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 areas of E&S focus include: (i) further development and implementation of the corporate E&S management system (ESMS) and relevant procedures and plans to assess and manage the E&S risks and impacts applicable to all manufacturing operations (including the proposed sanitary ware and glass manufacturing operations) of the company in line with IFC’s PSs during operations & maintenance (O&M), including provision of resources at the regional (Africa) level; (ii) enhancement and full implementation of HR policies and procedures, labor and working conditions, worker grievance redress, occupational health and safety (OHS) management for all plants, including those to be developed; (iii) ensuring emergency preparedness and response and life and fire safety is fit-for-purpose and scaled with respect to the scope of all operations; (iv) continual monitoring and management of air and noise emissions at all operations and management of hazardous wastes; (v) security management at all operations; and (vi) the company’s stakeholder engagement activities related to E&S aspects and effectiveness of community grievance redress.

PS1: Assessment and Management of Environmental and Social Risks and Impacts

E&S Policy and Management Systems - At the Group level, the Environmental and Social Management System (ESMS) includes policies, procedures, and guidelines that use risk assessments to identify and manage a wide range of E&S issues, including health and safety, community engagement, labor and working conditions, and environmental management. The ESMS, as developed in 2020 when there were fewer tile manufacturing operations, was broadly aligned with PS1 requirements and included measures to manage and mitigate potential E&S risks and impacts associated with IFC’s previous investment (# 42507). The focus of activities included compliance with host-country applicable standards and E&S regulatory permits and requirements and laws at the plant level. Whereas the E&S Management System as developed provides a foundation for managing E&S risks and impacts, the appraisal visits conducted for this potential investment did identify opportunities to strengthen existing practices and promote consistency particularly human resources management, occupational health and safety, contractor management, effluent management, and oversight of security both at existing facilities and at the more recently constructed plants that were visited. In addition, the corporate ESMS needs to be broadened in scope to include proposed sanitary ware and glass manufacturing operations.

To better operationalize its E&S policy commitments [ESAP #1a], the company will augment its existing corporate ESMS, ensuring it is scaled appropriately to include all existing plants, and those to be developed, and provide sufficient resources – both capital and human – at the plant and regional level to fully align with the requirements of PS1 in 2023 and beyond.

Management programs – The corporate ESMS and associated management programs [ESAP #1b] will draw upon E&S risk assessments [ESAP #2] as reported in several existing plants, and use those to further develop the following which will apply across all operations, and as required be tailored for specific plant needs, the scope of which shall include contractors: (a) identification of E&S risks and impacts, (b) emergency preparedness and response, (c) E&S training, (d) assurance, audit, monitoring and reporting, (e) hazardous and non-hazardous waste management, (f) environmental monitoring and reporting standard, including gaseous, particulate, effluent and noise emissions, (g) community health and safety, including a road safety management standard to apply to owned and contractor haulage operations, (h) security management standard including (security risk assessment and security management plan develop requirements), (i) hazardous materials management, (j) scope 1 & 2 GHG emissions monitoring, measurement, management and efficiency plan, and (k) life and fire safety, including fire detection and alarm system standard including inspection and maintenance procedures.

Organizational Capacity & Competency – The company’s board is ultimately responsible for the oversight of E&S matters. In general, plants have roles assigned for both a safety manager and safety officer and dedicated human resources; functional heads (such as production) include in their responsibilities matters of environmental management, including those related to legal compliance. To strengthen the E&S organization further, as part of IFC’s financing, safety, health, and environmental capacity will be enhanced at the plant (asset) level and regional (East and West Africa operations) level [ESAP #3]. Plant EH&S supervisors will report to the regional E&S/OHS Manager for the business operations in Africa; the managers shall in turn report directly to the nominated ExCo member who is responsible for the ongoing development and implementation of the corporate ESMS, supported by appropriate resources per ESAP #3. Further, where not currently in existence, the company will appoint safety representatives in each production area of the plant along with first aiders and fire wardens, or their equivalent, as required by host-nation regulation.

Emergency Preparedness and Response (EPR)- Plants have established plans and procedures related to EPR. Assessment of risks are undertaken, and measures defined to address emergency situations (for example, fire, structural failure, armed robbery, and chemical spillage, etc.) This practice will be augmented, and expanded to include new plants, as and when they become operational. Fire detection and suppression systems are in place and were seen to be current/in-date.

Monitoring and Reporting – As part of its ESMS, the company has developed a draft performance measurement and monitoring procedure to be utilized at the plant level. The draft management program defines responsibility and timeframes for completion to achieve defined objectives and targets. The draft program defines requirements to undertake monthly review of progress on objectives, targets and programs/ action plans. In turn, the draft plan defines management review requirements to determine the effectiveness of completed effort-based objectives. Amongst others, the draft monitoring program currently includes, i) safety (including working at heights, driving safety, emergency preparedness, COVID-19, PPE, gap assessment requirements resulting in corrective action requests), ii) occupational health (including noise, dust, fitness to work, biological and radiation), iii) environmental (including emissions, dust, noise, water usage and effluent discharge, energy usage, raw materials consumption, and waste generation and segregation).

As part of the augmentation of the existing ESMS, the company will enhance its monitoring and reporting practice, per ESAP 4, building upon the draft monitoring plan. A monitoring and reporting framework will describe: (i) key performance indicators (KPIs) on E&S compliance and performance, objectives and targets on sustainability including resource efficiency; (ii) monitoring processes (corporate audits, internal/external audits); (iii) reporting requirements in specific formats, including routine reporting via a corporate risk register to the company board; (iv) regular management review for all plants within the borrowing base by senior management; and (v) a corrective actions register to capture, track, report to management, and ensure closure of corrective actions.

The company has established Human Resources Policies and Procedures at the corporate level, which describe the corporate requirements to be applied across all operations. The policies and procedures focus on compliance with host country law and regulations and cover a range of issues related to human resources, including recruitment and selection, employee training and development, performance management, provision of meals to employees, accommodation, prevention of child labor and worker grievance mechanisms. During a site visit, it was reported that the company has a monthly HR workshop at the plant level for all employees on the HR policies and procedures including those related to sexual harassment in the workplace.

As part of IFC’s financing, Tilemaster shall augment its corporate HR Policies, ensuring provision of contracts to all workers meeting the requirements of national law and PS 2 and revise the current grievance mechanism to i) explicitly include contracted (casual) labor, ii) provide grievance mechanism training to all employees and contracted labor, iii) establish a tracking and reporting system, including reporting requirements to senior management, iii) internal audit procedure to ensure to assure consistent implementation across all borrowing base operations.

As part of the augmentation of the ESMS, the company will assess the compliance and effectiveness of its HR policies and procedures as they relate to the Performance Standards and those in force as part of host-nation law and regulation in all countries of operation. The assessment should ensure that the HR policies and procedures are implemented consistently across all operations, and any gaps are identified and closed.

The company has established an Occupational Health and Safety (OHS) Management System that outlines the requirements for managing occupational health and safety risks across all operations. The management system covers a range of issues related to occupational health and safety, including risk assessment, hazard identification, and control measures. Many of these are reinforced using good signage/posters to promote awareness. Results analyzed by IFC show the company controls well the ambient air quality within its existing operations as well as working temperatures. Overall, Lost Time Incident Frequency Rates (LTIFR) for employees engaged in ceramic tile manufacturing compare well with industry benchmarks. There remain opportunities to better drive the effectiveness of some elements of the management system, however. For example, in some operational areas and around some jobs/activities, better use of PPE could be made – in areas of high noise and jobs requiring working at heights. Further, the existence of an OHS committee in support of such a management system, and as required by law/regulation, was not in place in one plant at the time of the visit.

The extension of the OHS Management System to contractors, which had been completed in conjunction with the first investment, and was implemented in those plants following that investment, must be reviewed and where necessary scaled up to include all newly constructed operations. For example, during a visit to a newly constructed plant it was reported that whereas work had been stopped in one instance when plant management had observed a lack of PPE being used by contractors, a lack of obligations regarding the provision of such was subsequently noted in contracts governing the work being undertaken. A lack of reporting of LTIFR for contractors also needs to be addressed. Augmentation of the existing OHS management system to address the above opportunities for improvement is detailed in ESAP #1c.

Worker’s accommodation

The company provides accommodation for workers onsite. The visit to the Kisumu operation included a visit to the accommodation; the standard was judged to be good, in accordance with expected norms. Some temporary accommodation for construction workers in Zambia were thought to be cramped; however, they were not visited as they were occupied.  It is noted that permanent dormitories were under construction at that site.

 Occupational health and safety in the Supply chain

The supply of raw materials (clay, limestone, sand, etc.) for company operations generally come from existing quarries found in the country of operation. An exception to this is the soda ash required for the glass plant to be built in Tanzania which, it is understood, will be sourced from neighboring Kenya. Whereas these suppliers are third party operations, as per the existing investment, the company has included standard clauses in raw material supply agreements, referencing the need for suppliers to comply with applicable host nation environmental and social norms and regulations, including those with respect to worker occupational health and safety. The extension of this practice will be required for new operations; this will be tracked using the annual monitoring report (AMR) for this investment.                                                    

As was reported back in 2019 during the due diligence undertaken for the first investment, the company continues to implement various technically and financially feasible and cost-effective measures for improving efficiency in its consumption of energy, water, as well as other resources and material inputs for its core business activities. Such practices include rainwater harvesting and collection of waste process water and its reuse in the production process after treatment. Similarly, sediments recovered from the process effluent are returned to the tile making process after settlement and collection thereby reducing raw material inputs. Waste heat from the kilns, once discarded, is now captured and used in the drying kilns. Data provided to IFC as part of its supervision activities show that production practices using thermal and electrical energy are very efficient in their use of that energy, with data comparing well with established production benchmarks such as those contained in the WBG/IFC EH&S Guidelines.

Greenhouse gases. The project is estimated to generate total gross Scope 1 and 2 emissions of

191,984 tons of CO2e. Such emissions will result from direct sources such as combustion of fuel for the manufacturing process, electricity generation and auxiliary equipment, including trucks.

Air emissions

Stack air emissions as monitored from existing manufacturing operations (and reported via the Annual Monitoring Report) showed compliance with host nation regulatory and WBG/IFC EHS Guideline limits. Likewise for ambient air quality.

Water consumption and wastewater management 

As noted elsewhere in this document, operations are designed to re-circulate process effluent. This both reduces, or eliminates entirely, the generation of effluent and reduces the amount of raw water required for the manufacturing process. Some observations made at the Kenya operations showed opportunities to improve this practice to fully reutilize the effluent and avoid any discharge. This is addressed in the ESAP requiring the approach as found in older operations to be applied to the newer (and to-be-developed operations in due course) manufacturing operations.

Hazardous materials are limited on a typical tile manufacturing plant. Where they are found in large amounts/volumes, e.g., diesel, appropriate bunding is in place around aboveground tanks.

Non-hazardous wastes from the production process (such as broken or rejected tiles) are typically re-used. For example, data provided by the company for its existing operations in Senegal and Ghana show in 2021 300 tons of waste tile were crushed and re-used as inputs in the tile manufacturing process; at Kisumu they are similarly re-used or used as inputs to other non-production-related processes. Office and domestic waste are collected by an approved waste collector for the area and disposed of at a designated landfill. 

As per the last investment, and as noted above, the company uses the host-nation impact assessment process – as is required for manufacturing facilities of this kind – to evaluate the potential risks and impacts to the health and safety of members of the public that may be found near to or in some other way be impacted by company operations. The main risks to communities in general are those potentially associated with truck traffic (bringing in raw materials and transporting finished goods), fugitive dust and excessive noise from operations (with the latter two only being impacts if communities are located adjacent to plants). As observed during due diligence in 2019, visits to plants in 2022 saw that trucks only drop off and pick up materials and goods; there is no overnight parking at the plants. To deal with impacts from moving traffic, traffic management and traffic-calming measures (road humps, barriers, etc.) have been implemented in existing plants when trucks have to travel through built up areas found near to plants (e.g., in Ghana, the company added these features to plant access roads). 

With regards to security arrangements, one operation visited had unarmed security guards for access control and emergency response.  In addition, the company has engaged armed police. In the other, the company utilizes a combination of armed police – to whom they provide food and accommodation – and unarmed security made up of company employees and guards from a licensed, well known international security company who are employed to control access and operate as part of an emergency response team. As was observed with respect to other elements of the corporate ESMS, there is the need to expand the framework that was developed for the first investment and apply it at these newly constructed plants so that management of all security operations are seen to be responsive to the objectives of PS4, including the requirement to undertake a risk assessment of such arrangements in accordance with the requirements of paragraph 12, 13 and 14 of PS4. This is addressed in ESAP #1.

During IFC’s appraisal, it was observed that there were variances in the engagement of security personnel, ranging from unarmed security guards to combinations of armed police and unarmed security personnel. Where armed police were observed they were provided with food and accommodation by Tilemaster. The unarmed security personnel are comprised of both company employees and licensed guards from a reputable international security company.

Given the need to expand the framework developed for the first investment, Tilemaster shall undertake a comprehensive review of security risks and based upon that, update the security management plan in accordance with the guidelines outlined in paragraphs 12, 13, and 14 of PS4. The review shall focus on assessing the potential impacts of the company's security arrangements on its employees, contractors, and local communities, including explicit requirements for asset level security risk assessments and respect for human rights. Tilemaster shall take necessary steps to ensure that its security personnel are appropriately trained and equipped to handle any security-related incidents that may arise. Tilemaster shall establish clear protocols and procedures for engaging with local law enforcement agencies and community stakeholders, including prohibition of arbitrary or abusive force by security personnel, per ESAP #1.

The ESMS describes the company’s approach to stakeholder engagement, which includes conducting stakeholder identification, mapping, and analysis. The document also outlines the need for effective communication and consultation with stakeholders, and the importance of stakeholder feedback in decision-making. A community grievance mechanism (CGM) was created in response to the ESAP of the first investment.

During the appraisal review, it was noted that the company prioritizes interactions with communities through part of its on-going corporate social responsibility (CSR) programs. Given that the company in general looks for sites for its plants in areas away from communities, i.e., in industrial zones or their equivalent so that there are no affected communities per se, such an approach regarding interactions seems commensurate to project risks. One instance of a potential complaint from a business proximate to the manufacturing plant in Senegal, that was circulated via social media however, did highlight the need to ensure all those who may be interested in interacting with the company are made aware of the CGM and its role in addressing issues. The efficacy of the CGM will be reviewed as part of the ongoing supervision of the company, using such tools as the annual monitoring report or AMR, and results reported therein will be used to adapt the CGM as needed.

Lastly, in following the regulatory requirements with respect to environmental and social impact assessments, stakeholders are identified and are included in public disclosure activities.       

Keda (Ghana) Ceramics Company Limited, B918/17 South Odorkor, Bushia Junction, Accra, Ghana or

Company: Tilemaster Investment Limited

Point of Contact: Frank Li

Title: Chief Finance Officer

Telephone Number: +86 18934365778

Email: frank.q.li@twyfordtile.com