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 Policies.
Kepler has an Integrated Policy on Safety, Occupational Health, Environment and Quality, which is disseminated internally and externally. Its objective is to define the guidelines and application of the Integrated Management System (IMS). It addresses aspects such as: continuous improvement; ethical behavior; economical, environmental, and social sustainability; compliance with legislation; management of environmental and health and safety risks. In addition, the Company has also adopted several corporate-level policies, including: (i) Risk Management Policy, (ii) Related party Transaction Policy; (iii) Conflict of Interest Policy; (iv) Anticorruption Policy; (v) Supplier Policy; and (vi) People & Management.
Environmental and Social Management System.
Kepler implements at Panambi and Campo Grande plants an Integrated Management System (IMS) that is commensurate with the scale and E&S impacts of its operations. The Panambi plant is certified on ISO9001:2015 (international standard for quality management system), ISO14001:2015 (environmental management), and ISO 45001:2018 (OHS management). The Campo Grande plant is certified on ISO9001:2015. In September 2023, Campo Grande will be externally audited, with the aim to achieve ISO14001:2015 and ISO 45001 certifications.
The IMS includes the following: (i) IMS policy; (ii) objectives and goals, (iii) identification and evaluation of environmental, occupational health and safety (EHS) risks; (iv) EHS management programs; (v) organizational capabilities and competencies; (vi) legal requirements, (vii) internal audit, (viii) emergency preparedness and response; and (ix) monitoring and assessment procedures.
Identification of Risks and Impacts.
Environmental, health and safety risks and Impacts.
Kepler implements procedures for the continuous and proactive identification and control of EHS aspects, risks, hazards, and opportunities. The risk assessments are applicable to Panambi and Campo Grande plants and are also applicable to Kepler’s contractors. The area supervisors are responsible for assessing EHS risks and define control measures in collaboration with the EHS area. The outcome of these risk assessments is included in the EHS identification and evaluation matrixes. The risk assessment matrixes are reviewed annually in accordance with internal methodologies and procedures.
Environmental and Social Impact Assessment.
Both Panambi and Campo Grande plants have environmental licenses emitted by the State Foundation for Environmental Protection (FEPAM in Portuguese) and the Municipal Secretary of Environment and Urban Development, respectively. The environmental license for Panambi is #01113/2023 and is valid until 20/10/2027. The environmental license for Campo Grande is #03.126/2022 and is valid until 17/06/2026. Environmental and Social Impact Assessments (ESIA) were not conducted for these facilities, as to Brazilian legislation does not require ESIA for this sector.
As mentioned above, Kepler implements risk assessment procedures at both plants to avoid and or mitigate potential EHS impacts. The Company also has procedures to identify and manage EHS legal requirements.
Management Programs.
As part of the IMS, Kepler has developed Standard Operating Procedures (SOPs) and management programs which have been implemented at the Panambi and Campo Grande plants. These provide guidelines for EHS management including: (i) Identification of EHS Aspects, (ii) identification and evaluation of EHS impacts; (iii) hazard identification and risk assessment; (iv) health management; (v) waste management; (vi) machine safety; (vii) contractor management; (viii) chemical product storage and handling; (ix) accident and incident registry; (x) work at height; and (xi) emergency prevention and management.
Organizational Capacity and Competency.
Kepler has a dedicated and professional EHS team. The responsibility for EHS issues at corporate level resides with the People and Management Executive Manager who reports to the President Directors and is supported by the OHS Coordinator and People and Management Coordinator. Moreover, in the Panambi Plant, the total EHS team accounts 19 employees, while at the Campo Grande plant the EHS team accounts 4 employees, which is commensurate with the size of each plant. In addition, the Quality and Continuous Improvement Manager oversees the implementation of the IMS and is supported by the IMS Coordinator and the Quality Supervisor.
Emergency Preparedness and Response.
The company has defined specific procedures to prevent, respond to, and mitigate the risks of emergency situations. Emergencies are identified and managed in accordance with the Emergency Assistance Plan for each plant. Emergency preparedness and response planning for fire, explosions, spills, accidents, and evacuation is carried out in coordination with the competent local authorities, including the participation of the Fire Department. In addition, Kepler has developed a Drill Plan and consolidated an emergency brigade for both plants. Both plants have identified potentially hazardous areas; and designated and clearly marked evacuation routes and assembly points.
Monitoring and Review.
Kepler’s environmental monitoring at both plants is defined by the permit requirements and undertaken for (i) air emissions, (ii) disposal of solid/hazardous waste, (iii) noise, (iv) wastewater effluents. In addition, water and energy consumption are regularly monitored for internal benchmarking and reporting. Notwithstanding the processes and procedures described above, the Company will align E&S monitoring/reporting procedures and practices with IFC PS. As part of ESAP #1, Kepler will augment current environmental monitoring/reporting framework to meet IFC PSs & WBG General and other relevant EHS Guidelines.
As part of the OHS management system, the company monitors key performance indicators (KPIs) such as (i) number of accidents, (ii) accident frequency rate, (iii) accident severity rate, (iv) ergonomic improvements, (v) man hours, (vi) contractors’ accidents at assembly projects. The KPIs are monitor daily by area supervisors and reported monthly to the Internal Accident Prevention Commission (CIPA).
EHS KPIs are reported to managers through monthly meetings. The Company also reviews the IMS implementation through annual internal audits. Findings of the audits, including non-conformities and improvement opportunities are recorded and tracked to closure.
Supply Chain.
Kepler's supplier chain encompasses circa 1,300 suppliers from the manufacturing industry, such as steel providers, and manufacturers of engines, machines, and equipment (including laser cutting and bending machines). Other suppliers offer services related to the industrial assembly sector, meals, temporary labor, protective equipment, and office supplies.
Its Code of Conduct establishes the basic principles and conducts to be followed by suppliers, including standards in the following areas (i) environment (ii) health and safety and (iii) ethics, (iv) child labor and (v) sexual harassment.
Through its EHS Supplier Assessment Procedure, the Company requires suppliers to comply with labor, environmental, safety and health regulations. The Procurement area is responsible for evaluating suppliers as per this procedure in the following areas (i) service and product quality, (ii) environmental management, (iii) occupational health and safety; (iv) financial performance and (v) labor compliance.
Third-party contractors.
Kepler hires third-party contractors to assemble agriculture and port projects. The Company has a pool of more than 60 business partners and provides ongoing training. The Company launched in 2019 The Kepler Contractor Development Program (PDEK) which is a mandatory training for third-party contractors of assembly projects, for maintenance and replacement parts providers. The PDEK Program includes modules on people, business, and sustainability management.
Kepler has a team of 47 people organized in seven clusters responsible for supervising assembly projects in Brazil. Kepler allocates resident managers to supervise assembly of large projects, whereas smaller projects are supervised through visits. As part of ESAP #1 Kepler will strengthen the procedures and practices to manage and monitor EHS performance of contractors involved in assembly projects and at Panambi and Campo Grande Plants.
PS2: Labor and Working Conditions
Working Conditions and Management of Worker Relationship.
Kepler has documented Human Resources (HR) procedures that are applicable to all employees. Each worker receives a written contract that describes the working conditions and terms of employment, as per local laws and regulations. The Company electronically monitors overtime work, and limited extra hours to 20 per month per worker, as per internal procedures and agreements (as aligned with national regulations). Employees are enrolled in the mandatory social insurance scheme. As of June 2023, Kepler’s operations in Brazil had around 1670 direct workers, of which 400 are women. In the last three years, female participation has been gradually increasing. Women accounted for 17% in 2019, 21% in 2021, and 24% in 2022.
Human Resources (HR) Procedures.
Kepler’s employees abide by the company’s Code of Ethics. This overarching document is applicable to all consultants, and employees and consolidates the ethical principles applied to the Company. As per the document, all personnel are expected to follow the laws and regulations of countries in which the company operates. In addition, the document includes provisions for harassment, non-discrimination, and child labor.
HR procedures are based on the corporate principles and include procedures for (i) Training and Development, (ii) Competency-based assessment, (iii) Recruitment, (iv) Personnel Movement, and (v) People Management.
Workers’ Organizations.
The company does not prohibit the freedom to associate and workers right to form and join workers organization. A labor union is in place in each plant and the company holds regular meetings with union representatives. Working conditions are negotiated through Collective Bargaining Agreements.
Grievance Mechanism.
Kepler implements a Procedure for Internal and External communication that establishes guidelines for internal corporate communication between the various levels and functions of the company, as well as for external communication with the public. The Company implements a grievance mechanism through the Ethics Channel. Kepler will Improve workers grievance mechanism in a manner aligned 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 complaints to be raised and addressed, (iv) requiring contractors to implement grievance mechanisms (ESAP #2).
Occupational Health and Safety.
The company has formulated a health and safety policy and has developed its occupational health and safety (OHS) system based on Hazard Identification and Risk Assessment. The OHS has been implemented at the Panambi plant since 2012, and at the Campo Grande plant since 2021. The OHS policy is posted in several strategic locations of both facilities for employee’s easy access.
The Company implements Standard Operating Procedures and a working permit system for approving hazardous work activities (e.g., works at height, work in confined spaces, working with flammables and fuels). This includes both the Company’s own workers and contractors. The Company is in the process of implementing lockout/tagout (LOTO) practices and procedures in machinery or equipment at both plants. Kepler implement LOTO practices and procedures at both plants. Kepler will retain external expertise to assist on the LOTO implementation (ESAP #3).
No fatalities were recorded over the last three years. The Company has an accident/incident investigation procedure to review and complete a root cause analysis. The main causes of injuries include (i) entrapment, (ii) slips, (iii) trips and (iv) fall from height. The analysis involves a multidisciplinary team that is coordinated by the leadership of the area where the episode occurred. Corrective actions are then set and tracked to closure through Soft Expert Suite System. As mentioned above, OHS KPIs are reported monthly to the CIPA commission.
The identification, mitigation and control of risks is carried out through the Risk Management Program, which contains the environmental risks to which employees are exposed and the measures adopted by the company. The Emergency Response Plan is kept up to date in the units, allowing the adoption of logical, technical, and administrative procedures in cases of accidents and emergency situations.
Kepler implements at both plants an Occupational Health Medical Control Program (OHMCP) with the aim of promoting workers' health and preventing occupational diseases from physical, chemical, biological and ergonomic agents and from accidents. The company's occupational physicians (two at Panambi plant and one at Campo Grande plant) are responsible for implementing the OHMCP and evaluating the results. In addition, the Company implements Respiratory Protection Hearing Conservation Programs. All Personal Protective Equipment is certified and codified as per national regulations.
Workers Engaged by Third Parties.
Kepler requires its contractors to comply with national labor laws through specific contract clauses. The labor engagement practices, and statutory documentation maintained by the contractors are subjected to monthly labor audits undertaken by independent third-party agency. At some project sites, construction contractors engaged by the company set-up temporary workers housing camps near the construction site. Kepler has formulated specifications for labor camp which are made part of contract agreements and enforced during construction phase.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency.
Energy and Water Consumption. Electricity is provided from the national grid. Industrial water consumption is from a system of wells located in the premises of each facility. Kepler is implementing initiatives to reduce energy and water consumption. Since 2019, more than 60% of the energy consumed in the company comes from renewable sources. The Company is gradually replacing conventional light fixtures and lamps with LEDs and replacing conventional air conditioning equipment with inverters. Kepler replaced conventional air compressors with more energy efficient models and automatized lighting systems. In addition, Kepler regularly replaces damaged pipes that are sources of water leakage.
Pollution Prevention.
GHG Emissions. The GHG emissions is estimated to be around 1.564.000 tons of carbon dioxide equivalent per year. The main sources of GHG at Panambi and Campo Grande plants, were related to the consumption of Liquefied Petroleum Gas (LPG), used in forklifts, internal trucks, electric generator sets and meal preparation as well as the agents in the air conditioning / cooling systems.
Air Emissions and Ambient Air Quality. Panambi and Campo Grande plants have emission control systems installed (e.g., cyclones, bag filters, water curtains or dry systems to capture particulate matter and gases). The Company conducts atmospheric monitoring at the Panambi plant, for particulate matter and hydrocarbons. At the Campo Grande plants, the company monitors emissions from equipment with diesel motors as well. Kepler reports these monitoring values to the authority, as required by the operating licenses of each plant.
Wastewater. Panambi and Campo Grande plants have wastewater treatment plants with aerated biological reactor (ABR) technology. Wastewater is treated through a process consisting of: (i) Physical-chemical treatment; (ii) biological treatment; (iii) Physical-chemical and filtration treatment. At the Panambi plant physical-chemical effluents are generated in the phosphating and painting processes and contain heavy metals. The estimated volume of wastewater (industrial and sanitary) at Panambi produced monthly is around 922 m3 (31 m3/day). Wastewater from Campo Grande plant does not contain heavy metals and has an estimated monthly volume of 72 m3 (2.4 m3/day).
The effluent from the Panambi wastewater treatment plant is released to a river. The effluent from the Campo Grande wastewater treatment plant is released to a system of two lagoons. As per environmental licenses, the Company monitors the effluent at Panambi plant monthly or every two months (as applicable) and at Campo Grande every six months including: pH, temperature, Biochemical oxygen demand , Chemical oxygen demand total suspended solids, and oil and grease.
Solid and Hazardous Waste Management. The company has hazardous and non-hazardous waste management procedures including a system of appropriate sorting, handling, storage, and disposal. Kepler produces hazardous waste including (i) solid waste contaminated with hazardous substances, (ii) solvents, (iii) lubricant oils, and (iv) sanitary waste (biohazardous). The Company also produces non-hazardous waste such as (i) wood waste, (ii) food waste, (iii) paper and plastic. All hazardous and non-hazardous wastes are collected for disposal by authorized public service agencies specialized in each type of waste. As a result of the installation of the new powder painting facility, the Company’s expectation is to reduce the generation of chemical waste by 75%.
Hazardous materials management. Both plants have areas for storage of hazardous materials. The facilities have containment systems, adequate ventilation, emergency showers, and material safety data sheets (MSDS) for each stored material. The storage areas have measures in place to prevent and manage leaks and spills and to avoid contact between incompatible materials stored in tanks in the event of a release.
PS4: Community Health, Safety and Security
Since both plants are located within an existing industrial complex and plans to expand manufacturing capacity are acquiring new equipment and machines to be installed in existing facilities, no significant additional impacts on the health, safety and security of the local community are expected.
Transportation.
Kepler has a Management Plan for Transportation Contractors that provides guidelines for selection, training, and evaluation and monitoring. It applies to companies providing transportation of products, whether inbound or outbound. Contractors are evaluated by a set of criteria that includes (i) financial risk, (ii) truck conditions, (iii) safety and security measures (e.g., vehicle speed), (iv) quality of service. Kepler will strengthen its road safety procedures and practices by developing procedures for the transportation of hazardous materials as per IFC PS 4 (ESAP #4).
Security Personnel.
The Company hires security services at both plants through third-party contractors. A total of 8 armed guards oversee access control and surveillance of the plants. Guards are required to comply with federal police requirements. No other armed security is used, such as for the transportation of personnel, materials, or products. To qualify for a security position, prospective candidates must have a certificate of training issued by the federal police. Guards are screened based on background checks including review of criminal records. Kepler will develop a Security Management Plan as per PS4 requirements and as guided by the IFC Good Practice Handbook on the Use of Security Forces: Assessing and Managing Risks and Impacts (ESAP #5).
