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 Management System
Ara identifies and manages E&S risks and impacts associated with its operations through the pillars of its Corporate Responsibility strategy which include, respecting the environment, sourcing responsibly, and supporting surrounding communities. In addition, Ara has an integrated environmental, health and safety policy that outlines the Company’s commitment to promote safe and healthy working conditions and to contribute to the protection of the environment and pollution prevention.
Given the nature of the Project, Colombian regulatory agencies do not usually require an environmental impact assessment (EIA). The Company is currently working to align its management system with ISO 14001 and ISO 45001, international management system standards for environmental and occupational health and safety. Ara monitors key performance indicators (KPIs) such as energy and water consumption, food loss waste, recycling rate and record of injuries. The Group publicly discloses its KPIs following the following reporting frameworks: Global Reporting Initiative Standard (GRI), European Sustainability Reporting Standards (ESRS), and Sustainability Accounting Standards Board (SASB) in its annual Corporate Responsibility Report (https://www.jeronimomartins.com/wp-content/uploads/01-DOCUMENTS/Investor/Reports/AnnualReport-JM2023nonESEF.pdf).
Organizational capacity
Ara Tiendas has a dedicated EHS team. In Colombia, the environmental team is composed of seven people, one environmental professional per each of the four zones where Ara operates, one professional to support social and environmental sustainability projects, one person responsible of the ESMS and one manager. The team reports to the Sustainability Director who also oversees external communications and corporate social responsibility aspects. Occupational health and safety (OHS) is managed by the OHS manager who is supported by 14 professionals and reports to the senior labor relations manager.
Emergency preparedness and response
The Company has a documented Emergency Preparedness and Response Plan (EPRP) for each of its facilities, that includes a risk assessment, response procedures, resources available to implement the plan, communication flows and training requirements for the brigade, among others. For the distribution centers, the Company has prepared specific EPRPs, that include procedures for the probable risks scenarios, including those related to the use of ammonia in the refrigeration system and protection of surrounding communities. As part of ESAP #1, Ara will submit the EPRP for new distribution centers, Cali and Cota.
Supply chain
Jeronimo Martins has a Sustainable Sourcing Policy and a Code of Conduct for Suppliers that i) include provisions against human rights abuses, child and forced labor, ii) promote a safe and healthy working environment and, iii) promote the protection of natural habitat. The Group is committed that by 2025, its Private Brand and perishable products made with palm oil, soy, paper and wood and beef produced will not be linked to deforestation or the conversion of High Conservation Value ecosystems, while ensuring that human rights will be safeguarded.
Ara evaluates its suppliers and service providers’ environmental and social practices throughout the selection and monitoring stages. Suppliers and service providers are audited based on Ara’s purchasing volume and on the significance of their environmental and social impacts. Audits are mainly focused on compliance with legal requirements and alignment with Jeronimo Martin’s corporate policies. As per ESAP #2, Ara will demonstrate progress towards deforestation and conversion free commitments for direct suppliers of target commodities through annual reports for the next two years.
PS2: Labor and Working Conditions
Human Resources Policies and Procedures
At the end of 2023, Jeronimo Martins had over 131,000 employees worldwide, of whom 13.724 work for Ara Tiendas in Colombia, with 43% of them being women. The Group’s Human Resources policies follow the principles of non-discrimination, and equal opportunity. Ara’s HR policies and procedures are generally in line with PS2 requirements.
Through its Code of Conduct (CoC), JM commits to ensuring that its workers have a healthy working environment and appropriate compensation. CoC specifically prohibits discrimination and harassment and recognizes freedom of association and the right to collective bargaining.
Jeronimo Martin’s has an Ethics Committee tasked with monitoring the disclosure of and compliance with the standards of the CoC and Anti-Corruption Policy. The Ethics Committee has a reporting channel, available worldwide, that allows customers, employees, suppliers, or other stakeholders to report any breaches to the CoC confidentially/anonymously, including harassment, discrimination, or other improper practices. Additionally, in Colombia, Ara has an internal grievance mechanism called “Ara Te Oye” that is available through the Company’s website and there is a Labor Coexistence Committee (“Comite de Convivencia Laboral”) in accordance with local regulations. This committee is made up of representatives from both employees and Ara and its purpose is to promote a healthy work environment and prevent workplace harassment and sexual harassment. Ara Te Oye is widely disseminated to Ara’s workforce but is not currently available to contractors such as security guards. As part of ESAP #3, Ara will provide a grievance mechanism to third-party workers, through the wider dissemination of the Ethics Channel. In addition, Ara will document Ara Te Oye’s grievance mechanism procedure, detailing the process for raising grievances including those confidential, anonymous, and associated with gender-based violence and sexual harassment (GBVSH), the types of issues that can be raised, the procedure for handling received grievances, and dissemination, recording, logging, and tracking methods for all complaints to ensure the follow-up and analysis. People handling GBVSH complaints will receive specific training.
Occupational health and safety
The OHS team performs risk assessments to identify environmental, chemical, biological, mechanical, electrical, ergonomic, and psychosocial risks associated with Ara’s operations. The Company performs worksite inspections and EHS audits, which also cover contractors and are conducted by internal and external teams.
Main OHS risks cover manual handling and lifting, slips and falls, contact with machinery and exposure to high temperatures and chemical substances. Ara has a permit to work system and standard operating procedures for high-risk activities (e.g., work at heights, confined spaces, hot works). The refrigeration system has a combination of ammonia and glycol in a closed circuit. The OHS team has a detailed fire and explosion prevention and protection scheme for the protection of workers, and nearby communities. The plan considers the use of ammonia detectors in all areas at risk, ventilation, fire suppression systems, and emergency planning with specific training for the emergency brigade personnel and public first responders.
All incidents are investigated within 15 days to identify corrective measures to prevent recurrence. The lost time injury frequency rate (number of lost time cases per million hours worked) stood at around 12.3 between 2020 and 2022, but has increased to 16.6 in 2023, which is significantly higher than the 7.5 industry benchmark for grocery stores (www.bls.gov). As per local regulations, Ara Tiendas has a Joint Committee for Occupational Health and Safety ("Comité Paritario de Salud Ocupacional y Seguridad"), composed of both the employer representatives and workers. As per ESAP #4, Ara will strengthen its OHS practices, including gender safety considerations, training, awareness raising campaigns and the revision of the incident investigation methodology to address and mitigate the root causes.
The Company performs regular medical examinations for its employees depending on the level of risks associated with their tasks and to confirm their fitness to work. In addition, Ara monitors working conditions, including noise, temperature, air quality and light.
Contractor Management
Ara relies on third-party contractors for the construction of new facilities and the installation of equipment. An external company is hired to monitor the overall contractor performance and Ara’s internal standards are followed with the overall oversight of an Ara supervisor. The contracts with third parties have an OHS annex that details all the conditions to be followed by the contractor, such as special requirements for high-risk activities, accident reporting and use of personal protective equipment, among others.
PS3: Resource Efficiency and Pollution Prevention
Resource consumption
Electricity and water are mainly sourced from the national/municipal system. Environmental initiatives adopted by Ara to reduce its environmental footprint, include water saving solutions such as flow regulators, taps with timers, and rainwater harvesting.
Pollution prevention
Ara’s liquid effluents are limited to sanitary wastewater coming from the stores’ and distribution centers’ operations and cleaning of containers. Effluents from stores are discharged in the municipal sewage system. 10% of stores have implemented wastewater treatment to reduce organic compounds, suspended solids, and grease. Three of Ara’s distribution centers are located in areas with no sewerage connection networks and have wastewater treatment plants. The quality of discharged effluents meets World Bank Group (WBG) General EHS Guideline’s guidance values and local requirements.
With regards to the distribution centers that are currently under construction, after treatment, Cali’s effluents will be discharged to the sewerage system and Cota’s effluents will be either i) discharged to the municipal system; ii) sent to a third-party for final disposal or iii) discharged to surface water. In case effluents are discharged to surface water, as per ESAP #5 Ara’s wastewater treatment plant will meet WBG General EHS Guideline’s guidance values and/or local requirements (whichever is stringent).
Ara has a waste management program to sort, classify, handle and store solid and hazardous waste. In addition, Ara monitors its food waste and implements food waste recovery initiatives such as animal feed and bioprocessing, anaerobic digestions, composting and controlled combustion. In 2022, Ara increased its overall waste recovery rate by 2.5 % compared to 2022, reaching 75%. Hazardous materials (hazmat) are managed in accordance with Ara’s Chemical Risk Management Program that includes requirements for identifying and classifying chemical hazards, labeling chemical products, and ensuring safe storage and handling. The program also includes measures for emergency response, training, and verification of compliance with safety measures. As per ESAP #6, Ara will update its Chemical Risk Management Program stating that pesticides included on World Health Organization’s (WHO) Ia or Ib list cannot be used by Ara, or its services provides.
GHG emissions
Ara estimates its 2022 greenhouse gas emissions (GHG) as 60,115 tons carbon dioxide emission equivalent per year (tpa) compared to 69,611 tpa in 2021, achieving a 13.6% reduction. Upon Project completion, additional GHG emissions associated with the Project, are estimated to be less than 10,000 tpa.
PS4: Community Health, Safety and Security
Infrastructure and Equipment Design and Safety / Life and Fire Safety
For the design and operation of the distribution centers, Ara follows strict Life and Fire Safety (L&FS) requirements based on the Company’s fire risk management and property protection guidelines, and the business continuity plan aligned with WBG General EHS Guidelines. The design includes two or more independent and separate emergency exits; fire alarm systems; and fire protection systems: fire pumps, sprinklers, hose reels, special suppression systems for cold storage areas; exit and hazard signage; emergency lighting; portable fire extinguishers; and ammonia gas detection systems.
Distribution centers follow good practices for storage systems (e.g., staking arrangements, structural racks designed with load and seismic considerations, segregating and separating hazmat’s, etc.), strict housekeeping and use of electric forklifts, among others.
For stores, Ara has implemented a L&FS manual for the construction, remodeling, and operation of the stores, including design, testing and operational guidelines of the stores’ architecture and L&FS systems, in line with the WBG General EHS Guidelines.
Community Health and Safety
Contracts with construction third parties do not include mitigation measures to protect nearby communities from construction activities such as increased noise, dust, or traffic disturbances. As per ESAP #7, Ara will amend the contract to include specific provisions to protect surrounding communities and will verify implementation of mitigation measures through onsite inspections.
Road Safety
In accordance with local regulation, Ara has a Road Safety Policy and Strategic Plan that is applied to own employees and contractors. The plan also includes the selection, induction, and training of new drivers, as well as the monitoring and control of driver documentation, maintenance, infrastructure requirements and KPIs. The implementation of the plan is overseen by the Road Safety Committee. All transport services providers working for Ara have monitoring centers and are required to report any incident related to their operations. As per ESAP #8, Ara will map and analyze community GBVSH risks associated with trucking routes focusing on designated rest areas and implement mitigation measures as needed.
Security Services
Ara relies on external security guards. Security guards working at stores are unarmed and there is armed guards in distribution centers. All guards follow the Security Guard Manual that provides information on the specific procedures and protocols to be followed by the security personnel. These include specific instructions for CCTV surveillance, prevention of theft, response to armed robbery and others. As per ESAP #9, Ara will update the Security Guard Manual to include gender considerations, vetting of security guards, defensive use of force consistent with respect for human rights, training and monitoring, among others. The manual will follow the provisions of IFC’s Good Practice Handbook on Use of Security Forces and Ara will implement a dissemination and training campaign among security guards working on its premises.
Food Safety
Jeronimo Martins has a Product Quality and Safety Policy for food safety. In addition, the Company provides regular training to employees and carries out laboratory tests and conduct food safety and quality audits of suppliers.
