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
Identification of Risks and Impacts:
SKC Co., Ltd. (South Korea)
SKC conducts process hazard and occupational health and safety risk assessments to identify hazards and develops plans for improvement accordingly throughout different stages of each facility’s project cycle. Performance and mitigation effectiveness is verified through qualitative and quantitative assessments, with results regularly reported to senior management. Each facility is required to commission qualified third parties to carry out environmental and social impact assessments (ESIA), leading to required environmental permitting approvals.
SK Leaveo (Hai Phong, Vietnam):
SK Leaveo commissioned a qualified third-party consulting firm to undertake the EIA of the Project in accordance with Vietnamese regulatory requirements. The report, which assessed key risks and impacts of the Project and described risk mitigation requirements in the form of impact management and monitoring plans, was approved by the HEZA (Hai Phong Economic Zone Authority) Management Board. The same consulting firm was later commissioned to prepare the ensuing Environmental Permit Application – which is a sub-permit required for the commercial operation of the plant. The application was approved, and the Environmental Permit was issued in April 2024. In addition to these, as per SKC Corporate requirements, the Project has commissioned qualified consultants to complete Layers of Protection Analysis (LOPA) and Hazard and Operability Study (HAZOP) for the Project PBAT facility, which identified very few high-risk catastrophic scenarios.
Policy and Management Programs:
SKC Co., Ltd. (South Korea)
In 2015, SKC updated its existing corporate Safety, Health, and Environment (SHE) management system, which consists of its SHE Policy, Manuals, Standard Operation Procedures, and Performance Measurement and Monitoring Procedures, as well as detailed work instructions. This management system is adopted by all SKC subsidiaries and finetuned by each to meet local regulatory requirements and Good International Industry Practice (GIIP). As of 2024, seven SKC facilities (five in South Korea, and two overseas) have been certified against ISO 14001 (Environmental Management System) and ISO 45001 (Occupational Health and Safety Management System), with a target of another nine facilities to be certified by 2026.
SK Leaveo (Hai Phong, Vietnam):
The Project’s EIA approval, Environmental Permit, Firefighting Design Approval, and Construction Permit have been issued by the local authorities. Currently under construction, the Project site applies the EPC contractor’s SHE Management System under the supervision of SKC’s SHE General Manager and a team of EHS and OHS officers and site foremen. The Management System consists of Project-level SHE policy; SHE targets (i.e. Zero Fatality and LTIR less than 0.3); construction SHE procedures, JSA (Job Safety Analysis) & PTW (Permit to Work) Procedures; performance evaluation/penalty and reward procedures, PPE Procedure, SHE Training Procedure, and an Emergency Preparedness and Response Plan.
SK Leaveo will share a copy of Haiphong Project operational phase Environmental and Social Management System (ESMS) documents (which will be based on SKC’s corporate ESMS) once developed and finalized (refer to ESAP #1-PS1) and will share annual implementation status updates.
Organizational Capacity and Training:
SKC Co., Ltd. (South Korea)
At SKC, the SHE Division and Committee, headed up by the CEO, is responsible for high-level SHE decision-making and direction setting, and ensuring compliance with safety, health, and environmental regulations and GHG emissions targets of each subsidiary. Each SKC facility has its own SHE management system and SHE department staffed by qualified professionals, who regularly compiles and reports performance data to the heads of the facilities and to the headquarter SHE team in South Korea. The SHE team at SKC Co., Ltd. carries out regular (semi-annual) and unannounced site compliance verification audits at each subsidiary, and regularly communicates with facility SHE teams via phone and videoconference calls to receive briefings on EHS performance.
In accordance with South Korea vocational training regulations, SKC prepares an annual training plan for employees as well as for suppliers. The scope covers general training for all staff and specialized training for those involved in different types of higher risk tasks (e.g. electricians, chemical engineers).
SK Leaveo (Hai Phong, Vietnam):
Construction phase: the EPC contractor’s SHE department consists of a safety manager (from the EPC contractor’s South Korea headquarters), one safety engineer, one safety supervisor, and one nurse, all being Vietnamese nationals. Contractors employ safety supervisors based on their number of workers on site in accordance with Vietnamese regulations. Required safety training and induction training is provided to all new employees, while specific training is provided based on the nature of specific tasks (e.g. welding, scaffolding, lifting and rigging, confined space work, heavy equipment handling, etc). During operational phase, SK Leaveo expects to employ five EHS and safety professionals which will comprise an EHS/OHS manager and four officers. A detailed risk and workstation based EHS/OHS training plan will be developed as part of the facility’s operational E&S management system.
Monitoring and Reporting:
SKC Co., Ltd. (South Korea)
SKC integrates E&S monitoring requirements into its SHE management policy and SOPs and implements detailed internal regulations and procedures to monitor and report on point source air emissions, wastewater quality, solid waste management, noise, and odors, as well as ambient quality (groundwater, surface water, air quality, noise level) in the vicinity of its facilities, and the GHG footprints of facilities. Real-time monitoring of emission/discharge levels as well as of any potential signs of pollutant leakage is also undertaken as per host country regulations, and results are utilized by SKC facilities to make continual process improvements. Data is compiled and reported as per SKC’s SHE management plans and environmental permitting requirements, and high-level performance data is also included in publicly disclosed SKC annual ESG reports.
SK Leaveo (Hai Phong, Vietnam):
Construction and operational phase environmental performance data will be monitored and reported in accordance with the approved EIA report and Environmental Permit requirements of the Project, as well as with SKC’s internal reporting requirements. According to Vietnamese regulations, due to the low expected volumes and characteristics of emission pollutants at the Project, continuous monitoring is not required during operations.
Emergency Preparedness and Response (EPR):
SKC Co., Ltd. (South Korea):
SKC conducts process risk assessments, using results to establish improvement measures, and verify their effectiveness through site inspections. This includes developing emergency response scenarios and conducting annual simulation training to prepare staff and contractors. Contingency plans are developed, and annual emergency drills are conducted at all facilities in accordance with South Korea’s Occupational Safety and Health Act. Additionally, regular safety training and campaigns are conducted to raise awareness of workplace accidents.
SK Leaveo (Hai Phong, Vietnam):
The Project has been designed in accordance with Vietnamese Fire Safety codes and standards, with its fire safety design approved by Hai Phong City’s Fire Police Department. Before the Project comes into operation, SK Leaveo will prepare a firefighting plan addressing various potential fire scenarios to be submitted to the Fire Police Department for comments and approval. Upon construction completion, the plant will be inspected by personnel assigned by the Fire Police Department to ensure compliance with the approved fire safety design, leading to issuance of the Project’s Fire Safety Certificate. Fire scenarios and other emergency events, such as natural disasters, oil and chemical spills, etc., will be included in the Project’s Operational phase Emergency Response Plan (ERP). The Project team at Haiphong has been in the process of developing scenario based EPRPs to deal with events such as heavy rains.
Supply chain management:
SKC has established a code of conduct outlining the duties and responsibilities of suppliers in key aspects such as human rights, labor and working conditions (e.g. prevention of child and forced labor practices), environment, and ethics / anti-corruption, which applies to all suppliers. For those newly supplying to SKC, the Company has introduced a policy that requires first-tier suppliers to agree to the ‘ESG Compliance Pledge (Supplier Code of Conduct)’ as a mandatory condition. Compliance is annually monitored by selecting key suppliers for focused ESG assessments. For those deemed to have deviated from code of conduct requirements, SKC consults with and asks them to establish an ESG improvement plan. Lack of performance improvement for more than three years could lead to termination of the business relationship with SKC.
PS 2 – Labor and Working Conditions
Working Conditions, Human Resources Policies, and Management of Worker Relationships:
SKC Co., Ltd. (South Korea):
As of 2023, SKC had a total of 1,302 employees, with a male-to-female ratio of 5:1. SKC has corporate-level Human Resource (HR) policies and procedures, Human Rights principles, and an Ethical Management Framework in place which comply with national laws and which are consistent with IFC PS2 requirements. Hiring and employment practices recognize merit-based, non-discrimination, equal opportunity, and anti-harassment and anti-gender-based-violence (GBV) principles described in the Company’s employment code of conduct and employee manual. SKC implements an annual “Culture Survey” to measure employee satisfaction and incorporates their feedback to enhance policies and programs.
SK Leaveo (Hai Phong, Vietnam):
According to the Project's construction manpower schedule, construction worker (all local hires) numbers on site will range from 48 (lowest) to 452 (peak) A health examination and safety induction is required before workers can commence work. Working and overtime hours as per national laws are strictly observed. The EPC Contractor provides amenities for workers, such as rest shelters and portable toilets. Accommodation does not need to be provided, since all workers are from the local areas and return to their homes after work each day. During the operational phase, the Company expects to have up to 105 employees on site working on a three-shift-rotation schedule and is in the early process of starting to recruit and assemble its operational workforce. The Project will adopt HR policies and procedures consistent with the SKC parent company version and which will be finetuned to conform to national labor laws in Vietnam.
Workers’ Organizations and Grievance Mechanisms:
SKC Co., Ltd. (South Korea):
In accordance with the Act Concerning the Promotion of Worker Participation and Cooperation in South Korea, SKC has established a labor-management council, with 86.9% of its workforce being members. The council organizes quarterly meetings to serve as a channel for communication between employees and management, disclosing to all employees its operational status, meeting results, and performance for the previous quarter. Agenda items for the meetings are selected through the collection of members’ opinions in advance, to foster employee engagement.
SKC operates an internal grievance process to handle potential complaints related to human rights violations and any other matters which employees may wish to raise. Grievances are received both offline and online. Employees can also file an anonymous report via the whistleblower program available on SK Group’s website at https://ethics.sk.co.kr/Report/OnlineReportIN
SK Leaveo (Hai Phong, Vietnam):
As per Company policy, SKC guarantees freedom of association and assembly, and the right to collective bargaining, in concert with labor laws of each country or area where it operates. According to Vietnamese Union Law, employees have the right to organize and join a labor union. The Project is starting to assemble its operational phase team and will be developing its HR policies for the Haiphong Project which will include policies on freedom of association and employee grievance mechanisms and channels, consistent with national labor laws and SKC corporate requirements (which upon IFC’s review are found to be consistent with IFC PS2 requirements including provision of channels for all employees and third-party / contractor workers to file anonymous grievances and GBV-related grievances separately).
Protecting the Workforce:
SKC’s Human Rights Principles include statements of prohibiting forced labor and child labor practices as a matter of zero tolerance, and ensuring all necessary actions and precautions taken to safeguard occupational safety in its workplaces. The Hai Phong facility will be adopting the SKC HR policies and Human Right Principles and will comply with Vietnamese labor laws/regulations. IFC’s due diligence found no indications of child and forced labor practices at the Haiphong Project.
Occupational Health and Safety (OHS):
SKC Co., Ltd. (South Korea):
SKC’s OHS management system is standardized across facilities and consists of core elements such as OHS policies, safety standard rules, risk assessment requirements, chemical and hazardous materials management, accident management (including accident investigation and reporting procedures), OHS training, and emergency response.
SKC monitors OHS leading and lagging indicators in its operations and requires major suppliers to provide OHS performance statistics regularly. The lost time injury frequency rate (LTIFR – defined as the number of work injuries per 200,000 hours worked) of SKC operations in 2021, 2022, and 2023 were 0.33, 0.59, and 0.46 respectively, which were below the 2020 plastics material and resin manufacturing industry benchmark of 1.4, as per the U.S. Bureau of Labor Statistics.
SK Leaveo (Hai Phong, Vietnam):
The Project EPC Contractor manages potential OHS risks using its construction OHS management system, which comprises policies and procedures such as: access and identity verification, JSA & PTW, Lock-out Tag-out, OHS performance penalty and reward program, PPE (Personal Protective Equipment), confined space operation, OHS training and emergency response. There has been no Loss-Time Incident (LTI) in the past 10 months since the start of construction at the Haiphong site. The Project is starting to assemble its operational phase team and will be developing its operational phase OHS management system to be in compliance with national OHS related laws in Vietnam and with SKC Corporate level OHS policies and SOPs (which upon IFC’s review have been found to be consistent with IFC PS2 requirements).
PS 3 – Resource Efficiency and Pollution Prevention
Energy and Water Efficiencies and Greenhouse Gas (GHG) Emissions:
SKC Co., Ltd. (South Korea):
SKC manages daily energy consumption at each business site using its in-house Operation Information System (OIS) and the Manufacturing Execution System (MES). Savings are made possible through hardware and engineering measures, and through improvements in day-to-day operational practices. SKC monitors and manages facility GHG emissions in compliance with the GHG Management Regulation enacted in 2018 in South Korea. In 2023, across the entire company and its subsidiaries, total GHG emissions (Scope 1-2) were 607,693.2 tCO2eq, reduced by 323,768 tCO2eq compared to 2022.
SK Leaveo (Hai Phong, Vietnam):
During operational phase, as per current estimates, the Hai Phong facility is expected to annually use 29,862,000 kWh of electricity, 170,800 m³ of water, 49,000 tons of steam (to be generated by the two LPG-fueled boilers in the facility) and 6,800 tons of LPG. The Project facility is not expected to negatively impact the local water balance and availability of water to other local water users. The plant has been designed based on SKC’s experience in chemicals manufacturing and GIIP, and this includes raw material re-use within the production process and recycling of non-hazardous waste byproducts. The operational team, once assembled, will continually seek opportunities to improve energy and resource efficiencies. When operational GHG data from the Hai Phong plant (calculated based on an internationally recognized methodology) becomes available, the Company will share such data and GHG emission quantification results in Annual Monitoring Reports (AMR) shared with IFC.
Pollution Prevention (Energy and Production Process Air Emissions):
SKC Co., Ltd. (South Korea):
SKC facilities are equipped with a stack Tele-Monitoring System (TMS) that can continuously monitor air pollutant levels, and Leak Detection and Repair (LDAR) systems to monitor fugitive emissions. These systems enable swift responses in case of air emissions exceeding pre-set limits. Manual sampling and testing of air emission samples are also conducted both by in-house technicians and by qualified third party technical institutes. Regular system inspections and improvement activities are conducted at SKC facilities.
SK Leaveo (Hai Phong, Vietnam):
At the Hai Phong plant, the main combustion and process air pollutants will be PM (Particulate Matter), Volatile organic compounds (VOCs) and NOx (Nitrogen Oxides) arising from the PBAT, PBS and THF production process. The production process does not have a Sulphur source hence no SO2 content in process air emissions is expected. PM arising from raw material and pellet collision during chip drying process, will be treated using a combination of vent filters, Teflon back filters, and cyclones to be installed in the chip dryer, together designed to remove 99% of PM to be generated. NOx will be generated from the heat transfer medium boiler and on-site regenerative thermal oxidizer (RTO), which will be retrofitted with a low-NOx burner, with a design post-treatment NOx level at or below 140 mg/Nm3. Given the above, this Project is expected to meet applicable NOx and PM national standards and limits in applicable IFC/WBG EHS Guidelines.
VOCs (Volatile Organic Compounds) arising from the PBAT, PBS and THF production processes, will be combusted in the on-site RTO (with design specifications shared with IFC), which has been adopted by SK Leaveo for the Haiphong Project facility as per SKC corporate requirement. Key types of VOCs generated from this Project at design post-treatment concentrations (in unit of mg/Nm3) are not expected to pose material health hazards to workers and persons in the vicinity of the Project. VOC real-time monitoring at RTO sampling point will be conducted. An alarm will go off in case of exceedance of preset limit. Due to small fugitive volumes and source pollutant characteristics, RTO dioxin monitoring is not required by applicable Vietnam laws.
Pollution Prevention (Wastewater and Effluent):
SKC Co., Ltd. (South Korea):
SKC in-house technician teams at each facility analyze wastewater samples taken from sanitary and process sources and conduct regular inspections to ensure equipment functionality. SKC continually reviews the efficacy of wastewater treatment plants (WWTP) at each subsidiary site and engages in WWTP upgrades as needed and where financial and technically feasible. All facilities, as per host country laws and per SKC corporate requirements, conduct regular groundwater, surface water, and soil quality monitoring of samples collected in the immediate vicinities of each facility.
SK Leaveo (Hai Phong, Vietnam):
The Haiphong facility has been designed to collect and treat wastewater and stormwater separately to prevent cross-contamination. Stormwater, separated from process wastewater to prevent cross-contamination, will go through a sedimentation tank and a sump pit before being transferred to the Deep C IZ’s common drainage system. Sanitary wastewater at the facility will be treated in a three-chamber septic tank and a WWT package consisting of physical, biological and chemical treatment, then transferred to the IZ’s centralized WWTP for secondary treatment before being discharged to the local water body. Process wastewater will be routed directly to the Deep C IZ’s centralized WWTP with post-treatment discharges complying with QCVN 40/2011 National Standard (aligned with IFC/WBG EHS Guidelines limits) and which will be subject to real-time monitoring as required by appliable national laws.
As part of facility pre-commissioning and as per the Project’s Environmental Permitting conditions, Deep C IZ will monitor wastewater quality at the point of discharge to the Deep C IZ’s WWTP, to confirm compliance with Deep C’s incoming wastewater standards (Refer to ESAP #3-PS3).
Pollution Prevention (Wastes and Hazardous Materials and Wastes):
SKC Co., Ltd. (South Korea):
SKC collaborates with third party companies to recycle different types of wastes. At certain SKC facilities, waste oil is reused as fuel for boilers, with up to 50,000 tons utilized per year. Wastewater sludge is repurposed as raw materials and sold to cement companies instead of being landfilled. To manage hazardous chemicals, all SKC facilities are required to utilize the headquarter chemical substance management system (SkyCHEMS). This system also monitors compliance with updates in chemical laws and regulations, making adjustments as per regulatory requirement updates.
SK Leaveo (Hai Phong, Vietnam):
Non-hazardous wastes (e.g. packaging materials) at the Haiphong facility will be sorted at the source into recyclables and non-recyclables, then transferred to the non-hazardous waste storage area. Hazardous wastes will be stored by pre-defined codes and stored accordingly in the hazardous waste storage area (e.g. acids and alkali’s separately stored) which are constructed to be explosion and leakage proofed with secondary containment.
Hazardous materials (HAZMAT): Materials classified as hazardous (e.g. chemicals including the raw materials and products, solvents, catalysts, incoming oil drums, diesel, LPG) will be stored in separate, reinforced storage areas. The Project is starting to assemble its operational phase team and will be developing its operational phase HAZMAT management SOPs to be in compliance with national laws in Vietnam and with SKC Corporate level HAZMAT policies and SOPs (which upon IFC’s review have been found to be consistent with IFC PS requirements).
Solid and hazardous wastes: The company production process generates solid wastes such as packages and domestic wastes. Hazardous wastes (e.g. gas cylinders, oil drums, used lubricants, waste material and products) will be collected and transported by a licensed third-party contractor, with audit trail records maintained and shared with SK Leaveo in accordance with Vietnamese waste management regulations.
As per ESAP#1-PS1 and as part of its operational phase E&S management system to be developed, the Project will develop and finalize hazardous materials management plan and waste management plan, with the plans and the implementation status updates to be shared with IFC.
PS 4 – Community Health, Safety and Security
SKC Co., Ltd. (South Korea):
All SKC facilities, during ESIA and subsequent operational risk monitoring phases, fully consider potential facility impacts on local communities and undertake required preventative measures and mitigations to minimize potential impacts. Being in the chemicals sector, SKC facilities commission Layers of Protection Analysis (LOPA), Hazard and Operability Study (HAZOP), and Safety Integrity Level (SIL) assessments as part of facility critical process safety system requirements. Assessment results inform facility process safety engineering designs and operational management practices, which together are the basis of safeguarding against potential catastrophic scenarios (e.g. chemical spills) which might affect local communities.
SKC facilities are designed and constructed in compliance with South Korea Fire Safety Standards and building codes. A manufacturing plant needs to be equipped with fire detection and alarm systems, fire suppression systems and emergency exits and evacuation routes, and facilities are required to conduct fire risk assessments, prepare fire safety plans, emergency response plans and organize fire safety training and drills for their staff.
SK Leaveo (Hai Phong, Vietnam):
As per environmental permitting and Deep C IZ buffering requirements, there are no residential areas within the IZ, with the closest residential area to the Project being Trang Cat ward in Hai Phong City about 5 km away. As such, EHS and safety impacts on local communities are considered limited.
Construction design of the Project facility has been reviewed and approved by the authorities leading to issuance of the Project Construction Permit. As per SKC Corporate requirement, the Project has commissioned qualified consultants to complete LOPA / HAZOP / SIL studies which have identified very few high-risk catastrophic scenarios. Quantitative Risk Assessment (QRA) is not required for this Project (by Vietnam laws or SKC Corporate) given lack of high-pressure storage of hazardous substances and limited quantities of hazardous chemicals on site.
The Project’s fire safety design has been reviewed and approved by the Hai Phong City Fire Police Department. Before operations begin, the plant’s fire safety system will be inspected by inspectors assigned by the same department to ensure construction compliance with the approved design and all applicable national building and fire code requirements. The Project, through its consultant, is required to prepare a firefighting plan detailing the steps, methods, and firefighting techniques to be used in the event of any fire scenario at the plant during operations. Once the post-construction audit has been completed and approved by the Fire authorities, the Project will receive a “Firefighting Certificate” which is required before start of commercial operation. As per ESAP#1-PS1 and as part of operational ESMS development, the Project will prepare and finalize a Life & Fire Safety (L&FS) management plan to be shared with IFC.
