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
Policy
The company has in place a comprehensive health, safety, and environmental (HSE) policy applicable to all Netafim operations, sites and projects in countries and regions in which Netafim and its subsidiaries operate. Orbia, the parent company of Netafim, has also developed a comprehensive set of E&S policies and practices that are applicable to Netafim operations and the implementation of which is reported on by Netafim to Orbia The Netafim policy defines objectives, the requirement to conduct risk assessments, roles and responsibilities, accountabilities, training and competency requirements, the need for operational controls and change management, and reporting to senior management.. The policy requires project site managers to implement actions and workplans in support of the policy and to communicate all requirements to other site personnel including applicable HSE laws, regulations and other stakeholder's requirements and emerging issues of the same as they may arise.
Identification of risks and impacts
Within its manufacturing operations, the company conducts environmental, occupational health, and safety risk assessments as part of its E&S management system and maintains certifications to ISO 14001:2015 (environmental management standard) and ISO 45001:2018 (occupational, health and safety standard).
The Corporate Health, Safety and Environment (HSE) function evaluates both HSE related risks and opportunities to Netafim operations. . Outputs are used to improve HSE processes and performance. HSE risks and opportunities relating to processes, equipment, changes to facilities, capital expenditure projects and agricultural projects are required to be identified using procedures or tools based on the corporate Hazard identification and Risk Assessment (HIRA) process, the environmental aspects evaluation process, and project HSE risk assessment processes.
Since the first IFC investment in 2019, Netafim’s Global HSE team has expanded both its scope and capacity to include field/project operations, which includes the installation of projects of different sizes, from small to mega-projects. Projects are categorized according to project cost; a small/medium project would be under $5M, a large project between $5m-$20M and a mega-project above $20M or deemed complex.
Project actions are governed by the Netafim Project Life Cycle (NetPLC) process which sets out a methodology for project management, utilizing a structured process to allow for early identification of risks and opportunities, having defined roles and responsibilities among the various units within the company. After a project has been identified by the relevant business leader, the proposal is reviewed by relevant committees and decision-making bodies within Netafim operations and management. These include finance, engineering, legal, agronomy, supply chain, procurement, HSE, HR and quality departments/units. The HSE department is involved in the earliest stages (conceptual work plan and kick off meetings, inputs to preliminary procurement and risk assessment elements, project scheduling, cost and budget estimates) to implementation stages (construction, working with contractors and sub-contractors) and project monitoring and eventual completion and post-project de-briefing.
To manage the involvement of the HSE function in the above activities, a dedicated leadership position was created within the global team with responsibility across all territories in which Netafim could engage in projects. Example activities include creating policies, providing project teams with HSE-related advice, and supervising the implementation of these requirements down to the project level. As noted above, the HSE function is responsible for ensuring E&S risk assessments of the project are undertaken. For example, regarding their involvement in the project in Rwanda, acting as the technical lead, and based upon an E&S risk assessment as reviewed by IFC, Netafim required the company undertaking the construction of the bulk water system to develop and implement policies and practices regarding environmental management, including the need to have an Environmental Management System (EMS), to oversee construction activities with respect to compliance with applicable laws and regulations, minimizing environmental impacts, promoting good health and safety performance, ensuring quality installation, developing emergency preparedness requirements, and prohibition of unwanted behaviors within the contractor workforce such as sexual harassment among other requirements. See below for how Netafim organizes and supports the lead role responsible for HSE involvement in projects.
Management Programs
The company employs management programs that target mitigation and performance improvement measures/ actions that address the identified environmental and social risks and impacts of the activity. This includes their manufacturing operations and irrigation projects in which they are involved. For example, the NetPLC process involves 68 steps between introduction of the project idea and project closure; HSE involvement is required throughout this process.
Management programs are used throughout Netafim’s operations. They can be aligned with actions required in order to comply with host nations' laws and regulations (e.g., the requirements contained within permits and licenses) and/or by those actions identified by analysing manufacturing data that are used to drive performance improvements. For example, and as was described during the appraisal conducted for the first IFC investment in Netafim, data displays are used throughout manufacturing operations (and summarized on mobile devices carried by supervisors and managers), presenting detailed and summary data. These data are used by managers to oversee compliance with program targets, including key performance indicators (KPIs) in real-time. Such dashboards show whether the company operates within pre-determined limits and/or complies with the KPI set for each production area. These include incident rates, severity indices, electrical consumption, water consumed per product manufactured, amount of waste recycled, etc.
Organizational Capacity and Competency
The Global HSE function is found under the Senior Vice President for Operations (who reports to the company CEO). Within the function are leadership positions – including the Head of Global HSE, and those positions responsible for specific geographical territories (e.g., North and South America, Europe, Middle East and Africa, etc.). The Head of Global HSE is supported by an HSE corporate coordinator. The coordinator is supported by an HSE Officer in each geographical region.
Projects are managed by three functions - Services, Operations, and Divisions - each led by a senior vice president (SVP). The SVP Services is supported by the Head of Global Projects Unit, supported by the Head of Execution, a Project Manager, an On-site Installation Manager, a Project HSE Supervisor, and an On-site Supervisor. The SVP Division constitutes a Business Unit Manager supporting the SVP, supported in turn by a Regional Project Manager, Project Manager, an On-site Installation manager, a Project HSE Supervisor, and an On-site Supervisor. The Global and Projects HSE Officer (part of the Global HSE function noted above), provide support to both Services and Division units, with the relevant Project Managers reporting to the Projects HSE Officer. Specific roles and responsibilities are described in the HSE policy.
Emergency Preparedness and Response
Each manufacturing plant develops an emergency manual, informed by local regulations. Requirements include the performance of relevant emergency drills; three drills per year are conducted as a standard. Life and Fire Safety (LFS) systems utilize various systems including sprinklers, hydrants, fire extinguishers, water canons and smoke detectors.. Teams trained in fire response, and other hazards (e.g., earthquake response and first aid) are found in operations.
An emergency preparedness and response procedure for the irrigation project in Rwanda was provided to IFC for review. The procedure requires the preparation of an emergency plan consistent with the associated risks and any applicable statutory or client requirements, defines roles and responsibilities of those engaged in managing the operation, including the training they are required to undertake, and details responses to be taken in the event of an emergency.
Monitoring and Review
The company makes use of its enterprise-wide software platform to monitoring E&S performance. Weekly meetings with the HSE officer at each manufacturing plant and monthly meetings are conducted with country management with the involvement of the SVP OPS, Global HSE team, multi-site leader of each territory, plant managers, and HSE officers. KPIs are reviewed and corrective actions are followed, and expected improvement processes are emphasized, as needed.
Each incident or accident, whether safety or environmental, is investigated and presented in a biweekly meeting before the CEO of Orbia, SVP HSE of Orbia, and CEO of Netafim. SVPR OPS Netafim and the managers involved in the case also attend the meeting. Corrective actions are followed up and the process is managed using the company’s enterprise-wide EHS software platform.
The combination of the above management system elements results in a system that is compliant to the requirements of this Performance Standard.
PS2- Labor and working conditions
The company has global HR policies aligned with the global Orbia policies. A comprehensive procedures manual and a global Orbia/Netafim code of conduct has been developed. The contents are shared with new employees during their induction process. As was the case in 2019 when IFC conducted its first due diligence of Netafim, the manuals contain information on terms of employment such as, recruitment, probation period, transfers, promotion, and termination. They provide details on work schedule, working hours, overtime hours, remuneration including overtime pay, public holidays and leave, health insurance, pension fund, training and development, staff relations and communications (including a grievance mechanism or GM) and matters of occupational health and safety. The code of conduct references workplace rules and disciplinary actions that could be taken if they are breached. It includes a section on harassment, “Protection against harassment and sexual harassment”. It also continues to reference health and safety and includes references and details regarding protecting the environment and quality of life and caring about communities.
At the end of 2023, the company employed nearly 4,100 employees in 36 countries. India was the country with the largest workforce (1,177 employees), followed by Israel (1,123) and the Americas (984). Of the 3,564 permanent employees globally (representing 88% of the workforce) 2,973 were males (representing 83% of the workforce) and 591 females (17%). Job types with the organization include those involved in manufacturing (or assembly of drip irrigation components) and those undertaking administrative and management duties. Females typically undertake all type of duties. Those who are not permanent employees undertake duties such as seasonal manufacturing and assembly duties. In addition, the company has employees in its sales and distribution networks and those working on business development, including originating projects involving design and installation of irrigation solutions for agribusinesses.
In 2023, Netafim reported that employees received training, averaging 13.4 hours per employee. Out of this total, about 3,800 employees completed training on Orbia Pulse, the company’s Learning Management System, which covered core learning, information about Netafim’s products, compliance courses and Orbia’s policies including the Code of Conduct, Orbia’s Human Rights Policy, sexual harassment , safety, etc.), and new employee orientation.
Working Conditions and Terms of Employment comply with the laws and regulations of the country where the operation is located and also those requirements found within the suite of Orbia policies related to human resources. The EHS platform contains the applicable laws and regulations pertaining to the operation based on its location. Terms of employment are made available to all employees as described above and in appropriate/relevant languages. Orbia’s Human Rights Policy allows for Freedom of Association. Unions or some other form of worker’s organizations and/or collective bargaining agreements are present in Netafim’s operations worldwide.
Grievance Mechanism. Orbia/Netafim has put in place a global grievance mechanism (whistleblower policy, meeting the requirement of a grievance mechanism per PS2) embedded in the code of conduct. The mechanism for receiving grievance allows for anonymous reporting (either online or through use of a hotline) at each operation and worldwide and can be accessed by all working with or for Netafim, including contractors. The GM can address sexual or work harassment complaints. Measures are in place to prevent retaliation against employees who have submitted complaints through the GM. Netafim’s compliance office and internal auditor are responsible to address complaints raised through these channels and operation/country management is responsible to implement relevant corrective measures.
Non-Discrimination and Equal Opportunity. Orbia references equal opportunity in its Human Rights Policy. IT also has a “Women in the workforce” initiative in place in order to increase the number of women in management roles. The program aims to upskill women to enable them to be promoted to management roles.
Protecting the Work Force. Neither child labor or forced labor is utilized by the company. Minimum age is 18 and age of potential employees is confirmed before any offer of employment is made. Orbia has a Human Rights Policy, Modern Slavery Policy and a Diversity and Inclusion Policy. These prohibit any forced or child labor, discrimination, harassment, excessive force or threatening tactics such as holding work papers. Systems and processes to implement these policies are required to be integrated into their companies’ operations, including Netafim. Orbia’s policies are applicable to all who work for or on behalf of Orbia/Netafim such as contract workers and workers employed by companies doing business with Orbia, and therefore Netafim.
Occupational Health and Safety
Netafim did not experience any major accidents or safety incidents in the last three years (2021, 2022 or 2023); information reviewed by IFC showed most incidents resulted in minor impacts to the limbs, head, and back, thus most injuries were minor bruises, cuts, back strains, and slight fractures (at worst).
Occupational Health and Safety (OHS) falls under the corporate HSE function and is managed and staffed as per the positions described in PS1 section above. The company is certified to the ISO standard for OHS. The standard requires hazard assessments and supporting actions to eliminate risks to workers. As noted above, Netafim employs a Hazard Identification Risk Assessment (HIRA) process and the outcomes of these assessments are used to guide actions, develop controls, provide awareness to workers and others engaged by the company, etc. Example practices undertaken in 2023 included ensuring implementation of work permit procedures, awareness sharing through virtual global engineering meetings, promoting the implementation of global engineering controls (as best practice), promulgation of Life-Saving Rules (L.S.R.) and implementing focused safety campaigns. Other programs undertaken included mapping projects to a newly created position of Global H&S Lead for Operations and Services, enhancing the Projects and Services Health and Safety Management System (SMS), project manager and site supervision OHS trainings, updating terms and conditions for health, safety and wellbeing in subcontractor agreements for those engaged in projects, new communications to project teams (guidelines, safety alerts, toolbox talks) and risk workshops to enhance and update project hazard logs.
The overall Lost Time Incident Frequency Rate (LTIFR) for 2023 was 2.4; for employees it was 2.1 and 3.9 for contractors. These rates compare well with reference values for the sector. Proactive reporting (such as near misses) is undertaken, and results are tracked; increased awareness of this leading indicator has led to an increase of 30% year on year of near misses being recorded (data from 2021-2022-2023).
Personnel Protective Equipment (PPE) is supplied to all staff working with hazards and its use is required; failure to do so results in the issuance of a warning to the staff member. PPE typically consists of safety shoes, ear protectors and hard hats. A doctor is typically on site at manufacturing plants. Should there be an accident, procedures govern the action to be taken and information on the accident is shared with all Netafim operations for learning purposes.
Contractors and sub-contractors may be used to install irrigation systems depending on the nature of the project. Drip lines and associated equipment are typically delivered to the field by third parties. Netafim policies and procedures regarding OHS are annexed to the contract that governs the activities of the contractors. Evidence of this was seen in documentation used for the Rwanda project that was provided to IFC.
PS3-Resource Efficiency and Pollution Prevention
Greenhouse Gas Emissions
Company emissions were 5,164 tons (scope 1) and 47,315 (scope 2) for a total of 52,479 tons for 2023. This compares with total emissions for 2022 of 54,637 tonnes of CO2 equivalent. Netafim operations in LAC and Africa accounted for 7,198 tons of scope 1 and 2 emission combined. Recent initiatives to lower GHG emissions have included the installation of solar panels to generate electricity at manufacturing and operational plants, switching to green energy supplies in Chile, conversion to electric forklift fleets in 3 countries in LAC, replacement of older less efficient water chillers and doubling the number of electric vehicles in the company’s leased fleet. Manufacturing initiatives to reduce energy have included switching from hydraulic to electrical-based injection machines and use of larger/more efficient molds. Programs for 2024 include installation of solar panels in Mexico manufacturing operations and exploring use of solar panels for manufacturing plants in South Africa, Morocco and Colombia and further deployment of energy efficiency programs. In 2023, Netafim used 2.95 GJ of electrical energy consumption/ton of production. Results for 2021 were 3.07 GJ and 2.98 GJ for 2022. Netafim has a current target of 37,580 tons maximum GHG by 2030.
Water Consumption
Water consumption in Netafim manufacturing operations is tracked on a yearly basis. Total global consumption for 2023 was 188,459 m3 which equated to 1.22 m3/ton of production. Water for manufacturing operations is almost entirely sourced from local municipality networks. Orbia assesses all of its operations with regards to water stress using WRI’s Aqueduct tool.
Water availability for projects is risk assessed by Netafim before entering into commercial agreements. Compliance with host nation laws/regulations regarding abstraction, permits, etc. is a minimum requirement. Further assessment is identified as per the NetPLC process discussed above.
Wastes
Worldwide performance regarding solid waste management showed an improvement from 2022 levels when 1,808 tons of wastes were sent to a landfill; figures from 2023 showed 1,498 tons were disposed of in landfills. The percentage of Netafim sites that achieved a zero-waste-to-landfill (ZWTL) status grew from 61% in 2022 to 86% in 2023. Netafim has set a worldwide target of 100% of plants being ZWTL by 2025; this has already been achieved in Netafim operations in LAC and Africa.
Hazardous Materials. A very low volume of hazardous materials (HM) and hazardous wastes are generated in the manufacture of drip irrigation components. Both are managed according to applicable host nation laws and regulations with such requirements being tracked using the enterprise wide EHS platform. Less than 3 tons of HW were generated in 2023.
PS4-Community Health, Safety and Security
Manufacturing plants are typically found in industrial zones or areas with limited or no access to the public. Passive security measures are employed (walls, gates, etc.) to prevent unwanted incursions. These can be supplemented by unarmed security guards. Orbia references its security guidelines in its Human Rights Policy, that they are aligned with international human rights standards and the laws and regulations of the location of the operation. When hiring private security, they engage with the company providing security services to emphasize the need to comply with human rights to avoid violations to their stated objectives.
The manufacture of drip irrigation components does not require equipment that would present risks to adjacent communities should they be found near operations. Impacts from truck traffic delivering to manufacturing plants is negligible giving the location of the plants (in built up areas serviced with good road infrastructure). Impacts from trucks and other vehicles that would be required by projects (bringing in construction materials, etc.) are assessed and mitigation measures put in place to avoid or reduce those impacts, such as requirements for licensed drivers, observance of speed limits, maintaining road-worthy vehicles, etc.
Risks associated with irrigation projects could occur. These could involve unauthorized access by members of the public to construction sites and/or project components including reservoirs and canals that could constitute a drowning hazard. These are assessed by Netafim as per project-required risk assessments and, depending on the commercial nature of the project engagement and the control and influence Netafim can exert over the project lead, mitigating measures are put in place.
