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
In 2021, FPEL redesigned their Environmental and Social Management System (ESMS) with the help of an E&S consulting firm. In September 2023, they again revised their ESMS to incorporate the risk and impact identification and mitigation measures applicable to new business areas like wind energy, wind-solar hybrid, and BESS/ EV charging, and to cover their new operations in Vietnam, Bangladesh & Sri Lanka. The E&S policies and procedures defined in the ESMS guide FPEL on how to comply with both national E&S regulations and the requirements of additional reference frameworks including IFC Performance Standards (2012) and World Bank Group (WBG) Environmental, Health, and Safety (EHS) Guidelines. FPEL integrated management system is certified (ISO 45001, ISO 14001 & ISO 9001 & ISO 27001).
IFC Review of FPEL ESMS found it to be well adapted to the nature and scope of the E&S risks and impacts of the proposed project, and broadly consistent with IFC Performance Standards (PS). Limited gaps and proposed mitigations are discussed in the Environment and Social Mitigation Measures and Environment and Social Action Plan (ESAP) sections that follow. The following paragraphs highlight the key elements of FPEL ESMS that support the company’s effective E&S risk management practices, performance outcomes, and PS1 compliance record.
E&S Policy
FPEL E&S policies and asset level reports show that FPEL assess, plan, implement, monitor, evaluate, and improve their E&S policies and programs in line with good international industry practices. For example, FPEL ESMS framework includes appropriate policies on Contractor Management, Land Acquisition, Anti-bribery & Corruption, a Grievance Redressal Procedure, Water & Waste Management Plans, Supply Chain Management, and Community Development activities at every OA site, among others. IFC E&S due diligence for the previous investment with FPEL (#46362) in 2023 had identified PS1-related gaps on wind energy impacts and emergency preparedness and response. These gaps have since been successfully resolved.
FPEL ESMS also includes an E&S Screening and Risk Assessment Framework applicable for all greenfield projects and acquisition projects (brownfield). FPEL prepare detailed E&S Screening reports for all proposed investments, and Environmental and Social Impact Assessments (ESIA) for their larger, more complex Open Access (OA) and wind projects. Completed ESIAs are available in the Client Documentation section of this Environmental and Social Review Summary (ESRS) on the IFC Projects Disclosure website. FPEL hire independent third-party E&S experts to prepare ESIAs for all open access (OA) / Inter State Transmission System (ISTS) projects. The quality of these ESIAs is generally good, as they include critical habitat assessment, indigenous community assessment, Biodiversity Action Plans, Conservation Management Frameworks etc. where relevant.
FPEL does not develop or acquire category A projects, for example those located in natural and critical habitat (CH), located in Scheduled Tribe areas, posing a risk to safety of members of the public, potentially causing significant impacts to ecosystem services, or potentially causing physical or economic displacement including to informal users. FPEL will amend the existing E&S Screening and Risk Assessment Framework of their ESMS to clarify that the company will not acquire or develop category A-type projects, even where all potentially significant E&S impacts are avoided, mitigated, or compensated/offset for (ESAP#1).
E&S Organizational Capacity and Competency
Environment, Social and Governance (ESG) issues are highlighted by FPEL Board members, the founding directors, and company staff whose corporate vision is to develop their business in ethical ways and with minimal adverse E&S impacts. FPEL Board-level ESG Committee oversees the ESG Department consisting of a Head Director, Manager, and seven E&S specialists, occasionally supplemented by 3rd party E&S consultants who prepare ESIAs and ESDD for more complex projects in accordance with IFC PS. The ESG Department ensure that: i) all company activities are consistent with the Environmental and Social Management System (ESMS), which is consistent with IFC PS, ii) E&S due diligence and ESIA reviews are conducted and incorporated into company decision-making and implementation processes, and iii) progress and adherence to ESMS implementation and applicable E&S management plans is monitored and reported on.
E&S Management Programs
FPEL conduct ESG-related audits, inspections, trainings, inductions, and implement site specific Environment, Health, and Safety (EHS) plans including for emergency preparedness, biodiversity, traffic, stakeholder engagement, etc. FPEL monitor and report on their E&S performance by tracking key indicators such as number of female staff, lost time injuries, tonnes of CO2 averted, water consumption, among others. FPEL E&S performance monitoring and reporting has demonstrated their commitment and capacity to identify and manage the E&S risks and impacts associated with their renewable energy business activities. IFC review of a sample of these management plans found them to be broadly consistent with IFC PS and World Bank Group EHS Guidelines, and effective for mitigating the nature and scope of the E&S risks and impacts of their business activities.
PS2 – Labor and Working Conditions
FPEL have documented Human Resources (HR) policies and procedures that are consistent with national labor regulations and IFC PS2 requirements and apply to all employees. Each worker receives a written contract and induction training that describes the working conditions and terms of employment, Grievance Redress Mechanism (GRM), Supplier Code of Conduct, among others.
FPEL screen their suppliers and contractors using an ESG checklist. This checklist captures questions pertaining to labor and working conditions, Occupational Health and Safety (OHS), and other core E&S impacts and risks. FPEL does not restrict freedom to associate or workers right to form and join workers organizations. Company policies encourage non-discrimination and equal opportunity for staff and contracted workers. FPEL’s HR policies prohibit engagement of child, forced or bonded labor. The Company’s whistle-blower policy set up protections in the investigation process that include confidentiality and periodic monitoring & review. FPEL have a grievance procedure to facilitate prompt and responsible resolution of issues raised by their staff and workers. This procedure guarantees that employees and contract workers can freely voice their concerns without fear of reprisal. In addition, grievance boxes are displayed at strategic locations in the corporate office as well as at the project offices.
FPEL OHS Audit department encourages active reporting of unsafe acts, unsafe conditions, near-miss occurrences, incidents & accidents, and helps to mitigate inherent safety risks and prevent recurrence. In 2022, they reported zero (0) lost time injuries over a period of 808,040 combined safe hours worked. Despite having successfully implemented all the above-mentioned PS2 related policies and programs, IFC due diligence identified a few instances of FPEL contractors’ non-compliance with overtime provisions for wages, maximum number of daily working hours, and record keeping of statutory documents. FPEL will continue with its program of labor audit of a representative sample of their contractors at construction and operations phases and resolve any identified PS2 compliance gaps in contractor performance (ESAP#2). FPEL will ensure that security guards are restricted to 48 working hours per week with one weekly day off, and that security agencies maintain wage registers, and all mandatory deductions.
At the project level, FPE ESG Department develop Contractor Health and Safety Management plans that instruct contractors on E&S compliance requirements, and identify key OHS monitoring parameters for routine supervision and reporting. The company’s HR team also monitors contractors’ compliance with applicable labor laws and related contract clauses, for example by requesting copies of statutory documents filed by contractors with labor authorities.
On supply chains, FPEL has procured solar modules from 22 different suppliers (Top 10 suppliers contributing ~95%), including Indian and mostly Tier 1 module suppliers from China. Components for the FPEL wind portfolio are sourced from India-based manufacturers. The Company is aware of the potential for forced labor risks in solar supply chains, and their commitment to prohibit all forms of child labor and forced labor is made public in their 2022-2023 Sustainability Report. FPEL supply management system includes a supplier Code of Conduct, a due diligence process to assess new suppliers including a risk assessment tool for tier 1 suppliers. Clauses prohibiting use of forced labor are included as a requirement in supplier contracts, and the company reserves the right to audit direct suppliers and disengage should non compliances be identified and not addressed. FPEL have implemented corporate sourcing and supplier management policies for conducting due diligence on the module suppliers’ supply chains to best endeavors has adopted applicable mitigation measures. Given the exposure to potentially high-risk suppliers in the solar and BESS supply chains and the results of the IFC supply chain due diligence, the company will hire an external expert to review its supply chain management systems and make recommendations to strengthen the system (ESAP# 3). It should include a risk assessment beyond tier 1 suppliers, a process to monitor and audit identified high risk primary suppliers and enhance their traceability efforts in particular regarding solar PV suppliers including polysilicon suppliers, and time-bound actions to shift suppliers with risk of forced labor if remedy is not possible due to lack of management control or influence.
PS3 – Resource Efficiency and Pollution Prevention
IFC E&S due diligence for the previous investment with FPEL (#46362) in 2023 had identified one PS3-related gap on site specific waste management programs. This gap has since been successfully resolved. IFC review of FPEL PS3 policies and practices did not identify any compliance gaps. FPEL renewable energy production activities are not energy or resource intensive, nor do they result in significant quantities of wastes or emissions. Nonetheless, FPEL have implemented management programs to reduce energy and water consumption and waste production, including steps to increase the share of renewable energy in their consumption mix, replacing wet cleaning of solar panels with robotic dry cleaning, authorized disposal of damaged solar panels, and recovery and reuse of packing materials, among others.
PS4 – Community Health, Safety, and Security
IFC E&S due diligence for the previous investment with FPEL (#46362) in 2023 had identified one PS4-related gap on Community Health, Safety, and Security (CHSS) plans to manage road safety, dust from vehicles, and security personnel. This gap has since been successfully resolved. IFC E&S due diligence of FPEL PS4 policies and practices identified one area of concern to be safety setback, noise and shadow flicker from wind turbines. Safety setbacks are required to address the risk of blade throw and tower collapse. Shadow flicker can be a problem when residences or other occupied structures are located too close to a wind turbine. Three FPEL operated wind turbines were observed to be in proximity to housing and farming structures. To mitigate the risk to safety to anyone who uses these structures, FPEL will identify all structures within a 300-meter radius of their operating and planned wind turbines, and prepare and implement mitigation plans including relocation of the structures FPEL will also develop and implement a Wind Turbine Noise and Shadow Flicker Mitigation Plan to mitigate these risks in line with GIIP (ESAP#4).
PS6 - Biodiversity
IFC completed biodiversity sensitivity screening for the FPEL portfolio and some pipeline projects related to risks from solar and wind assets and their associated transmission lines. This screening confirmed that no sites are in or near to any protected areas or internationally recognised areas for biodiversity, including any Key Biodiversity Areas (KBA). One hybrid wind-solar project in Karnataka is located within the potential foraging zone of a Sooty Tern Onychoprion fuscatus IUCN LC colony approximately 30km away. However, it is likely that the risks are low because the project site is on the landward side of the colony.
FPEL wind and OA solar projects reviewed are located within the range of several species of soaring birds and water birds (vultures, eagles, and cranes) which may pose collision risks with turbines and transmission lines. FPEL will review existing bird and bat monitoring and mitigation strategies for these assets and conduct fatality monitoring for those assets where data indicate collision risks, or these risks remain unquantified. If unmitigated collision risks are identified, FPEL will adopt appropriate mitigation measures according to good industry practices (ESAP#5).
