This is a Category B project as per IFC’s Policy on Environmental and Social Sustainability (2012). The key E&S issues include: i) the company’s management and monitoring systems to assess and manage E&S risks and impacts from its operations, as well as those related to the expansion of Sriperembudur campus production capacities covered under the project; ii) assurance of fair, safe and healthy working conditions (including for contract workers) and compliance to labour laws; (iii) monitoring and management hazardous and e-waste; iv) life & fire safety risk management; v) community health and safety; and vi) supply chain risks assessment and management.

PS1: Assessment and Management of Environmental and Social Risks and Impacts

Policy: Salcomp has adopted an environmental and health and safety policy, that is broadly aligned with the objectives of IFC’s Performance Standards. The company has established environment and social management systems (ESMS) certified as per ISO 9001(Quality management), ISO 14001(Environmental management) and ISO 45001 (Occupational Health and Safety) across its operations. The ESMS is commensurate with the operational E&S risks and impacts and aligned with the requirements of IFC PSs. The company has in place a functional Human Resource (HR) management system to address and manage HR and labour related aspects. The company's systems also adhere to globally recognized principles, including those set forth by the Responsible Business Alliance (RBA), previously identified as the Electronic Industry Code of Conduct (EICC). Additionally, they align with the codes of ethics and procedures (Supplier Responsibility Standards) established by recognized international companies, particularly leading smartphone manufacturers who are the purchasers of the company's products.

Identification of E&S risks and impacts: The company identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and E&S regulatory permits and requirements. The company performs regular internal and external E&S audits as part of ISO14001, ISO 45001 and RBA certification. The company as part of the ESMS has established procedures for identification of E&S risks and impacts of its operations consistently with nation law and good international industry practices. The company uses standard tools such HIRA (Hazard Identification and Risk Assessment). Comprehensive HIRAs have been developed for all engineering and production-related activities, with the latest revision conducted in June 2023.

The company’s manufacturing capacity expansion in the Sriperembudur industrial campus (ST3 and ST5), as per national law does not require prior environmental clearance. However, the Company has conducted an identification of E&S risks and impacts associated with the proposed expansion, by developing HIRAs for the planned activities.

The company maintains legal registers separately for all its units and the registers capture the key applicable permits and approvals (including consents from the Tamil Nadu Pollution Control Board (TNPCB), Factory license, Fire safety license, hazardous waste licenses, safety permits, etc.). The legal register includes information on the validity of each permit along the permit renewal calendar. The company reported that consents have been obtained from TNPCB for ST5, while for ST3 the process will be initiated on completion of building works.

Organizational Capacity and Competency: The company has an environment, health, and safety (EHS) organizational structure in place with defined roles, responsibilities, and authority to implement the ESMS. The personnel with direct responsibility for the environmental and social performance have the knowledge, skills, and experience necessary to perform the work. The head of Human Resources (HR) holds overall responsibility for overseeing HR, health and safety (H&S), social & labour-related aspects and stakeholder issues and is supported by a dedicated team of safety Managers and senior safety specialists, who specifically manage the H&S aspects of operations. The Systems department oversees both the quality and environmental functions, with a dedicated Manager (Q&E) leading the management of environmental aspects. Permitting and compliance-related matters are under the purview of the Admin and Compliance department.

Emergency Preparedness and Response: The company has documented emergency response and preparedness plans (EPRPs) for all production facilities. The EPRPs are approved through a third-party industrial planning agency and then submitted to the Tamil Nadu Fire Department. The Fire department reviews the life and fire safety plans and conducts site inspections before issuing a fire safety permit. All operational units of the company have valid fire safety permits. During the site visits, the units of the company were noted to be having appropriate fire detection and suppression systems. The emergency response and preparedness plan also outline specific procedures to be followed in case of climate-related incidents such as heavy rains, flooding, heavy winds, and tsunamis. The company has emergency control procedures in place that outline response guidelines for employees in the event of fires, and climate related emergencies. A specific emergency response organization within Salcomp has been defined and external responders to be contacted during emergencies (SEZ Emergency Response Team, State Fire Service, Police, Hospital, etc.) have also been identified.

As part of ESAP#1, the company will update the Emergency Response and Preparedness Plans to address expansion of manufacturing capacity at ST3 and ST5 units The updated plan will outline the necessary resources and equipment as well as the dedicated teams assigned for responding to emergencies.

Monitoring & Reporting: The company regularly monitors E&S indicators linked with resource consumption (energy and water usage), stack emissions and ambient and indoor air quality, drinking water quality, wastewater generation and quality of treated effluent, workplace and ambient noise levels, waste generation and disposal, accident/incident records, first aid cases, lost time in injuries, labour compliances, grievance redressal, etc. Internal auditing is coordinated by HR and Q&E functions and the findings are shared with the Senior Management. External audits are organized as per the requirements of global customers and the company’s systems and procedures are reviewed during independent assessments (as required by the buyers) applicable to the electronics industries sector such as Responsible Business Alliance (RBA), Suppliers’ Responsibility Standards, etc.

PS2: Labor and Working Conditions

The company employs 7953 workers (4195 female and 3758 male), which includes management staff, workmen (on-roll), trainees, apprentices, workers hired through manpower contractors as well as contract workers working under third party service contracts (such as housekeeping/ security etc.). The company has 1344 management staffs including office personnel and 3857 workers on the direct- roll of the company. The company also hires trainees (currently 67) and appoints apprentices (currently 72), either registered through National Apprenticeship Training Scheme (NATS) or National Apprenticeship Promotion Scheme (NAPS) - both schemes are operated by different ministries of Government of India (GoI). The remaining workforce (currently 2628) represents third party workers. Furthermore, approximately 490 temporary third-party workers are engaged in civil construction activities for the ST3 unit, with the anticipated completion date set for the end of January 2024.

Human Resource (HR) Policies and Procedures, Working Conditions and Terms of Employment: The company has documented HR policies and procedures adhering to national law, covering aspects such as recruitment, wages, working hours and overtime, prohibition of child labour and forced labour, sexual harassment and abuse, non-discrimination, freedom of association, etc. Appointment letters which describe terms of employment are issued to enrolled workers at the time of employment. New employees receive induction training on HR policies and procedures and employees receive an employee handbook which includes the company’s policies. However, circulation of the handbook and the clarity regarding the applicability of policy elements to various worker categories, including contractual workers, third-party workers, trainees, and apprentices, is not well-established within the company.

The company performed an independent third-party labour audit against national law and PS2 requirements as part of IFC appraisal. The labour audit has identified the need for a comprehensive review and update of the company's HR policies and procedures to align with IFC PS2 requirements. Policies should also encompass all worker categories (trainees, third-party workers). It is also recommended to establish a robust contractor management system to improve contractors' compliance with the company’s policies and IFC PS 2 requirements. The audit also highlights the need to establish a standard operating procedure (SOP) on recruitment of trainees, apprentices and interns aligned with national law and IFC PS2 requirements. The company needs to improve the efficiency of its overtime compensation framework by adopting an overtime compensation policy which is over-arching and covers all category of workers. The company needs to extend the current grievance redressal mechanism to include contract workers. The company has committed to implementing a time-bound labour audit corrective action plan (CAP) that reflects all the gaps presented above. Hence as per ESAP#2(a), the company will update and enhance its HR policies and procedures in line with the requirements of IFC PS2 requirements to also include other worker categories such as trainees, apprentices, and third-party workers. The updated policies and procedures will then be communicated and shared with all worker categories. The policies will include prevention and remedial actions for child labour and forced labour in operating assets and supply chain, freedom of association and collective bargaining, retrenchment, working hours and overtime compensation, hiring of trainees, apprentices and interns, grievance mechanism, prevention of sexual harassment (POSH), non-discrimination, accommodation, contractor management, freedom of movement, disciplinary action.  applicability of policies and procedures for the different categories of workforce will be clearly defined.

Further as per ESAP#2(b), the company will update the employee handbook with the revised set of policies and procedures and distribute the revised handbook to all workers. The company will conduct trainings and build awareness on revised policies and procedures for all worker categories and management to ensure their effective enforcement. The company, as per ESAP#2(c), will develop and adopt a SOP on recruitment of trainees, apprentices and interns aligned with Govt. Guidelines and IFC PS2 requirements. The SOP will define the terms and condition of employment including working hours, weekly off and overtime (OT) provisions and clearly reference HR policies; the SOP will extend the existing mechanisms related to grievance redress and POSH to trainees, apprentices and interns to enable them to raise concerns or grievances regarding their working conditions, instances of harassment, and other related matters. The company will communicate on the SOP provisions to all trainees, apprentices and interns through training programs and awareness sessions.

As per ESAP#2(d), the company will develop and adopt an OT compensation policy which is over-arching and covers all category of workers; the company will develop a plan to bring OT hours across its operations within legal limits permitted under law in a systematic manner and address root causes of OT; the company will inform all eligible workers about their right to be compensated for OT according to the new policy as reflected in the company’s HR Management System (HRMS).

Freedom of Association: The company has developed a freedom of association policy and does not restrict formation of employee unions, in line with national law, but there are no staff unions established at Salcomp. A 50-member worker committee has been formed at Salcomp which manages aspects such as work environment, transportation, canteen, safety, etc.  The company selected the committee members based on representations from workers; nevertheless, the company imposes no restrictions on the formation of independent unions. The committee meets with the management monthly to discuss issues related to workplace and improvement of facilities.

Non-discrimination and Equal Opportunity: The company has a policy on equal opportunity which mentions about equal employment opportunities and no cases of discrimination were observed during the appraisal. The company will enhance its policy and procedures on prevention of sexual harassment (ESAP#2a).

Grievance Mechanism: The company has an internal grievance redress mechanism (GRM) that can be used by mail, in person or via a grievance box to raise and address grievances including anonymously, if complainants so prefer, that are dealt by a grievance redress committee. The company has also arranged for kiosks within shop floors through which workers can access the grievance mechanism. The grievance redress committee has been established with fifty selected workers. The committee meets on a monthly basis and discusses with management on redress of grievances. From the information reviewed, workers raise grievances in relation to quality of food, and transport services. The access to GRM for various groups of workers, including contractual workers, third-party workers, trainees, and apprentices, was restricted and requires strengthening. The grievance redress provisions (especially policy and procedural aspects) needs to be further strengthened and adequately communicated to all categories of workers.

The company has documented an ‘Anti-Harassment (Physical and Sexual) & Abuse Policy’ and conducts awareness trainings on the same for workers and supervisors. The company has an Internal Complaints Committee (ICC) or Internal Committee (IC) in accordance with the Prevention of Sexual Harassment (POSH) Act to address issues related to harassment and abuse. Nonetheless there is a need to enhance awareness regarding the policy provisions and the procedures for reporting abuse, and to strengthen trust in the system while mitigating fears of reprisal.

Accordingly as per ESAP#2(e), the company will reinforce its existing mechanisms related to grievance redress and POSH, including provisions for anonymous grievances and ensure due access for all category of employees including the contract workers, third party workers, and trainees, apprentices and interns; the company will organize trainings and build awareness on grievance redress and POSH for the entire workforce; additionally grievance redress and POSH provisions should be displayed in local language at each of the establishments.

Further as per ESAP#2(f), the company will implement corrective actions as identified during the third-party audit (and as briefly outlined here) through a time bound corrective action plan (CAP), agreed with IFC. The company will carry out a third-party labour CAP completion assessment confirming closure of all identified issues in labour audit; the company will continue to undertake annual assessment till all the issues identified in the labour audit are closed to the satisfaction of IFC.

Protecting the Workforce: The company clearly indicates its commitment in respect of child labour and forced labour through its policies and employee manual. The company has a policy not to hire anyone who is below 16 years of age. Based on observations during the appraisal, no instances of child labour or forced or bonded labour were noted.

Third-party workers: The company hires a considerable percentage of contract workers either through third party contractors and labour agencies for operations like security, housekeeping and engineering through annual agreements and through service agreement contracts for some specific nature of maintenance work like gardening, civil works, etc. The company ensures that the third parties who engage these workers are legitimate enterprises and require them to have appropriate systems in place to manage working conditions in line with local regulations. The contract agreement specifies the laws and regulations to be complied by the contractors. However, there is a need for reinforcing the present system for contractor management and improving the to ensure improved compliance with the company’s policies and statutory provisions. So as part of ESAP#3, the company will develop a contractor management system with dedicated staff and strengthen its oversight of contractor management practices to ensure compliance with national law, and requirements of IFC PS2, encompassing aspects related to third-party workers such as terms of engagement, working environment, non-discrimination, equal opportunity, freedom of association, occupational health and safety, grievance mechanisms, and other relevant requirements.

Occupational Health & Safety (OHS) Management: The company has established Occupational Health & Safety (OHS) Management System certified as per ISO 45001 Standards across all its plants. To evaluate the performance of the OHS management system, the company conducts regular internal audits. In addition, the company’s OHS systems are also audited by its global customers to ensure alignment with their supplier responsibility standards in respect of OHS.  The company maintains Occupational Health Centres (OHCs) along with an ambulance within its premises. In case of emergencies, workers are attended to by nurses and doctors at the OHC. In case of any major injury or referral, workers are reported to nearby hospitals. The company offers maternity benefits for pregnant women as per national law. Routine medical examinations are scheduled for expectant mothers starting from the third month of pregnancy and they are provided with a pink scarf for easy identification. Additionally, pregnant women are granted relief from night shifts following the third month of pregnancy.

In the past 3 years, the company reports that there has been no fatal workplace accident or incident at any of the facilities in operating plants. The company maintains an injury register and tracker to document all injuries and accident/incidents that have occurred within the company premises. A review of the injury register for 2023 (January – October 2023) indicates 10 medical injuries – most of them were noticed to be hand injuries and were treated in the company OHC, with some being referred to nearby hospitals for further treatment. All accidents and incidents were analysed by the designated H&S team to identify the root causes and the appropriate action plan to mitigate as a result. The company conducts OHS trainings including fire and emergency preparedness training, and first aid training for its operational personnel.

A workplace environmental quality monitoring program is in place to monitor indoor air quality (Particulate matter, carbon monoxide, volatile organic compounds), using 3rd party laboratories. The results of the workplace monitoring (conducted during Oct 2023) were aligned with exposure levels recommended by Occupational Safety and Health Administration (OSHA) and Indian factory regulations. The company also monitors workplace noise within the facilities and the results demonstrate compliance with the occupational exposure limits recommended by OSHA and factory regulations.

All operational units of the company have valid fire permits from the Tamil Nadu fire department. During the site visits, the units of the company were noted to have fire detection, alarm and firefighting passive and active systems included centralized smoke detection and alarm, fire hydrant, sprinklers and fire extinguishers, manual call points, fire exit signages, emergency lights and public address systems. The emergency evacuation plan was also displayed appropriately at strategic locations within the units. The firefighting equipment is subjected to periodic inspection and regular life and fire safety (LFS) training is provided for workers. Mock drills are organized at unit levels and in association with the Tamil Nadu fdre Department. For the new buildings, the LFS designs will be consistent with the National Building Code as well as internationally recognized LFS code (e.g., United States National Fire Protection Association (US NFPA) or equivalent) and the designs will be vetted through a third-party industrial planning agency.

Supply chain: The company has established a supply chain management system aligned with PS2 requirements. The company has adopted a supplier code of conduct (COC) that includes prohibition of child and forced labour practices, and safety requirements. The company has a comprehensive system for supplier screening, selection, and performance including an audit checklist against the COC. The COC and checklists are aligned with requirements of Salcomp Global (Finland) and LingYi (China). The proposed expansion funded under this project will involve manufacturing of top modules and back frames for a global producer of smartphones and tablets which will provide an approved vendor list from where the company will have to source. The company also procures limited quantity of briquettes from a local supplier as fuel for boilers installed at ST5.

PS3: Resource Efficiency and Pollution Prevention

Resource Efficiency: Salcomp operations consume resources such as electricity, diesel, and water (only for domestic needs). Based on last year’s consumption (Jan – Dec 2022), the annual resource consumption covering company facilities is around: 16.9 million units (kWh) of electricity; 4000 liters of diesel and approx. 40,000 cubic meter of water. The company sources electricity from national power grid power and has also installed 4 MW of rooftop solar capacity at the ST5 unit. The company also purchases green energy from external sources through the special economic zone (SEZ) authorities. Currently the renewable energy sources account for approx. 23% of the total energy demand.

The company’s operations do not require water in any of the processes as the nature of production is largely electrical and electronic assembling of product parts. The water consumption is mainly for domestic purposes and is sourced through piped supply provided by the industrial park authorities (SIPCOT). The storm water from the roofs and the storm water drains is pumped back to a rainwater harvesting pond, that is located on the northwestern side of the Sriperumbudur campus.

The company is actively engaging in initiatives to enhance both resource efficiency and energy conservation. These include practices such as reuse of treated effluent, zero water discharge, and rainwater harvesting. Additionally, the company is focused on optimizing water utilization through the installation of water-efficient fixtures, such as push taps in restrooms. To enhance energy efficiency there is a widespread adoption of light emitting diode (LED) lights throughout the facilities along with use of timer-based lights in common areas. The company also implements specific start-stop procedures for equipment, while design interventions involve selecting equipment with low specific energy consumption. Regular auditing, tracking and benchmarking of energy consumption at the unit/shopfloor level further underscore the company's commitment to improving its energy footprint.

Greenhouse Gases (GHG) Emissions: The IFC funded project is not expected to produce more than 25,000 tons of (Scope 1 and Scope 2 emissions) CO2-equivalent annually. As part of GHG emission reduction strategies, the company has started renewable energy sourcing from external sources and has also installed small rooftop solar plants.

Air Emissions: Air emissions from the company’s operations are limited to the diesel generator stacks and the boiler exhausts. Boilers of 3 ton capacity (one working and one standby) have been installed for supply of steam to the anodizing plant at ST5. These boilers operate on briquettes as the primary fuel, with diesel serving as the startup fuel. The company procures briquettes from a local supplier and maintains a three-day supply of fuel consumption within the boiler room. Diesel generators (DGs) have been set up to serve as a backup power source; however due to the availability of two dedicated grid power lines, the use of DGs was minimal.

As part of the ESMS, the company has established monitoring program for air emission in line with permit conditions wherein boiler and DG set stack emissions as well as ambient air quality are monitored regularly using independent, accredited, third party laboratories. The latest stack air emission monitoring results (conducted during October 2023 and covering generator and boiler stacks) as well as the ambient air quality monitoring results indicate compliance to permit conditions and India’s National ambient air quality standards.

Ambient noise levels are regularly monitored by independent third-party labs. The results of noise monitoring indicate adherence to permit conditions and ambient noise standards.

Wastewater Treatment: The company operates a wastewater treatment plant (WWTP) of 650 KLD capacity to treat the effluent from the anodizing plant (ST5) and CNC cleaning water (ST2). The treated effluent is recirculated back as demineralized water into the anodizing process. The sanitary wastewater is discharged into industrial zone sewage system and treated by a Sewage Treatment Plant (STP) operated by the SEZ authorities. The STP includes 3 modules of 750 KLD capacity (2 working +1 stand by) and the treated effluent is used for landscaping within the company premises.

Waste management: The company operations generate e-wastes, hazardous and non-hazardous wastes which are managed as per permit conditions. The company has entered into legal agreements with authorized waste management companies for waste management and disposal across all its units. Operational procedures have been put in place by the company, outlining the processes for the collection, handling, storage, and disposal of waste, including control procedures to deal with any accidental spillage. The company maintains valid authorizations for hazardous, e-waste and biomedical waste and submits annual returns to the relevant regulatory authorities.

The company handles limited quantities of hazardous materials such as diesel and liquid nitrogen which are transported, stored, and handled as per national regulations and permit conditions. The Emergency Control Procedures offer essential guidance for addressing accidental spills of hazardous chemicals, aiming to minimize the potential harm to both human health and the environment.

PS4: Community Health, Safety and Security

The company’s manufacturing plants are located within established industrial zones and have been designed, constructed, and are operating in compliance with the national building and fire safety codes. The company has obtained factory licenses, layout approvals and building stability certificates from the competent authorities for all its operational units. The company has established regular infrastructure and an equipment safety related inspection regime in compliance with local factory regulations. All high-pressure vessels, lifting equipment, conveyors, tools and tackles and other critical equipment are tested on a regular basis by competent authority as per national standards and norms.

The company contracted specialized and licensed transportation companies to provide complimentary transportation services for its workforce. The buses are equipped with global positioning system (GPS) based tracking and a card punch system has been implemented to facilitate the monitoring of workers boarding the bus. The company raises driver’s awareness on defensive driving and speed limits during traffic to address issues of local traffic increase and associated impacts on community health and safety.  Additionally, a specialized transport committee has been established, featuring appropriate representation from the workforce, to effectively address any issues related to transportation. All the manufacturing plants have adequate access roads and are typically located close to the highways/wide roads with basic infrastructure available for attending to emergency scenarios.

As per ESAP# 4, the company will develop a transport management plan and include in the contracts with fleet operators the plan will address driver-related considerations, including recruitment, training, monitoring performance, and ensuring compliance with safety regulations; the plan will also emphasize on road safety protocols including vehicles meeting safety standards, adhere to speed limits and traffic rules and availability of necessary permits and licenses.

Security Personnel: The security arrangements within the industrial zone are managed by the SEZ Authorities. The company had engaged third party, security vendors and arranged for deployment of unarmed security personnel (including female security personnel) across all manufacturing plants. The company reports no security incident in the past. The company briefs security personnel about policies on prevention of child labour to be verified among contractor/third party workers at gate and provides training on basic safety, first-aid, fire safety and emergency response.

As per ESAP#5, the company will review and strengthen its security management plan in line with the requirements of IFC PS 4. The plan will be guided by the principles of proportionality and good international practice and include procedures to: assess risks posed by security arrangements; ensure hiring, rules of conduct, training, equipping, and monitoring of security personnel; provide for background verification on security personnel's individual character with no incidents of past abuses; train security personnel to exhibit appropriate conduct towards plant workers and neighbouring communities; train security personnel to manage mock sessions of labour unrest and protests; and to receive and resolve grievances about the security arrangements and acts of security personnel. 

The company’s engagement with the neighbourhood communities is limited as all of the facilities are located inside designated industrial areas (SEZ). The company has developed a specific procedure for communication with different groups of internal and external stakeholders (workforce, contractors, suppliers, regulators, communities, etc.). The company maintains regular engagement with the labour department and other regulatory authorities regarding compliances as well as meeting the local requirements. Company’ engagement also includes partnership with educational institutions, associations, etc.

As part of ESAP #6, the company will develop a stakeholder engagement plan (SEP), to apply to the entire company, including (i) stakeholder identification, analysis, and planning, (ii) disclosure and dissemination of information, (iii) updating the community grievance mechanism, and (iv) ongoing reporting to affected communities and stakeholders, in a manner aligned with IFC PS1 requirements. 

Nokia Telecom SEZ, SIPCOT Industrial Area Phase III, Sriperumbudur 602105

Chennai Bangalore National Highway, Tamilnadu – India

Phone: +91 44 3717 7777

E-Mail: india.sales@salcomp.com