PS5 does not apply as Johnvents cocoa processing plant is in an industrial zone, the Ondo State Industrial Estate in Akure, and the expansion of the plant will be on the same plot; no land acquisition or economic displacement risks identified. PS7 does not apply, no indigenous people are within the direct project area/footprint and no sourcing risks are identified by the proposed investment on Indigenous Peoples. PS8 does not apply, the project is not located in an area of known historical or cultural significance and the proposed investment does not impact any known cultural heritage. If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the PSs. 

This is a Category A project according to IFC’s Policy on Environmental and Social Sustainability (2012) due to significant E&S risks and/or impacts inherently associated with primary production of cocoa in Nigeria, specifically the high risk of child labor, forced labor, unsafe working conditions associated with the cocoa supply chain, in addition to the use of agrochemicals including application of pesticides, and significant conversion risk of natural and/or critical habitats.

Key E&S risks and issues for this proposed investment are: (i) cocoa sourcing practices to avoid-minimize-mitigate supply chain risks on child labor, forced labor, conversion of natural/critical habitats including traceability, verification, and application of good agricultural practices; (ii) availability and effective implementation of Environmental and Social Management System (ESMS) for the cocoa processing and storage operations, including resource efficiency, management of air emissions and generated wastes; (iii) assurance of fair and safe working conditions for direct, contracted and third party employees; (iv) emergency preparedness and response at the processing plant and warehouses; (iv) road traffic safety, community safety, and use of security forces.  

Evironmental and Social Assessment and Management System

To effectively manage the scale and range of risks posed by Johnvents’ processing operations, the company has developed and is implementing an ESMS largely aligned with the requirements of IFC Performance Standard 1 and commensurate to the level of risks associated with the company’s processing activities. The ESMS incorporates elements including E&S policies, an Environmental Management Plan (EMP), standard operating procedures, risk identification, emergency preparedness and response, and stakeholder engagement. The company has also appointed an external consultant to support their achieving ISO 9001 (quality management), ISO 22000 (food safety management), ISO 14001 (environmental management), and ISO 45001 (occupational health and safety management) certification by the end of 2023.

The company’s E&S policies include: (i) health and safety policy; (ii) environmental sustainability policy; (iii) quality and food safety policy; (iv) health hazard policy; (v) Hazard Analysis and Critical Control Point (HACCP) policy. These E&S policies include provisions that align with the relevant PS objectives, in addition to compliance with national regulations.

As detailed in its EMP, the company has developed a risk assessment, management, and monitoring matrix detailing key risks associated with project activities, including occupational, health and safety (OHS), environmental, and community related risks. In addition, Johnvents’ HSE and quality team conduct periodic HACCP and OHS inspections for routine works. In order to maintain their national environmental certification, Johnvents are required to conduct an environmental and social due diligence (ESDD) every three years. The last ESDD was conducted in December 2021.

As a component of the ESMS, the company develops and delivers an annual training plan on operational and E&S implementation topics to employees. Training topics include HSE management; fire, safety, and accident prevention; food safety, internal audit training, among others. HSE induction is provided to all new hires. As part of the ESMS upgrade under the proposed investment; (i) the ESMS will include training requirements to be included in the company’s training plan for all categories of employees (i.e., direct and contractedworkers) as well as training provided to supply chain workers through the existing sustainability program; (ii) the induction and annual training program will be expanded to detail the worker grievance mechanism, worker’s rights, and HR policies and procedures for all direct and contracted workers; (iii) include a specific training module for managers and senior staff on the implementation of social commitments of E&S policies and IFC PSs (ESAP #1).

Management Programs

Johnvents have developed and is implementing an EMP defining their environmental management approach and strategy across all phases of operation. The EMP is aligned with national environmental management and monitoring requirements, including risk identification, roles and responsibilities, monitoring and auditing (including emissions, noise, waste disposal, sanitation, health and safety, and emergency response). The implementation of the EMP is audited on an annual basis as required by the National Environmental Standards and Regulations Enforcement Agency (NESREA).

Organizational Capacity and Competency

The company has an HSE head at the factory, supported by section heads who work on the operationalization of the E&S policies and associated procedures. To strengthen the implementation of HSE programs at the processing plant, the company will establish an OSH committee, which is a regulatory requirement, and define terms of reference of its mandate (ESAP #2).

Supply Chain Risks

Johnvents sourced approximately 29k tons of cocoa in 2022 and plans to increase this to 45k tons in 2023, with approximately 20% increase year-on-year to service the increased capacity of the processing plant. Cocoa is sourced primarily from Ondo and Cross River (60%) with the remaining coming from Osun, and Ekiti states. The project sources from 2 types of suppliers. Local Buying Agents (LBAs) currently provide ~90% of supply. The company works mainly with pre-financed LBAs (agri-inputs) where an agreement is signed that includes supply chain E&S provisions, and non-pre-financed LBAs that resemble open market and are used only to cover supply shortages in case it occurs. LBAs are traceable to the regional level but further tracing to farm-level is considered difficult. No verification or certification system exists for LBAs due to inability to trace. Co-operatives or farmer associations currently provide ~10% of supply. Co-operatives and farmer associations present no insurmountable obstacles to tracing to farm level. The implementation of a tracing and certification process (using Rainforest Alliance (RA)) is underway (currently ~15% of all farms). RA certification addresses child labor, forced labor, protection of workers from significant safety issues, as well as protection of protected areas, and expansion into natural areas (including key biodiversity areas, World Heritage Sites, and Ramsar sites). The supply chain program is currently led by a sustainability consultant retained by the company, who is supported by a team of field officers to work with the farmers on traceable and sustainable cocoa production.

The project has a draft Sustainability Strategy where it has committed to achieving 100% traceable cocoa, with at least 90% certified, by 2027. This is driven by new EU regulations limiting imports of commodities linked to deforestation. This would be achieved by increasing sourcing from RA certified LBAs (up to 55% of supply) and RA certified co-operative/farmer association (up to 45% of supply). The feasibility of achieving these compliance targets whilst also achieving the growth objectives as described above requires further assessment by the client. To support the strategy workstream, in particular regarding supply chain requirements on biodiversity and labor risks, the company will develop an internal sustainability function and retain a sustainability director, sustainability manager, social impact associate, environmental impact associate, and other additional resources for this team as required (ESAP #3).

To align with IFC PSs on supply chain and strengthen the roll-out of the sustainable cocoa sourcing strategy, the company will: (i) assess the feasibility of the 100% traceability and 90% certification targets; (ii) finalize board-approved Sustainable Cocoa Sourcing strategy. The strategy will include methodology, commitment on resources, timebound roadmap and working programs to achieve 100% traceability and 90% certification by 2027 including annual milestones; (iii) Based on and as included in the sustainability cocoa sourcing strategy, Johnvents will achieve traceability of 25%, 50%, 75%, and 100% between 2024 to 2027 respectively; (iv) develop a supplier code of conduct with social and biodiversity requirements to be signed by all the raw cocoa suppliers as part of sales agreement, which will include shifting away from suppliers where significant child labor, safety concerns, or conversion risks to natural/critical habitats exists; (v) define procedures for monitoring the implementation of the company Sustainable Cocoa Sourcing strategy and undertake independent annual audit; (vi) retain an independent consultant to periodically assess and review labor and conversion risks associated with the supply chain as it expands and develop a timebound strategy and procedures to identify, reduce, and monitor interim risks associated with sourcing from non-RA certified LBAs before 2027 (ESAP #4).

Emergency Preparedness and Response

The company has an emergency preparedness and response procedure with emergency situations identified, preparedness and response measures described, plant layout depicted, and evacuation routes marked. The firefighting equipment used at the cocoa processing plant includes fire alarms, fire extinguishers, and fire hydrants. Firefighting equipment is inspected monthly by the company and annual firefighting and emergency response training and inspection is administered by Ondo State Fire Service. The review of the emergency preparedness and response procedure identified areas for improvement to align with PS1 requirements (ESAP #5); these include defining types/quantities of emergency equipment across the processing plant and warehouses and maintenance requirements; providing first aid and spill kits; defining firefighting and first aid teams including training requirements; emergency drills type/frequency; defining internal and external emergency contacts and communication protocol.

Monitoring and Reporting

The company monitors E&S performance as part of the current overall E&S and food safety management activities. This includes periodic HSE and food safety inspections, food safety internal audits, and environmental measurements of air quality and noise. The company also receives unscheduled audits from NESREA and the Federal Ministry of Labor and Productivity. To align with IFC PSs and as part of the ESMS, the company will: (i) define E&S internal and external audit regime; (ii) develop monthly E&S performance reports for senior management with leading and lagging health and safety indicators (e.g., inspections, training, lost workdays, accidents, etc.), social performance (e.g., grievances, terminations, overtime, etc.), and environmental performance (e.g., water, energy, waste, etc.); (iii) establish continuous improvement register to track closure of findings from internal and external monitoring and audit activities (ESAP #6).                                                  

Johnvents currently employ a total of 251 workers, comprising 185 (74%) direct workers and 66 (26%) contracted workers. Currently the company has an 80:20 male to female ratio within the workforce. The company has adopted a local recruitment approach whereby the hiring of workers within the local catchment area is prioritized.

Human Resources Policies and Procedures

Human resources (HR) at Johnvents are managed through the HR and Administration department, headed by an HR Manager, who is responsible for the formulation and implementation of policies and procedures. In addition, the company has an HR board sub-committee with oversight of HR matters. Johnvents has implemented an HR policy that defines the company/employee relations and management approach. Johnvents has also adopted a Staff Handbook, Disciplinary Procedure, Asset and Information Management Policy, Performance Management Policy, and Whistleblowing Policy.

The Staff Handbook defines the various worker related policies and procedures, including a code of conduct, driving policy, anti-harassment, compensation and benefits, allowances, bonuses, leave, performance management, disciplinary action, and learning and development. As per the Staff Handbook, should an employment contract be terminated due to redundancy, this process will be managed as per statutory requirements. In addition to statutory requirements, should retrenchment be planned at any stage of the project, Johnvents will commit to undertaking the process in accordance with PS2 (ESAP #7).

Working Conditions and Terms of Employment

All employees are provided with a written contract defining their role, effective date, compensation and benefits, and core duties. The factory operates 24-hours per day with the implementation of three 8-hour shifts. Any hours beyond defined contractual hours are considered as overtime and remunerated accordingly.

All workers are provided with a medical and welfare service covering the costs of medical expenses, pension fund administration, national housing fund contributions, and group life insurance.

Johnvents provides employees with training as defined in their annual training plan. Training topics, provided through various platforms, including on the job experience, mentoring, and computer-based training, includes internal auditor, machinery and equipment maintenance, fire safety, food safety, financial and accounting skills, and industrial operations. Furthermore, as a component of the company’s business continuity strategy, they have started a training academy to upskill engineering/technical graduates to enhance the available talent pool.

Workers’ Organizations

All labor and working conditions at the Johnvents operation, for both direct and contract workers, are governed by local labor law, including the Labor Act and Trade Unions Act, which promotes freedom of association and collective bargaining. While Johnvents do not restrict unionization at their operation, currently no workers are unionized, nor is there an existing collective bargaining agreement in place. 

Non-Discrimination and Equal Opportunity

As per the company’s HR policy, Johnvents is committed to being an equal opportunity employer without any form of discrimination.

Grievance Mechanism

Johnvents has adopted a worker grievance mechanism, as defined in the Staff Handbook, that provides various channels for the submission and resolution of grievances and issues. While management encourages informal management of grievances, the Handbook does make provision for a four-stage formal management process. The process defines feedback timelines and allows for the submission of anonymous submissions. Should resolution not be achieved through the defined process, the process allows for an Appeals and Grievance committee to be established at the discretion of the managing director. In addition to the grievance mechanism, Johnvents has also adopted a process for the reporting and management of all forms of harassment in the workplace.

All workers also have access to the Whistleblowing Policy. This policy allows for the submission of anonymous allegations and complaints.

Protecting the Workforce

As per the Nigerian constitution, Labor Act, and Child Rights Act, Johnvents prohibits the use of forced and/or child labor within their workforce. Worker’s age is verified and recorded at the time of recruitment, while third-party contractors are prohibited from employing anyone under the age of 21.

As part of their recently launched sustainability program, Johnvents is actively working with farmers, cooperatives, and local buying agents to improve awareness and promote good practice in relation to labor and working conditions within the cocoa supply chain, including the potential use of child labor. The company have recently adopted the RA approach of “Assess and Address” which is comparable to the International Cocoa Initiative’s CL Monitoring and Remediation System. As detailed under PS1, compliance and progress will be monitored through periodic RA audits and the company’s sustainability program.

Occupational Health and Safety

Johnvents have identified high risk areas pertaining to occupational health and safety (OHS), which primarily relate to dust, heat, and noise exposure, as well as the risks associated with the operations of the plant machinery. The company have developed various standard operating procedures in relation to these risk areas, to support the implementation of the Health and Safety Policy defining the key principles and objectives relating to OHS, and the Health Hazard Policy defining the process for the elimination of potential hazards. The company is aiming to achieve ISO 45001 certification by the end of 2023.

As indicated under PS1, training is provided to workers including fire prevention, control and emergency management, safety and accident prevention, road safety, and general HSE. Daily toolbox talks are also undertaken. All staff are provided with the relevant personal protective equipment (PPE) including safety boots, earplugs, overalls, and dust masks.

Workplace noise level are monitored on quarterly bases in accordance with national regulations. Where noise levels are noted to be high, above 90 dB(A) in some workstations, the company requires the use of mandatory PPE. In addition, first aid boxes and safety signage are positioned at strategic locations around the operation. In addition, where the Company is promoting the distribution of agrochemicals in the supply chain, the correct application, handling, and storage of these inputs is covered under the ongoing training provided through the sustainability program.

The reporting and recording of near misses and incidents have been institutionalized. In 2022 three minor incidents were recorded. No serious injuries or fatalities have been recorded since the inception of operations.

Workers Engaged by Third Parties

Johnvents currently utilizes third-party contractors to support functions such as cleaning and security. Prior to procurement, all contractors are vetted and approved at a group level. As per existing contracts, all contractors are required to abide by Johnvents’ policies and procedures. As per ESAP #6, Johnvents will develop a procedure to monitor and report on the performance of their contractors against company policies and procedures.

Contracted workers have access to the Johnvents grievance mechanism should they need to submit a grievance or complaint.

Supply Chain

Through their ongoing sustainability program, Johnvents are actively working with farmers, cooperatives, and LBAs to improve awareness and promote best practice in relation to labor and working conditions within the cocoa supply chain, including the potential use of child labor and risks associated with health and safety. The supply chain mitigation and proposed corrective actions associated with these risks are described under PS1. Risks associated with the current supply chain cannot be excluded in the period prior to completion of the associated ESAP proposed in PS1.  

Resource Efficiency

Johnvents utilize grid electricity for the cocoa processing plant, which is supplemented by two 800 kVA diesel generators for the hours when the grid supply is not available. Currently one of two boilers is fired using cocoa shells (a by-product from raw cocoa bean processing) and wood that is sourced from a certified supplier. To improve resource and operational efficiency, the company is in the process of transitioning from grid/diesel to Liquefied Natural Gas (LNG) for all energy requirements including the electrical boiler as part of IFC's proposed investment.

Water requirements for cocoa processing are not considered intensive, with the main water requirements being steam generation, hygiene, sanitation, and potable consumption. Johnvents source their water from an onsite borehole. The borehole is not fitted with a volumetric meter therefore water consumption is not monitored. To align with PS3 resource efficiency objectives, the company will (i) install a volumetric water meter at the borehole to monitor and track water consumption (ii) quantify and track energy and water consumption intensity per unit of production, benchmark against regional and international standards, and define measures to improve efficiency (ESAP #8).

The greenhouse gas (GHG) emissions from the company's direct operations (scope 1 and 2) is associated with electricity and fuel consumption for the cocoa processing plant and fuel consumption for transportation, which are estimated to be less than 25,000 tons CO2eq per annum.

Air Emissions and Noise

As per national regulatory requirements, the company monitors and reports on workplace air quality on a quarterly basis. The air quality parameters monitored are sulphur dioxide, nitrogen dioxide, hydrogen sulphide, carbon monoxide, volatile organic compounds, and suspended particulates. The air quality results for 2022 measurements are compliant with the regulatory requirements and within the guideline values of the General WBG EHS Guidelines. The company will codify a procedure for the environmental measurements in the ESMS, including i) expand the air quality monitoring program to include fine particulates (PM2.5 and PM10), ii) include point source air emissions for boilers stacks above 3 megawatt thermal, and iii) implement ambient noise monitoring at key sensitive receptors in close proximity to the factory (ESAP #9).

Waste and Wastewater Management

The main solid waste generated from processing activities is cocoa shells, along with other forms of solid wastes such as cocoa extraneous matter, paper, polyethylene bags, and scrap metals. A portion of the cocoa shell is used as fuel for the boilers and the rest is sold as animal feed. Industrial wastewater/effluent is not generated from cocoa processing, and general wastewater generated from the processing plant is collected in a septic tank for regular disposal. Hazardous waste generation is limited to waste generated from the laboratory such as spent reagents and plant maintenance activities such as spent oil and oil filters. The company uses licensed waste collection and disposal service providers for the collection of the waste generated from the cocoa processing plant. The company has a waste management procedure, which the company will review and update to address management of the hazardous waste generated including storage, collection, and disposal requirements in accordance with General EHS Guidelines; define and implement a chain of custody requirements for both solid and hazardous waste final disposal; and establish a waste register for monitoring and reporting waste disposal (ESAP #10).

Pesticide Use and Management

As a component of Johnvents sustainability program, the company, through various partners, promotes the distribution of agrochemicals (pesticides and fertilizers) within their supply chain. Ongoing training provided through the program, promotes the responsible application and storage of agrochemical inputs. This includes the use of chemicals approved by the Cocoa Research Institute of Nigeria (CRIN), responsible and appropriate application, safe storage, record keeping, and disposal.    

Community Health and Safety

Johnvents’ cocoa processing plant is located within an industrial area of Akure, with limited risk of exposure for local communities. Potential community health and safety risks emanating from the company’s operations could relate to exposure to contaminated food products, road and traffic incidents, dust and noise associated with the movement and transport of goods, and risks associated with security personnel.

Food Safety and Hygiene

The management and oversight of food safety is the responsibility of the quality assurance department. Johnvents have adopted several policies and procedures relating to food safety and hygiene, including a HACCP policy, Quality and Food Safety policy, Food Safety Operations Manual, and product hold-release procedure. All final products, including cocoa powder, butter, and cake, are submitted to the Institute of Public Analysis for compliance and certification purposes. The company conducts Food Safety System Certification, FSSC, 22000 internal audits on an ongoing basis.

Road and Traffic Safety

Johnvents currently own and operate a fleet of 35 trucks, and plan to expand this by 20 trucks under the proposed investment. Drivers are employed directly by Johnvents and are provided with ongoing training (including driver behaviour, vehicle maintenance and inspection, safety and security, and fleet management) as a component of the company’s annual training schedule. All trucks are fitted with an in-vehicle monitoring system (IVMS) that provides continuous monitoring on speed, location, and driver behaviour. All trucks are also fitted with internal and external cameras. As a component of the existing OHS procedure, Johnvents will develop a Road Traffic and Driver Safety (RTS) procedure, consistent with GIIP, to mitigate and manage risks associated with company’s trucking operations and road traffic accidents (ESAP #11). The RTS procedure will include driver, vehicle, and journey management procedures, incident reporting and investigation procedures, driver training relating to gender-based violence, as well as appropriate leading and lagging indicators.  The company will also develop suitable driver recognition and sanction to engender the required driver behaviour.

Security

Johnvents currently employ a Security Manager who is responsible for oversight and management of security at the cocoa processing plant. Onsite security is provided by a third-party contractor who provide 24 security guards to the operation. In addition, the Nigerian national police force provides six armed police offices to the operation for additional security requirements. Johnvents have commissioned a security risk assessment to define the risk profile of the operation and inform their security requirements. In addition, to meet PS4 requirements, Johnvents will develop a Security Management Plan (SMP) that will include provisions for guard selection, rules of engagement (including minimum force), included in MOUs with public security forces on roles and responsibilities, training, equipment, facilities, working conditions, and community access to the grievance mechanism (ESAP #12).  

The company sources cocoa which is produced in regions where there is a risk of significant conversion to natural and /or critical habitats. The supply chain mitigation and proposed corrective actions associated with these risks are described under PS1. The risk of ongoing conversion of natural/critical habitats cannot be excluded in the period prior to achievement of targets described in ESAP #4.   

Johnvents have adopted a procedure for external communication defining the company’s engagement approach with external stakeholders, including suppliers, contractors, customers, consumers, and statutory and regularity authorities. In addition, the company has mapped their external stakeholders including the nature of their involvement, compliance obligations, and reporting and monitoring requirements. External communication is predominantly focused on certification, compliance, quality, and safety of food products produced by Johnvents. The quality assurance and sales managers are predominantly responsible for external communications. Ongoing engagement with communities where farmers are located is primarily conducted by the sustainability consultant.

Johnvents has also adopted a grievance mechanism for external stakeholders to allow for the receipt and resolution of external concerns and grievances relating to the company’s environmental and social performance. In addition to the grievance mechanism, external stakeholders also have access to the Johnvents whistle blower policy. The company will update the existing external grievance mechanism to include a clearly defined and alternative channels for the submission of external grievances, a process for recording and tracking grievances, a feedback process and timelines, and the approach to communication/dissemination (ESAP #13).