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
Environmental and Social Assessment and Management System and Policy
According to local environmental regulations, new water treatment operations (such as those proposed by EMPAGUA) are required to undertake an Environmental Impact Study (EIS). Regulatory approval must be obtained from the Ministry of Environment and Natural Resources (MARN), along with the relevant municipal authorities. EISs encompass all activities related to water treatment and supply, including extraction. The projects to be developed by EMPAGUA (two pretreatment plants in Hincapie and Canalitos, as well as the refurbishment of the Ojo de Agua groundwater pumping and storing system) will be required to undergo an E&S impact assessment (ESIA) commensurate to the project risks in line with IFC PS including climate risks prior to their construction (ESAP Item #1).
At the time of the site visit, the smart traffic lights installation was ongoing. The project entails the installation of traffic lights in intersections to be installed in multiple phases, including sensorized cameras, new variable message boards, total connectivity via fiber optic and the installation in an existing building of a control center with software platforms for traffic engineering, traffic simulation, traffic light planning, and remote traffic light control. E&S management of the construction sites was being undertaken in line with local legislation by contractors and MGC’s E&S team. As required by the Institute of Anthropology and History of Guatemala (IDAEH), a professional archeologist supervised excavation activities and overhead electrical and fiber optics connection was preferred to underground installation to avoid impacts on historical heritage in areas prone to findings.
The feasibility study for the construction of urban cycling routes and the deployment of a public bicycle system will include considerations aligned with IFC PS, including any specific measures required to meet PS4 (Community Health and Safety) and PS5 (Land Acquisition and Involuntary Resettlement) requirements (ESAP Item #2).
Management Programs
MCG has established dedicated manuals to instruct municipal personnel of the internal procedures for specific tasks, including flowcharts defining the responsibility of each staff involved, for MCG’s Human Resources Department, the Police department, the Department of Health and Wellbeing (Direccion de Salud y Bienestar, responsible for implementing and coordinating strategies, policies, plans, and programs aimed at promoting comprehensive health and well-being within the municipality) and the Department of Vulnerability and Emergency Management (“Direccion de Administracion de Vulnerabilidades y Emergencia, or AVE, responsible for coordinating emergency responses and managing risks related to vulnerabilities within the city). The manuals are specifically intended to provide instructions to properly record activities and define reporting lines and approvals needed to ensure that internal processes abide the Guatemalan legislation. A Code of Ethics and Conduct has been developed serving as a guide for the behavior of all officials and employees of the Municipality of Guatemala and its companies, presenting the ethical principles that govern municipal operations. Finally, the Land-use Plan (Plan de Ordinamento Territorial) aims to manage urban expansion, protect natural resources, reduce disaster risks, and ensure efficient public services. It includes public policies for territorial planning aiming to enhance residents' quality of life through sustainable development, efficient urban mobility, equitable land access with public services, disaster risk reduction, environmental protection, disability accessibility, and citizen engagement.
Regarding EMPAGUA’s assets, due to the nature of the operations, aside from chlorine storage (see below under PS2), the environmental risks associated with the operations are low and relate primarily to solid and liquid waste management, and there are limited social aspects. However, a formalized approach to these issues is required, along with adequate health and safety management. EMPAGUA will establish and implement a formal Environmental, Health, and Safety (EHS) Management System for Construction (ESAP item #3) and Operations (ESAP item #4) to ensure alignment with IFC PS (e.g., OHS management, waste management, noise/dust management, erosion control, hazardous materials and substances management) and integrate relevant aspects related to the management of applicable social issues, such as a Stakeholder Engagement Plan (SEP) and a Grievance Redress Mechanism (see below for more information). The system will encompass a comprehensive policy statement, objectives and targets, training requirements, management and monitoring procedures, and reporting procedures.
Organizational Capacity and Competency
MGC E&S management organizational chart includes (i) an environmental director managing 280 members, including technical/administrative staff (involved in environmental control, remediation, training and project supervision) and operative staff (in charge of maintenance of municipal parks); (ii) a social development director, managing 850 people divided in four areas: the local auxiliary mayor's offices (or alcaldia auxiliar), social programs unit, social development technical unit (including bricklayers and gardeners who work for the auxiliary mayor's offices), and cultural department; and (iii) an HR manager, managing 119 people, including those in charge of labor and OHS aspects. The municipal agencies as EMETRA and EMPAGUA have similar structures with dedicated staff. At the time of the appraisal, EMPAGUA started building a dedicated executive unit for the projects to be financed by IFC, including a multidisciplinary team, with one environmental specialist, one environmental/sanitary specialist, one civil engineer (also Project Manager), an electro-mechanical specialist, and a financial specialist. As per ESAP item #5, EMPAGUA will define an enhanced E&S org-chart for the management of the Project during both construction and operations, including a team member with decision-making authority who is proficient in IFC PS, defining reporting lines between the executive unit and other EMPAGUA’s management departments, the job description of all staff involved in the management of E&S and proving adequate capacity in line with IFC PS1. Training requirements for employees and contractors will be defined in the EHS systems to be developed per ESAP items #3 and #4. For operations, as part of their overall job description all employees at the plants to be financed by IFC should have responsibility (and be trained accordingly) for ongoing implementation of the EHS system. These individuals would then report to selected plant managers, who will be responsible for the EHS performance of each plant; this will need to be defined in their job description, and specific training should be planned to ensure adequate competency in line with PS1.
Emergency Preparedness and Response
As per ESAP item #6, EMPAGUA and EMETRA will develop and implement Emergency Response and Evacuation Plan (EREPs) for all facilities to be built/refurbished as part of the Project. Each EREP will also define minimum requirements for emergency response training (including emergency drills), equipment and signage, and adequate monitoring and recording tools. For EMPAGUA’s EREPs, the plans will include mitigants to protect workers and communities (where applicable), considering environmental emergencies (e.g., accidental spills, erosion risks), extreme weather events and climate-related risks (specifically flooding and extreme temperatures). The EREP will also include, when applicable, response in case of person in water (PIW) and will consider the need for community involvement in the event of an unplanned release of a substance (e.g., chlorine) beyond the plant boundary line.
Monitoring and Review
EMPAGUA monitors the quantity and quality of treated waters as part of its daily operations. The approach on Monitoring and Review will be defined in the EHS Management Systems to be prepared as per ESAP items #3 and #4, and include key performance indicators such as those related to training, energy consumption, waste generation and water quality. This information will then be reported to the plant managers to allow for benchmarking between operations.
Contractor Management
Contractors are mainly employed for construction and are required to submit documents demonstrating the financial and technical capacity to undertake the work in order to participate to public tenders, in line with the State Procurement Law. As per ESAP item #7, EMPAGUA will develop a Contractor Management Plan to assess contractors and subcontractors as part of the tender process in line with good practice (i.e., IFC’s Good Practice Note: Managing Contractors' Environmental and Social Performance). The municipal agency will review OHS and E&S performance and practices of prospective contractors, including labor conditions and quality control. In case construction is not directly managed by EMPAGUA, the municipal agency will contractually ensure that contractors apply the EHS Management System for Construction (to be prepared as per ESAP item #3 for EMPAGUA) or a system that achieves comparable performance, with the municipal agency providing oversight.
In addition, EMPAGUA will ensure adequate supervision and reporting of the contractors’ implementation of the procedures to be developed in line with ESAP item #3 in the field, and periodically collect the relevant Key Performance Indicators (KPIs) through direct monitoring or collecting information from the contractor, logging the necessary evidence of compliance.
Audits to contractors and key suppliers will be conducted regularly in line with the monitoring and review procedures of the EHS Management System for Construction and the monitoring schedule to be included in the Contractor Management Plan. The audits will assess compliance with E&S requirements and with Guatemalan legislation, identifying non-compliances, observations, and improvement opportunities, reducing risks and mitigating impacts. After the auditing process, the contract managers will monitor and track to completion the implementation of any identified non-conformities and corrective actions with suppliers and contractors, in line with ESAP item #7.
PS 2 – Labor and Working Conditions
The Labor Code of Guatemala covers a wide range of labor-related issues including recruitment, employment contracts, working hours, labor discipline, and dispute resolution. The Labor Code mandates that all employment contracts be in writing and outline the terms and conditions of employment, including wages. Employers are required to contribute to the national social security system, which covers various benefits including health insurance, pensions, and work-related accident insurance. The Labor Code ensures the right of employees to form and join trade unions. MGC presented the collective bargaining agreement signed between the MGC/EMETRA and the Sindicato Central de Trabajadores Municipales (SCTM), while EMPAGUA signed a similar one with the Sindicato de Trabajadores de la Empresa Municipal de Agua (SITRAGUA).
The Labor Code prohibits discrimination based on gender, race, religion, political opinion, and social status. Employers are required to uphold principles of equality in all aspects of employment, including recruitment, wages, and promotions. A grievance mechanism is available for municipal workers through the municipal intranet, allowing for anonymous reporting.
In addition, MCG and the municipal agencies provide to the workers manuals that include information on employment conditions, compensation, benefits, rights, and responsibilities. In 2021, MGC developed a protocol to prevent and respond to Gender Based Violence and Harassment (GBVH) cases, in order to address potential cases of sexual harassment in the workplace and contribute to its eradication, as well as to authorize the creation of the Sexual Harassment Intervention Committee of the Municipality of Guatemala and its Companies. As per the ESAP item #8, MGC and its agencies are to develop and implement HR documentation applicable to IFC-financed activities that aligns with the Labor Code and IFC PS. More specifically, this requires development of HR documentation including: (i) a HR Policy, including explicit statements to ensure non-discrimination, non-acceptance of child and forced labor, inclusion, equal opportunity, and fair treatment with respect to any aspects of the employment relationship, such as recruitment and hiring, compensation (including wages and benefits), working conditions and terms of employment, access to training, job assignment, promotion, termination of employment or retirement, and disciplinary practices; (ii) a worker grievance mechanism, with defined objectives, assigned responsibilities, timelines (for addressing grievances), senior management oversight, and regular reporting. The procedure will include a complaint management and resolution procedure with provisions for GBVH complaints; a commitment that individuals conducting investigations of GBVH complaints are qualified to handle such cases; and a training program and awareness campaigns to disclose the grievance mechanism for both direct employees and contractors; (iii) action strategies and guidelines to operationalize the Code of Ethics and Conduct and the HR Policy, including awareness and training program, and associated KPIs; (iv) campaigns, mechanisms and action plans for monitoring risks associated with GBVH and promoting gender equality. As part of this, MGC and its agencies will also need to demonstrate that the HR documentation has been communicated to employees and contractors linked to IFC-financed activities and provide evidence of implementation.
Occupational Health and Safety
The Labor Code defines specific requirements relative to OHS, the need for safety management plans by companies, responsibilities of the employer and employees in the event of an accident, training requirements and requirement for personal protective equipment, requirement for employers to facilitate regular annual medical checkups for employees, amongst other aspects. EMPAGUA produced OHS Plans that include a risk matrix per each workplace at the agency’s operating plans. As per ESAP items #3 and #4, these will be upgraded to include KPIs, training frequencies, incident reporting requirements (including root-cause analysis and corrective actions to avoid recurrence), and a monitoring and reporting section to ensure auditable records are produced. The EHS Plans will also describe the roles and responsibilities of all workers in the EHS performance of each plant during construction and operation, training, supervision and auditing requirements, as well as introduce a permit to work system for high-risk activities, including work at heights, hot works, work in confined-space, work on energized equipment and chlorine handling. In addition, the EHS Plans will define the necessity of adequate guarding around the edge of flocculation and open storage tanks, as well as the use of PPE for workers and visitors, to be defined per area of the plant, depending on relevant risks including noise and vibrations.
All EMPAGUA facilities visited had dedicated storage rooms for chlorine. Access control and safety systems as per good practice (see IFC’s EHS Guidelines for Water and Sanitation), including alarms, automatic shutoff valves activated when a chlorine release is detected, containment systems and adequate emergency response equipment, will be defined in the method statement for the storage and handling of chlorine at all facilities part of the Project as per ESAP item #9. This statement will also define emergency response equipment to be available at the chlorine storage units, along with the requisite safety signage. In addition, as part of the EHS management systems, a procedure will be developed for the handling of chlorine on-site inclusive of the training requirements for this.
The approach to health and safety during construction will be managed by the EHS Management System for this phase (ESAP Item #3) and will include the approach to oversight of contractors by EMPAGUA/EMETRA.
PS 3: Resources Efficiency and Pollution Prevention
Environmental issues to be managed during EMPAGUA’s projects construction phase are those typically associated with construction sites and include the management of contaminated (high silt loads/oil and grease) stormwater, diesel and oil spills, waste, erosion, and potential for nuisance impacts (e.g., noise and dust) on surrounding land users including traffic congestion at selected locations. These impacts can be adequately managed with the effective implementation of the EHS Management System for the construction phase (ESAP Item #3). In case environmental impacts relevant during construction carry over into operations, these will be managed via the EHS management system for operations (ESAP Item #4).
With regard to operations of EMPAGUA’s WTPs, the primary waste is sludge generated as part of the water treatment. General waste and limited quantities of hazardous waste (e.g., empty chemical containers) will also be generated. In addition, all facilities will have storage areas for variable quantities of flocculants and other consumables, potentially hazardous substances (e.g., diesel and oil for standby generators). EMPAGUA will develop and implement a procedure for management of wastes (including sludge) and hazardous materials that is aligned with good practice (see IFC’s EHS Guidelines for Water and Sanitation and General EHS Guidelines) and incorporate this into the EHS management system for application at all operations part of the Project (ESAP Item #4).
Among its objectives, the EMPAGUA projects will optimize surface water utilization and increase available capacity by enhancing the efficiency of the groundwater supply system post-abstraction, minimizing water system losses, and integrating alternative water sources.
PS 4: Community Health, Safety, and Security
With regard to EMPAGUA, the water quality supplied by the respective operations is regularly tested and reported to comply with national requirements for potable water quality.
While routine operations at the plants are not expected to pose risks to communities/individuals off-site as the facilities are not located in proximity to communities, there is a need to define and implement EREPs at facilities as per ESAP item #6.
Regarding security management, MGC and its agencies, engage public security forces (including the municipal police) to control the access to their main buildings and secure critical infrastructure, such as major water treatment plants, in times of emergency, public disorder, or threats to such assets. EMPAGUA’s security arrangements are managed by a Security Officer (Encargado de Seguridad), who selects police personnel and will be in charge of the security of the water treatment plants to be built under the IFC investment. As per ESAP action item #10, MGC and its agencies will develop a Security Management Plan for the Project, including a security risk assessment, aligned with the requirements of PS4. The Security Management Plan will define the policy requirements, responsibilities, actions to be implemented with respect to engagement with public forces, and appropriate conduct toward project stakeholders and affected community, with focus on gender considerations.
