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
Environmental and Social Assessment and Management System, Identification of Risks and Impacts and Management Programs.
GFI has an ongoing effort to implement an E&S management system (“ESMS”). Its practices are conducted in line with local law requirements. The Company has adopted several corporate-level policies, including: (i) Anticorruption Policy; (ii) Code of Conduct; (iii) Sexual Harassment Policy and (vi) People & Management. The company 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. Since the headquarters, the DC, the satellite office in Panama and the retail stores are in rented spaces, Environmental and Social Impact Assessments (ESIA) are not required by local regulation. In January 2023, GFI did a risk assessment for the DC in the Verbena Park and the implementation of the related corrective actions was finalized in December 2023. GFI implements other practices to manage EHS impacts including (i) health management; (ii) waste management; (iii) machine safety; and (iv) emergency prevention and management. As per ESAP #1, GFI will develop an Environmental and Social Management System (ESMS) in line with IFC PS, covering all its operations and new developments. The ESMS will incorporate (but not limited to): (i) an overarching E&S policy; (ii) identification of risks and impacts procedure, for operations, pipeline projects and supply chain; (iii) plans and specific management programs to mitigate E&S risks and impacts; (iv) organizational capacity and competency, including roles and responsibilities and training needs, as described in following paragraphs (Organizational Capacity and Competency); (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review, in line with PS requirements, described in the paragraphs below.
Organizational Capacity and Competency.
At GFI, the Human Resources Director is responsible for environmental and social (E&S) issues at the corporate level, with support from the Culture Manager, OHS (Occupational Health and Safety) Specialist, and Company Physician. Additionally, GFI employs a corporate-level safety officer with OHS functions, overseeing both the Distribution Center (DC) and administrative offices. In the Retail business, stores report E&S related cases to a Territory Manager, who then escalates these issues to the Culture department. The Pharmaceutical Professionals in Retail Stores are legally liable for regulatory compliance.
Notwithstanding the above, to further strengthen its E&S organizational structure, GFI will to: (i) hire a corporate-level EHS (Environmental, Health, and Safety) Officer or a specialized ESMS (Environmental and Social Management System) consultant responsible for implementing the ESMS, supported by the Human Resources Department; (ii) define roles, responsibilities, and authority for ESMS implementation, including ESG (Environmental, Social, and Governance) performance monitoring, reporting to senior management, and overseeing community/stakeholder engagement and community grievance mechanisms; (iii) identify training needs and implement an E&S training plan; (iv) allocate necessary management, human, and financial resources continuously to ensure effective and ongoing environmental and social performance (ESAP #2).
Emergency Preparedness and Response.
The company is in the process of developing emergency preparedness response plans (EPRPs) for its retail stores. As part of ESAP #3, the company will incorporate necessary guideline, such as templates to be used in the retail stores, into its corporate EPRP. EPRP will be adjusted to the risk level of the stores, as required by national law and will include instructions and measures for different emergency scenarios and situations, as well as the schedule for regular emergency drills and regular auditing and maintenance of fire safety equipment which is discussed in detail under PS4.
In the DC, GFI personnel (voluntary fire brigade team) receive regular training related to emergency preparedness & response. Periodical emergency exercises of different risk scenarios (fires, earthquakes, loss of power) are conducted. The evacuation routes and muster points at the DC and main offices are marked. As part of ESAP #3, GFI will strengthen the EPRP for the DC in the Verbena Park by establishing (i) an annual drill plan, (ii) a monitoring system to ensure evacuation route are clear from obstructions; and (iii) a maintenance program for stationed emergency equipment and facilities work adequately.
Monitoring and Review.
GFI has an ongoing effort to undertake monitoring and review of its E&S performance. GFI will establish procedures to monitor the effectiveness of the ESMS, as well as compliance with any related legal and/or contractual obligations. The procedures will define monitoring mechanisms and Key Performance Indicators (KPIs), including environmental, occupational health and safety and social KPIs. The Company will document monitoring results, identify and reflect the necessary corrective and preventive actions in its management program and plans (part of ESAP #1).
Supply Chain.
GFI keeps full traceability of the products and oversees the movement of drugs from the manufacturer to the distribution center, and finally to the pharmacies or health centers. GFI’s risks and impacts identification process will also consider those labor risks and impacts (child / forced labor and OHS risks, if any) associated with its primary supply chains, in which the Company can reasonably exercise control (part of ESAP #1).
PS2: Labor and Working Conditions
Human Resources Policies and Procedures, Working Conditions and Terms of Employment.
As of June 2023, GFI’s workforce is around 1,050 direct workers (55% women and 45% men). The Company follows national requirements related to minimum wage, benefits, working hours, shift times and overtime payment. GFI directly recruits subcontractors and workforce through various means (e.g., word of mouth, recruitment drives, etc.). As per ESAP #4, GFI will develop an HR Manual and relevant policies and procedures, consistent with the requirements of IFC PS2 and national labor laws. The HR manual will include (but not limited to): (i) collective bargaining and freedom of association according to local regulations, (ii) retrenchment process, (iii) workers’ access to grievance mechanism, (iv) equal opportunity, and (v) measures to prevent and address gender-based violence. The implementation of this manual will be accompanied by an induction training and communication material applicable to all workers regardless of the type of contract (permanent, temporary, apprentice, professional services). In addition, as part of ESAP #4, GFI will align its Code of Ethics with IFC PS2 and will incorporate principles, which include: (i) no discrimination in the workplace; (ii) equal opportunity and equal pay for equal work; (iii) protection of workers against any form of forced or child labor; (iv) freedom of association; (v) right to collective bargaining, (vi) retrenchment procedure and (vii) monitoring system (for KPIs such as compliance with legal requirements for migrant workers, status and verification of contracts, payment of social security benefits and monthly salaries, working hours and overtime for both direct employees and contracted workers).
Additionally, the pharmacies' sales are mostly face-to-face based, and part of them use third-party services for delivering medicines to final consumers. As per ESAP #5, GFI will update its contracts with these service providers to have relevant provisions in place in relation to the requirements of the local labor law, practices to avoid force/child labor, policies and programs with clear terms for fair, safe and healthy working conditions, among others in line with PS 2 requirements.
Workers’ Organizations.
GFI provides workers with freedom of association and will continue this practice towards the future not discriminating or retaliate against workers who participate or seek to participate. Accordingly, the company encourages workers to elect representatives, forming or joining employee organizations of their choice. As a result the existing workers association is fully operational (Asociación Solidarista de Empleados de GFI -ASOGFI)) under Costa Rica Law 6970. ASOGFI was founded in 1989 and has its own governance, freely elected by their associates in an Annual General Assembly. Under this form of association, the employees receive dividends, incentives and other social services originated in the yearly profits. Nevertheless, there are no labor unions representing its employees, in any of the countries in which it operates. As part of ESAP #4 GFI will explicitly include the commitment to provide workers with freedom of association in its HR manual and Code of Ethics.
Grievance Mechanism.
GFI rolled out an internal communication mechanism in September 2023. GFI will improve its workers grievance mechanism in line with IFC PS2 requirements, including (i) development of a written procedure, (ii) providing timely feedback to those concerned, without any retribution, (iii) allowing for anonymous and gender-specific complaints, (iv) facilitating platforms to file complaints, (v) requiring contractors to implement grievance mechanisms (ESAP #4).
Occupational Health and Safety.
The Company is updating the OHS Policy, to reflect the potential new risks and hazards at the DC in the Verbena Park. In addition, GFI implements practices for machine safety and use of personal protective equipment. GFI has registered in 2022, a Lost Time Injury Frequency Rate (LTIFR - number of lost time cases per million hours worked) of 32.2 hours per million. No fatalities have been recorded. As part of the ESMS development, GFI will establish corporate OHS procedures applicable to its operation in all countries to (i) identify potential risks and hazards to workers; (ii) provide preventive and protective measures; (iii) train workers; and (iv) document and report of occupational accidents, diseases, and incidents (part of ESAP #1).
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency and Greenhouse Gases (GHG) Emissions.
Electricity is provided from the national grid in all facilities; however, the company does not quantify its footprint regarding to GHG emissions. The DC includes small cold storage rooms that are served by specialized air conditioning systems for storage for selected medicines and drugs.As part of ESAP #1, GFI will integrate its energy, water and GHG monitoring into its ESMS, will define resource efficiency programs using relevant KPIs and goals, and will quantify its direct GHG emissions in accordance with internationally recognized methodologies and good practice.
Water and Wastewater, and Solid Waste Management.
Water for all its facilities is supplied from the public network. The wastewater is discharged into the public sewage system for the Panama office. In the case of DC and main offices wastewater is discharged into the wastewater treatment plant at the Verbena Park. All non-hazardous waste is temporarily stored in containers and properly disposed later by local licensed third-party contractor. The hazardous waste is mainly expired medicines and other pharmaceutical products which are disposed according to local regulations and contracts with suppliers. The Company has an onsite recycling program including reusing materials such as carton and plastic, in addition to recyclable materials that are collected and delivered to authorized companies for their treatment.
PS4: Community Health, Safety, and Security
Life and Fire Safety.
GFI’s retail stores follow the construction code of Costa Rica, which includes requirements for fire safety and emergency planning. Visited DC has fire protection equipment and is equipped with automatic fire detection and alarm systems, means of egress with evacuation signage, emergency power, and firefighting provisions. Protection of warehouse is provided by hose reel system fed from the industrial park’s fire pump and water supply systems. As per ESAP# 6, GFI will develop a corporate “Life and Fire Safety (LFS) Master Plan” for the construction and remodeling of new stores, that will form part of the “corporate design manual of stores”, as the standard for all stores. The Master Plan will consider local requirements, and aspects such as occupancy levels, means of egress, interior finishes, and systems for fire safety, as per the section 3.3 Life and Fire Safety (LFS) applicability and approach of the WBG General EHS Guidelines.
The audit and maintenance of LFS systems (e.g., fire alarm, extinguishers, means of egress) is conducted by third-party authorized companies that conduct periodic maintenance controls. As part of its ESMS, GFI will develop an audit and maintenance program with training sessions to ensure that all facilities, equipment, and personnel is aware of the required EHS measures, minimum maintenance requirements and emergency evacuation procedures for all retail stores and the DC (ESAP# 1).
Security Personnel.
GFI's facilities, including the Distribution Center (DC) and select retail stores, are equipped with an electronic security system. Additionally, the DC is safeguarded by security personnel from a private security company contracted by GFI. This company is tasked with preparing the Security Risk Assessment (SRA) and conducting vulnerability analyses.
