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
The Group has a well-established corporate E&S management system (ESMS), including policies, manuals, work instructions and monitoring procedures addressing the main environmental, health and safety (EHS) and social risks of its operations, generally in line with IFC PS requirements. The corporate ESMS (certified ISO 14001 and 45001 international standard for environmental and occupational health and safety managements system - certified) provides the main strategic targets to the individual industrial plants part of the Group. Randoncorp plants have their operative ESMS, which is continuously audited and improved, strategically supervised by the corporate Compliance department.
EHS Key Performance Indicators (KPIs) are disclosed publicly through the Group’s Sustainability Report. The Group is a signatory of UN Global Compact - a non-binding United Nations pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.
Randoncorp has an E&S organization with experienced staff at the corporate headquarters and plants. The E&S structure has a direct reporting line with the Movement Control COO, providing feedback of the status of EHS to the senior management weekly. Bimonthly, EHS KPIs are presented to the CEO and to the executive committee, and strategic discussions are held to improve the Group’s performance.
Per the legislation in place, no Environmental Impact Assessment is expected to be required for the project. In any case, the Group will conduct due assessment of E&S impacts as per its existing procedures and practices.
The Group has Contractor Manual that applies when contracted service providers are working with Randoncorp, including the need for adequate risk assessment and supervision. During the tender process, contractors are requested to operate in line with Brazilian legislation. Through ESAP item 1.1, Randoncorp will update the direct supplier manual in order to: (i) detail responsibilities of each department in the interdisciplinary assessment of contractors and service providers as part of the tender process; (ii) review OHS and other E&S performance and practices of prospective contractors; and (iii) develop E&S KPIs for the main contractors to ensure close follow up of the contractors’ performance at corporate level.
Randoncorp has documented an emergency preparedness and response plan (ERP) for its operations, and emergency drills are undertaken periodically. The roles and responsibilities for various teams responsible for evacuation, rescue, firefighting etc. are defined. Meeting points, evacuation route maps, extinguishers and hose reels have been placed at appropriate locations. Several workers have been trained in fire safety and operation of fire safety equipment. The fire brigade team conducts internal audits to ensure preparedness and maintenance of fire safety equipment. As part of ESAP item 1.2, Randoncorp will conclude the Climate Risk Assessment that was started in 2023 and update the ERP and other relevant management procedures to include any new risk identified.
Randoncorp has a strategy to grow through mergers and acquisitions. As part of ESAP item 1.3, the Group will develop a documented strategy for E&S Due Diligence (ESDD), in line with IFC PS requirements, covering screening of all IFC PSs, applicable to every new acquisition, where the ESDD findings will be linked to post-closing actions of the transaction.
PS2: Labor and Working Conditions
Randoncorp has a set of HR policies and procedures that align with IFC PS2. The code of ethics includes provisions against discrimination and outline the Group’s commitment to offer a respectful working environment for all employees. Each worker receives a written contract that describes the working conditions and terms of employment.
As of September 2023, Randoncorp directly employed around 15,409workers, out of which 80% were men and 20% were women. Randoncorp respects freedom of association and Collective Bargaining Agreements (CBAs) are signed by the Group and the different unions, representing employees.
Randoncorp has an-established grievance mechanism (Canal de Etica) that is available to direct, contracted, and supply chain workers as well as the community and allows for anonymous grievances. A formal procedure establishing the flow, analysis and management of grievances is in place.
In 2020 Randoncorp carried out a voluntary retrenchment effort, covering 2,15%of its employees. No further retrenchment is anticipated per the Project and the Group has procedures addressing retrenchment planning, in line with local labor law requirements.
Randoncorp categorizes and evaluates its suppliers though a supplier manual that outlines the process to select and onboard suppliers as well as the requirements to comply. The manual also includes detail process for supplier evaluation. Through ESAP item 1.1, Randoncorp will update its direct supplier and contractor manuals to include explicit prohibitions to child labor and forced labor. These requirements will also be added to the technical visit forms. The prohibition of child labor and forced labor will also be formally covered during the supplier onboarding and in the supplier evaluation process.
Occupational Health and Safety (OHS)
The Group has a health and safety policy and has implemented risk management programs at each factory. An internal and external audit program is in place. The Group has an occupational health surveillance program and carries out occupational medical examinations of workers. The risk management program mapped all risks by property and position, evaluating exposure to chemical, biological, ergonomic and other safety risks. Randoncorp has implemented an incident reporting and investigation process and periodically reports on incident and accident statistics to senior management. Lost time injury frequency rate (LTIFR) for 2023 is 13.1 for Randoncorp (21.5 for Randon Caxias and 6.5 for Fras-Le) above industry average (U.S. Bureau of Labor Statistics, www.bls.gov). HSE training is part of the induction of all workers and is reinforced periodically according to the level of risk of each workstation. Randoncorp is currently implementing a behavior-based safety improvement program at its facilities led by the Corporate HSE staff, since January, 2023. As part of ESAP Item 2.1, Randoncorp will augment the behavior-based safety program by engaging a competent third party OHS consultant, acceptable for IFC, to conduct an organizational safety culture assessment and to define a corrective action plan to improve safety performance across its facilities.
In addition, for the accumulated dust-related potential fire and explosion risk, Randoncorp will undertake a dust hazard analysis in line with recognized international standards for combustible dust handling (e.g., NFPA 652 and 654), and evaluate the effectiveness of existing dust control system at the furnaces, dust collectors, dust conveying systems and the exhaust system at the spray-painting area where VOCs are handled (ESAP 2.2).
PS3: Resource Efficiency and Pollution Prevention
Main energy sources are natural gas and electricity, supplied by a dedicated supplier and the public network, respectively. Sanitary water is sourced from the public network and industrial water is supplied through authorized private wells. The Group follows the EHS Policy that has been developed at the corporate level which defines the main KPIs and targets, including reducing 40% the GHG generation in the next 10 years, compared to the values calculated in 2020, and zeroing the waste to be disposed in industrial landfills and liquid effluent discharges (by 2025). Several strategies are in place to reach these targets including the introduction of new materials and more efficient production processes, continuous investigation for the recycling or reuse of industrial waste, renewable energy plants construction and water reuse. Strategies include a specific project for the substitution of the main gas steam boiler at Fras-Le with a wood-chip fed boiler, that is expected to reduce GHG generation of the Group by 20% (compared to 2020). As part of ESAP item 3.1, Randoncorp will develop a Green Supply Chain Policy integrating environmentally responsible principles and benchmarks into supply chain management for wood chips and other supplied material for the industry.
Sanitary wastewater is mixed with industrial wastewater and treated in a chemical-physical-biological treatment system and partially reused for toilet flushing and gardening. Sludge produced is dewatered and a contractor uses part of it as a component for surfacing material production. Liquid effluent reuse is above 50% and the treated unused discharges are sent to the public wastewater management system in most factories. At Fras-Le, treated wastewater is sent to a natural water body and discharges are aligned with local requirements and WBG General EHS Guideline guidance values.
Main stationery emission sources are the gas boilers that are for steam generation, and chimneys dispersing treated emissions from the painting areas. Emissions are monitored according to the environmental license (at least yearly), and results are aligned with both local legislation requirements and WBG General EHS Guideline guidance values.
The waste generated in Randoncorp's operations comes mainly from the cutting and stamping processes of parts that generate metal scrap, in addition to the disposal of raw material packaging and other materials and inputs required in production.
Recycling opportunities are investigated for all waste classes generated in line with the waste management procedures and authorized contractors are selected for waste handling and management, prioritizing reverse logistics. Waste that is not recycled or reused is sent to authorized landfills or incineration (e.g., residues from the infirmary). Hazardous materials (HazMat, such as paints, solvents, welding-gas cylinders and lubricants) are stored in a dedicated warehouse, with automatic fire detection and fighting system, and with strict access control. Authorized contractors are employed for the handling, transportation and managing of HazMat.
Noise monitoring is undertaken in alignment with local legislation. Most of the Group’s factories are operating within industrial areas, at a distance from residences. Randon Montadora is located in an industrial area that has recently seen the construction of few residences. Noise levels are aligned with the local legislation for industrial areas (i.e., as it is defined in the official land use), but in some occasions exceed noise levels for residential receptors, mostly during night hours. Randoncorp has been working to avoid noise exceedances and has worked with the affected community members, however several complaints have been recorded in its community grievance mechanism. As part of ESAP item 1.4, Randoncorp will document all corrective actions that have been and will be put in place to mitigate noise levels at the receptor, and structure the engagement of the dwellers on noise and on the management of expectations of complainants.
PS4: Community Health, Safety and Security
Randoncorp works with more than 100 authorized transportation service providers with 2700+ transportation routes in Brazil. No transportation vehicle is owned by Randoncorp. As part of the Updated Contractor Management Plan (ESAP item 1.1), Randoncorp will enhance the contractor selection process including an E&S performance assessment at the tender phase, and specify how contractors’ performance will be monitored to ensure alignment with IFC PS4 (e.g., spot checks of speed limits and route tracking, in-vehicle monitoring system, journey management, vehicle inspections, record controls, alcohol and drug testing of drivers, driver training and certification, contractors’ incident report review, review of grievances related to contractors mostly due to inappropriate parking in the vicinity of the factories) and actions to take in case of non-compliance. Randoncorp has two corporate staff members dedicated to the management of the Group’s asset security, managing 198 security outsourced professionals, including 159 guards, 21 of which are armed. More than 600 cameras are part of the Group’s CCTV system. Professionals receive training from the outsourced companies and are contractually obliged to act within the law and respect Randoncorp’s code of conduct and Security Policy. A security risk assessment is being conducted for all factories of the Group. As part of ESAP item 4.1, Randoncorp will develop a procedure for security professionals regarding their selection, training on use of force, and appropriate conduct toward workers and Affected Communities, in line with PS4. The procedure will include an assessment of risks posed by its security arrangements to those within and outside the project site.
