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
The GGU and its core subsidiary GWP have established a robust corporate integrated E&S management system (ESMS) certified for ISO 14000 (environment) and ISO 45000 (occupational health and safety – OHS) that includes policies, screening and assessment procedures, management programs, operational procedures, organizational structure, emergency preparedness and response, and a monitoring and review procedures.
Environmental, Health, and Safety (EHS) standards are based on local requirements. As part of the project, GGU will make certain enhancements to its current E&S policies and EHS standards, as detailed in the following sections of the ESRS, to align with IFC Performance Standards and World Bank Group’s EHS Guidelines for Water and Sanitation.
GGU also has a corporate-level Contractor Management Plan , which outlines the approach for managing relevant E&S risks in line with its EHS standards. ??????????
PS2: Labor and Working Conditions
As of June 2024, the Group employs 2954 employees across its subsidiaries, including 2891 people employed in GWP.
GGU has developed its HR policy and internal procedures in accordance with the requirements of the Labor Code of Georgia, which also aligns with International Labour Organization’s (ILO) core conventions.
GGU implemented a Workers’ Grievance Redress Policy (Grievance Policy) in 2020. This policy is accessible to all GGU subsidiaries, including all GWP assets, and allows for anonymous grievances. As agreed in the Environmental and Social Action Plan (ESAP) #1, GGU will update its Grievance Policy to incorporate a gender-sensitive approach to grievance management. This approach aims to ensure that potential gender-based violence and harassment (GBVH) grievances are appropriately addressed and that the necessary support mechanisms are in place. The updated Grievance Policy will cross-reference GGU's Anti-Sexual Harassment Policy (and complaints-related sections of other Policies) to ensure consistency in the process outlined. Both policies will specify designated roles for the management of potential GBVH complaints and provide training for investigators on gender sensitivity. Additionally, privacy and confidentiality provisions will be strengthened to protect individuals from retaliation or further harm.
The updated Grievance Policy will also include provisions to ensure that where third party workers do not have access to a workers’ grievance mechanism, they will be able to access GGU’s grievance mechanism.
To ensure responsible management of any potential job reductions, which may occasionally occur due to gained efficiency (such as the replacement of manual labor with automated systems), GGU adopted a Retrenchment Policy in 2020, aligning it with national law and the terms of collective bargaining agreements. As agreed in ESAP #2, GGU will update its Retrenchment Policy in line with IFC PS2 requirements.
In addition, as mentioned above, the updated Grievance Policy will cross-reference GGU's updated Retrenchment Policy (and complaints-related sections of other Policies) to ensure consistency.
In terms of Occupational Health and Safety (OHS), GGU's OHS incident rate is reported as 0.98 per 1,000,000 hours worked, which is significantly lower than the international industry benchmark of 7.5 incidents, according to the US Bureau of Labor Statistics.
The project locations are sensitive to climate hazards, including higher temperatures (with daily maximum temperatures reaching up to 44ºC by the mid-term under RCP8.5). Heatwaves may expose construction and maintenance workers to heat-related illnesses such as heat stroke, heat stress, dehydration, and fatigue. Additionally, flooding events may put worker’s health and safety at risk. In response to the increased frequency and intensity of climate-related events, as agreed in the ESAP#3, the client will update its OHS procedures to include preventive measures to protect workers during climate events such as heatwaves or flooding, both for its own workers and contractors.
PS3. Resource Efficiency and Pollution Prevention
Water is obtained from the Zhinvali reservoir and the Mukhrani/Natakhtari aquifer, accounting for approximately 10-12% of the total water source. The Tbilisi Sea, a buffer reservoir, serves as a secondary water source. The Ministry of Environment and Natural Resources Protection of Georgia oversees water extraction in the country, and the Company holds the necessary license for water extraction. Given the characteristics of the River Aragvi basin, its flow rate, and the presence of the 520 million cubic meter capacity Zhinvali Reservoir, which is equivalent to annual consumption, there is no expectation of over-extraction.
The company's business strategy incorporates sustainable water and wastewater management. Key performance indicators (KPIs) include reducing annual non-revenue water, decreasing annual energy consumption in the water supply system (including extraction, treatment, and distribution), and reducing/avoiding annual greenhouse gas emissions in tonnes of CO2 equivalent.
The company prioritizes reducing water leaks in the water supply system, as this not only compromises system integrity and potentially impacts water quality, but also increases demands on the water supply, chemical usage, and energy consumption for pumping and treatment. Additionally, the company continuously enhances hydraulic schemes to minimize the number of pumping stations and reduce energy consumption. Almost 100% of the energy consumed by GWP is obtained from renewable sources.
Water supply systems generally have limited E&S impacts. The company complies with relevant environmental legislation in Georgia regarding waste management and air pollution, aligning its performance with the requirements of the World Bank Group Environmental, Health, and Safety (EHS) Guidelines for Water and Sanitation
To prevent pollution, the Government of Georgia has implemented regulations defining maximum permissible concentration norms for pollutant substances discharged into sewage systems. These regulations help control and regulate pollution to safeguard water quality and the environment.
Furthermore, GWP has identified and prioritized sections of its sewage network that pose a higher risk of leakage and failure. These sections will be rehabilitated before others to mitigate potential impacts on the environment, community health, and safety.
The capital maintenance works for existing water supply mains are included in the Green Bond's capital expenditure (CAPEX), ensuring that funds are allocated for necessary improvements.
PS4 Community Health, Safety and Security ?
GWP is treating raw water to achieve World Health Organization drinking water standards and then disinfecting it using chlorine gas to maintain a disinfection residual within the water network.
Drinking water is continuously monitored 24/7 based on 53 parameters to ensure its quality.
The company has 5 Water Treatment Works which rely on chlorination disinfection process. The water may require additional purification in certain instances. For example, when the distance to the end user is relatively long, this can result in a decrease in chlorine levels in the water. For these reasons, chlorine tanks are installed on the water units located across the districts of the cities GGU serves. The chlorine is transported by a third-party supplier in liquid form in the reinforced metal drums and extracted from the drums in gas form when injecting into the water.
To ensure the safe management of chlorine gas, the GGU adheres to national regulatory requirements and implements specific safety measures to minimize the risk of leaks or releases. GGU is actively studying opportunities for the gradual replacement of gaseous chlorine systems with sodium hypochlorite in all of GWP’s chlorine stations. In the meantime, in line with its commitment to continuous improvement, as agreed in the ESAP#4, the GGU will conduct an independent review of its chlorine liquid/gas management practices. This review aims to align the current practices with good international industry practices (GIIP) as outlined in the WBG EHS Guidelines for Water and Sanitation.
The review will cover various aspects of the GGU management of chlorine, including facilities’ design, equipment maintenance, emergency response plans, OHS-related procedures, worker training, and the management of storage and transportation of chlorine drums. By evaluating these areas, the assessment will identify any deficiencies and, if necessary, provide recommendations for further improvements in line with GIIP, which the GGU will implement as agreed in the ESAP#5.
PS5. Land Acquisition and Involuntary Resettlement
GGU has the legal right to rely on land expropriation under the law of Georgia if any of its projects are deemed to be of national interest. However, GGU has confirmed that none of its projects have been classified as such in the past, and the acquisition of small plots of land for pumping stations from the state and private owners has not resulted in any involuntary displacement impacts.
The current project is not expected to result in any involuntary displacement considering that the planned new connections will not require the expansion of the footprint of Water Treatment Works, as the existing capacity is sufficient to meet the demand.
While the installation of new water distribution mains may be necessary to service the new areas, these activities typically involve laying water mains in publicly owned roads and cause only minor and temporary disruptions.
Considering these factors, land acquisition, if needed, is not likely to cause any adverse impacts. However, in the unlikely case of involuntary resettlement, GGU is committed in its Land Acquisition and Compensation Policy to comply with IFC’s PS5 requirements. To ensure alignment with the requirements of IFC PS5, as agreed in ESAP#6, GGU will update its Land Acquisition and Compensation Policy to include provisions for informal land users and GGU's commitment in cases where government-led resettlement is required.
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
The portfolio of existing assets includes water supply networks, of which the Rustavi Water Supply Network partially overlaps with Lower Kura Valley Key Biodiversity Area (KBA)/Important Bird and Biodiversity Area (IBA). The network infrastructure is predominantly within existing urban centers. Hence, impacts on biodiversity values associated with the Protected Area are not anticipated. The GGU has a corporate Biodiversity Management Plan (BMP) as part of its ESMS, which sets for company’s commitment to consider impacts on biodiversity values across their ongoing operations. In line with IFC PS6 requirements, the client will update the BMP to include engagement with relevant stakeholders responsible for the designation of the KBA/IBA, with respect to their planned activities. For future infrastructure locations, the client will assess 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, risks and impacts will be assessed and mitigated in alignment with IFC PS6 requirements (ESAP#7).
