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
Policy, Identification of Risks and Impacts, Management Programs
Afya has a Sustainability and Environmental Policies approved by the Board and applicable to all the facilities, which sets out the commitments to United Nations (UN) Global Compact, compliance with local requirements to continuously improve the E&S performance. The company will enhance its existing environmental and social (E&S) policies and procedures, in line with IFC Performance Standards (PS) requirements and World Bank Group (WBG)’s applicable Environmental Health and Safety (EHS) Guidelines, incorporating into an ESMS at the corporate level and implement it at the facility level. The ESMS will incorporate (but not be limited to): (i) due diligence checklists for merger and acquisition (M&A) and land/building leasing, covering evaluation process against applicable IFC PSs for any future acquisition and land leasing; (ii) management programs (Contractor Management and Monitoring Plan, Evacuation and Exits Plans, Pest Management Procedure); (iii)retrenchment policy, (iv) stakeholder engagement framework and grievance mechanism for the affected communities; and (v) monitoring and audit program. Current and future assets will be incorporated into Afya’s ESMS (ESAP #1).
Afya has adopted a corporate level code of ethics and conduct that is applicable to employees, contractors, and suppliers. It covers aspects related to the provision of environmental protection, working environment, human rights, equal opportunities and non-discrimination, anti-sexual harassment, integrity, relationships with stakeholders, and management of ethics channel. The compliance department provides an oversight of the implementation. E&S policies and the code of ethics are disseminated at the corporate induction and at the contract with third-party contractors and suppliers.
The company has environmental license required for each of the facilities. Brazilian regulatory requirements do not require the company to conduct an Environmental and Social Impact Assessment (ESIA) for the expansion and refurbishment of campuses. The company’s E&S risk identification and management programs include environmental aspects and impacts assessment, OHS risk assessment and management of employees per type of tasks and operations, resource efficiency, general and hazardous waste, environmental monitoring, and emergency preparedness and responses. To improve the E&S management programs in line with PS1, per ESAP #1 under the ESMS, Afya will develop management programs to mitigate the risks, including: contractor management, emergency responses, and pest management and pesticide elimination plan. Details on the enhancement of management programs are highlighted under the following PS sections.
The company has followed a due diligence process for the M&A, which includes a verification of some E&S risks such as overlap with sensitive areas on biodiversity, areas of indigenous and/or traditional communities, environmental and operational licenses, as well as legal cases on labor, civil, and environmental aspects. As part of ESAP #1 under the ESMS, the company will formalize and implement a procedure to assess additional E&S aspects such as Life, Fire and Safety ( LFS), working conditions, and OHS performance as part of the M&A due diligence.
Social risks and impacts are mainly related to community safety derived from expansion activities. The company either lease lands from commercial owners for 95% of their operations or acquires the land for existing campuses from private owners on a willing seller-willing buyer basis. New land acquisition is not foreseen, moving forward. As part of ESAP #1 under the ESMS, the company will develop a land leasing procedure to ensure that projects financed by IFC requiring land/building leasing will be implemented in accordance with PS5 requirements, including the avoidance of risks and impacts related to LFS, biodiversity, indigenous peoples, and cultural heritage.
Organizational Capacity and Competency
At corporate level, the key E&S function is led by the Vice Presidency of People, Management, and Services. It oversees the environmental management, human resources (HR), OHS, contractor management, LFS of facilities, patrimonial security aspects, and integration of newly acquired companies. Compliance department manages the grievance mechanisms for workers and external communities through its ethics channel. The Vice Presidency of Finance manages the M&A due diligence and management as well as land/building leasing aspects. Institutional communication and sustainability department, under the Vice Presidency of Marketing and Sustainability implements the stakeholder engagement and external communication, including the annual sustainability report. The senior management team is composed of the leaders of vice presidencies, reporting to the CEO. At the facility level, E&S aspects are overseen by an administrative and financial department, reporting to the Dean. There are dedicated staff members for environment, OHS, and HR aspects who report to the respective corporate E&S managers.
Monitoring and Review
The company has implemented monitoring programs to measure the effectiveness of the E&S performance (such as aspects of resource efficiency, Greenhouse Gas (GHG) emissions, general and hazardous wastes, effluents, incident performance, internal and external grievances as well as compliance with contractual obligations and regulatory requirements). Monitoring outcomes are reported to the E&S Committees (Waste management, HR, Audit and Compliance) for the continuous improvement and also publicly reported as part of the sustainability report (2021): https://api.mziq.com/mzfilemanager/v2/d/d9de61ef-dfe7-4141-bf30-ad612d6eeca2/b1b266b9-595e-4392-77cd-4f3d623c9ffb?origin=1.
Afya has implemented an E&S internal audit program, however, the corporate audit procedure is yet to be formalized. Going forward, as per ESAP #1, the company will formalize and implement the audit program upon aligning E&S management programs to IFC PS and applicable WBG EHS Guidelines.
Emergency Preparedness and Response
Afya has developed Emergency Response Plans (ERP or PAE in Portuguese) for each facility, aligned with local legal requirements and Good International Industry Practices (GIIP). Trainings in emergency preparedness, response and first aid are provided to all employees. Afya’s facilities are normally located in a mixed used area with commercial communities or residential areas. Local ERPs have considered the potential impacts on and from the communities.
The ERP, for the facilities visited during the appraisal, were noted to cover relevant potential emergencies such as fires, medical emergencies and other probable events. Evacuation plans include emergency contacts and details of relevant management team members from Afya and other tenants in the same facility. Emergency exits and assembly points are identified. During the site visit, it was observed that the necessary floor evacuation plans were not displayed near the main gathering places of the floors (i.e. elevator lobbies, other) in all cases. As part of ESAP#1 under the ESMS, the company will review its evacuation and exit plans, communicate it to employees such as posting them on the walls of all facilities, as well as coordinate the emergency procedures with other tenants located in the same facility, as applicable.
The facilities that were visited had fire sprinkler system, extinguishers, fire hydrant systems, fire hoses, signage, emergency lighting, and fire detection and alarm system. Each facility also has a basic emergency brigade and the respective equipment is located at the strategic locations of the facilities.
The Company keeps records and copies of permits related to the LFS systems e,g, Auto de Vistoria do Corpo de Bombeiros - AVCB, issued after the design approval and inspection at the associated facility of the installed systems by the local fire authorities.
PS2: Labor and Working Conditions
Human Resources Policies and Procedures / Working Conditions and Terms of Employment
As of May 2023, Afya employs around 9,600 direct employees of which 40% are men and 60% are women. Employees are hired full-time or part-time, under permanent employment contracts covered by Brazilian labor code (Consolidation of Labor Law). Approximately 5% of workforce serve as contractors to cover temporally work demands.
The company’s human resources (HR) policies, procedures, and code of ethics and conduct are communicated to employees through induction and training programs. The policies cover terms of employment, compensation and benefits, OHS, recruitment and promotion, workers’ grievance, sexual harassment, professional development, 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, salary and benefits, and safety requirements. The company has implemented apprentice and internship programs.
The company’s HR policies stipulate non-discrimination, equal opportunities aspects as well as the prohibition and management of gender-based violence and harassment (GBVH) as stipulated in the Brazilian law (No.14457, 2022). Regarding the GBVH risks, the company has a confidential grievance mechanism (ethics channel) available for workers, contractors, and students. It has also developed and implemented educational materials where it explains the definition and types of sexual harassment in the educational environments, disciplinary measures, and how to use the confidential channel. Afya has disseminated the procedures and grievance channel through its distance learning program and posters within campuses. The company also makes available the psychological and emotional support to survivors in a confidential way.
Workers’ Organizations
Afya’s employees are represented by multiple trade unions for the different job categories. The company annually negotiates Collective Bargaining Agreements (CBAs) with the trade unions. CBAs include workers’ rights and benefits including minimum wage, overtime, additional bonus for length of services, leave, transportation vouchers, meal vouchers, vacation, and health care, among others.
Retrenchment
Afya reports that no retrenchment is anticipated, moving forward. In case a retrenchment needs to be implemented, under the ESAP#1, the company will develop a corporate retrenchment policy and implement it, establishing steps to be taken in alignment with the national legislation and PS2.
Worker Grievance Mechanism
The company implemented a workers’ grievance mechanism allowing for anonymous and confidential complaints and is accessible via online platform, email, and/or phone (https://www.contatoseguro.com.br/afya), which is accessible to employees, apprentices, interns, third-party contractors, suppliers, and customers, without risk of retaliation. The flow of grievance resolution and roles and responsibilities are detailed within the corporate grievance investigation procedure. Afya’s Compliance Department manages grievances until closure including the reporting of key performance indicators (KPI), ensuring confidentiality and anonymity. Internal Commission of Ethics and Conduct oversees the investigation process and outcomes, including the recommendations on the disciplinary measures.
Occupational Health and Safety
Afya’s operations might include exposure to biohazards, chemical substances and ergonomics. The company has developed a management program for OHS risks at each of its facilities that assesses the main risk for each job and establishes mitigation measures such as administrative controls and use of collective and individual protective equipment. In addition, Afya has developed a series of standard operating procedures for activities inside laboratories. The company records incidents for its own employees as well as contractors, including those happening at the workplace and during commuting. In 2022, Afya’s lost time frequency rate per 100 full-time workers was 0.2 compared to the 0.5 US Bureau for Labor Statistics 2021 benchmark for educational support services.
Afya has an occupational monitoring program that includes temperature, air quality, lightning, and noise. Overall, monitored parameters are aligned with local regulations and WBG General EHS Guidelines.
Workers engaged by Third Parties
Afya engages with the third-party contractors for construction, catering, cleaning, security service, and Information Technology (IT), among others. The company implemented a contractor selection and management policy and established OHS requirements for the contractors as per the national legislation. As per the ESAP#1 under the ESMS, the company will develop a contractor’s management procedures as per the PS2, to ensure the adequate OHS and working conditions for third-party contractors with an enhanced monitoring program. The contractor management procedures will include: (i) E&S requirements for contractors, detailing the OHS and labor conditions requirements; (ii) contractors management and assurance plan describing the controls to be implemented by Afya (e.g. inspections, audits, regular meetings); (iii) roles and responsibilities of contractor’s oversight and (iv) E&S monitoring and corrective actions management aspect to record and track the performance of the contractors by establishing KPIs. These requirements will be included in the contractor’s contract, and trainings to third-party contractors will be conducted.
PS 3: Resource Efficiency and Pollution Prevention
Resource Efficiency and Greenhouse Gases (GHG) Emissions
In most of its facilities, Ayfa sources electricity from the grid and started to install photovoltaic panels in some of its units in 2019. The company monitors energy and water consumption at its facilities and has also developed a GHG emissions inventory following the GHG Protocol Corporate Accounting and Reporting Standard. In 2021, Afya GHG emissions accounted for 4,048.08 ton carbon dioxide emission equivalent per year. There are air conditioning equipments in place that use refrigerant gases such as R22. As part of the ESAP, Afya will develop a policy to reduce fugitive emissions, which will include commitment on not to use and replace ozone deploying refrigerant gases. (ESAP#2).
Pollution Prevention and Control
Afya does not produce industrial effluents and air emissions are limited to back up diesel generators that are used only in case of emergencies. At two premises where Afya operates, the company discharges sanitary effluents to surface water and while the facilities have wastewater treatment plants (WWTP), discharged effluents are not fully aligned with WBG General EHS Guidelines. To comply with EHS Guidelines, (i) for the existing and/or future assets that Afya is not/will not share it with other tenants and that they will have full control, Afya will improve the quality of the treated effluents to meet WBG General EHS Guidelines guidance values; (ii) for the existing assets and/or future assets that Afya is / will be sharing with other tenants and will not have full control, Afya will work with the building owner and other tenants to improve the quality of treated effluents (ESAP#3a and b). ESMS, that will be developed per ESAP#1, will include a monitoring and audit system, to evaluate and report the E&S performance to senior management, in line with IFC PS requirement, which might be stringent than local requirements.
Each of Afya’s facilities has a Solid Waste Management Plan that details the classification, segregation, storage, handling and disposal method of generated waste. Domestic waste is collected by relevant municipal entities while hazardous waste is collected and disposed of by licenses third-parties. The company tracks the transportation of hazardous waste from its generation source to its final destination through manifest of transports that are logged into the National Information System for Solid Waste Management. Afya monitors that transport providers and final disposal companies have valid operating licenses. Moreover, the company has established a Waste Management Commission at the corporate level and is rolling out a platform to monitor waste generation, transport and final disposal.
Main hazardous materials used by Afya include diesel for emergency generators and chemical products used in small quantities. Going forward, the company will install secondary containment for the storage of hazardous materials (ESAP #4).
Pesticide Use and Management
Afya engages with different service providers for pest control and products. As part of ESAP#1 under the ESMS, Afya will develop a pest management operating procedure and will request all service providers to eliminate any product included on World Health Organization’s Ia or Ib list. This requirement will be included in contractual agreements between Afya and its service providers.
PS 4: Community Health, Safety & Security
Infrastructure and Equipment Design and Safety and Emergency Preparedness and Response
All Afya facilities have processes in place to address the hazards posed by storage and transportation of pharmaceutical products and miscellaneous. Afya has a corporate-wide framework and tailored the Emergency Response Plans (ERP) for each facility and include the necessary emergency scenarios involving neighboring communities. Generally, the fire protection systems in the schools and healthcare facilities have been designed to comply with local regulations and based on GIIP. The facilities maintain close contact with the local fire department. The company, as part of ESAP#1 under the ESMS, will develop an auditing and screening tool to be used to evaluate life and fire safety (LFS) risks in future acquisitions of existing schools and facilities based on the LFS requirements of the WBG EHS General Guidelines and complete action plans to close any gaps with the requirements.
Security Personnel
Afya has implemented a security procedure for some of the largest facilities, however, it has not rolled out a corporate security policy and procedures throughout the facilities. The company’s security control includes CCTV, visitors’ access control, and regular patrol conducted by Afya’s security staff and/or third-party providers. Security staff and third-party contractors are unarmed at most of the facilities. Afya verifies that security contractors are properly vetted with a background check, documentation, and accreditation required by the local law and regulations. Security contractors are required to participate mandatory trainings which includes code of conduct, human rights, and principles of proportionality, HR policy and procedures, first aid, respect to culture, and prevention of sexual harassment. According to the company, there have not been any incidents or grievances related to its security arrangements.
Afya will develop and implement a security policy and management plans aligned with PS4 requirements, based on the security risk assessment. The security management policy and plans will include: (i) security management objectives and targeted stakeholders, (ii) internal and external risks identified in the security risk assessment, (iii) security arrangement employed within facilities, (iv) incident reporting, (v) training requirements for security personnel and (v) KPIs for the security management and trainings (ESAP#5). The company will consistently implement them at acquired facilities in the future.
