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: Environmental and Social Assessment and Management System
Policy
ETG Group has developed and implemented a Group Sustainability Policy, Sustainable Sourcing Policy and an ESMS manual based on ISO 14001 and 45001 principles. These are applicable to all Group entities including those assets subject to this proposed financing. These policies are supported by 35 ESMS elements that align with the assessment and management system requirements of this Performance Standard. In addition, policies, and procedures regarding Child Labor Remediation; Control of Suppliers, Sub-
Contractors and Sub-Suppliers Procedure; a Land Acquisition Procedure; Employee Grievance Handling
Procedure; Risk Assessment of New Projects; Environmental and Social Risk Assessment of Supply Chain and E&S risk assessment of suppliers have been developed and implemented.
Responsibility for applying the policy lies with the respective business area CEOs, supported by the operations teams and the Group Sustainability Team. Policies reference international standards including IFC’s Performance Standards (and EHS Guidelines), UN Convention on Business and Human Rights, ILO Codes of Practice on Labor and Employment, among others.
Identification of Risks and Impacts
As per the relevant environmental law and regulation of the respective countries in which the operations are located, the three plants slated to benefit from proceeds of this proposed investment conducted environmental and social impact assessments prior to the commencement of construction and/or operation. Based upon those assessments, each asset received the relevant licences to construct and subsequently operate those plants.
As per the Sustainability Policy, operating plants and facilities are required to develop and maintain an environmental aspects/risks and impacts/hazards register (aligned to an E&S risk assessment as per required by Performance Standard 1) that are also assessed for significance; those deemed significant are subject to specific objectives, targets and/or programs to eliminate or minimize the cause of the impact/hazard. This is required to be implemented as per a standard operating procedure (SOP), undertaken by asset E&S coordinators and employees working in various departments at the asset. Several example risk assessments for operations within Lilongwe operations were made available to IFC for review through the EHS enterprise platform.
The identification of risks and impacts assessed using the above SOP is required to be supplemented by the identification of applicable legal and other requirements. A list of applicable law/regulation for operations is then to be maintained in an enterprise-wide EH&S platform. This platform utilized by ETG since September 2023 remains a work-in-progress and is being populated as the above actions are completed. Business partners, suppliers of raw material and services, off-takers in agribusiness and inputs to all the ETG plants are subject to E&S assessment as per an SOP within the corporate ESMS. Evidence of these actions having taken place for all assets (such as being available in the platform) is addressed in ESAP #1.
Supply Chain Assessment
ETG’s supply chain risk assessment and management system practice continue to evolve as new commodities are sourced from new geographies. Leveraging from experiences gained in the cocoa and coffee sectors, mapping of new commodities against areas of high biodiversity value is undertaken by specialists based in Amstelveen, The Netherlands, supported by personnel on the ground in the sourcing areas. See the discussion under PS 6 below for details on what has been undertaken to date re soy in the countries subject to this proposed investment, including additional actions to be included in the ESAP.
Management Programs
Programs requiring upgrades to assets or acquisitions are managed by Investment and CAPEX committees. As part of its ESMS, ETG corporate has developed a suite of practices and operational procedures to be implemented at the asset level. Relevant to this proposed investment, practices regarding supply chain assessment (mapping origins against biodiversity areas to be avoided, for example and as noted above) and programs designed to identify opportunities for resource efficiency are undertaken (see PS3 below, for example) and managed by specialist departments, for example, within the Sustainability function.
Organizational Capacity and Competency
As of May 2024, the company E&S organizational structure is led by the Chief Sustainability Officer (CSO) who reports to the Group CEO. Under the CSO are the Heads of Sustainability, EHS and ESG Compliance. These positions are supported by various managers, coordinators, project officers, etc. Within each business unit are E&S program leaders and champions.
Plant managers have overall responsibility for matters related to EHS and labor management. A typical structure, as found at the Malawi operation, is the plant manager is supported by a full time EHS manager and an HR manager as well as EHS representatives. An EHS committee is in place and meets monthly. In addition, Zambia and Malawi operations have a dedicated food safety lead; in Rwanda, this role is combined with the E&S function. Within the Mwembeshi operation these individuals are supplemented by an employee who focusses on gender issues, including the wellbeing of female employees in support of ETG’s Diversity, Equity and Inclusion Policy. IFC met the E&S leads while visiting assets in Zambia, Malawi and Rwanda.
E&S coordinators receive annual training on their roles and responsibilities to ensure they have the required skills and experience to fulfil their job duties. Need for additional training for employees and others working for or on behalf of the company is identified using a variety of sources, including regulatory requirements, corrective actions arising from internal audits, near miss and accident and incident data, all of which is maintained within the enterprise wide EHS platform. A comprehensive suite of EHS training programs is maintained as part of that platform.
Emergency Preparedness and Response
Emergency Preparedness and Response plans (EPRP) are required to be developed based on the nature of operations found at the assets and the risk assessments. The ESIAs described the need for EPR plans, the role of an emergency response coordinator, the types of events that could lead to an emergency and expected response. The corporate ESMS requires assets to develop and maintain and EPRP, with its purpose, scope, procedure defined within an SOP; an example EPRP for Rwanda operations was provided for review.
Specific measures in place at the assets to deal with emergencies, as were seen during IFC’s visit, include firefighting equipment (extinguishers, pressurized hydrants), the presence of trained employees (trained by the local fire departments; an example of a training session on firefighting was provided to IFC for review), signage directing personnel to safe places, and summary depiction of plan requirements, etc. Drills are reportedly undertaken at each asset, the conduct of which is a key performance indicator (KPI). The ILESA report highlighted the need to differentiate with respect to the nature of the emergency. In particular, the actions regarding a hexane emergency need to be fully described. As per the ESAP (#2), the requirement to update the EPRP at all assets to be funded to fully define the actions to be taken in the event of different emergencies is addressed.
Monitoring and Review
Various practices regarding monitoring and review of asset operations are described within the corporate ESMS. Some are undertaken by E&S coordinators, who monitor and record specific parameters (corporate KPIs, measures within the SOPs of the ESMS, or collecting data required for IFC’s annual monitoring report, or AMR) and some are conducted by external consultants or 3rd party firms. For example, for the former, the SOP entitled Performance Measurement and Monitoring lists KPIs to be reported on a daily (such as energy, fuel, water consumption) or weekly basis (incidents, lost time, safety suggestions) by the coordinators. Monitoring, as required under operating licences (such as air emissions) is outsourced to relevant competent companies. Data is entered into the enterprise-wide platform and summary information (trend analyses) is reviewed in quarterly sustainability meetings.
Company assets are subject to internal audits, the methodology of which is described by an SOP. The ESMS management representative creates the audit plan and assembles the audit team. Findings (non-conformities, observations or opportunities for improvement) are determined and, in conjunction with the entity being audited, timebound corrective actions created. All audit records (including tracking of the closure of corrective actions) are maintained in the enterprise-wide EHS platform.
An SOP (Management Review) describes the procedure for periodic review and evaluation of the corporate ESMS by top management (Chairman, Steering Committee comprising Partners, Directors, COO, etc.) to ensure its continuing suitability, adequacy, and effectiveness.
PS 2: Labor and Working Conditions
The Malawi plant employs 74 long-term contracted employees and 93 short-term contracted workers. The number of casual workers (which can include seasonal workers) vary between 15 and 75 depending on operational requirements. Mwembeshi has 250 employees: 226 male 24 female. Of these 192 are fixed term (permanent), 28 short term and 30 seasonal. Short term (skilled – often hired for projects, electricians, fabricators) are employed on a contract basis for 6-9 months. These can be converted to permanent if a job exists. Seasonal – unskilled - (such as those hired for re-bagging – putting loose soy into bags) are utilized on an as needed basis (typically from May to December.) They are paid monthly and are hired on an individual basis. Some 3rd party contractors are also used for loading and unloading. The Rwanda plant currently employs 68 fixed term employees, among which 8 are women. The plant also employs casual workers though a work recruitment agency for truck loading/offloading and operations activities. The total number of casual workers vary between 100 and 150 a month depending on operational requirements.
Human Resources Policies and Procedures
ETG corporate includes HR operations. Responsibility includes policy setting and development of Group-wide employee learning and development practices and practices for talent acquisition. An HR policy committee is in operation that interacts with the sustainability team. Recent examples of policies updated and disseminated by the committee to operating units include those regarding retrenchment and grievance redress.
Each business line within the Group has an HR leader. HR matters at the asset level are compiled into an HR manual and the implementation of such requirements is the responsibility of country-based HR professionals. For example, the HR manual for Rwanda operations was provided to IFC for review. Whereas the manual does reference in general labor practices as found in Rwanda, it would benefit from explicit reference to the section of labor law/regulation that underpins all the rights and responsibilities on the part of both the company and the employee. The manual lacks explanation of some practices (e.g., the calculation of overtime rates) and omits references to practices that would be expected to be described, such as how grievances are to be raised and managed at the asset level (as is the subject of overall corporate policies, as noted above). As per the ESAP (#3), the company will be required to update its HR manuals for all assets to be funded by this investment to ensure they comprehensively and accurately describe and expand upon all the rights and responsibilities of both company and all types of individuals working for or on behalf of the company (permanents, temporaries, seasonal workers and those employed by 3rd party organizations), based on applicable host nation law and/or regulation and the requirements of PS2. Once finalized, the HR manuals will be disclosed and shared with all the employees in the appropriate national language through regular information sessions performed by the HR department.
Working Conditions and Terms of Employment
Practices related to working conditions and employment were discussed during appraisal. For example, those described to IFC while at Mwembeshi include the issuance of contracts to all those who are engaged for work (including temporaries and seasonals). Contracts contain a code of conduct and are based on national employment code. All contracts are required to be submitted to the Ministry of Labor for verification/recordation. The disciplinary code is also included in the contract which included a grievance procedure. Salaries are based on national law (for those working in factories and this is determined by the GoZ and is publicly disclosed information). Additional allowances are paid for housing, transport and meals. A Christmas bonus is also paid (which is not stipulated by law). Deductions are made for national insurance, pension and taxes. All of this is documented on a payslip.
Some observations from the Lender’s Independent Environmental and Social Advisor (LIESA) report described opportunities to improve some HR matters at the asset level. For example, providing documented contracts to seasonal workers in the operations in Malawi as well as the need to review adherence to paying minimum wage and adherence to overtime hours worked when defined by host nation law/regulation; also, appropriate provision of suitably located rest areas and sufficient toilet facilities. As noted above, similar matters were reviewed by IFC, and discussions held with plant management and country-based HR leads, and with select workers in separate meetings (permanent employees, contractors and those employed by 3rd party contracting companies) at Mwembeshi and were not found to be wanting. In Rwanda, all direct workers have a fixed term contract renewable on an annual basis; salaries are aligned with the national wages for the same industry and applied to the worker’s grades. Contracts include details on remuneration, employment period, responsibilities, probation period, available leaves (annual, medical and special ones) . Pension and social security contributions are paid by the Company but there is no evidence that payslips are delivered to the employees at the end of the payroll cycle.
Working hours are dictated by the national labor law with workers required to work on a 45-hours per week schedule. Workers engaged in production are employed on a 12-hours/day shift basis while overtime is often practiced and paid in line with the national requirements. An accommodation hosting a maximum of 10 people and equipped with a kitchen and a canteen has been built within the facility for the use of expatriate employees and is in line with the IFC/EBRD workers accommodation requirements.
A changing facility with gender-segregated compartments has been built on site for the use of both direct and casual workers. No canteen is available on site for local employees who will source their meal outside the plant perimeter.
Given the existence of reported shortcomings in some operations, following the updating of asset-based HR manuals (as per ESAP 3), the company will be required to submit to an independent audit of its labor practices at all assets to be funded by this proposed investment, and for all those working regardless of contractual relationship, and to develop timebound corrective action plans as necessary, to ensure all operations are meeting both host nation labor law and regulation and the requirements of PS2. This is addressed in ESAP #4.
Worker’s Organizations
Freedom of Association is stated as being a fundamental right in the ETG MS and therefore joining union and collective bargaining is freely allowed within the ETG Group. Promotion of communication between management and staff is seen as key to good operations. For example, a requirement to establish a worker’s social welfare committee is included in an SOP of the corporate ESMS. Along with the promotion of dialogue, a primary responsibility of the committee is to periodically review grievances and their outcomes. This is in addition to the responsibility of the grievance redress committee (GRC) described below. For example, Malawi and Rwanda operations have an established a self-elected worker committee. The need to establish the same for all assets to be funded is addressed in ESAP #5.
Non-Discrimination and Equal Opportunity
Per the Sustainability Policy, ETG shall ensure the equality of opportunity and treatment with respect to employment and occupation and no discrimination on the basis of race, color, religion, political opinion, nationality & social origin. With regards to Sexual harassment, ETG commits to operate a zero-tolerance policy for any form of sexual harassment in the workplace, treat all incidents seriously and promptly investigate all allegations of sexual harassment. Any person found to have sexually harassed another will face disciplinary action, up to and including dismissal from employment.
Retrenchment
Given the use of proceeds of this proposed investment is to increase capacity within the defined assets, and therefore is expected to result in an increase in the workforce, retrenchment is unlikely. Regardless, as noted above, corporate has recently updated its retrenchment policy which would be applicable, adopted and adapted to reflect host nation specifics as needed.
Grievance Mechanism
An employee grievance redressal policy has been established as per the corporate ESMS. Mechanisms to receive grievances, including anonymously (for example, complaints/suggestion boxes as seen during IFC’s visit), are described, as well as the procedure to address them. Access to the GM is required to be made available to contract workers as per the SOP. Per the Plant manager at Malawi, only a couple of grievances have been recorded since operations began. In Rwanda, the site-HR manager registers and addresses complaints but no formal GM has been established and shared with the employees. For all sites, the company will need to ensure all workers, including temporary workers and contracted workers who do not have access to a GM, are aware of its existence, purpose, and how to use it, for all assets to be funded, is addressed in ESAP #6.
Child Labor/Forced Labor
ETG corporate has policies in place that prohibit both child labor and forced labor within ETG operations. Identification, showing date of birth, is required prior to issuance of a work contract. In addition, the Sustainable Sourcing policy further references a supplier code of conduct, the scope of which applies to suppliers, contractors, sub-contractors and visitors to ETG premises, which stipulates no child labor or forced labor is allowed. In Rwanda, the IDs of both direct and indirect workers are checked by the site-HR manager to ensure that no workers below the age of 18 have access to the site.
With regards to its overall supply chain practice, ETG Group requires exporters to sign ETG’s Supplier Code of Conduct (ETG/COD/OCP03) to declare that no child labor abuse, (gender) discrimination, forced labor and/or sexual harassment takes place in the suppliers’ facilities and suppliers are subject to assessment inspection questionnaire (ETGMS-CL18). Depending on the soft commodity, and how it is sourced, ETG’s Dedicated Sustainable Supply Chains follow a variety of industry-recognized sustainability standards either Rainforest Alliance (RA), ARS, 4C, Organic US/EU, CMiA (Cotton Made in Africa), Fairtrade International and/or the Beyond Beans Standard and such are verified annually by a third- party auditor. At present however, soy for domestic consumption in the countries targeted by this investment, is not the subject of these types of sustainability standards. Therefore, the issues that are addressed by such standards (including child and forced labor) are tackled by various actors in the supply chain including the primary producers themselves (following awareness of the issues), ETG/Parrogate extension/buying agents and local NGO’s, such as One Acre Fund, with whom ETG/Parrogate partner to operate their Agrihubs and through which information on all manner of sustainable propagation of soy is provided to co-ops and the farmers therein. IFC visited an example Agrihub at Msundwe, Malawi and saw such information available. The areas of supply visited by IFC were well served by local schools. Conversations held with farmers (male and female) included matters related to the participation of children in smallholder propagation of crops. It was stated by the farmers interviewed that their children do attend the nearby schools and that they are engaged in household chores before and after school and not in hazardous or dangerous agricultural work.
Occupational Health and Safety
OHS matters are the ultimate responsibility of the asset plant manager. Day to day oversight is a function of E&S coordinators and is reviewed as part of the duties of EHS committees formed at the plant/asset level. Hazard assessments and related SOPs are required to be developed for higher risk workplace activities/tasks and other SOPs for more routine operations. The required personnel protective equipment (PPE) for specific work areas is posted outside of the work areas. Behavioural Safety SOPs are used to guide identification of the types of behaviour that can lead to unsafe workplace situations. Near misses, accidents and incidents are recorded in the enterprise-wide platform and, as noted above, data within are summarized and reviewed as part of quarterly sustainability meetings and annual management reviews.
Wholesale production was not underway while IFC was onsite in Malawi. Some observations, however, were made regarding warehousing operations (stacking, moving 50kg bags around) and bagging of product (soy meal); appropriate practices and adequate (PPE) were observed. Activities observed in Zambia included bagging, use of conveyor belts to build stacks (thereby avoiding the need for workers themselves to transport bags to height) and bagging of product. Again, appropriate PPE was observed being used. Possible high ambient dust levels were seen however; as such, the company should ensure it is monitoring ambient air quality and, if needed, consider additional mitigating measures to ensure ambient levels are below host nation/WBG EHS guideline levels. Noise levels are monitored throughout the site; earmuffs are provided to workers in those areas where noise levels are high, and engineering controls are not possible. In addition, the LIESA, during their site visit to Malawi operations, observed opportunities for improvements regarding OHS. As such, and to ensure all operations within the assets to be funded are conducted all the time with adequate practices to protect the health and safety of all working for or on behalf of the company, the company will conduct reviews of its working practices (including internal audits by the corporate EHS function and annual E&S audit by an independent third party) and ensure they align with the objectives of both corporate policies, the IFC Performance Standards/EHS Guideline limits and those found within applicable host nation law/regulation. This is addressed in ESAP item #7. Following demonstration of suitable levels of performance, ongoing reporting will be achieved through submission to IFC of the annual monitoring report.
Workers engaged by third parties.
In Rwanda, the company currently uses one labor agency for the provision of truck loading/offloading and mechanical/ production services. The contract between the Company and the labor agency stipulates that the labor agency must respect fiscal and social obligation to its workers including tax payments and social security. Workers engaged in truck loading/offloading are paid by task with no clear limitation of working hours and paid bi-monthly basis without a formal contract . As noted in ESAP 4 above, the Company will ensure to extend the labor audit to all its third-party and sub-contractors and implement time-bound corrective action plans to ensure alignment with host country labor laws and PS2 requirements.
PS 3: Resource Efficiency and Pollution Prevention
Resource Efficiency
ETG corporate sets KPIs with regards to consumption of resources on an annual basis. Both Group and asset level targets are set and include both leading and lagging indicators. Results are recorded within the enterprise platform allowing drill down to individual sites and/or for specific elements/assets that are being tracked.
Whereas both facilities visited by IFC were connected to their respective national grids (and KWh are tracked using the same EHS platform), diesel consumption (as required for back-up generators when electricity is cut) used within ETG/Parrogate facilities is also recorded.
Greenhouse Gases
The GHG accounting practice is described in a corporate SOP. As presented in ETG’s Sustainability Report 2023-24, ETG Group’s total GHG emissions for Scope 1 increased from 140,217 t (CO2-e) in 2022-23 to 155,225 in 2023-24 (10.7%). Scope 2 emissions also increased from 31,503 t (CO2-e) in 2022-23 to
45,887 in 2023-24 (45.6%). Increases are attributed to an increase in outputs for some business units, need for more drying of raw materials in the face of increased precipitation in some geographical origins and expansion of operations in new areas. Use of coal accounted for 55% of total scope 1 emissions in 2022-23 and 67% in 2023-24.
Coal is used in the boilers in the processing plants. Bag filters and cyclones are used. Air emissions monitoring data from the Mwembeshi plant was supplied to IFC (emissions are monitored monthly by a local consulting company). Data indicated emissions comply with Zambian regulatory limits for SO2 and NOx for both boilers. Data on particulate matter within emissions was not provided. Data from Msundwe operations for either SO2, NOX or PM was not provided. Ambient air quality monitoring has been undertaken for sites within the Rwanda asset, however, not for point source emissions as this is not currently undertaken. Therefore, the need to monitor all boiler point source emissions and compare results with both host nation emissions limits and those of the General EHS Guidelines (as applicable), and, if results indicate non-compliance, the need to put in place timebound measures to attain compliance to the applicable requirements is addressed in the ESAP (#8).
The project is currently assessed as likely to be Paris Aligned. This is determined because of the use of coal. As part of ETG Group’s decarbonization strategy, however, operations to be supported by this investment are investigating alternatives to the use of coal. For now, short/medium term initiatives focus on assessing the efficiency of the practices that utilize heat from the boilers, in an attempt to reduce the amount of coal required per unit of production. Summary results shared with IFC (from Malawi operations) indicate savings from boiler house performance improvements, savings from avoidance of steam loss, and condensate/flash steam/heat recovery in various operations (the solvent extraction plant, the refinery and the steam distribution network) could lead to reductions in steam consumption of almost 15% (resulting in reduced need for water and a reduction in the generation of CO2 by 25% in the boiler house) and a 10-12% reduction in the consumption of coal. Technical and financial plans are under development to implement suggested measures. Medium to longer term initiatives involve switching the fuel source to alternatives to coal, such as biomass. Pilot programs to produce biomass pellets (from hulls and husks) are underway. In 2024 ETG Group started to pilot biomass sourcing in Malawi and Zambia, and successfully built a collection network of corn cobbs, rice husks, sunflower husks, and groundnut shells for a first 4,000 tonnes. Success will require the further scaling of supply networks of a suitable scale to support the production of sufficient quantities up to 15.000 tonnes per annum. Acquiring land, equipment, transport logistics, biomass origin traceability, and replacement of some boiler equipment in order to accommodate the new fuel type will all be required. The first biomass pelletizing machines will be installed in Q 2025, with full scaling would be achieved from 2-6 years from the present.
Water Consumption
Typically, on-site boreholes provide water for production purposes (with rainwater harvesting also employed at Rwanda operations). Except for Rwanda operations, water abstraction licenses were not available for review. Whereas the use of water has not been fully assessed (for example, the EIA for Mwembeshi highlighted that no modelling of water availability was undertaken), project design (from that same document) indicated that expected consumption was to be just 10,000l/day (10 m3/day). This amount will increase as production increases (as per the project description section, production is expected to triple upon expansions being complete) however, this will still only equate to 30 m3/day. Regardless, the need to apply for the necessary license to abstract water for this and other assets to be funded is addressed in the ESAP (item 9).
Pollution Prevention
Waste Management
As noted above, use of raw water is not significant within the production process; therefore, effluent generation is relatively low. Effluent from the production process is treated onsite (stormwater is channelled separately); Effluent Treatment Plants (ETP) were seen to be in operation during site visits. Treated water is land applied, either within the facility (to promote vegetative growth to reduce dust) or on approach roads (to suppress fugitive dust generated by truck traffic). See ESAP item 10 with regards to the company confirming compliance with applicable regulations regarding land application. Wastewater from sanitary facilities are directed to septic pits.
Non-hazardous wastes are disposed of via a contractor in Lusaka. An onsite landfill and incineration is currently utilized for non-hazardous waste generated from operations in Malawi. The need to implement GIIP for waste management at the Malawi operations (e.g. contract for removal and proper disposal at a licensed landfill in Lilongwe) is addressed in the ESAP in item #11.
Hazardous Materials and wastes
Production of hazardous wastes (waste lubricants, light fittings, batteries, waste from the laboratory, etc.) is monitored as part of the monthly environmental monitoring plan found at plants. Proper storage is assessed as part of that same report. Wastes are disposed of using locally available licensed resources; for example, HW from Mwembeshi are handed over to a ZEMA licensed disposal contractor.
Pesticides are not used within the assets that are subject to this proposed financing.
PS 4: Community Health, Safety and Security
Assets to be supported by this proposed investment are standard in their design, engineered to reduce risk and located away from densely populated areas. All processing elements (from receipt of raw materials, sorting, crushing, extracting, refining and storage and/or filling operations) are constructed and ultimately operated behind walls designed to keep the public out. Trucks, used to deliver raw materials and move finished goods depart the processing facilities in a controlled manner after being weighed, and utilize the tarmac road networks found in the respective countries of operation.
The corporate ESMS includes assistance to sites to implement safety and security systems to prevent loss/damage of material, harm to personal and property of the company. Practices based on this advice are then implemented at the asset level. For example, Mwembeshi has sourced and now utilizes the services of a security company registered by the Ministry of Home Affairs in Zambia. As well as unarmed gate guards, passive security measures are in place, such as walls/fencing, camera surveillance and locked points of entry. IFC was informed that no issues to date with respect to the conduct of security guards has been recorded.
The means to record such matters, should they arise, is required to be implemented as per the corporate community grievance (CG) redress policy and CG handling SOP (and referenced in the Group Sustainability Policy). The responsibility to implement these practices is with the relevant Site/Office Manager who has the ultimate responsibility for oversight of company-community relations. The ETG corporate sustainability team is tasked with advising site personnel on the appropriate practices regarding handling community complaints should they occur. Contractors working for ETG operations are contractually obligated to operate a process aligned with that described in the above SOP.
PS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources
As noted under PS1 above, ETG applies mapping techniques to determine whether potential for habitat conversion is evident in the soy supply chain required by crushing plants in Zambia and Malawi. In summary, both countries include regions of concern for natural habitat conversion with over a three-fold increase in production area for soy in Zambia (374,713 ha in 2022) and a doubling in Malawi (215,000 ha) over the 10 years from 2012-2022, according to FAO. Remote-sensing imagery shows this expansion includes conversion of natural habitat into new agricultural land.
ETG will therefore upgrade its corporate “no deforestation” commitment to “no conversion of natural habitats” and will promulgate an updated supplier code of conduct to align its supply chain performance requirements with IFC PS6. ETG will commit to achieve 100% compliance of its supply chain in at least its Zambia and Malawi soy supply chains by 2027 (ESAP #12).
In Zambia, the ETG-Parrogate JV mainly buys soya through direct bush buying, commercial farmers, and local aggregators. In Malawi, it is not permitted by law to buy directly from farmers, so the ETG-Parrogate JV mostly buys from aggregators, who source soy from within the localities in which they do business, with >80% of the volume purchased in the Msunde region. To categorize the risk of buying soy in this way (i.e. not directly from the farmer), supplier areas around aggregator purchasing centers have been categorized by the ETG supply chain assessment team into high, medium and low risk for natural habitat conversion. This was undertaken using satellite-derived land cover change data, which while useful is not definitive. As such, the initial assessment will be complemented by knowledge from the JV procurement teams, field surveys (including use of GIS to plot exact locations of farms and when they were established, use of community and household surveys that ask questions regarding prior land use and potential conversions into agricultural lands), and collaboration with aggregators. In sum, this ground truthing of sourcing from designated high-risk of conversion areas is expected to provide operational intelligence to the JV, and allow them to determine whether regions can be included as sources of soy or that they are to be excluded from the supply chain ahead of the beginning of the next soy season, expected to occur in March 2025.
As part of ESAP #13 ETG will conduct an assessment and provide a report to IFC on the efficacy of this approach in identifying and avoiding high-risk areas of soy supply and, if necessary, to amend and enhance the ground truthing process accordingly, to IFC’s satisfaction. The assessment will be conducted following the 2025 sourcing season and ahead of the 2026 season.
ETG purchases crude palm oil (CPO) for processing in its Rwanda asset. The Wilmar Group supplies all CPO. Wilmar’s responsible sourcing policy includes, “no deforestation, no peat, and no exploitation” (NDPE). Corporate verification systems are in place to ensure that the NDPE policy is implemented, and it is externally audited by credible 3rd parties. As of 2023, 90.6% of the product was traceable to plantation level and Wilmar seeks 100% traceability to plantation for supply to its mills by 2025 and also applies its NDPE policy to third-party mills (which traced 92.1% in 2023). Given current performance and short-term commitments, CPO supply chain is on track to align with PS6 objectives.
