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.
PS 1: Assessment and Management of Environmental and Social Risks and Impacts
Environmental and Social Policies. In 2022, Omarsa revised its Code of Conduct and Ethics (CoC) and aligned it to the requirements of IFC’s PS1 – Stakeholder Engagement, PS2 and PS3. The CoC is shared with workers during induction. Omarsa will amend its CoC to include applicable PS4 and PS6 requirements, including the No Net Loss of Natural Habitat (ESAP#1).
Identification of risks and impacts. Omarsa conducted Environmental Impact Assessments (EIA) to obtain the environmental licenses for all its operations (i.e., hatcheries, shrimp farms, processing plants) and has a consolidated legal registry for applicable environmental requirements. In addition, the company has developed environmental risk matrices for shrimp farms and processing plants. Omarsa will prepare an E&S Risk Assessment Procedure and revise its environmental risk matrices. The E&S risk matrices will include mitigation/control measures (e.g., plans, programs, procedures) for significant risks. Omarsa will prepare a E&S risk matrix for electrification of shrimp farms (ref. ESAP#1).
Management Programs. Omarsa has consolidated the requirements of Good Manufacturing Practices (GMP), food safety and sustainability voluntary standards to which the company adheres (i.e., ASC, BAP, Naturland Organic, BRC, and GlobalGAP) into one set of standard operating procedures (SOP) and internal audit controls, eliminating redundancies and overlaps.
Organizational Capacity and Competency. In 2023, Omarsa reinforced its organizational capacity to assess and manage its E&S risks through the hiring of additional staff in the areas of environment, OHS, stakeholder engagement, and HR. The E&S department has now three (3) full-time dedicated staff (including one staff responsible for community relations) and the OHS department increased from three to eight staff. The HR department hired additional social workers to monitor labor and working conditions in farms and plants.
Environmental, Health and Safety (EHS) training continued to be insufficient in 2021 and 2022 as evidenced by the limited number of recorded EHS training hours and substandard EHS practices observed during IFC site visit. Omarsa will prepare an EHS training program to reinforce the skills and competencies of middle management, emergency brigades, OHS joint committees, and personnel implementing high-risk activities (ref. ESAP#1).
Emergency Preparedness and Response. Omarsa has an Emergency Preparedness and Response Plan which identifies and addresses potential threats to life and property, such as explosions, fire, earthquakes and chemical spills. In 2022, Omarsa revised the plan but did not develop specific response procedures for ammonia leakages. Omarsa will develop and implement a Process Safety Management (PSM) program for highly hazardous chemicals, including emergency planning and response (ESAP#7). Both processing/packing plants have received authorization from the Duran’s Fire Department. Fire hoses and extinguishers are ubiquitous around the plant and tested monthly. Sprinklers are installed in the warehouse containing packaging material (combustible). Emergency drills are performed twice per year. In 2022, Omarsa added evacuation doors in Abel Gilbert plant to ensure workers can safely evacuate in case of emergency.
Monitoring and Review. Omarsa conducts regular internal audits based on its certification requirements and is implementing a corrective actions management software. The software allows for automatic notification and escalation of actions that have not been closed. Nevertheless, substandard EHS practices (e.g, open valves in hazmat secondary containment, hazardous wastes exposed to the environment, deficiencies in the storage of chemicals) still take place both in plants and farms. Omarsa will implement an EHS inspection program based on applicable WBG EHS Guidelines and Good International Industry Practice (GIIP) and finalize the implementation of the corrective actions management software (ref. ESAP#1).
Omarsa has an environmental monitoring program to satisfy legal requirements and demonstrate compliance with criteria as defined in voluntary sustainability standards (e.g., effluents, air emissions, noise). Omarsa also collects information on E&S key performance indicators (i.e., feed conversion ratio, energy and water consumption, lost-time injury rate, employee turnover, absenteeism), which is reviewed monthly by senior management. Omarsa has set up annual and long-term corporate targets.
Supply chain. More than 1,000 shrimp farms are currently authorized by the Ecuadorian Ministry of Aquaculture and Fisheries, most of them located in the Gulf of Guayaquil. Omarsa purchases up to 70 percent of its process throughput in the spot market from 593 pre-approved third-party medium and large shrimp farmers (from 200 up to 3,000 ha). In 2022, the 15 largest shrimp producers represented more than 50% of Omarsa’s supply. In 2022, 17 suppliers were ASC certified corresponding to 28% of the third-party supply. The management of risks related to Omarsa’s supply chain, including its traceability system, are described under PS2 – Child Labor and Forced Labor, and PS6 – Supply chain.
PS2: Labor and Working Conditions
In 2022, Omarsa employed 7,446 workers (5,827 in processing/packing plants and 1,619 in shrimp farms); about 30% were part-time workers hired during harvesting peaks (about 10 days per month). Women represent 35% of the workforce and are mostly dedicated to product processing in packing plants; most supervisors in the packing plants are also women. Women are practically absent in shrimp farms and hatcheries. At managerial level, women represent 25% of the workforce. Employee turnover in 2022 decreased compared to 2020 but was still around 120% among permanent employees in packing plants and 60% in shrimp farms. Employee turnover among part-time workers is around 200%.
Human Resources Policies and Procedures. Omarsa has documented HR policies and procedures (i.e., recruitment, hiring, training, disciplinary, termination, management of grievances, prevention of harassment and sexual harassment). Workers’ rights and responsibilities are also documented in the internal work regulations approved by the Ministry of Labor in 2021. In 2022, Omarsa revised its CoC to include all the requirements of PS2. A copy of the CoC and internal work regulations are provided to workers at hiring and explained during a 20-min induction training.
Working Conditions and Terms of Employment. Terms of employment are documented in the internal work regulations and contracts. As part of workers’ contracts, Omarsa provides in/out transportation, meals, and lodging (in shrimp farms) at no charge to all workers. According to these documents, the company operates in two eight-hour shifts: a day shift from 8 am to 5 pm, and a night shift from 8 pm to 5 am (8 hours per day and 1-hour non-paid lunch/dinner break) for a total of 40 statutory hours per week. Workers are entitled to two days off per week. Workers in shrimp farms work 10-day-on and 4-day-off shifts. Overtime in packaging plants is limited to 2 hours/day as per legal compliance. The company tracks working hours using biometric fingerprint scanners both in the packing plants and shrimp farms. Workers are paid hourly wages or by piece-rate. Piece-rate workers receive overtime compensation for work performed during overtime and during days off or holidays, as mandated by law. In 2023, Omarsa revised the format of piece-rate payrolls as per IFC PS requirements, but workers have not been consulted to ensure the information regarding the calculation of their wages is understood. Omarsa will improve the communication of terms of employment to employees (ESAP#3).
Workers’ accommodations. As of December 2022, about 1,600 workers lodged in the shrimp farms. In 2021, Omarsa hired a qualified consultant to conduct an audit of workers’ accommodations as per part II of the IFC/EBRD Guidance Note on Workers’ Accommodations. The audit identified 53 corrective actions and concluded that 186 people needed to be relocated to comply with space requirements, and 486 people housed in containers/plywood houses in Puna needed to be moved into cement housing. The corrective actions and new accommodations in Puna were completed in 2022.
Workers’ Organizations. Ecuador’s labor laws allow for worker’s organizations and protects labor leaders against discriminatory actions by employers but a very small percentage of workers in the private sector in Ecuador belong to unions. Omarsa has a freedom of association policy – now included in its revised CoC – that is communicated to workers during induction training. However, workers in Omarsa do not belong to any union and the company has confirmed that there has been no initiative by employees to create a workers’ organization.
Non-Discrimination and Equal Opportunity. Omarsa has non-discrimination and prevention of harassment/sexual harassment policies – now included in its revised CoC. The policies are introduced to workers during induction training and through awareness campaigns via WhatsApp.
Workers/Contractor Grievance Mechanism. Workers can submit complaints through suggestion boxes located in the cafeterias, a dedicated email and phone number. In addition, Omarsa has a Department of Social Well-Being (DSWB) staffed with three social workers (two for the packing plants and one rotating among the three shrimp farms). In 2022, Omarsa revised its internal grievance procedure to align it with PS2 requirements and implemented communication campaigns to raise awareness of the grievance mechanism among workers. As a result, the number of registered complaints increased from 22 in 2020 to 156 in 2022, and included inquiries and complaints related to wages, unsafe working conditions, harassment and sexual harassment, which have been investigated by the company.
Workers engaged by Third Parties. Omarsa relies on one contractor for the provision of catering services, four contractors for physical security, 70 contractors for the transportation of goods and personnel, and 60 maintenance contractors. Every month, Omarsa verifies labor compliance of catering and physical security contractors (i.e., contracts, payroll, payments to social security). Logistics and maintenance contractors must provide evidence that their workers are affiliated to social security and payments are up to date before they are given a credential allowing them to access to the site. Biometric entry systems are used to control access of catering workers, security guards, and drivers into the company’s facilities.
Occupational Health and Safety. Due to deficiencies in Omarsa’s OHS management system and the high number of injuries identified in prior appraisals, IFC requested Omarsa in 2021 to increase the number and competences of OHS personnel. In 2023, Omarsa hired six additional OHS staff including a new qualified OHS Manager. The OHS Department increased from three to eight full-time staff. The OHS Manager has prepared a plan to improve the company’s OHS safety culture and decrease the number of injuries.
IFC also requested the implementation of a (i) management of change procedure; (ii) LOTO procedure; (iii) medical surveillance program; (iv) hearing protection program. In 2022, Omarsa implemented a management of change procedure and hired a qualified consultant to implement a LOTO program. However, the medical surveillance and hearing protection program does not yet meet good international industry practice. Omarsa will implement a medical surveillance program and hearing protection program (ESAP#4 and #5).
Finally, IFC requested an audit of the ammonia refrigeration system in 2021. In 2022, Omarsa hired a qualified consultant to conduct the audit of the ammonia refrigeration system. As of June 2023, half of the corrective actions had been implemented. The audit did not include a gap assessment with Process Safety Management (PSM) standards as the company has not implemented a PSM program. Omarsa will complete the implementation of the ammonia audit corrective action plan and implement a PSM program (ESAP#6 and #7).
A doctor and a nurse are present at the plants both during day and night shifts. In 2022, four additional doctors were hired to be stationed in shrimp farms. The company also maintains several speed boats and a helicopter for evacuation needs. Communications between the farms and the base headquarters operations are good and guaranteed by radio and cellular service. Marine transport of workers and staff is on licensed boats equipped with radios, and personal floatation devices of proper size and number.
Child Labor and Forced Labor. Omarsa does not hire people under 18 years old; age is verified through the person’s ID and recorded in the worker’s file. The US Department of Labor (USDOL) 2021 report does not identify the production and processing of shrimps as an activity at risk of child labor, and the decision by the Government of Ecuador to allow the use of part-time contracts for shrimp harvesting activities, reduces labor informality in the sector and the consequent risk of forced labor. Shrimp farming is a highly regulated sector in Ecuador, and purchase orders in Omarsa are emitted only for third-party suppliers who have obtained all the required authorizations, including a certification by the Ecuadorian Social Security Institute (IESS) that payments are up to date. In addition, in 2019, Omarsa developed a Code of Conduct for Suppliers which includes the prohibition of child labor and forced labor, and protections for young workers. Shrimp suppliers must sign the code every year as part of their approval. To ensure chain of custody, Omarsa’s procurement staff supervises the shrimp harvesting activities in suppliers and can therefore detect any major non-compliance.
PS 3: Resource Efficiency and Pollution Prevention
Resource efficiency. Long-term profitability is determined by efficient resource use, including minimization of mortality and efficient feeding. From 2020 to 2022, the Food Conversion Ratio (FCR) improved by 15%. Other important indicators are the Forage Fish Dependency Ratio (FFDR), which is the quantity of wild fish used per quantity of cultured crustacea produced, and the Protein Retention Efficiency (PRE), which gives an indication of the conversion efficiency of all protein ingredients (i.e., it includes terrestrial plant and animal proteins). In 2022, the FFDR was 0.73-0.78, which is below the 1.3 limit established by ASC, and the PRE was 40-44%, which is among the best in livestock production.
Water Consumption and Water Quality. On farms, water is pumped from the estuaries of the Gulf of Guayaquil and retained in a sedimentation area prior to release into the shrimp ponds through a central canal. Water is returned by gravity to the estuaries through large expanses of native mangroves. Water use in farming is insignificant relative to the total amount of water available. Water quality (i.e., pH, temperature, BOD5, COD, TSS, Oil and Grease, Phosphorus, Nitrogen, and Coliforms) is tested at the intake and outfall of the shrimp farms by an accredited external laboratory at regular intervals. In 2022, results indicated compliance with national discharge requirements and with WBG EHS Guidelines for Aquaculture - Table 1. Total phosphorus and nitrogen load per ton of shrimp produced complied with ASC requirements.
At the processing facilities, brackish water is abstracted directly from the Guayas River and subject to treatment prior to rinsing use or ice making. The quantity of processing water decreased from 4,000 m3/day in 2020 to 1,600 m3/day in 2022 and consumption rate (4.14 m3/ton) is below WBG EHS Guidelines for Fish Processing - Table 3. Processing water is recycled within the various chilling and washing lines and effluents undergo primary and secondary treatment prior to discharge to the Guayas River. Only kitchen facilities use fresh water which is trucked into the facility and discharged through the municipal sewage system. Concentration of pollutants in treated effluents are analyzed at regular interval by an external licensed laboratory. Results indicate compliance with national discharge requirements and WBG EHS Guidelines for Fish Processing - Table 1, except for total phosphorus in Abel Gilbert in 2022. Omarsa will provide evidence of compliance with WBG EHS Guidelines for Fish Processing -Table 1 in the Annual Monitoring Report (AMR).
Greenhouse Gases and Energy Efficiency. Omarsa estimates its scope 1 and scope 2 GHG emissions using an accredited methodology every three years. Most recent data correspond to 2019, GHG emissions were estimated at 70,000 tCO2e/year (GHG emissions due to leakages in the refrigeration system was estimated at 8,500 tCO2e/year). Updated data for 2022 will be available in January 2024.
The primary source of Omarsa’s GHG emissions stem from diesel use in the pumping of brackish water into outgrowing systems (system requires a 10% of daily water exchange). Diesel consumption increased from 4.5 million gallons in 2020 to 4.77 million gallons in 2022 (about 48,600 tCO2e), but diesel consumption rate decreased from 128 gallons/ton of shrimp in 2021 to 110 gallons/ton in 2022 mostly thanks to an increase in productivity.
Electricity consumption in processing plants increased from 47 million kWh in 2020 to 64 million kWh in 2022 (about 12,500 tCO2e), but electricity consumption rate decreased from 0.22 kWh/lb in 2020 to 0.20 kWh/lb in 2022 mostly thanks to an increase in productivity in Las Brisas. Electricity consumption is still above WBG EHS Guidelines for Fish Processing - Table 3. Freon is used in the refrigeration system (R134, R404-A, R409, R 410-A, R507 and R22).
While the company is implementing energy saving measures (e.g., installation of electric aerators in Cachugran), it has not conducted a cleaner production audit. Omarsa will conduct a cleaner production audit and will establish energy consumption reduction targets going forward, including the reduction of ozone depleting substances and GHG emissions from refrigerants (ESAP#8).
Pesticide Use and Management. Omarsa makes no use of antibiotics, pesticides or chemical additives in its farming operations.
Hazardous Materials Management. On farms, the most dangerous substances used by Omarsa are petroleum derived products: diesel and lubricants used in pumps, generators and vehicles. While present, the risk of significant spills is minimized by Omarsa’s use of specialized petroleum product transporters and handlers monitored by the Government of Ecuador’s Directorate of Hydrocarbons and the storage of diesel in stilled tanks with secondary containment. Risk of minor spillages and leakages requires constant attention by the company due to the large number of water pumps and generators (i.e., aerators) distributed across the farms. Used oil and oil filters are temporarily stored on site in areas with secondary containment and then transported to Duran for processing and/or disposal by companies licensed to provide these services. The other chemical largely used is sodium metabisulfite added to the shrimps at the time of harvesting to keep shrimp shells from undergoing melanosis (also called black spots). To minimize the impact of sodium metabisulfite on Dissolved Oxygen in the receiving water body, the sodium metabisulfite solution is deactivated with lime before its discharge. To ensure that the procedure is effectively implemented, random checks are done to verify that pH is between 6 and 9 and Dissolved Oxygen is greater than 4.
PS 4: Community Health, Safety & Security
Ecosystem services. The three shrimp farms are in areas populated with few villages or enclaves. Two communities, El Zapote hosting around 2,400 people and Aguas Piedras, are within two kilometers of the Puna shrimp farm. Livelihoods in El Zapote depends on agriculture and livestock grazing. One community (Cerrito Los Morrenos) is within one kilometer of the Cachugran shrimp farm hosting around 100 people. Community members in Cerrito Los Morrenos are mainly fisherman, engaging in a variety of “wild caught” fishing or other harvesting of marine animals, including conch, crab, shrimp, mussels, scallops and demi dorsal fish. The most important ecosystem service to local communities is the production of fish, mollusks and crustaceans by mangrove ecosystems. Mangroves have been minimally impacted by Omarsa’s operations. Shrimp farms have limited impacts on services beyond pumping brackish water from the estuaries into shrimp ponds, which then returns to the estuaries by gravity (see PS 3 – Water Consumption and Water Quality above for more details). No communities are found nearby to the Chongon shrimp farm.
Security Personnel. Omarsa’s security arrangements are described in the 2021 disclosed ESRS (#44456). As requested by IFC, Omarsa updated its physical security policy and risk assessment. Omarsa evaluates security contractors twice per year including labor compliance, selection of personnel, training, and supervision. The company also maintains documented records of interactions with public security forces. To complete IFC’s requirements, Omarsa will (i) update its Code of Conduct for Security Forces based on the content of the International Code of Conduct for Private Security Service Providers (ICoCA); (ii) procure acknowledgement of receipt of updated CoC from all security contractors; and (iii) develop induction training for security guards based on updated CoC for Security Forces (ESAP#9).
PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
Omarsa will expand its Puna operational footprint into a mix of Natural and Modified Habitat overlapping the Ecuadorian Dry Forest ecoregion (WWF), an ecoregion that has been occupied by people for centuries and has been degraded by deforestation, overgrazing and unsustainable agriculture. Floristic structure in this habitat ranges from scrub, thorn, deciduous to semi-evergreen with trees adapted to the dry conditions that last most of the year. The site overlaps the Manglares del Golfo de Guayaquil KBA/IBA, an area identified as a priority for mangrove forests and both range-restricted and congregatory birds. Natural habitat within the project area was identified mainly as secondary tall vegetation and open shrub. A biodiversity and environmental and social impact assessment (B-EIA) was completed in 2020 by a team of biologists to meet ASC requirements. In 2023, the company hired an independent external consultant to delineate areas of natural habitat and develop a draft Biodiversity Action Plan (BAP) towards achieving No Net Loss. The BAP identified the potential presence of priority biodiversity values, including range restricted and threatened plants: Encyclia angustiloba (IUCN Red List - unassessed, National Red List CR), Acmella leucantha (IUCN Red List VU, National Red List VU) and Ophryosporus densiflorus (IUCN Red List - NT, National Red List VU). Mangrove habitat is not impacted by the expansion, and critical habitat is not expected to apply for priority biodiversity values. In order to achieve No Net Loss of natural habitat, the company will continue to update the BAP with qualified consultants experienced with biodiversity offsets. The BAP will include pre-construction monitoring to confirm the presence of priority biodiversity values, include a loss/gain assessment and include relevant metrics. The final BAP will focus on the selected biodiversity offset, include partners for implementation and an estimated budget and timeline. The final BAP will also include additional conservation actions to promote and enhance the conservation aims and effective management of the internationally recognized area. The final BAP will also include metrics to measure the effectiveness of implementing the BAP including the offset. (ESAP#10)
Supply chain – shrimp. Mangroves ecosystems are legally protected in Ecuador since 1994. The main risk for packaging plants is the introduction of shrimps from illegal shrimp farms (that could have been established in areas converted after 1994) in their supply chain. To prevent this, Omarsa sources shrimp only from authorized suppliers and has a food safety traceability system in place, which prevents contamination of their supply with illegal sources. Each purchase order must be authorized by the Certifications Coordinator who verifies that Omarsa has valid copies of the supplier’s legal authorizations and checks the website of the Ministry of Fisheries and Aquaculture to verify that the authorization has not been rescinded. Although mangroves are protected, shrimp farms are expanding into other natural habitat, therefore to align with PS6 requirements, the company will update its Code of Conduct for Suppliers to limit purchases from suppliers who have not converted natural habitat. The company will update its risk assessment and verification system accordingly and will also include an independent auditor to verify effectiveness of new supply chain procedures after the first year of this investment (ESAP#11).
Supply chain – feed. To obtain ASC certification, fishmeal and fish oil and soy components must originate from fisheries and farms (respectively) under sustainable management as recognized by international organizations. Omarsa’s feed suppliers – Vitapro and Skretting– comply with ASC requirements. Feed does not contain palm oil. Feed suppliers currently buy Roundtable for Responsible Soy (RTRS) credits for the feed supplied to Omarsa. By January 1, 2025, the company will no longer accept RTRS credits, rather will only accept feed products that contain soy verified as deforestation and conversion free (ESAP#12).
PS 8: Cultural Heritage
Protection of Cultural Heritage in Project Design and Execution. Puna Island is archeologically important as it was the geo-political capital of the Huancavilca culture and an important pre-Colombian trade hub. Community members in El Zapote were not aware of cultural relics where Omarsa operates but indicated historical burial sites in the mountainous areas in central portions of the island. While the likelihood of chance findings may be lower on the side of the island where OMARSA operates, there is some possibility that pre-Colombian artifacts may be found. IFC’s first investment in 2015 (#36819), which included the expansion of 500 ha of new ponds in Puna shrimp farm, required Omarsa to implement a Chance Finds Procedure in case artifacts and/or important archaeological sites were found fortuitously. As in 2015, Omarsa will implement a Chance Finds Procedure in accordance with Ecuador’s Cultural Heritage Law (Ley de Patrimonio Cultural No. 3501) and IFC PS8 for earth movements due to Puna’s new expansion. Omarsa will commit to meeting its legal requirements under the Heritage Law: cease operations that may threaten the integrity of the object or site and notify the Cultural Heritage Institute as soon as possible. If a potentially important archaeological site is unearthed, Omarsa should also protect the site against potential looters (ESAP#13).
