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
E&S Policy and Management System: Intco has overarching environment, health and safety (EHS) policy in place at the corporate level, based on which each facility develops its own EHS policy taking into account local conditions and legal requirements.
Intco identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and E&S regulatory permits and requirements in regard to pollution prevention (e.g., dust collector, flue gas, local exhaust ventilation system), occupational health and safety, machinery plan and others. Intco has management system certified as per ISO9001:2015 (Quality), ISO14001:2015 (Environment), the Global Recycle Standards (GRS) (a voluntary product standard for tracking and verifying the content of recycled materials in a final product which applies to the full supply chain and addresses traceability, environmental principles, social requirements, chemical content and labeling.), and OceanCycle(a third-party certification of ocean-bound plastics recycling supply chains to ensure that they meet international quality, ethical, environmental, and labor standards).
As per ESAP #1, Intco will augment its current E&S management system (ESMS) in line with the requirements of IFC Performance Standards (PSs) at the corporate level and cascade down to production facilities with the objective of bringing a standardized management system in line with the good international industry practice. ESMS will be developed by integrating the EHS practices already in place covering elements such as (but not limited to); (i) identification of risks and impacts; (ii) management programs; (iii) organizational capacity and competency; (iv) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review.
Identification of Risks and Impacts: Intco identifies and manages E&S risk and impact associated with its operations primarily through compliance with applicable national standards and E&S regulatory requirements, including the requirements defined by the Department of Environment (DOE) in Malaysia. Environment and social impact assessments (ESIAs) have been developed both for the existing facility at Selangor and the new site at Bating, and obtained regulatory approvals in August 2019 and July 2023, respectively.
Intcoor hired EPC contractor will develop and implement the suite of site-specific construction environmental management plan (ESP) based on the EIA defining site-specific mitigation & monitoring measures. EMPs will address aspects such as dust & noise control, waste management, wastewater management, use of heavy vehicles, traffic management, hazardous material management, emergency preparedness and response and others for construction phase, based on which EPC contractors manage E&S impacts associated with construction activities.
In addition, as per ESAP #2 Intco / EPC contractor will develop a suite of site -specific construction EMPs in line with IFC PSs.
Organizational Capacity and Competency: At the corporate level, Intco has ESG committee of the board of directors in place with the chairman as director of the committee. ESG team is in place under the ESG committee composed of representatives from relevant internal departments to support decision making and implementation of ESG strategy by the ESG committee. At the facility level, regular monitoring (daily, weekly or monthly depending monitoring parameters) is undertaken by EHS officer and monitoring reports are compiled by EHS department, which is shared with the plant general manager for review. Key performance indicators (KPIs) are further escalated to the respective departments at the corporate level which is ultimately shared and reviewed by the ESG committee.
Emergency Preparedness and Response: Major emergency situations associated with Intco's business operations may include fire, leakage or spills of hazardous materials, and natural disaster. Intco has documented an emergency preparedness and response plan (EPRP) covering scenarios, emergency management flow, identification of roles and responsibilities, implementation of emergency drills, etc. In addition to emergency response drills, fire system auditing is undertaken by Intco on daily/weekly basis, and third-party (authorized private company) is undertaken every three months as per the regulatory requirements. The recent report of a third-party audit on life and fire safety in March 2023 indicates adequate compliance.
Apart from the main warehouse for rPET finished products, Intco currently stores partial rPET finished products at a warehouse which will be renovated for multi-purpose use including storage of rPET finished product. As per ESAP #3, for this warehouse to be renovated, Intco will install adequate fire prevention, means of egress, detection and alarm systems, fire suppression and control (e.g., automatic sprinkler systems, manual portable extinguishers, fire hose reels) in line with the WBG General EHS Guidelines. The future fire safety system as per ESAP #3 will be audited and verified by a third-party expert on fire safety (ESAP #4).
In addition, the raw material rPET bales are currently stored in the open air within the facility premise, and Intco is in process of relocating those bales to rented indoor storage with fire safety installed which will be located out of the main facility premises. The majority of the raw material bales will be eventually stored in the indoor storage area, and limited amount will be kept in the open air for immediate processing. As per ESAP #5, Intco will complete relocating raw material PET bales to a dedicated indoor storage which will be provided with the required life and fire safety systems in line with the local fire safety codes. PET bales stored in the open air for immediate processing will be covered by a roof to protect against the exposure to rain and sunlight, and relocated near fire hydrants.
Monitoring and Review: As part of the current ESMS, Intco established monitoring programs which include pollution preventions (e.g., point source emissions, effluents, workplace air quality and noise levels, waste handling/disposal), resource consumptions and occupational health and safety (OHS) tracking with established key performance indicators (KPIs). These KPIs are compiled by EHS department and shared with the plant general manager, which is ultimately reported to the corporate level EHS committee, and made publicly available as part of annual ESG report.
PS2: Labor and Working Conditions
As of April 2023, Intco employs approximately 300 direct workers (approximately 80% male and 20% female employees) in the Malaysia facility. As part of the project, an undetermined number of construction workers will be hired through third party contractors for the construction of the new recycling facility.
HR Policies and Procedures: While Intco has a set of overarching HR policies at the corporate level, HR function is largely decentralized to each manufacturing facility in a coordinated manner to meet the local requirements of countries where facilities are located. Accordingly, the Malaysia facility also has a set of HR policies and procedures including, non-discrimination and equal opportunity, prevention of sexual harassment, freedom of association, prevention of child labor and forced labor and grievance mechanism. Details of each policy at the Malaysia facility are described in the respective sections as follows.
Working Conditions and Terms of Employment: Working conditions and terms of employment as well as responsibilities of workers are formalized into employment contracts and communicated to all direct employees along with the employee handbook. The terms and conditions are aligned with the statutory requirements set by the local regulatory framework including minimum wage, working schedule, overtime, social security benefits and others. Intco monitors working hours of its employees and keeps records to ensure that excess wages are adequately paid and to ensure that employees do not work more than that allowed as per the regulatory requirements.
Worker's Organization: Intco fully respects freedom of association and right to collective bargaining power with established policy in place, and in compliance with legal requirements, such as Trade Union Act and Industrial relations Act in Malaysia. The HR policy respects freedom of expression and association without any direct or indirect impediment or negative consequences for any employees.
Non-discrimination and Equal Opportunity: The HR policy on non-discrimination specifies non-discrimination and equal opportunity. Intco commits to equal opportunity (e.g., respectful workplace environment, prevention of gender-based violence, sexual harassment), and discrimination is strictly prohibited in any procedures or practices. All the hiring and promotion are merit-based. There is no difference in salary between female and male employees with same experience.
Grievance Mechanism: Grievance mechanism of Intco is introduced to new employees during induction. Employees can report their grievances to their supervisors, HR managers or labor union leaders. All grievances, responses and actions taken by Intco are recorded in document. Suggestion boxes are also available for anonymous grievance raising. Intco also has a policy on protection against retaliation.
As per ESAP #6, Intco will formalize employee's grievance mechanism for the facilities in Malaysia in line with IFC PS2 requirement, also covering stipulations related with prevention of sexual harassment, by describing detailed time bound steps upon receipt of grievance, including formation of grievance committee comprised managements and representatives of employees.
Prevention of Sexual Harassment: Intco commits to prevention of sexual harassment in its policy pursuant to relevant (inter)national requirements such as the sexual harassment provisions in the Employment Act and the Anti-Sexual Harassment Act 2022. The policy prohibits any verbal, written, provocative behavior or physical harassment.
Protecting the Workforce: Intco has defined HR policy and procedure for prohibition of forced labor and child labor. The policy complies with national law and does not hire workers below the age of 18 years. HR team checks relevant ID information during hiring process.
Supply Chain Risk Assessment and Management: One of the key factors for rPS and rPET facility is the availability of post-consumer PS and PET bottles. The manufacturing facility sources used PS and PET bottles both from local markets and import from overseas globally, including countries where there is known risk of child and forced labor in deep tiers of the recycling supply chain. Intco has a policy to prohibits engaging in any types of child/forced labor, based on which direct suppliers to Intcoare required to sign a contract (or purchase order) including aspects of prevention of child labor, forced labor, human rights violence, adherence to ethics and legal requirement and OHS, and others.
The Malaysia facility is certified with various quality management standards such as GRS as previously explained based on which Intco takes commercially reasonable effort to trace supply chain to the extent possible and regularly undertakes audit to its direct suppliers.
Intco has more than 100 staff in the sourcing department globally (5 staff stationed in the Malaysia facility) who undertake audit to suppliers every 2 months covering not only quality and business perspective but also OHS of workers and prevention of child/forced labors of the audited suppliers as well as indirect suppliers to the extent possible. At the same time, Intco itself also undergoes regular external audit by its off-taker/buyer, which provides additional layer of oversight and strengthens Intco's management of supply chain E&S risks.
As per ESAP #7, with support of an external supply chain consultant where feasible, Intco will: i) evaluate its supply chain management system against IFC PS1 and PS2 supply chain requirements and identify gaps; iii) create risk mapping of its supply chain and prioritize risk areas to create mitigation plans commensurate to the risks; and iii) provide training to sourcing department staffs who undertake supplier audit for identification and management of child/forced labor topics.
Occupational Health and Safety (OHS): Intco identifies and manages OHS risks and impacts associated with its operations through compliance with applicable national standards and requirements Occupational hazards at the facility in Malaysia typically include exposure to noise, dust, high temperature and chemicals. Monitoring of workplace air quality and noise level is undertaken on a regular basis and the recent records indicate compliance with both the local and the WBG EHS guidelines. Job hazard analysis (JHA)is conducted for all new positions exposed to physical or chemical hazards. In addition, formalized routine OHS training plan is in place for new employee training and refreshers covering aspects such as chemical response, safe vehicle operations, ergonomics and others. As for OHS statistics, incidents and near-miss are recorded on a regular basis. Incidents are investigated and root cause analysis records are maintained. OHS statistics in the recent three years indicate no fatalities with major incidents reported include mechanical injury (e.g., cut, hit) and physical (e.g., slip).
In the other hand, it was observed during the visit that there is still room for improvement of personal protective equipment (PPE) use practice. As per ESAP #8, Intco will modify its OHS procedures through review of JHA, OHS statistics, refresher OHS trainings, and actively monitor proper use of PPE at all operation positions, including hardhat, steel-toe boots, and ear muffles (at high noise positions).
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency: Major sources of electricity consumption for the existing Malaysia facility operations are the grid and natural gas (for boiler). Water supply is sourced from public utility. Wastewater is treated and recycled back to process (e.g., washing, cooling) and used for other purposes (e.g., domestic use) to the extent possible to save water resources. Resource consumption amounts at the existing Malaysia facility are approximately 171,985 m3/year (water) and 24,800MWh/year (electricity purchase). Intco actively deploys photovoltaic solar panels within facilities wherever available to replace traditional energy sources and reduce energy consumption & GHG emission to the extent possible.
GHG Emission: The Malaysia operational facility's current GHG emission is estimated at 21,300 tCO2e mainly due to electricity purchase from the grid (Scope 2) and consumption from natural gas for boilers (Scope 1). Incremental GHG emission associated with the new expansion facility operation is estimated at 57,300 tCO2e.
Asper ESAP #9, Intco will institute a program of GHG calculation, with results either calculated or certified by a qualified independent party covering the IFC financed facilities. Quantification of GHG emissions will be conducted by Intco annually in accordance with internationally recognized methodologies and good practice.
Air Emission Monitoring and Ambient Air Quality: In the Malaysia facility operations, main source of emission is a vacuum melting of PS products to sperate PS and metal filter net. Melted PS from vacuum melting is cooled down to isolate organic substances which are sold as by-product, and fumes undergo treatment through water scrubbing and bag filters. Metal filter nets are reused. Monitoring results of Sample records of stack air emission monitoring reviewed at the site visit indicated compliance with the regulatory requirements as well as WBG EHS Guidelines air emission levels .
Wastewater Management: Malaysia operational facility uses water primarily for baled PET bottles washing. Wastewater containing sodium hydroxide is treated by on-site wastewater treatment plant (WWTP) (precipitation, flocculation, aerobic & anaerobic treatment, membrane filtration) to meet the regulatory standard before being discharged to public drainage system. 70-80% of the treated wastewater is reused. Treated wastewater is monitored on a daily basis and tested once a week by a third-party laboratory. Sample records reviewed at the site visit indicated compliance with the national regulatory requirements as well as WBG EHS Guidelines effluent levels. The design for the new facility will also include WWTP with the efficiency meeting both national and WBG EHS guidelines effluent levels.
Solid and Hazardous Waste Management: Wastes generated from the Malaysia facility operations typically include non-recyclable wastes, waste machine oil, waste package, duster cloth and gloves, etc. Non-hazardous are collected by municipal waste collection system for disposal. Hazardous wastes are stored at designated locations and disposed of through licensed contractors in accordance with local regulations.
PS4: Community Health, Safety and Security
Security Personnel: Unarmed security personnel are employed which conducts routine ID checks at the gates and security monitoring. Regular trainings are conducted by Intco for the security workers on their roles, responsibilities as well as use of force and human rights.
Road Traffic Safety: Intco does not operate its own fleet, and used PET and products transport is outsourced to external transport service provider. Intco checks outsourced contractors' legitimacy, possession of licenses from regulatory body and practices related with safety (e.g., regular maintenance of vehicles, OHS of drivers) at the time of contractor selection process.
