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 and Management Programs:
Joincare has a corporate level environmental, health, and safety (EHS) policy, Standard Operating Procedures and Manuals (e.g. SOP on facility energy efficiency evaluation - based on requirements in national regulation GB/T23331-2020/and international standard ISO50001: 2018 energy management; SOP on site-specific management of construction E&S impacts); and monitoring procedures in place. These documents: (i) describe the Company’s overall EHS goals and objectives; (ii) delineate EHS roles and responsibilities of all staff (from senior management to working level staff, such as electricians), departments, and subsidiaries, and their reporting lines and relationships, together with organizational charts; (iii) cover key EHS risks at facility level, including mitigation requirements reflecting pharmaceutical production processes at Joincare facilities (e.g. life and fire safety; workplace risk assessment to minimize injuries from contact with machinery moving parts; hazard point identification and risk rating procedures; electricity related risks and safety requirements; medical and hazardous wastes contamination and leakage risks); (iv) lists EHS related Key Performance Indicators (KPIs) and how they are utilized in day-to-day performance monitoring and reporting.
The EIAs, Company EHS policy, and SOPs (at corporate and subsidiary/facility levels) reviewed by IFC are materially compliant with the requirements of IFC PSs and applicable World Bank Group (WBG) Environmental Health and Safety (EHS) Guidelines. The corporate EHS policy and SOPs are and will be applied to all Joincare subsidiaries, including the two proposed greenfield facilities. Each facility, using the corporate policy and manual as performance-based benchmarks, develops finetuned EHS SOPs which reflect local conditions and local regulatory requirements and are consistent with corporate level EHS requirements. Group EHS policy and SOP updates are communicated to facility level EHS teams who are required to update their facility level documents and submit such to headquarters for review and clearance. Greenfield facilities aim to attain ISO14001 and ISO45001 certifications after operational commencement.
Identification of Risks and Impacts:
As per Chinese environmental permitting requirements, and identification of E&S risks and issues SOP, Joincare has commissioned qualified third-party technical institutes to undertake environmental impact assessments (EIA) at its operating facilities in China and will undertake the same at the two greenfield Project facilities. The EIAs will identify sensitive social and environmental receptors, assess project alternatives, describe baseline conditions and include baseline data, list and analyze key identified E&S risks and impacts, and include required management and monitoring plans during pre-construction, construction, and operational stages to manage and mitigate identified E&S risks and impacts. Environmental, life & fire safety (L&FS), and occupational health and safety (OHS) permits have been secured for each operating facility, which stipulate ongoing compliance with relevant national regulations and monitoring requirements. The Company regularly monitors its regulatory and permitting compliance status.
In line with Company SOPs, each Joincare facility at pre-commissioning and EHS permitting stages, undergoes a hazard point identification and risk rating exercise as part of EHS, OHS, and L&FS permitting requirements. The outcome forms the basis of subsequent construction and operational phase E&S risk management plans, mitigation measures, and site inspections at each facility. A sample facility hazard point identification and risk rating results matrix was shared with IFC to illustrate work undertaken.
As per ESAP #1, the Company will commission Environmental Impact Assessments (EIA) for each of the greenfield Jiaozuo and Zhuhai Projects, to be prepared by licensed and qualified third-party technical consultants, and whose content and format will be in line with national law and requirements of IFC Performance Standards (2012). The EIAs will be prepared prior to project construction and before the two facilities reach the environmental permitting stage.
Organizational Capacity and Monitoring and Reporting:
The EHS committee at the Joincare board of director level is responsible for high level EHS related decision-making including budget approvals. Reporting to this committee is the corporate (headquarter) level EHS team comprising three staff including the head of department. At each Joincare facility, each functional department (e.g. production department; facility EHS department; equipment maintenance and energy/water efficiencies; etc) has annually assigned EHS KPIs and certain staff with EHS responsibilities who carry out EHS related tasks (e.g. OHS site inspections). They report monthly EHS performance data to the head of facility, whose office in turn complies and reports summary EHS performance information to the corporate EHS department. In addition to such line reporting, EHS officers at facility level functional departments also interact directly with headquarter EHS team members to seek technical guidance, with the latter supervising their work directly during internal site audits.
The corporate EHS department sets KPIs and KPI targets (e.g. zero fatality and lost time accidents; EPR drill staff participation rates), and each facility then finetunes corporate KPIs into locally nuanced KPIs. This then further leads to KPIs for each role and department being developed. KPI results are connected to the performance review of each staff member and department.
All facilities conduct regular annual EHS and resource efficiency monitoring as per environmental management plans from a facility’s EIA report and based on Joincare corporate EHS policy, with the September 2023 monthly EHS and OHS results shared with IFC to illustrate data collected and reported. The headquarter EHS team and Audit Department jointly conduct 1-2 announced and unannounced internal site audits per year of a sample of the Company’s facilities across China. Any non-compliances or deviations from KPI targets lead to time-bound requirements at a facility to take corrective actions and report on implementation status to the corporate EHS team.
Staff with EHS/OHS responsibilities are regularly trained on technical topics. All EHS training sessions end with written tests to ensure practical knowledge uptake by trainees. Headquarter and facility level staff with EHS responsibilities meet semi-annually to discuss good practice, problem solving experiences, and new technologies which could potentially be adopted to improve EHS performance. The same interactions and team learning also happen within internal company chat app groups.
Once a new facility has passed the feasibility study stage and enters into detailed planning, the corporate Human Resource (HR) department advertises management and operational openings to staff at existing facilities, and selects and assembles a team through an internal competitive process, or recruits from external sources if internal personnel could not be identified. This approach maximizes transfer of existing knowledge and experience to new facilities to facilitate consistent application of corporate EHS and OHS requirements across facilities. The appointed team, during transition, becomes fully involved in a new facility’s planning, design, and construction, through to construction completion, at which point they formally take over operation and management of the new facility and further recruit local staff.
Emergency Preparedness and Response (EPR):
Each Company facility has developed site-specific EPR plans based on facility hazard point analysis and risk rating results, which list likely emergency scenarios which may arise at that facility (e.g. accidental leakage of HAZMAT; flooding; etc.), with clearly defined roles and responsibilities including EPR chains of command. EPR drills are conducted on a quarterly basis with full participation from staff and in coordination with local fire brigades. Some examples of L&FS and EPR related measures in place at Company facilities are: (i) detailed electrical safety procedures being followed; (ii) smoke detectors installed in all major sections of each facility, connected to a central fire control panel room managed by staff 24/7; (iii) dedicated L&FS water tank of adequate capacity on-site and municipal dedicated fire-fighting water supply which deliver water to every major production area within a facility; (iv) EPR drills and fire-scenario planning carried out jointly with local fire brigades.
PS 2 – Labor and Working Conditions
Working Conditions and Management of Worker Relationships:
At present the Company has a headcount of about 14,000 employees in China – all direct full-time workers - of whom about 90% are in non-managerial and non-supervisory roles. The male-to-female ratio is 53%:47%, which reflects the availability of talents and graduates in the sector in which the Company operates. The two greenfield facilities at Jiaozuo and Zhuhai are expected to add a further headcount of 280 and 850 employees respectively once operational.
Joincare has a set of corporate level human resource (HR) policies and procedures which are consistent with national law and requirements of IFC PS2. These describe recruitment policy, attendance record management, social insurance, remuneration and overtime policies, benefits, training and development, leave arrangements, performance evaluation, and rewards and disciplinary procedures. Hiring and employment practices recognize merit based, non-discrimination, equal opportunity, and anti-harassment principles, which are described in the Company’s corporate employment code of conduct and employee manual documents. Each facility adopts the same set of HR policies and procedures for their day-to-day HR operations with adjustments made to reflect local requirements (e.g. different minimum wage levels across provinces). All staff sign an employment contract with the Company whose terms comply with national labor regulations.
The Company is expanding and there is no plan for any major workforce retrenchment. Depending on location and proximity to local housing, certain Company facilities provide non-local staff with on-site staff housing, which meet Company standards in terms of construction quality, sanitary condition, safety, space-per-person, availability of washing facilities and amenities, and protection from the elements.
Workers’ Organization and Grievance Mechanisms:
Most staff are members of the labor union at the company with membership being completely voluntary, with no restrictions placed on freedom of association. The labor union functions as a channel to collect suggestions to improve the overall working environment e.g. on canteen food quality, staff benefits, etc., and also as one of several important employee grievance redress channels. Other anonymous and non-anonymous channels are: through the HR department; through the company WeChat (social media app) account; drop boxes; and the CEO and head of facility email addresses publicized to all staff. Grievance logs are maintained by the HR department. The Corporate HR and internal audit departments also conducts employee interviews regularly to understand staff views, and the Company’s corporate Grievance Reporting Procedures describe process and steps involved in filing and handling worker grievances.
Protecting the Workforce:
There is no evidence of child or forced labor in the Company’s workforce. The Company has clear hiring procedures and requirements on minimum age for employment. Maximum working and overtime hours as per China’s labor laws are observed. Joincare requires its EPC construction contractors to abide by all aspects of the national laws and the Company’s HR and OHS requirements in the management of their workforces, with compliance verified through random and regular site inspections. All employees involved in operations or duty stations (e.g. electricians) considered to entail higher OHS risks are required to present valid technical qualifications (e.g. licensed electrician qualifications) and to attend ongoing OHS related training. Construction OHS and L&FS training is provided by the EHS department to all contractor construction workers and daily toolbox meetings are held at construction sites.
Occupational Health and Safety (OHS):
Based on data provided by the Company, in 2022, collectively, Joincare facilities and operations had a lost time injury frequency rate (LTIFR, defined as number of work injuries per 200,000 hours worked) of 0.03 - significantly lower than industry benchmarks (the U.S. OSHA 2019 “Pharmaceutical and medicine manufacturing”). The Company’s OHS management system is defined in detail in its EHS policy and SOPs. Examples of key elements and day to day practices of this system are as follows: (i) during hazard identification and analysis stage, identification and description of various potential OHS scenarios (e.g. mechanical and electrical injuries), classifying them into different levels in terms of severity, developing and implementing required mitigations under each scenario, and specifying pre-emptive measures required in day to day operations to minimize risk events before they transpire; (ii) incident analysis and reporting; (iii) monitoring of indoor air quality, ensuring the use of personal protective equipment, and providing for annual health checkups for all staff (with sample anonymous staff checkup reports shared with IFC); and (iv) facility staff at each functional department assigned and trained as OHS officers and conducting daily and weekly OHS site inspections to identify potential non-compliances (including work practices regarded as unsafe work behaviors – reflecting a focus on using leading OHS indicators oriented towards prevention) and improvement actions. A recent sample monthly report of OHS statistics recorded by an operating Joincare facility and submitted to HQ EHS department for review was provided to IFC, which included data on various operating permits issued (e.g. permit issued based on safety check before crane/lifting operations were allowed to proceed), number of non-compliances identified and corrected, number of tool box meetings and OHS training sessions conducted, etc.
PS 3 – Resource Efficiency and Pollution Prevention
Energy and Water Consumption and Efficiencies and Greenhouse Gas (GHG) Emissions:
In 2022, the Joincare Pingshan facility consumed about 17,500 MWh of grid-purchased electricity, and an amount of purchased steam (from local steam supply company) equating to c. 60,700 GJ in terms of calorific value. Using conversion factors of 0.9849 tCO2eqv/MWh and 0.11 tCO2eqv/GJ, the GHG evaluation conducted by a third-party consultant (commissioned by Joincare) calculated the 2022 Scope 2 GHG emission level of Pingshan to be c. 23,380 tCO2eqv. Scope 1 total GHG emission, linked to company vehicle related fuel emissions and backup operation of on-site natural-gas-fired boilers, has been calculated to be 45 tCO2eqv.
The operating Pingshan facility, starting in 2022 as per local environmental bureau requirement, procures electricity and steam from local utility companies to meet all its operational needs, no longer operating its on-site natural-gas-fired boilers to generate steam (with boilers now being maintained as a backup). While the two greenfield Project facilities are currently at an early planning stage without confirmed designs, the Company expects both to take the same approach and only procures electricity and steam from local utilities.
Once operational GHG related data from the two greenfield facilities become available, the Company will report annually to IFC such data and resulting GHG emission quantification results with IFC (based on an internationally recognized methodology).
Pingshan’s facility design has considered and incorporated energy conservation measures, including engineering measures such as installation and use of variable frequency equipment, and waste heat recovery units. Water consumption at Pingshan averages about 170 m3 /day based on 2022 data. As per local environmental bureau requirement, the Pingshan facility almost entirely re-uses all its water after treatment (i.e. limited wastewater is discharged externally to the municipal sewer) at its on-site wastewater treatment plant (WWTP – see next section), except for natural loss through evaporation, production process use, and sanitary/canteen/worker use. As such, new freshwater intake from the local water utility company is a small fraction of the facility’s daily needs, at about 10% or 17 m3 /day to replenish those losses. The Pingshan EIA requires an energy use and conservation evaluation as well as a water balance study to be conducted. In its day-to-day operations, Pingshan has adopted various water-conservation measures and engineering designs such as rainwater collection and installation of low-flow water aerators. The Company expects that a similar setup will be adopted at the two greenfield Project facilities i.e. minimal external discharge of wastewater, and adoption of various water-conservation measures which is locally appropriate and technically and financially feasible for those facilities.
Pollution Prevention:
The Pingshan facility has separate rainwater and process wastewater collection and discharge systems. Wastewater (parameters COD, BOD5, suspended solids, total phosphorous, total nitrogen, and ammonia) generated from Pingshan (production and sanitary sources) is treated at the on-site wastewater treatment facility (WWTP) with a maximum daily throughput of 250m3/d and which utilizes several treatment stages: membrane bioreactors, sedimentation, reverse osmosis, aerobic and anaerobic treatment stages, and further sedimentation. Treated wastewater meets the national GB3838-2002 and GB/T19923-2005 standards - limits specified are materially consistent with WBG EHS Guideline for Pharmaceutical and Biotechnology Manufacturing (2007) effluent levels and is re-used within the Pingshan facility in gardening, as cleaning water, and at cooling towers. Odors arising at on-site WWTP are treated using a combination of spraying towers and ultraviolet light disintegration technology. Sludge generated from the WWTP and other non-hazardous solid wastes are regularly collected by licensed third-party companies and taken to landfill or resold to other industries as per regulatory requirement.
There are limited air emissions from energy sources given that Pingshan no longer operates its on-site boilers regularly. Key air pollutants arising from the Company’s WWTP and production processes include: Particulate matter, total organic carbon, volatile organic compounds from production process, hydrogen chloride, and ammonia. Key treatment methods are active carbon adsorption and HEPA filters built into HVAC systems of production buildings, alkaline sprays, and ultraviolet light disintegration. After treatment to meet applicable national and industry standards (GB14554-93, GB37823-2019, and GB37822-2019), these emissions are emitted via rooftop stacks. Emission limits specified in these standards are materially consistent with applicable WBG EHS Guidelines for Pharmaceutical and Biotechnology Manufacturing (2007). The Company is planning that similar air emissions and wastewater treatment setups will be adopted as part of the technical design for the two greenfield facilities funded under the Project.
At Pingshan, non-hazardous wastes, hazardous wastes, and hazardous materials are stored in separate access-controlled locations, as per requirements specified in applicable national standards for each of these three classes of materials and wastes (e.g. in the national standard for hazardous waste management pollution control standard GB18597-2001). On-site storage locations for hazardous wastes visited by IFC are designed with anti-explosion and anti-static features, are temperature-controlled, and are structurally reinforced to minimize potential leakage to the ambient. All hazardous materials and wastes have material safety data sheets (MSDS) displayed clearly, and the maximum amount of each material and waste which can be stored on site, as well as maximum on-site storage duration, is stipulated as part of the facility’s environmental permitting conditions. Hazardous material and waste transfer and safe handling to and from Company facilities is managed by licensed third parties, with detailed audit trails maintained. As per regulatory requirements, Joincare EHS staff is required to regularly accompany licensed third parties to disposal locations to verify that audit trail requirements have been met. Wastes classified as medical wastes are segregated, stored, transported, and disposed in color coded sealed containers, by licensed third party handlers.
Hazardous material management at Pingshan is subject to similar permitting requirements and procedures as that applied to hazardous wastes, in relation to storage space conditions and reinforcement, delivery and handling by Government licensed third parties, audit trails, display of MSDSs, and on-site storage quantities and durations.
PS 4 – Community Health, Safety and Security
The two greenfield Projects will be sited with a setback of at least 750m from the nearest local communities within established industrial zones. Dust, noise, and odors from the Project facilities during construction phase are not expected to create a disturbance to local residents. Transport of hazardous and medical raw materials and finished products to and from Pingshan during construction and operational phases are subject to stringent national requirements on safe transport and accidental leakage prevention e.g. transport vehicles need to be retrofitted with sealed stowage compartments as part of their design and are regularly inspected to ensure proper functionality. The same transport requirements will be observed by the greenfield Jiaozuo and Zhuhai facilities.
Security personnel: At its operating facilities, the Company employs unarmed security guards to secure its premises, and there have been no known security or fire incidents since the start of operations at Pingshan.
L&FS: All major buildings, areas, and sub-areas within buildings at Pingshan have temperature and smoke detectors installed at ceilings, which are connected to the facility’s central fire control panel room. The central fire panel room is staffed 24/7 to monitor all parts of the facility. Any potential fire or smoke event can be immediately traced to a sub-area and will trigger a series of control and mitigation actions defined in the Company’s EPR and fire safety SOPs. The fire control room is equipped with a team of fire fighters trained by the local fire brigade. Dedicated fire-fighting water is available from the on-site fire-fighting water tanks, as well as from the municipal fire-fighting water supply connected to the premises by underground water pipes. All production buildings are designed with smoke ventilation ducts at rooftops which are powered by electric pumps – these pumps are triggered to evacuate smoke from within building spaces whenever the smoke or temperature level has been detected to exceed a preset level. As described under PS1, EPR drills are carried out on a quarterly basis with full staff participation to prepare for potential emergency scenarios including fire and smoke events. The two Project greenfield facilities are expected to have a fire safety setup similar to what is implemented at Pingshan. Each greenfield facility will be required by national laws to go through a detailed pre-construction fire safety design review, and post-construction verification audit by local fire department inspectors before notice-to-proceed permits are issued for construction and subsequent operations to commence.
