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
Identification of E&S Risks and Impacts
The mall refurbishment will be conducted by MDC and once completed, the operation will be AMG's responsibility. The Project is subject to local regulatory assessments, including construction permits focused on impacts related to noise, water, waste, and air pollution. These permits, which will be obtained prior to construction, have provisions generally consistent with IFC PS1 in connection with the management of construction-related environmental and social (E&S) risks. An E&S impact assessment is not required for the mall refurbishment under local regulations.
Environmental and Social Policies and Management Systems:
ALI has corporate level policies and procedures that are applicable to AMG’ development and operations. ALI’s ESMS has been certified in line with ISO 14001 international standard for environmental management systems through MDC and Ayala Property Management Corporation (APMC). Although policies and procedures are generally in line with ALI’s system, AMG does not have a certified ESMS specific to its operations. ALI’s ESMS includes policies on managing contractors and suppliers, hazardous materials management, waste management, worker safety, fire safety and emergency response and is generally aligned to IFC PS1 requirements. The gaps are mainly related to stakeholder engagement, grievances mechanisms and community health and safety (further discussion on these gaps is below). AMG and MDC will consolidate and, augment existing policies and procedures into an ESMS, in line with IFC PSs for the refurbishment and operation of the Project [ESAP #1]. The ESMS will include additional policies and procedures to address the gaps and be structured to include (but not be limited to): E&S policies; a process to identify E&S risks and impacts, with mitigation measures such as management programs; an E&S organization, with documented roles and responsibilities; a process defining monitoring and review requirements as well as stakeholder engagement; guidelines on labor and working conditions; and community health and safety.
E&S Organization Capacity:
ALI’s Corporate Sustainability team has dedicated staff to implement and monitor E&S policies for the Project, including for the planned refurbishment of the malls, project design, tenant coordination and access to renewable energy. AMG has three (3) property management teams that coordinate the operation of the 10 malls with dedicated Pollution Control Officers assigned. These property management teams are responsible for engaging with tenants and service providers, property and utility management, health, safety, and security. AMG and MDC will strengthen its E&S organizational capacity for the implementation of the ESMS by providing dedicated resources, and training for MDC, property management teams, contractors or service providers as required under ESAP #2 and ESAP #3.
Emergency Preparedness and Response:
ALI has in place well-developed emergency response plans, including evacuation plans and business continuity plans, which are adapted by AMG and MDC operations. The plans include social and security risks, natural disasters (earthquakes, volcanic eruptions, and typhoons) and health and safety risks. Incidents are promptly investigated, and new controls are put in place if necessary to prevent similar emergencies. Any issues are reported to the appropriate management level and recorded through a monitoring system. MDC has emergency preparedness and response plans in place, including regular drills for fire, earthquakes, and other emergencies for construction work which are applied to its employees, subcontractors, and visitors, Incidents are promptly investigated, and new controls are put in place, if necessary, to prevent similar emergencies. Any issues are reported to the appropriate management level and recorded through a monitoring system. AMG has its own Emergency Response Plan/Evacuation Plan tailored to its operations. Emergency drills are conducted regularly at the subject 10 malls. The company will update the existing Emergency Preparedness and Response Plan as part of the Community Health and Safety Plan (CHSP) [See ESAP #7] and to demonstrate its continued commitment to prevent incidents [See ESAP #6].
Monitoring and Review:
ALI, AMG, and MDC have been conducting internal audits, which cover E&S aspects, on a regular basis by both corporate and building management teams. The ALI corporate team collects performance data and key performance indicators (such as energy and resource consumption, waste generating and waste recycling rate, greenhouse gases emissions, health, and safety conditions) from the Projects, aggregating them in dedicated platform and in internal/external reports. ALI reports E&S performance to the Board of Directors.
PS2: Labor and Working Conditions
Human Resource Policies & Procedures:
As of 2023, the regular employees for ALI were around 7,000 persons, with 53% being female and 47% being male, and supported by indirect hires of 46,000 persons (support staff). The support staff comprises 60.9% third-party contractors, 27.1% indirect hires, 11.6% project-based, and 0.4% consultants. APMC and MDC employees numbered around 7,700 and 29,000, respectively. Human Resource (HR) management is coordinated between the corporate and Project level. HR procedures address terms of employment, working hours, training, leave, employee welfare, wages and benefits, training, the principle of equal opportunity, fair treatment, and non-discrimination as per the Philippines Labor Code. The whistleblowing policy is used as grievance mechanisms with employees encouraged to share their concerns, suggestions, or complaints with senior staff. Compliant channels are monitored, and each report is documented and submitted to management. There are various channels for the submission of anonymous grievances. No unions represent employees at ALI and its subsidiaries though there are no policies barring any form of associations throughout the company. ALI will be required to update its existing HR policies and procedures, in line with IFC PS requirements, to address gaps, such as a retrenchment policy and a clear statement that employees have the freedom to join and form unions. Additional items regarding updating of the HR policy are outlined below and are included within ESAP #5.
Gender Based Violence:
ALI has in place a Diversity and Equal Opportunity Policy which defines its values. The company's non-discrimination policy encourages employees and stakeholders to report any discriminatory practices to Human Resources. The Whistleblowing Policy allows all employees, regardless of gender, to report any irregularities or misconduct involving ALI employees, brokers, sellers, business partners, suppliers, and service providers through secure channels. In addition to whistleblowing policy, AMG have sexual harassment policy and procedures in place, which is enforced not only on their direct employees/workers but also on third-party service providers. As per ESAP#4, ALI will be required to enhance the HR policy, in line with IFC PS requirements, to include detailed policies on diversity and equality opportunity, non-discrimination, and grievance redress mechanisms to prevent Gender-Based Violence [See ESAP #5].
Human Rights, Child Labor and/or Forced Labor:
ALI at a corporate level has included provisions in its HR policies to address the issues of child labor, forced labor, and human rights protection. As part of its commitment to combat child labor and forced labor, ALI regularly monitors and audits its subsidiaries, vendors, and contractors in line with this policy. ALI’s procurement policy has requirements that demonstrate their commitment to reduce risks of forced labor and child labor. However, the company does not have policies such as assessing risks pertaining to work and life under duress, involuntariness, exploitative recruitment practices, threat and menace of penalty and impossibility of leaving employers. ALI will update existing HR policies and procedures to manage and mitigate forced labor, child labor, and human rights, in line with IFC PS requirements. [See ESAP #5].
Grievance Mechanism:
ALI has a whistleblowing policy in place which applies to both AMG and MDC, providing various grievance mechanisms for customers, employees, and the public. These include a customer service hotline, a website feedback form, and designated personnel in different Ayala Land units. The policy covers a wide range of individuals and entities and is part of the company's Business Integrity Program. However, there are no specific worker grievance mechanisms/procedures for workers who are either directly employed by ALI, AMG or MDC or indirectly employed or contracted through third-party suppliers to raise concerns about discriminatory practices and harassment. ALI will update the worker grievance mechanism to align with PS2 to redress workers’ concerns and incorporate them into the existing HR policies and procedures [See ESAP #s 4 and 5].
Occupational Health and Safety and Third-Party Employees:
MDC has dedicated OHS requirements in its contracts for the contractors who will undertake the mall refurbishment. During operation, the property management teams of the malls have responsibility for OHS matters, including vendors’ contractor management such as pest control, cleaning services, security, and gardening. Both MDC and AMG’ property management teams, are responsible to provide staff training, for their employees, sub-contractors, and third-party suppliers. Third-party suppliers are contractually required to have staff properly trained and equipped in accordance with local regulatory requirements. ALI operates a Safety Council for oversite of all personnel, including those employed by the Project. Based on information provided by ALI, the Total Disabling Injury Rate (TDIR) for 2023 was 0.05 per million hours, which was slightly higher than in 2022, but still below national and international standards. TDIR is the probability or risk of a disabling injury or disease to a worker during one year of work. During mall refurbishment works and operation, MDC will be responsible to monitor all contractors and contracted labor’s compliance with relevant OHS policies and procedures as outlined within the updated HR policies [See ESAP #5].
Supply Chain:
ALI has an HR policy that is applicable to AMG and MDC and prohibits the employment and engagement of forced labor and child labor by themselves and third-party suppliers. ALI aims to reduce the adverse environmental impacts of its products and services and that its suppliers of products, services, and labor are socially responsible. To enforce its policy against forced labor and child labor, ALI conducts regular audits of vendors and suppliers to verify that no underage or child workers are employed and to determine whether subcontractors and vendors adhere to general labor standards. ALI has a procurement policy in place with provisions that restrict engagement of vendors and suppliers that do not adhere to social and environmental responsibilities. As of 2023, around 3,700 partner vendors were accredited by ALI, of which 45% were engaged based on sustainable procurement. All contractors and contracted labor employed by AMG and MDC will be required to comply with the company’s relevant policies and procedures for ensuring oversight and compliance with relevant supply chain requirements [see also ESAP #5].
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency
ALI has policies on reducing energy, water, and materials like steel and cement used in construction. For the refurbishment, the Project will install high efficiency lighting, heat recover ventilation, high efficiency air conditioning systems and use of on-site renewable energy. The Project will also separate all recyclable materials for reuse, use energy efficient lighting and apply water efficient techniques to reduce water consumption.
Water and Wastewater
The 10 malls subject to the Project discharge wastewater to the sewerage systems and the effluent quality is tested prior to discharge to meet local Philippine discharge standards. Water supplies for the malls are from the relevant municipal supplies. Water efficiency measures such as low consumption taps and cisterns will be installed as part of the refurbishment.
Solid waste and hazardous material management
ALI has policies in place to manage the generation and disposal of waste generated. During the construction, building and construction waste generated during the mall refurbishment, including any hazardous waste (such as asbestos, waste paint oils and grease) will be managed by accredited waste management companies. Waste materials such as steel and concrete will be recycled by a third-party contractor. All hazardous wastes will be stored onsite using appropriate cabinets with practice used to manage any spill. All non-recyclable and hazardous waste will be tracked and disposed at regulated landfills. Waste generated during the operation will be separated at source and managed through licensed contractors. These requirements will be outlined within the ESMS (see also ESAP #1].
Pesticide Use and Management:
All pesticides used are managed through a pest management guideline that requires targeted use of chemicals for specific species. Pest management is contracted to a licensed pest control agent. The procedures for pesticide use and management will be incorporated within the ESMS.
Air emissions
Each of the 10 malls operates diesel electricity backup generators (GenSets) which emit exhausts when operational from the mall basements. All GenSets are subject to local air emission standards and permits issued by local Philippine authorities.
GHG Emissions: The projects have been assessed to determine their lifespan GHG emission based on the WBG GHG Guidance Manual. The results indicate that the scope 3 emissions for the malls is 24,537tCO2e until 2030. This is based on modelling of the operations of the malls during this period considering the efficiencies in lighting and other GHG sources included in the refurbishment.
PS4: Community Health, Safety and Security
Infrastructure and Equipment Design, Life and Fire Safety:
The ten malls have been designed, constructed, and operated in compliance with local building codes, local fire department regulations, local legal/insurance requirements, and in accordance with internationally accepted life and fire safety standards, such as the United States national fire protection agency requirements. The buildings are compliant with local regulations related to earthquakes, typhoons, and other natural disasters at the date of construction. During refurbishment of the Project, there will be no significant changes to infrastructure and equipment design, as well as life and fire safety measures. The design of the refurbishment incorporates universal access principles providing accessibility and egress for Persons with Disabilities (PWD). AMG is compliant with local standards in relation to Life and Fire Safety Management Systems (LFSMS) through the provision of sprinklers, fire hydrants, alarms, mobile fire extinguishers, emergency exits and emergency lighting.
Traffic Impacts and Transportation Safety:
AMG has identified mobility and transportation connections for its malls, which include pedestrian-only areas and walkways, as well as transit stops and terminals. Both AMG and MDC are committed to maintaining connectivity during construction and operations to ensure transportation safety and minimize the impact of the refurbishment to traffic. It is recommended that AMG and MDC consolidate existing policies into the Traffic Management and Transportation Safety Plan (TMTSP) as part of the CHSP [See also ESAP #7].
Community Health and Safety:
AMG’s written E&S management policies cover internal operation of malls. While there are well established practices by AMG and MDC for the community health and safety, these are not yet embodied into policy statements and safety procedures. AMG and MDC will document and augment existing practices into a Community Health and Safety Plan (CHSP) for the construction and operation phases. The CHSP will include policies and procedures for the refurbishment does not compromise existing life and fire safety procedures, such as the requirement for an evaluation plan and exit layout of the malls, and access for disabled people during construction and operation to satisfy the requirements of IFC PS 4 [See also ESAP #7].
Security Personnel:
AMG have armed security personnel, hired by licensed security service providers. These providers were trained to comply with Philippine law. AMG has security procedures and manuals in place and provides mandatory training for all personnel and conducts safety inspections of critical and hazardous activities before commencing work at operating properties and construction sites. AMG will update existing policies and include how the use of firearms respects human rights including how security personnel do not infringe on the rights of shoppers, vendors, and other stakeholders. [See also ESAP #7].
