savannas and shrublands ecoregion (WWF). The Llanos include open grasslands, savannas with scattered trees or clusters of trees, small swamps (morichales) and small areas of gallery forests along rivers and streams. BACAO’s cocoa plantations are being developed within four properties that are characterized by the presence of grassland dominated by exotic species (due to historical agriculture and pasturage) and patches of secondary growth forest (at different successional stages), gallery forest and morichales.

In 2022 the client has completed a desktop and field study to characterize the habitat types within its properties. No Net Loss requirements apply for the following Natural Habitats scattered across the properties: 361,2 total hectares of gallery forest, 224,6 ha of secondary vegetation, and 55,8 total hectares of morichales. As per ESAP#14, the client commits to avoid conversion of these areas and to develop a Biodiversity Management and Monitoring Plan that will ensure these requirements are met.

The client’s sustainability strategy includes a commitment to zero-deforestation, to using degraded land such as cattle-grazing land and to boosting local biodiversity by maintaining conservation areas in their farms. To do so, the client has identified opportunities to enhance biodiversity by maintaining corridors between patches of Natural Habitats and monitor priority biodiversity values, as per ESAP#14.

Supply Chain. BACAO has a documented a Supplier Code of Conduct, which must be signed by suppliers. The Supplier Code of Conduct is aligned with IFC PS6 requirements for Supply Chain regarding the non-conversion of natural habitat. Farms of third-party suppliers are mapped in the company’s geographic information system (GIS) and are visited regularly by BACAO’s agricultural team to provide technical assistance on Good Agricultural Practices (GAPs). In addition, BACAO is currently testing a prototype IT solution to trace the product from the supplier’s farm to export markets paired with near-real-time deforestation remote sensing. As per ESAP#15, BACAO will develop a procedure to ensure that its suppliers have not caused recent deforestation and/or conversion of Natural Habitat.

Sustainable Management of Natural Living Resources. BACAO’s cocoa will be sold to Mars through a long-term purchase agreement. BACAO’s practices comply with national Good Agricultural Practices and Mars’ sustainability principles, which include: No planting in areas deforested after 2014, No Forced Labor, No Child Labor, Improve Gender Equality, Free Informed Prior Consent (FPIC), and Living Wage for Workers. As per ESAP#16, BACAO will align its practices to a credible globally, regionally or nationally recognized standard for sustainable management of natural resources, and demonstrate it by independent verification. Regular external audits against the voluntary standard and evidence of closure of non-compliances will be reported to IFC as part of the Annual Monitoring Report.

 BACAO has developed a stakeholder map that identifies several groups, including local authorities, contractors, suppliers, workers, and neighbors, and has established a series of commitments and communication channels with each one. BACAO also engages with workers' families and their surrounding communities. To align with PS1 requirements, as part of ESAP#17, BACAO will develop and implement a Stakeholder Engagement Plan (SEP) indicating, in addition to the stakeholder mapping already completed by BACAO, (i) the principles, objectives and criteria for stakeholder engagement; (ii) local regulations and lender requirements; (iii) description of key social and environmental risks and impacts; (iv) summary of engagement activities and stakeholders’ concerns; (v) identification, analysis and prioritization of stakeholders, focusing on those directly affected including vulnerable groups; (vi) methods and tools to provide information and consult with each stakeholder group, including women, men, youth and vulnerable people; (vii) annual stakeholder engagement activities; (viii) timetable, resources, and responsibilities, and (ix) completion indicators (KPIs) for monitoring purposes.  As part of ESAP#18: BACAO will also implement a Community Grievance Mechanism (CGM) with (i) clear procedures to receive, analyze, and provide responses to the complaints of the stakeholders in the project’s area of influence; (ii) channels for the submission of confidential and anonymous complaints; (iii) appropriate methods to handle grievances or concerns related to GBVH; (iv) periodic monitoring of the grievances with defined KPIs; (v) training to staff/Community Liaison Officer(s)  for implementation of the grievance mechanism. BACAO will disseminate the existence of the CGM among stakeholders (e.g., communities, suppliers, people affected by land acquisition, etc.) through its SEP.                                                  

 Contact Person: Marianela Villamizar Bacca

Company Name: Bacao SAS

Address: Cra 9 #80-45 oficina 301 Bogota

Email: mvillamizar@andeancacao.com

Phone: 3105844703