Hela’s manufacturing facilities in Kenya and Mawathagama (Sri Lanka) are located in industrial zones, while the Egypt factory is situated in an urban area. All the factories are held by Hela on a lease basis. Therefore, PS 5: Land Acquisition and Involuntary Resettlement, PS6: Biodiversity and Natural Resource Management, PS7: Indigenous Peoples and PS 8: Cultural do not apply                

   This is a Category B project according to IFC's Policy on Environment and Social Sustainability (2012). Based on information reviewed by IFC, the proposed Project will have limited adverse E&S impacts that are few, site specific, largely reversible, and readily addressed through existing mitigation measures and good international industry practices (GIIP).

Key E&S issues include; i) company’s management and monitoring system to assess and manage E&S risks and impacts from its operation and those related to supply chain; ii) consistent management of labor and working conditions, occupational health and safety, and prevention of gender-based violence across the group’s operations; iii) management and monitoring of air emissions, waste water, solid waste, and hazardous materials management; (iv) management of life and fire safety (LFS) risks and emergency preparedness and response; v) impacts on community health and safety due to transport of raw material and finished products, as well as transportation provided to workers; and vi) company’s stakeholder engagement activities.         

   Environmental and Social Assessment and Management System (ESMS). Hela has an overarching environmental health and safety policy which is communicated to all levels of its organization. Based on this policy, the company has established a corporate level Environment, Health, and Safety (EHS) management system which has been cascaded down to all of its production facilities, including Kenya, Egypt and Sri Lanka (Mawathagama).

Hela’s ESMS is supported by the following external certifications: (i) Higg FEM 3.0, an apparel and footwear industry standard for assessing environmental and social sustainability throughout the supply chain; (ii) Worldwide Responsible Accredited Production (WRAP) certification, the world’s largest factory-based certification program for manufacturers of clothing, footwear, and other sewn products; (iii) ISO 14064-1:2018 for quantification and reporting of greenhouse gas (GHG) emissions and removals, which includes requirements for the design, development, management, reporting and verification of the group's GHG inventory, (iv) SMETA (Sedex Members Ethical Trade Audits), one of the world’s most widely used social & ethical compliance audits (https://www.sedex.com/solutions/smeta-audit/). These certifications are renewed annually. Hela’s Egypt and Sri Lanka facilities are also enrolled with the ILO's Better Work program.

Identification of Risks and Impacts. The company identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards, E&S regulatory permits, and other industry-specific requirements. In addition, Hela is also using the internally-developed HICAT system (Hela Internal Compliance Assessment Tool), as a comprehensive risk assessment system comprising of key performance indicators (KPIs) on labor, payroll, EHS, brand protection, security, onsite service provider compliance, and trade compliance. The system is based on international laws, statutory guidelines, customer requirements and international standards. Monitoring of production indicators is done quarterly, while accreditation and compliance is done annually.

The company regularly undertakes audits on the environmental impacts of its operations, wastewater discharge, and LFS risks (as per local statutory requirements) to obtain annual operational licenses and permits, such as Environmental Protection Licenses in Sri Lanka. In addition, an Environmental Impact Assessment was carried out for Kenyan manufacturing facility at the time operations were established, in line with national requirements. Aside from the internal HICAT system, major customers and accreditation organizations perform frequent operational audits. These audits focus on aspects such as the Global Organic Textile Standards (GOTS), Global Recycle Standard (GRS), Organic Content Standard (OCS), the Social & Labor Convergence Program (SLCP) which includes development programs based on gender equality, gender empowerment and career development and, SMETA for social and ethical work compliance, health, and safety. WRAP audit reports reviewed as part of the IFC appraisal indicate satisfactory performance.

Organizational Capacity and Competency. Hela has a dedicated corporate-level EHS team as part of the Compliance, Brand Protection and Sustainability team. This is led by the company’s Head of Compliance, Brand Protection and Sustainability, who manages the corporate-level team and oversees dedicated compliance and sustainability officers located at each manufacturing facility. The onsite compliance and sustainability officers lead an EHS Committee at each location, which is comprised of representatives from administration, human resources, production, quality, and engineering. Committee meetings are held monthly with the participation of the General Manager of the facility.

Emergency Preparedness and Response Plan (EPRP). All of the Hela Group’s production facilities have documented EPRPs, which includes emergency response plans for (i) production-related emergencies such as power outages, chemical spills, fires and explosions, and (ii) people-related emergencies, such as workplace injuries and (iii) environmental emergencies, such as storms and flooding. The EPRPs in Kenya, Egypt and Sri Lanka were reviewed and found to be satisfactory. The roles and responsibilities for staff in evacuation, rescue, firefighting etc. are displayed at various prominent locations across the facilities. Fire alarm call points, evacuation route maps and portable fire extinguishers have been placed at locations defined by the relevant EPRP. Employees are also trained in fire safety and operation of fire safety equipment annually, while fire drills are conducted at least bi-annually. Based on statutory requirements, the company commissions a suitably qualified professional to conduct a fire safety audit of relevant locations. Where corrective actions are identified, Hela defines a time-based corrective action plan to address these requirements.

Monitoring and Reporting.  As noted above, there are regular internal and external EHS audits and the EHS and Compliance team report quarterly to the senior management on key performance indicators. Externally, the Company also reports to relevant national authorities on compliance and licensing, and provides an annual E&S report to lenders and customers.                            

 Hela has a Group Chief People Officer (CPO) responsible for HR and Administration across the company. At the country/factory level, each production facility has HR and Administration Managers reporting to the cluster CEOs and indirectly to the Group CPO. The total workforce of Hela Kenya, Egypt and Sri Lanka as of February 2023 was 7,751 (out of which 5,384 were female). This comprised of 4,433 employees in Kenya (3,267 females and 1,166 males), 1,989 employees in Egypt (1,080 females and 909 males), and a total of 1,329 in Sri Lanka-Mawathagama (1,037 females and 292 males). In addition, Hela has engaged 295 workers indirectly through service providers across these locations.

Human Resources (HR) Policies and Procedures.

At group level, Hela HR policies and procedures cover non-discrimination and equal opportunity, prevention of child labor or forced labor, prevention of harassment and abuse, worker representation, worker grievance mechanisms, and recruitment. HR policies and procedures are consistent with the countries’ national legislation. As part of the ESAP, Hela will update its HR policies and procedures to be in line with the requirements of IFC PS2. HR policies and procedures will also be communicated to workers in their local language and through various channels including induction, regular trainings, shout outs and notice boards (ESAP #2). Going forward, Hela will also develop a retrenchment policy and procedure in line with IFC PS2 to be cascaded to the Kenya, Egypt and Sri Lanka factories. (ESAP#3)

Working Conditions and Terms of Employment.

Hela has 5,394 direct workers across the three production facilities engaged on fixed term contracts (3,793 women and 1,601 men) renewed annually. The remaining employees are engaged on open term contracts. Generally, contracts refer to expected working hours, leave entitlements in accordance to host country laws and the company’s code of conduct, except for the Egypt facility where standard legal contracts are used. Hela will amend the worker contracts in Egypt and Sri Lanka to include information on working hours, leave entitlements, wages, overtime and any benefits provided by Hela. All workers will have copies of their contracts in their own language and will be made aware of their rights and obligations (ESAP#4).

Non-discrimination and Equal Opportunity

The Hela Group has a non-discrimination policy and is committed to the equal treatment of all individuals regardless of race, color, gender or any other attributes not relevant to the job acquired. One of Hela’s measures to ensure equal opportunity is hiring a percentage of workers of people with disabilities (PWDs) in its factories. Also, 70% of Hela workers are females with 8% of total managerial roles occupied by females. As mentioned in ESAP #6, Kenya and Egypt’s non-discrimination policy will be finalized and endorsed by senior management. Egypt’s non-discrimination policy will also be developed to align with the national legislation and the group-level policy, and will be translated into the Arabic language and communicated to workers effectively.

Freedom of Association

The Hela Group has a worker representation policy and procedure implemented differently across its factories. In Kenya, a worker union was recognized in February 2022 under the Tailors and Textiles Workers Union (TTWU). Shop stewards have been elected and trained, and the first collective bargaining agreement (CBA) was signed in June 2022.                                      

In Egypt and Sri Lanka, workers are represented through Employee Councils elected every two years. This Council is an active body and meets with the management every month to raise employee concerns. Going forward, the worker committee/employee councils will ensure regular meeting records are kept, female constituencies are included, and that the council has an active role in resolving some of the worker grievances in line with IFC PS2 (ESAP #7).

Workers Grievance Mechanism.

The Hela Group has an overarching grievance handling policy and procedure. It should be strengthened to become fully aligned with IFC PS2 by including a clear anti-retaliation statement, allowing for anonymous complaints, and providing access for service providers and third parties workers to the grievance process (ESAP #8b,c and d). The amended grievance handling policy and procedure will be communicated to the Kenya, Egypt and Sri Lanka factories’ workforce through induction training, notice boards and various sensitization activities (ESAP#9). Kenya and Egypt will also include code of conduct training for contracted security staff (ESAP # 17b). In addition, Hela shall make sure that the grievance handling procedure of its service providers is in line with its own (ESAP #10).

Hela Kenya will ensure existing grievances and litigation cases are closed in a fair and transparent manner and will review its dismissals procedure to ensure all dismissals are aligned with IFC PS2 (ESAP #11b). Hela will update its grievance mechanism to allow for anonymous complaints to be raised in Kenya and Egypt as per ESAP#7. The Hela Group also has a sexual harassment prevention policy. To put this into effect, the company will include provisions for a separate channel for receiving gender-based violence complaints in its grievance procedure for Kenya and Egypt as per ESAP#7 and 8c.

Retrenchment.

 Hela will share a retrenchment report documenting its last retrenchment process, worker consultations, selection criteria and alternative arrangements considered prior to the retrenchment, to ensure adverse impacts have been mitigated in line with IFC PS2 and the relevant labor laws (ESAP#11a). Going forward, the Hela Group will develop its own retrenchment policy and procedures in line with the requirements of IFC PS2 and cascade these to production facilities in Kenya, Egypt and Sri Lanka (ESAP#3).

Workers Engaged by Third Parties.

Hela’s operation creates 295 working positions for third -party workers involved in security, canteen, transport and cleaning services. On the Group level, Hela has a contractor safety policy, supplier code of conduct and standard operating procedures for onboarding. The supplier code of conduct covers compliance with human rights such as prevention of child labor and forced labor, non-discrimination, disciplinary practices, grievance mechanisms, compensation and working hours, health and safety, freedom of association, environment and community, the use of subcontractors and Hela’s right to audit compliance. The standard operating procedures includes an evaluation form covering environmental and social elements. As per ESAP #8d above, all service providers and their staff will have access to Hela’s Grievance Handling Procedure.  The Egypt facility’s service provider contracts will be amended to align with the Hela contractor safety policy and IFC PS2, and will be communicated to the contractors effectively (ESAP #12).  Hela will also make sure that the grievance handling procedure of its service providers is in line with its own (ESAP #10)

All service providers are trained on the Hela Code of conduct upon admission, and their workers will be made aware of the Hela internal grievance mechanism in case they are unable to access their systems (ESAP #8d).

Child Labor and Forced Labor

The Hela Group has a corporate anti-child labor policy, as a stand-alone policy under the group HR policies and procedures, specifying the minimum working age as 17 years of age. This also restricts engagement in specific types of work until an employee reaches 18 years of age, which aligns with Sri Lankan national legislation. In applying the policy, none of the factories, including Sri Lanka, identified workers below the age of 18 and age is checked at the time of screening. As per ESAP #13a, the Hela Group will revise its anti-child labor policy to reflect local labor laws in all countries of operation and will extend its scope to apply to third-party workers and supply chain.

Supply Chain

The main raw materials used by the Hela Group are fabrics, trims and packing, provided by approximately 30 suppliers with a majority based in in the Indian Sub-Continent, Far East and Africa. Contextual risk screening did not reveal any significant recent reputational issues with the existing suppliers apart from one supplier. As per ESAP #13b, Hela will implement supply chain due diligence and management procedures as part of its existing ESMS to identify high risk labor practices such as forced labor and child labor in at least its primary supply chain and high-risk suppliers

Hela will adopt a robust supplier mapping, verification and traceability program as part of the strengthening of its supply chain management system. Hela will also update its procurement policy and supplier code of conduct to include a clear prohibition of child labor and forced labor in all purchasing procedures. The company will require its adoption by its primary suppliers and develop a communication plan to inform its suppliers and their sub-suppliers (ESAP #13c).

Occupational Health and Safety (OHS).

Monitoring and management of OHS risks and issues is the responsibility of the EHS compliance team, which regularly audits performance of each production facility. In particular, Hela currently conducts monthly safety audits and bi-annual risk assessments. Occupational health & safety trainings are also regularly conducted at each facility. This covers emergency preparedness, emergency equipment handling, certifications and licenses to maintain this equipment, personal protective equipment handling, equipment safety, electrical and personal safety, chemical handling, maintenance safety, storage tanks handling, personal hygiene, fall protection, and factory conditions (ESAP#14 c, d, e ).    .

The Hela Group’s production facilities comply with respective national legal requirements in relation to OHS. However, the company will take further steps to strengthen OHS risk management in line with IFC PS2 and World Bank Group Environmental Health and Safety Guidelines. Hela will formulate an OHS policy and develop an OHS management plan based on an OHS risk assessment including gender considerations (ESAP#14 a,b).   

Hela Kenya has implemented an Occupational Hygiene Measurement Report in June 2022 to assess potential health risks for workers handling chemicals, lighting levels, thermal conditions and ensure compliance with governmental and other guidelines. The report has shown no lung health issues on examined employees and recommended maintaining regular examinations for workers exposed to fabric and dust, ensuring the existing local extraction ventilation systems for controlling dust in the cutting department is always functional, ensuring continued use of the provided PPE to reduce exposure to chemical vapors at the chemical stores and pad printing area, and maintaining annual air quality monitoring to control worker exposure to contaminants at the workplace. 

Each of the Hela factories in Kenya, Egypt and Sri Lanka have an EHS Committee composed of 50% workers and 50% senior management and including service provider representation. The committees conduct quarterly audits and meet every month to discuss audit findings and accident reports, as well as other EHS matters and provides recommendations to improve them.

COVID-19 Measures.

During COVID-19, response measures for the Hela Group’s operations included ensuring access to vaccinations for staff and their families, provision of masks, and cleaning and disinfecting in line with governmental public health requirements.

 Hela currently follows a corporate sustainability strategy under the theme ‘Only One Earth’, which covers the period between 2020-2025. This commits the company to complying with national laws, production of sustainable products through sustainable manufacturing, responsible sourcing, adherence to local context, and building a sustainable culture. The strategy has benchmarks, including (i) reduction of the company’s carbon footprint by 10%; (ii) reduction of electricity consumption to 1kWh/SAH (Standard Hours Produced), (iii) reduction of water consumption to 25L/day/person; (iv) 100% utilization of ethically sourced raw materials; and, (v) 100% use of recycled polybags by 2025.

Energy Use and Greenhouse Gas Emissions (GHG). The energy requirement for the company’s operations in Kenya and Egypt is sourced from the national grid, and is used to power the sewing, embroidery, and other machinery, as well as lighting. Electricity from the national grid is supplemented by diesel powered generators used during power outages. Hela estimates its annual energy consumption and calculates the GHG emissions from these energy sources. Current GHG emissions within the operational boundary under scope 1, 2 & 3 (based on fuel consumption, electricity use, and upstream & downstream transportation) have been calculated to be 23,300 tons of CO2-equivalent per year for the Group, and 8,200 tons specifically in Kenya. The production facility in Egypt is not captured within this assessment as it is relatively new, and will be included in future reporting. Additional GHG emissions due to the proposed expansion, are not expected to be significant. Hela has also committed to be reach net zero by 2050 and is developing GHG reduction targets based on Science Based Target Initiatives (SBTIs).

Water Use and Efficiency. The Hela Group’s operations are mainly a dry process and water is primarily used for sanitary processes. In Sri Lanka, Kenya and Egypt, water is sourced from the municipality and the company monitors the amount of water used monthly.

Solid Waste Management. The main solid waste streams from the Hela Group’s operations include fabric offcuts, paper, plastics, cartons, and absolute machines and/or machine parts no longer in use. Waste management planning is part of the ESMS. All solid waste is sorted and stored in designated areas, and collected for disposal by authorized companies. Rejected products are stored and destroyed periodically as per the apparel industry guidelines or sent for recycling.

Hazardous Materials. Limited quantities of diesel are stored for the operation of the generators at the production facilities, and this similarly applies to other hazardous materials (e.g. oil and paints), which are stored in designated areas. Biohazardous waste (from the on-site medical facilities), waste oil, electrical waste and chemical waste are stored in locked premises, recorded in the inventory for each facility, and collected by an authorized companies for disposal in and/or incineration.

Wastewater Management: In Egypt, sanitary wastewater is collected in septic tanks and regularly removed by licensed sewage removal trucks to be transported to treatment facilities. In Kenya, sanitary wastewater is discharged to the sewerage system which is connected with a wastewater treatment facility. Similarly, in Sri Lanka (Mawathagama), sanitary wastewater is discharged to the common sewerage system located within the industrial zone, which is managed by the Sri Lankan Board of Investment.                                                  

 Fleet Management: At the production facilities assessed, Hela leases 135 vehicles on a long-term basis to transport workers. This is composed of 77 buses in Egypt, 53 vehicles in Sri Lanka (inclusive of buses and vans), and 5 vans in Kenya. The Hela Group has a Traffic and Vehicle Management Safety Procedure to avoid and manage raw material and worker transport safety risks. The Procedure entails an identification of potential hazards associated with the modes of transport used, assessment of risks and effective implementation of risk control measures. Workers are trained on vehicle safety and use of helmets (in case motorbikes are used), and safety equipment is provided to vehicle users. Daily inspections, periodic preventive maintenance of vehicles, and annual inspection takes place according to national legal requirements. Hela does not directly operate a truck fleet for the transport of raw materials or goods, but in Sri Lanka and Egypt it provides transport to workers through third-party service providers. Hela will ensure that the third-party transport provider’s anti sexual harassment policy and code of conduct is aligned with its own (ESAP#5b). The Vehicle Management Safety procedure will be strengthened by adding safety of women users such as physical safety in pick up locations, any security duress systems, consultations with women on their specific safety concerns and needs, include training for bus drivers on the company’s code of conduct and how to help in the event of any form of harassment etc. (ESAP #15a). In Kenya, the majority of employees commute to work on foot, using public transportation or private motor vehicles. Hela Kenya raises awareness for workers commuting using private motor vehicles to ensure their safety. In Egypt, a contracted service provider is responsible for the transport of workers and the facility. Hela Egypt will ensure its corporate Traffic and Vehicle Management Safety Procedure is reflected in the contract for these service providers and that their performance is monitored. Hence, contracts with the service provider will be updated to include all requirements of the corporate Traffic and Vehicle Management Safety Procedure (ESAP #15b). Additionally, Hela Egypt will undertake a traffic and transport risk assessment to optimize transport routes and reduce transport risks, and will develop a facility level traffic and transport management plan that includes roles and responsibilities, monitoring and audit requirements for the contractors (ESAP #15c).

The Sri Lanka production facility (Mawathagama) also provides transport to its workers within a radius of 50 km, from which most employees are sourced. The bus route map, capacity of buses, number of users on each route, phone number of contact persons for each bus are displayed publicly at the factory. The facility manages the vehicle fleet based on a facility-level traffic management plan that has been developed based on the corporate-level policy.

Life and Fire Safety (LF&S). 

The Hela Group’s emergency management plan covers the precautions and measures to be undertaken in the event of fire in its existing factories, including regular fire drills and internal audits. The Kenya facility’s LFS certification is issued by the County Occupational Safety and Health Office and is renewed on an annual basis. The Egypt facility’s LFS certificate is in progress with the Department of Civil Defense, while in Sri Lanka the LF&S certificate is renewed on quarterly basis. For Egypt, the Hela Group will commission a suitably qualified fire safety specialist to conduct a review and test LF&S passive and active systems, and certify that these systems comply with national fire safety and building codes The LF&S systems for the new production facility in Egypt will be designed, constructed, and operated in full compliance with local building codes and local fire safety regulations. The fire safety specialist will also review schedules for mandatory regular maintenance, and the schedule and frequency of testing for LFS features will ensure that mechanical, electrical, and civil structures and systems are in conformance with LF&S design criteria and required operational readiness (ESAP #16).

Security Personnel:

Hela contracts unarmed security providers for the three production facilities. The company trains security workers on its code of conduct, which will be strengthened to include prevention of sexual harassment, exploitation and abuse (ESAP #8). Across the three facilities, a total of 77 security workers are contracted. Due to the high female component of the workforce, Hela will provide, as needed, women security to conduct body security checks of women where required (ESAP #17c). The Hela Group currently screens private security providers based on valid business license, corporate history, company and employee background checks. To strengthen alignment with PS4 requirements, Hela will include clauses in its service agreements to ensure compliance with its corporate security policy and strengthen screening of any human rights violations including GBV (ESAP #17a). The Hela Group’s Customs Trade Partnership against Terrorism (CTPAT) manual and procedure outlines measures for the protection of employees, property, and loss prevention through risk assessment, access control and security. It also includes training and awareness raising for workers. As for the security personnel, regular training will focus on the company’s code of conduct and include anti-sexual harassment, exploitation and abuse aspects, as well as standard operating procedures for their security duties, and will cover engagement with local communities where applicable (ESAP #17b).                                                   

   The General Manager and HR Manger at each production facility are responsible for discussing any community-related complaints with external parties/communities and identifying solutions. There is a mechanism to escalate any such complaints to the corporate level if the complaints are not satisfactorily closed. The company implements corporate social responsibility projects as part of its stakeholder engagement plan. Hela will further strengthen engagement with affected communities through development and implementation of a stakeholder engagement plan and grievance mechanism in line with the requirements of IFC PS1.  (ESAP #1).                                                

  Contact Person: Adam Collins

Company Name: Hela Apparel Holdings PLC

Address: 35 Balapokuna Road, Colombo 06, Sri Lanka

Email: adamc@helaclothing.com

Telephone Number: +94 76 9867475