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
Environmental and Social Assessment and Management System, Policy and Management Programs
The Borrowers have E&S Management Systems (ESMS), Policies and Management Programs aligned with applicable national standards, E&S regulatory permits and requirements. Moreover, the Borrowers have adopted several policies, including: (i) Code of Conduct; (ii) Sexual Harassment Policy, (iii) Human Resources (HR) Policy, (iv) Procurement Policy, and (v) Contractor Management Policy.
Siegfried Colombia has an Environmental Policy and an Occupational Health and Safety (OHS) Policy. Its environmental programs focus on the management of general and hazardous wastes, and the monitoring of effluents and air emissions in accordance with the provisions set forth in the country’s environmental regulations. The company’s OHS programs focus on industrial hygiene, occupational medical surveillance, and industrial safety. The programs’ objectives, resources and activities are defined in the OHS Management System Manual.
Siegfried Mexico has an integrated ESMS, which is certified per ISO14001 (environmental), and ISO45001 (OHS) international management system standards requirements. EHS procedures include response to emergencies, use of personal protective equipment, handling of waste and chemicals, and handling of loads. Siegfried Mexico has a risk matrix for environment, health, and safety and aspects, impacts, risks, and hazards are defined and assessed. As part of this project, the Borrowers will adopt, and maintain Project-level E&S policy and Management Framework guided by their existing E&S Management Systems and in line with IFC PS requirements at the new plants in Colombia and Mexico (ESAP #1). The framework will incorporate (but not limited to): (i) an overarching E&S policy; (ii) identification of risks and impacts procedure, for construction, and operations; (iii) plans and specific management programs to mitigate E&S risks and impacts; (iv) organizational capacity and competency, including roles and responsibilities and training needs; (v) emergency preparedness and response; (vi) stakeholder engagement; and (vii) monitoring and review, in line with PS requirements, described in the paragraphs below.
In addition, for Pharmedic, Siegfried Colombia will undertake an environmental, OHS and labor practices gap assessment versus the requirements of IFC’s PSs. Based on the results of this assessment, Siegfried Colombia will develop and implement an action plan to mitigate environmental and social (E&S) impacts and risks associated with Pharmedic in accordance with its own E&S Management System and IFC PSs (ESAP #2).
Identification of Risks and Impacts
The Borrowers identify and manage E&S risks and impacts associated with their operations through a risk management framework aligned with applicable national standards, E&S regulatory permits and requirements. Siegfried Colombia has a documented procedure for the identification of OHS risks and has developed Hazard Identification, Risk Assessment and Control matrices for each job position. The matrix includes the area where the hazard is present, the type of hazard as chemical, physical, biological, psychosocial, electric, biomechanical, and technological, the source, potential impact and the mitigation measures classified according to the risk control pyramid, namely elimination, substitution, engineering controls, administrative controls and use of personal protective equipment (PPE).
Siegfried Mexico has developed and implemented Standard Operating Procedures (SOPs) to manage the identified risks and impacts. The SOPs incorporate OHS and environmental work instructions and cover management of effluents, emissions, solid waste; accident investigation; and control of OHS risks. As part of ESAP #1 the Borrowers will update their E&S Management Systems by developing and implementing procedures for screening and identifying risks and impacts for construction and operation of new projects (i.e. expansions, greenfield). Pharmedic has a valid environmental license, which was approved on June 9th, 2008. The Borrowers will commission environmental and social impact studies for the construction and operation of the two manufacturing facilities in Colombia and Mexico, aligned with local requirements and IFC PS (ESAP #3).
Organizational Capacity and Competency
As per Siegfried Colombia’s organogram, environmental matters fall under the Operations Manager, while OHS is under the Administrative and Human Resources Manager. In 2023, Siegfried Colombia strengthened both E&S and OHS teams, integrating three and four people respectively to each team. In addition, Siegfried Mexico has a Safety and Hygiene Coordinator at head quarter, a Chief Safety, Security and Health at plant level.
The Borrowers will define roles and responsibilities for E&S staff to be responsible for screening, appraising and monitoring new projects (ie. acquisitions, greenfield) (ESAP #4). In addition, as per ESAP #5, Laboratorios Siegried will design and implement an E&S training program for Pharmedic staff. Training will include health and safety aspects, risks and impacts, management of contractors, stakeholder engagement, and implementation of ESMS plans and procedures.
Emergency Preparedness and Response
The Borrowers have documented Emergency Preparedness and Response Plans (EPRP) aligned with national requirements and IFC PS. Siegfried Colombia has an EPRP which defines emergency scenarios including fires, earthquakes, floods, explosions, spills and terrorist attacks. Emergency equipment, including extinguishers, spill and first aid kits are regularly inspected by brigade members. Siegfried Colombia is working on implementing a Fire Detection System (FDS) which includes the installation of emergency lightning, smoke detectors and alarms in all areas at the two operating manufacturing plants. Moreover, a FDS has been included in the design of the expansion.
Siegfried Mexico’s EPRPs are based on qualified third-party vulnerability assessments. Training for emergency preparedness and response and first aid is provided to all employees. The Company also conducts regular fire and emergency drills. As part of ESAP #1, the Borrowers will adopt, develop, and maintain Project-level EPRPs for the new plants and the brand/facility to be acquired.
Monitoring and Review
The Borrowers monitor a wide range of EHS related key performance standards (KPIs) including resource efficiency such as water and energy, generation of general and hazardous wastes, OHS statistics, wastewater and air emissions as per regulatory requirements. As part of ESAP #6, the borrowers will upgrade E&S monitoring and reporting procedures, by including procedures to oversee project construction. The procedures will define monitoring mechanisms and Key Performance Indicators, including near misses, incidents, waste amounts, noise monitoring, in addition to other environmental, social and OHS related indicators.
Supply chain
The Borrowers have a Supplier Selection Process that includes supplier pre-evaluation, and verification that supplier has a quality management system. The process also includes audits to suppliers. Siegfried Colombia has a Compliance Policy that establishes the guidelines of behavior and ethical principles to be followed by all employees, partners, suppliers, shareholders and any third parties. The Compliance Policy addresses topics including human rights, safety of products and medicines, conflict of interest, OHS, diversity and inclusion, harassment and abuse, and an ethical line. Siegfried Mexico has a dedicated Supply Chain & Business Development Department, which is supported by The Procurement and Legal Department to check work and labor-related risks before the purchase of the supplies. In addition, international brokers conduct labor-related audit for Siegfried Mexico.
PS2: Labor and Working Conditions
Siegfried Colombia currently employs around 750 direct employees, where approximately 500 are women. Siegfried Panama employs around 100 workers, of which 65% are women. Siegfried Mexico has around 1650 employees, whereas roughly 825 are women. In addition, Pharmedic has a labor force around 400 employees (45% are men and 55% are women).
Working Conditions and Management of Worker Relationship
Human Resources Policies and Procedures
The Borrowers have documented HR policies and procedures, prepared per national labor regulations and applicable to all employees. HR policy and procedures are generally consistent with IFC PS 2 and covering recruitment, compensation, labor relations, induction and training, codes of conduct, annual performance evaluations, promotion, and disciplinary actions, among others. As per ESAP #7, the Borrowers will adopt, develop, and maintain Project-level HR Management Framework guided by their HR policies and procedures in line with IFC PS requirement. In addition, the Borrowers will develop procedures to manage working conditions during project construction.
Working Conditions and Terms of Employment, and Workers’ Organizations
The Borrowers provide employees written contracts with the conditions and terms of employment, including the information on corporate code of conduct, working hours, benefits, and the roles and responsibilities within the organization. According to company’s management, in alignment with Colombian regulations, Siegfried Colombia does not discourage workers from joining unions or prevent workers from forming organizations. Siegfried Mexico has one collective agreement with CTM Union, that represents approximately 8 % of the staff.
Non-Discrimination, Equal Opportunity and Protection of the workforce
The Borrowers’ HR policies include their commitment for non-discrimination and equal opportunity. Siegfried Colombia’s Internal Workplace Regulations document the company’s commitment to non-discrimination and for a workplace free of harassment. In addition to its sexual harassment policy, Siegfried Colombia also has the Compliance Program and the Protocol for the Management and Investigation of Complaints – that include provisions to promote the respect of Human Rights, diversity and inclusion in the workplace. Siegfried Mexico has a code of conduct that establishes their commitment for being an equal opportunity employer, promoting fair and equitable treatment of employees. Siegfried Mexico has a diversity and inclusion committee, and a non-discrimination policy. In addition, the Borrowers comply with relevant legislative requirements, including prohibitions against the use child or forced labor.
Retrenchment
Although Siegfried Colombia is not anticipating to implement collective dismissals as part of the Pharmedic acquisition, as per ESAP #8, the Borrowers will develop a Retrenchment Framework, that will include as a minimum (i) procedures to analyze alternatives to retrenchment prior to any collective dismissals, (ii) if the analysis does not identify viable alternatives to retrenchment, a retrenchment plan will be developed and implemented to reduce the adverse impacts of retrenchment on workers. The retrenchment plan will be based on the principle of non-discrimination and will reflect the Borrowers’ consultation with workers, their organizations, and, where appropriate, the government, and comply with collective bargaining agreements if they exist. The Borrowers will comply with all legal and contractual requirements related to notification of public authorities, and provision of information to, and consultation with workers and their organizations.
Grievance Mechanism
The Borrowers have internal grievance mechanisms which are also available to the contractors’ workers. Claims and complaints can be filed anonymously, online, or by email.
Occupational Health and Safety
The Borrowers implement OHS management systems that are developed per the requirements of national legislation and standardization. Siegfried Colombia’s OHS Management System includes an OHS Manual that describes the roles and responsibilities of key personnel, OHS leading and lagging performance indicators, training requirements, and lists operational controls. Siegfried Colombia conducts OHS inspections and workplace monitoring and has developed a series of OHS-related procedures that cover the use and provision of PPE, safe handling of chemicals, safe working procedures during maintenance activities, and implemented permits to work for high-risk maintenance activities and working at heights. In 2023, Siegfried Colombia hired an independent consultant for OHS review, where action plans were developed for improvements that relate to management of chemicals, electrical safety, lockout and tagout procedure, mechanical risk, and psychosocial risk. At Siegfried Colombia facilities, in 2023, the lost time injury frequency rate (LTIFR, number of lost time injury cases per million hours worked) was 5, above the good industrial benchmark value for pharmaceutical and medicine manufacturing (3.0, www.bls.gov). The most common accidents are slips and falls, struck by objects, and entanglement.
Siegfried Mexico’s OHS system includes risk assessment, mitigation and monitoring and reporting programs and procedures, and worker participation in accident prevention committees. Staff exposed to hazardous chemicals are provided with appropriate safety procedures and equipment, including monitoring devises, containment mechanisms, eye wash stations, showers. Siegfried Mexico has “near-miss” reporting, where the staff is awarded for reporting “near-miss” incidents. In 2023, Siegfried Mexico LTIFR was around 5. Other than traffic-related accidents, the most common accidents were due to slip and fall and hand injuries. No fatalities were reported for Siegfried Mexico and Siegfried Colombia, including traffic related accidents.
As part of ESAP #1, the Borrowers will adopt, develop, and maintain Project-level OHS policy and Management Framework guided by their OHS Systems and in line with IFC PS requirements. In addition, the Borrowers will upgrade their contractor management procedures to ensure oversight of occupational health and safety performance of their contractors during construction align with national and IFC PS requirements.
Workers Engaged by Third Parties
The Borrowers as part of their contractor management practices and procedures, require contractors to comply with national labor laws through specific contract clauses. The Borrower’s construction activities of the greenfield facilities will heavily rely on contractors, and as per ESAP #9, Siegfried Colombia and Siegfried Mexico will update their Contractor Management procedures, by including requirements for contractors to comply with IFC’s PSs. The contractor management procedure will include: (i) minimum E&S requirements for contractors including mandatory competency requirements, certification and trainings, (ii) E&S pre-qualification criteria and process, (iii) communication and training, (iv) E&S audit, (v) requirements and process for E&S risk assessment prior to work commencement, (vi) E&S monitoring and reporting (including performance indicators), (vii) requirements and provisions regarding compliance with labor host country law and PS2 (including nondiscrimination, compensation, timely payment of salaries, freedom of association, no child/forced labor, grievance mechanism, occupational health and safety, etc.), and (viii) training on sexual harassment during contractor induction.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency
The operational facilities in Colombia and Mexico use electricity from the national grid and source water from the municipal aqueduct. In addition, the Pharmedic manufacturing facility, uses electricity from the grid and from photovoltaic panels installed on its rooftop, and sources water from the public network. As part of the ESAP #1, the Borrowers will define Project-level resource efficiency programs using relevant KPIs and goals as part of the required ESMS.
Greenhouse Gases (GHG) and Air Emissions
GHG emissions from the Borrowers are estimated at approximately 401.4 ton carbon dioxide (CO2)-equivalent per year. Additional GHG emissions are not expected to be significant upon project’s completion.
Siegfried Colombia has two gas-fired boilers, whereas Siegfried Mexico facility has three steam generators that burn natural gas. Natural gas has been supplied via the municipal gas network. The company’s emissions have remained below national permissible limits and the World Bank Group (WBG) Environment Health and Safety (EHS) Guidelines guidance values.
Pollution Prevention
Wastewater Management
Siegfried Colombia has a wastewater treatment plant (WWTP) to treat process wastewater and effluents meet WBG Environment, Health and Safety Guidelines for Pharmaceuticals and Biotechnology Manufacturing guidance values. Siegfried Mexico WWTP is under construction and it will be operational in August 2024, where the effluents will meet WBG Environment, Health and Safety Guidelines for Pharmaceuticals and Biotechnology Manufacturing guidance values. Domestic effluent is discharged into the city’s sewage system in both plants.
As per ESAP #10, for the expansion in Colombia and the new Plant in Mexico, the Borrowers will provide the effluent waste water quality monitoring reports, of the treated industrial wastewater effluents, that will verify compliance with national limits and WBG Environment, Health and Safety Guidelines for Pharmaceuticals and Biotechnology Manufacturing guidance values. If gaps will be identified, the Borrowers will agree with IFC for the action plan (which might include expansion of the WWTP) to improve the performance.
Solid Waste and Hazardous Materials Management
The Borrowers have been implementing solid and hazardous waste management plans, involving waste reduction, segregation, storage, and disposal. Segregated wastes are stored in well-ventilated and gated designated areas. Non-hazardous wastes are collected for disposal by authorized public service agencies. Transport, treatment, and final disposal of hazardous waste is managed by licensed third parties. The Borrowers periodically monitors the service providers to verify operating conditions and legal compliance.
In the operational facilities, the Borrowers segregate and store hazardous materials including active pharmaceutical ingredients, and other chemicals (such as maintenance, and cleaning substances) to avoid spilling and/or land and water pollution risks. Material Safety Data Sheets for chemicals are available at working stations and employees are trained in line with safe work instructions. The Borrowers will implement the same practices during construction and operation of the new facilities.
PS4: Community Health, Safety and Security
Siegfried Colombia’s plants are within the industrial zone of El Ejido in Bogota and are not in proximity to houses or schools. The company has armed security guards employed by an external service provider, who are supervised by an in-house Security Coordinator. Provisions on respect to human rights, use of force and training are included in the contract requirements. Security forces are subject to a background check and a yearly polygraph test.
Siegfried Mexico’s manufacturing plants in the Benito Juarez industrial park in the city of Queretaro is approximately 0.5 km away from the closest residential community. Monthly meetings are held with the representatives of the industrial park to review the emergency response plans of each company. Transportation of raw materials and products at all operations is sub-contracted to specialized companies with safety and verification protocols, including GPS tracking and real-time reporting of chain of custody.
The Pharmedic manufacturing plant is in the Soyapango municipality in San Salvador, along a main highway. Siegfried Colombia will carry out at Pharmedic manufacturing plant a risk assessment to determine potential health and safety, L&FS and security risks associated with the neighboring communities and how to mitigate them (if any exist) (ESAP #11). Siegfried Colombia will construct the expansion within a lot of its property, that is located next to the existing manufacturing facilities. Siegfried Mexico will construct the new plant in the Industrial Park Polígono Empresarial San Miguel, in the city of San Miguel de Allende, away from communities and no additional impacts on the health, safety and security of the local community are expected.
For the new plant in Mexico, as per ESAP #12, after construction and before starting operations, the Borrowers will engage with an external L&FS expert to confirm that the fire-fighting systems were installed as designed, in accordance with the L&FS section of the WBG General EHS Guidelines and to provide the certification, affirming that and were properly installed and commissioned. In addition, as per ESAP #13, Siegfried Colombia will engage with an external L&FS expert, to perform a risk-based L&FS review in Pharmedic (EL Salvador), affirming that the L&FS systems are installed as per an international life and fire safety code and are properly working. Per ESAP#12 and #13, a corrective action plan, to fulfill the gaps (if any), with time-bound implementation schedule, will be developed. The expansion of the plant in Colombia is an ongoing project that will require redesign of the L&FS systems of the new and existing portions of the facility, together with the modification of the flammable liquid storage areas, in line with the L&FS master plan. The L&FS master plan has been approved on April 14th, 2024 by a local L&FS specialist, who will also provide the post-construction certification (ESAP #14).
