Environmental and Social Management Systems (ESMS): Scatec has developed a corporate ESMS to direct the company’s environmental and social activities. The corporate ESMS includes a set of policies, procedures, and tools to identify and manage the company’s exposure to the E&S risks of its projects and its contractors’ and subcontractors’ activities.
The ESMS presents the E&S principles for business conduct, the procedures for identifying and managing environmental and social risks and impacts and the organizational requirements for operating the ESMS. The ESMS further articulates Scatec’s policy commitment to carry out all its business activities in accordance with international standards including IFC’s Performance Standards, the Equator Principles, and WBG Environmental Health and Safety (EHS) Guidelines. In addition, Scatec is ISO certified for its corporate ESMS (ISO 9001, ISO 14001 and ISO 45001).
The corporate ESMS also requires that Scatec develops project specific ESMSs to mitigate risks identified in a project ESIA and any risks identified during Scatec’s internal risk assessment process. In 2021, Scatec’s ESMS was revised by the Company to ensure the integration of biodiversity concerns for all its activities. A site level ESMS inclusive of ESIA requirements and Scatec’s corporate requirements will be developed for each sub-project as per ESAP #1. Each sub-project site ESMS will inherit corporate requirements and detail project specific actions needed for meeting the reference framework requirements, namely Scatec requirements, the IFC Performance Standards, WBG EHS Guidelines, and national legislative requirements.
Policy: Scatec has developed corporate policy statements demonstrating its commitment to E&S management which are published on its corporate website. Amongst others, policy statements include: i) sustainability policy, ii) code of conduct (CoC), 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 labour policy for site personnel. In 2021, Scatec published an environmental policy which 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 the ESMSs, Scatec will develop sub-project level E&S policies reflecting the project’s corporate policy commitments and in alignment with IFC PSs, per ESAP #2a. Further, as part of its corporate ESMS, Scatec will develop a corporate Land Acquisition and Resettlement framework/ procedure aligned to IFC PS5 requirements ESAP #2b. In addition, Scatec will develop an adequate E&S screening procedure as part of its corporate ESMS to assess the risks of any new projects (not defined under the Eligible projects) to be considered for IFC financing ESAP #2c. The screening procedure will define clearly the criteria for medium risk versus a high-risk projects on aspects such as resettlement, biodiversity, IPs, among others.
Identification of Risks and Impacts: Scatec has a global risk management policy that ensures management of risks across all its activities including project development, compliance, financial, supply chain and construction related risks. The corporate ESMS requires that project level environmental risks are identified and mitigated, in conjunction with the ESIA process. The ESIAs and BAs generally align with IFC PS 1 and mitigation measures were recommended and associated E&S Management plans (ESMPs) developed to close the gaps against IFC PSs. As per ESAP #3, Scatec shall ensure that the ESMPs for each sub-project is implemented.
RMI4P Projects: The ESIAs were conducted between 2016-2019 and all authorizations received by 2021. The three contiguous PV sub-projects are located within a Renewable Energy Development Zone (REDZ) as promulgated by the then Minister of Environmental Affairs (in Government Gazette No. 41445 of 16 February 2018, Government Notice No. 114), which represent strategic priority areas for renewable energy developments. Supporting the approval of each REDZ a Strategic Environmental Assessment was completed assessing the cumulative impacts of multiple solar PV projects in a region. Any solar project applying for development permission within a REDZ is required to undertake a ‘basic assessment’ process. Under South African law the basic assessment (BA) is a streamlined environmental impact assessment processes, requiring fewer requirements in lieu of a strategic environmental assessment (SEA) process preceding it. Through these provisions the authorities and other decisionmakers are able to ensure that wind and solar PV development in REDZs are given priority in planning, approval and implementation. Three of the six impact assessments were undertaken prior to the REDZ designation, thus requiring the submission of ESIAs. The latter three were developed subsequent to the REDZ designation, thus requiring the submission of a BA. Various pre-construction E&S activities have been completed, e.g. development layouts were updated by micro-siting infrastructure to avoid protected flora, cultural heritage, and water resources; the ESIA for the access road, Water Use License application for water resource mitigation; biodiversity permit applications for the removal and transplantation of protected flora have been completed ahead of construction start.
Mendubim: The project ESIA was completed in May 2020 and key licenses and authorizations received in 2021 and 2022. The risks identified include; water consumption, soil erosion, resettlement impacts, noise and vibration emission, waste management, polarized light pollution (Lake Effect) that leads to collisions with birds, suppression of native vegetation, increased hunting, loss of habitat, lack of sufficient stakeholder engagement with project affected persons on resettlement and engagement with the local community on traffic impacts and use of local access roads. Various management and monitoring plans are recommended in the report.
Management Programs: Scatec oversees the implementation of the project specific Environmental and Social Management Plans (ESMPs) developed following the ESIA process and relevant contractual obligations including alignment with IFC PSs and WBG EHS Guidelines. The corporate ESMS states that a set of ESMPs required for the sub-project must be identified as outcome of a risk assessment and an ESIA carried out for the sub-project should be developed as part of the sub-project ESMS.
The project ESIAs/ BAs include ESMPs which contain mitigation measures for all relevant E&S risks and impacts including on potential visual, heritage, palaeontological, soils, ecology, avifauna, traffic, socio-economic, waste, and hydrological impact, Other management and mitigation aspects noted in the risk assessments include an electromagnetic control plan, alien invasive species management plan, plant rescue and protection plan, traffic management plan, revegetation and habitat rehabilitation plan, stormwater and waste water management plan, erosion management plan, a post construction avifaunal management plan. Scatec shall develop ESMP for each sub-project site which integrate the requirements from the impact assessments’ ESMPs and in alignment with IFCs PSs and WBG EHS Guidelines for approval by IFC prior to commencement of activities. (ESAP #4a). The company will also develop a Contractor Management Plan for each subproject, that includes the management of third-party contractors. (ESAP #4b)
Organizational Capacity and Competency: Scatec have developed a project management organogram during construction for each PV power plant, providing adequate and qualified E&S resources. At the project management level, Scatec establishes Special Purpose Vehicles (SPV) board who oversees various activities including E&S reporting.
Key project staff are appointed prior to project commencement and include: i) health safety and environment manager, ii) health and safety officer, iii) HR administrator and iv) community liaison officers. At the site level, depending on the E&S risks to be managed, resources may include i) site safety manager, ii) biodiversity officers, iii) and a community liaison officers (CLOs). Scatec will appoint suitably qualified permanent project HSE staff and CLOs to manage the relevant E&S risks at each project site prior to the start of activities for construction and operations (ESAP #5).
Emergency Preparedness and Response: In 2021, Scatec completed a revision of their entire HSSE framework and emergency response procedures. The company organizes annual emergency drill as part of the security and emergency preparedness program.
The Scatec corporate ESMS requires emergency response plans are developed for each of its projects and should include a review of potential incidents that may impact the environment and/or the surrounding communities linked to a project’s development, construction and/or operations. Emergency response plans will be developed for each sub-project site as per ESAP #6a and shall include any provisions included in the ESMPs.
Monitoring and Review: The Scatec corporate ESMS defines monitoring and review requirements. Specifically, Scatec requires regular monitoring of project activities and E&S management plans. Key Performance Indicators (KPIs) form various ESMPs are also monitored and reported on a regular basis.
At Corporate level there is an Executive Vice President (EVP) for Sustainability as the management representative. The EVP undertakes biweekly presentation of key updates and performance to the Scatec Executive Management Team. In addition, the E&S performance and objectives are monitored and evaluated through internal and external audits and annual management reviews. Third party audits may cover performance and compliance loan agreement requirements or compliance with requirements of the local regulatory framework.
Scatec reports externally to stakeholders in accordance with the Global Reporting Initiative (GRI) Standards 2016 (Core option) which includes Communication on Progress (COP) to the United Nations Global Compact (UNGC), meeting the requirements of the UNGC Active Level. Furthermore, Scatec reports to the Carbon Disclosure Project (CDP) and in line with the Task Force on Climate-related Financial Disclosures (TCFD).
At project level, Scatec sets requirements and monitors HSSE performance in the development, construction, and operations phases of the projects. Further, the health and safety standards are defined and communicated to employees and contractors. For example, at Mendubim, there are several project related plans developed which are being communicated to related employees and training sessions are being performed. Such plans include: Emergency Preparedness and Response Plan, HSSE Management Plan, COVID 19 Management Protocol, Project Security Management Plan among others. As part of ESAP #1, each ESMS for the sub-project will include monitoring reporting and review requirements for company staff, contractors and subcontractors for adequate management of E&S aspects.
Supply Chain: The Supplier Code of Conduct (CoC) and Human Resource (HR) Policy for site personnel are integrated into all subcontracts to ensure that these principles are respected including those parts of the value chain Scatec has no direct control over. Scatec undertakes labour management audits, encourages toolbox talks with labour requirements as main topic, and has updated audit checklists to include labour management during daily inspections.
Forced labour is a growing concern in the development of solar panels. Scatec has developed a sustainable supplier procurement process and supplier management procedures, supplier conduct principles and an integrity due diligence questionnaire that all interested suppliers and contractors must complete. The CoC includes provisions for responsible sourcing specifically requiring supplier parties ensure that no forced labor occurs in the supply chain. The CoC includes prohibitions of sourcing from named PV material producing regions. Scatec’s process requires a supplier selection process for each project across three selection stages, namely i) vendor registration including integrity due diligence screening, ii) tendering, including requirements on materials traceability, E&S contract provisions, the corporate code of conduct, and iii) post contract award including quality, health, safety and environmental audits, integrity flags and evaluation of performance. Similarly, the estimated 4,400 contracted workforce requires adequate labor supply chain oversight.
As part of Scatec commitments, no relationship with a third party may be established without appropriate integrity due diligence (“IDD”). Any provider must complete the IDD questionnaire and provide their shareholder registries or similar incorporation documents. A full IDD and reputational review of the company and project is afterwards performed through external intelligence providers. As per ESAP #6b, Scatec will review existing supply chain policy, processes and procedure to ensure it is in full compliance with IFC PSs requirements on supply chain and will be rolled out and implemented on all the sub projects.