The subprojects selected for the use of IFC proceeds have already been implemented and none of them involved impacts requiring to be managed in line with PS 5: Land Acquisition and Resettlement; PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS 7: Indigenous Peoples, or PS 8: Cultural Heritage.

 This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability, as the construction and operation of the subprojects to be financed by the proposed investment have limited adverse E&S risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures, by adhering to good international industry practice (GIIP) procedures, guidelines and design criteria, as described in the following sections. 

Key E&S issues reviewed at appraisal include: (i) adequacy of the corporate ESMS and organizational capacity, including contractor management; (ii) management of labor and OHS; (iii) stakeholder engagement and grievance mechanism; (vi) community health and safety/infrastructure safety; and (v) use of security forces. The review also focused on the sub-projects’ E&S performance during construction.  

Environmental and Social Assessment and Management System

SABESP has a corporate Environmental Management System based on two main principles: environmental compliance with local requirements and changes in corporate environmental culture. To this end, various corporate programs have been implemented, including: (i) management of greenhouse gases (GHG), (ii) environmental education, (iii) environmental permitting process and water right permits, and (iv) E&S management system (ESMS) for water and wastewater treatment plants (WTPs and WWTPs), among other measures. SABESP’s ESMS is based on ISO 14001 for Environmental Management and aims at improving operations and processes for WTPs and WWTPs to optimize efficiency, minimize risks, prevent accidents, and avoid environmental impacts. In addition, as part of the previous project’s (#46253) agreed ESAP, SABESP implemented an Environmental and Social Assessment Management System (ESAMS), which included (i) Contractor Management Plan; (ii) Stakeholder Engagement Plan; (iii) Grievance mechanism for affected communities; (iv) Land Access and Acquisition Plan; (v) Emergency Preparedness and Response Plan; (vi) security risk assessment (SRA) and Security Management Plan (SMP); and (vii) Chance Finds Procedure.

SABESP has developed a corporate Risk Policy and Matrix as tools to support identifying risks and mitigations for the following key operational risks: climate change; pollution of water resources; water availability/scarcity; excess of water/flooding conditions; sea-level rise; and emergency preparedness.

The company follows the local environmental agency requirements to conduct E&S assessments, which are required for the construction of WTPs and WWTPs. For projects that are not subject to the environmental permitting process, SABESP aims at avoiding impacts on areas with vegetation cover and/or that are densely populated. During supported sub-projects construction, contractors were responsible for E&S compliance for the execution of the project.

Contractor Management and Monitoring

In the Terms of Reference (ToR) of each subproject contract, SABESP formalized a contractor E&S management plan, aligned with IFC PSs, which included: (i) the comprehensive framework, making reference to the Brazilian regulation and SABESP’s policies and procedures applicable to the project; (ii) contractor’s E&S performance monitoring and report procedures; (iii) subproject risk matrix; (iv) subproject E&S management plan, covering the requirements for: organizational capacity and competency, identification of risks and impacts, monitoring and report, OHS management plan, working conditions, measures for managing risks related to purchases, solid waste management, risk management plan, emergency preparedness and response plan, traffic safety plan, stakeholder engagement plan, and community health and safety plan.

Organizational Capacity and Competency

As part of its ESMS, SABESP has a corporate environmental division, in addition to the regional E&S staff at the Company's Business Units, which are hierarchically linked to the Company's corporate division and seek to guarantee the uniformity of procedures and information, as well as the dissemination of corporate programs to other units of the company. At the corporate level, E&S staff focus on strategic E&S issues and on the development of procedures, performance indicators, and monitoring of the performance of the various operating units. SABESP has personnel specialized in (i) human resources; (ii) OHS; (iii) environmental management; and (iv) quality control, including auditing, risk management and compliance.

At the subproject level, SABESP ensured that the contractors complied with the ToR requirements for E&S staff capacity and competency, as well as working conditions, through formalization of the contractor’s E&S team and presentation of their curriculums for SABESP’s evaluation and approval. The subproject E&S team was responsible for implementing the plans and procedures required by SABESP in the ToR.

Emergency Preparedness and Response

At the corporate level, SABESP 's OHS Management System includes the identification and analysis of risks and preparation of emergency preparedness and response as well as investigation of near misses and accidents at the workplace. In addition, Brazilian regulations also require emergency preparedness and response plans for water and sanitation facilities.

For each subproject included in the proposed investment, SABESP ensured that construction phase Emergency Preparedness and Response Plans (EPRP) were developed by the contractors with the goal of preserving the life of the workers and other people present at the construction sites, assuring the health and safety of the surrounding communities and guaranteeing environmental quality. The EPRPs were based on an environmental risk assessment and on the analysis of credible emergency scenarios specific to the subproject.

Human Resources Policies and Procedures

As of February 2022, SABESP directly employs approximately 12,500 workers, of which 80% are men and 20% are women. Employees are hired full-time, under permanent employment contracts.

The company’s human resources (HR) policies, Code of Conduct and procedures are aligned with the local regulations and PS2 requirements and are communicated to employees, third-party contractors, and interns through induction and training programs. The company’s HR policies and internal regulations cover recruitment, terms of employment, compensation and benefits, OHS, workers’ grievance mechanism, training, professional development, gender-based violence and harassment (GBVH), non-discrimination and equal opportunity, freedom of association, and prohibition of child or forced labor. The employment contracts define working hours, working days, holidays, duties, and job title; payment including overtime; insurance; grievance procedures; and termination of employment.

Workers’ Organizations

Brazilian labor law protects collective bargaining and the right for workers to associate. Approximately 65 percent of SABESP’s employees are unionized and represented by five main unions for the different job categories. The company negotiates Collective Bargaining Agreements (CBAs) on an annual basis. CBAs include workers’ rights and benefits including minimum wage, overtime, additional bonus for hazardous activities, transportation vouchers, meal vouchers, vacation, and health care, among others.

Worker Grievance Mechanism

The company has an adequate workers’ grievance mechanism with systematic tracking and reporting in line with PS2. SABESP has an anonymous grievance channel (e.g., telephone and website) accessible to employees, trainees, and third-party contractors to raise concerns and grievances related to non-conformities to the Code of Conduct and internal procedures, without the risk of retaliation (https://www.contatoseguro.com.br/SABESP, http://faleconosco.SABESP.com.br/). The channel is disseminated through induction and training programs. This channel does not prevent complainants from accessing to judicial remedies set by Brazilian regulations.

Grievances are administered by an independent and specialized company (Contato Seguro). Once a complaint is received, SABESP’s Internal Audit Department classifies it by risk level and liaises with the HR department to resolve grievances related to the HR aspects, and oversees them until closure, ensuring confidentiality and anonymity. The internal audit department reports the grievances and their status to the corporate Audit Committee on quarterly basis.

As per local regulations, SABESP has developed a formal and confidential grievance handling policy and a resolution procedure to address and resolve grievances related to sexual harassment, consistent with PS2 requirements and GIIP.

Regarding the eligible subprojects, SABESP has a Code of Conduct applicable to all workers and contractors, which makes its own channel available to contracted workers, as previously mentioned.

Occupational Health and Safety (OHS)

The company has an OHS Management System in accordance with the Business OHS Manual (PE-RH0001), which includes the identification and analysis of risks as well as procedures for activities performed by employees and contractors during construction and operation and maintenance (O&M). Key OHS procedures include: work at heights, excavation, electricity, inspection of cables and hoist, confined space, civil construction activities, and hazardous materials. The OHS Management System also includes procedures for work permits, training, composition of the OHS teams, and personal protective equipment (PPE) training program, among others. In addition, the company also has a specific procedure for managing OHS matters in constructions and other services held by contractors, applicable to contracted and sub-contracted workers (PE-RH0003).

No significant OHS incidents were reported for the proposed subprojects during construction.

Workers engaged by Third Parties

SABESP secures the services of qualified companies to provide a wide range of services for construction and O&M. SABESP’s contracts typically include the E&S and OHS requirements that the contractors must follow, and it transfers the responsibility of compliance to the contractors via contractual clauses. For the eligible subprojects included in IFC’s proposed investment, SABESP ensured that relevant aspects of their HR and OHS policies and procedures (i.e., (i) periodic internal OHS and labor audits conducted by company’s team; (ii) evidence of job safety analysis; (iii) adequacy and use of PPE and other preventive and protection measures for OHS (including hygiene) implemented by the contractor; (iv) OHS, first aid and emergency response training; (v) work permits at the construction sites; (vi) investigation, analyses and statistics of accidents and incidents, including injuries and illnesses; (vii) compliance with labor laws and company’s policies, including non-discrimination, working conditions, payment of salaries, benefits and insurance) were extended to cover the practices of contractors and their sub-contractors in compliance with this Performance Standard.

SABESP prioritizes the development and implementation of programs and initiatives to reduce water losses and to minimize untreated sewage discharge to rivers, especially the Tiete and Pinheiros Rivers in the Sao Paulo Metropolitan Area.

The eight subprojects proposed for IFC’s financing are part of the Novo Rio Pinheiros Program, implemented by the company to improve coverage and quality of sanitation services, meet legal requirements and pollution prevention, by reducing the volume of sewage discharge, and therefore, the organic load released into the river through the collection and treatment of sewage from low-income neighborhoods located along tributaries of the Pinheiros River. Since 2019, more than 538,000 households have been connected to SABESP’s sewage system. The program will benefit more than 1,200,000 people with access to sanitation.

Solid Waste and Hazardous Material Management

During the implementation phase, limited amounts of non-hazardous and hazardous wastes were generated at subprojects’ construction sites. The main types of waste related to this phase were: (i) common solid waste, recyclable (plastic, paper, cardboard, etc) and non-recyclable (organic); (ii) soil and civil construction waste; (iii) sanitary waste, derived from the use of chemical toilets.

SABESP required the contractors to develop an adequate Waste Management Plan, including procedures for handling, store, disposal and traceability for the different types of waste, in accordance with local legislation. The contractors were required to monitor and maintain registers of the volume, transportation and disposal of generated waste. The company monthly monitored the contractor’s waste management and reported no issues on that matter.

During the operation phase, limited amounts of waste are expected to be generated, mainly related to maintenance of sewage collection infrastructure (e.g. network, lifting stations, etc). The waste will be managed by SABESP and will be stored, collected and disposed in accordance to the company’s procedures, which are aligned with local legislation.

The construction and operation of the subprojects included in the use of IFC proceeds are expected to have limited potential risks to community health and safety and will contribute to better sanitation with direct positive effects on community health and reduce exposure to diseases linked to water pollution. The selected subprojects consist of facilities associated with sanitation networks that, once constructed, were either buried (e.g., sewage collection system) or consist of small facilities (e.g., quality recuperation units) that are not accessible to the public.

During construction, SABESP supervised that the relevant provisions of the Contractor Management Plan were implemented with respect to adequate measures to prevent and mitigate community safety risks, specifically in terms of management of construction traffic, earthworks, excavations, and trenching, and with respect to emergency preparedness and response. The company reported that there were no significant community health and safety incidents related to the selected subprojects.

Since the subprojects proposed for IFC’s financing included construction works in public roads/sidewalks and near households, SABESP supervised the works and ensured that, upon completion of civil construction and repairs, that road and affected areas were left in good and safe condition by the contractors.

Security Personnel

Security personnel is provided by private security companies. Security contractors include armed and unarmed staff based on site-specific security risk assessments (SRA) that are required to conduct as per the company’s security procedure. All the security contractors must be registered and comply with the Federal Police Decree 387/06 for the provision of these services. Security contractors are required to provide evidence of compliance with Brazilian law and they are vetted by the company with criminal background checks and evaluation. Security contractors are required to participate in trainings offered by security service providers, which includes code of conduct, human rights, and principles of proportionality as per the Brazilian legislation.

Regarding the subprojects, the contractors were responsible for providing or subcontracting patrimonial security to the construction sites, in line with Brazilian legislation and SABESP’s policies and procedures. There were no reported incidents involving security staff and community members.

For facilities requiring environmental licenses, the company implements consultation and information disclosure activities before and throughout the construction and expansion activities and third-party contractors were required to develop and implement a social communication plan with monthly reporting of key activities to SABESP’s team.

Regarding the eligible subprojects, SABESP ensured that the contractors implemented a Social and Educational Management Plan and a Communication Plan, which included: methods of consultation and engagement with communities, methods and frequency of reporting on the risks and impacts derived from project construction activities; monitoring of community engagement activities; noise control; community grievance mechanism. The main stakeholders related to the subprojects were the local residents, the residents’ associations, the public authorities and the local NGOs. The records of engagement activities demonstrates that the contractors made effort to maintain ongoing dialogue with project affected households and local communities.

Grievance Mechanism for Affected Communities

SABESP has several confidential channels to receive concerns and suggestion from customers and communities through its regional centers, email, telephone (0800-055-0195), WhatsApp, applications, and website (https://site.SABESP.com.br/site/fale-conosco/Default.aspx?secaoId=591). In 2022, the company implemented a new platform that allowed the unification of the digital channels into an omnichannel, therefore enhancing the agility and effectiveness of grievances resolution through data analysis. The company monitors the resolution process until the closure and conducts the analysis of grievances and its trends.

Grievances related to the eligible subprojects were directly handled by the contractors and oversaw by SABESP’s operational team. As part of the Communication Plan, contractors were required to implement an external grievance mechanism, aligned with IFC PS1 and PS4, that should: (i) specify all communication channels, including any additional channels made available (e.g., suggestion boxes, community meetings), (ii) disseminate communication channels to communities, (iii) receive, register, and handle all inquiries and grievances in timely manner, (vi) provide a resolution and feedback to communities, (v) analyze its trends and take corrective actions, including KPIs to measure its effectiveness.

During construction, all of the subprojects received grievances from the affected communities which were mainly related to (i) property damage; (ii) obstruction of the sewage connection; and (iii) traffic disturbance.

Company: Companhia de Saneamento Básico do Estado de São Paulo

Point of Contact: Luiz Roberto Tiberio 

Title: Head of Capital Markets and Investors Relations

Telephone Number: +55 11 3388 8679

Email: sabesp.ri@sabesp.com.br

Mailing Address: Rua Costa Carvalho 300, São Paulo, Brazil 

Website: https://site.SABESP.com.br