This is a Category B project according to IFC's Policy on Environment and Social Sustainability (2012) because the project is expected to have potential limited adverse E&S risks and/or impacts that are few, generally site-specific, largely reversible, and readily addressed through mitigation measures.

 PS1: Assessment and Management of Environmental and Social Risks and Impacts

Element Mexico has established at a local level a Quality & Continuous Improvement Policy through a Quality Management process that is aligned with ISO 9001:2015; ISO 26001 (Social Responsibility); and Mexican Center for Philanthropy’s (CEMEFI) Corporate Social Responsibility Framework. Element Mexico also guides its operations in Mexico on the Balanced Scorecard (BSC) and discloses within its MX Sustainability Index. The United Nations Sustainable Development Goals are also part of its E&S sustainability framework. As per ESAP #1, Element Mexico will expand its quality management oversight with E&S management programs and procedures, related to (i) EV fleet maintenance, ii) battery supply chain management issues, EHS and life and fire safety requirements for construction and operation of EVs charging infrastructure, iii) waste, hazardous material and battery management plan, iv) monitoring of  effectiveness of EVs maintenance and charging infrastructure vendors EHS management systems  per national law and standards and the requirements of IFC Performance Standards (PSs).

Element Fleet Management’s Business Continuity Plan provides direction, guidance, and a comprehensive written plan in managing, coordinating, and communicating during a business disruption event, defined as a short- or long-term event which may impact Element’s normal operations, products and\or services.

PS2: Labor and Working Conditions

In Mexico, Element Mexico employs over 500 individuals. Element Mexico has an experienced human resources (HR) management team representing areas of the business including Communications, Sustainability, Corporate Social Responsibility, Recruitment, Learning and Development, etc. As part of its HR policies, Element Mexico has developed a Diversity, Equity, Inclusion, and Belonging (DEI&B) policy to promote diversity in all parts of its processes - including recruitment - and foster an inclusive work culture in their operations. Moreover, Element has developed a Vendor Code of Conduct that tackles non-discrimination and gender-based violence and harassment and performs periodically audits to their maintenance suppliers to ensure compliance with labor laws and conditions, including forced and child labor.

Occupational Health and Safety (OHS) risks for the project are related to EV maintenance, battery management, and ancillary infrastructure construction. Element Mexico has established an OHS management process as part of its Business Process Management, and contractually cascades down to its EV maintenance and ancillary infrastructure vendors (EV charging infrastructure). As part of its expanded quality management oversight Element Mexico, will monitor effectiveness of EV maintenance and charging infrastructure vendors EHS management systems (ESAP #1).

Element Mexico sources vehicles, including EVs, from Original Equipment Manufacturers (OEMs) via dealerships. In most cases, OEMs have systems in place to manage risks in the supply chain as it is often a requirement from customers for global players in the auto industry. As per ESAP #2 Element Mexico will evaluate OEMs’ standards and key components of their supply chain management systems and document it as part of its due diligence process. Equally, Element Mexico will share Element’s corporate vendor code of conduct with the OEMs to clearly set its expectations regarding the expected standards to be applied in the supply chain. The obligation for OEMs to be aligned with Element’s code will be reflected in contractual clauses and legal representations from OEMs. Assessing the alignment or equivalency of OEMs’ systems with Element’s corporate code will be part of Element Mexico’s ongoing compliance monitoring activities.

PS3: Resource Efficiency and Pollution Prevention

The project will enable Element Mexico’s clients to reduce their carbon footprint by increasing the available fleet of EVs, specifically, BEVs, PHEVs & HEVs for lease. Pollution risks associated with the company activities relate to half-life maintenance, occasional repairs, battery disposal and end-of-life disposal. These activities will be undertaken by OEMs and vendor partners, in compliance with applicable regulatory requirements. Batteries, paint solvent, lubricant and oils are hazardous wastes. These suppliers have a set of management instructions and a hazard identification table for hazardous waste handling, as well as a procedure for the management of hazardous waste, done through authorized third-party waste management company responsible for the collection, transport, treatment and final disposal of hazardous waste. Element Mexico performs an annual audit to verify compliance with the regulatory requirements and Element Mexico’s Quality & Continuous Improvement Policy.

The company is required to develop a battery management plan which will include the management of spent batteries or their deployment for reuse, according to applicable requirements. The company's current intention is to identify, together with OEMs and batteries suppliers, reuse opportunities for the batteries once they no longer comply with the minimum range limit, thus avoiding the need to recycle or dispose of the batteries. Element Mexico will and part of its extended quality oversight develop a waste, hazardous material and battery management plan (ESAP #1) and cascade it down to EVs maintenance vendors.

PS4: Community Health, Safety and Security

The operation of the EVs is outside the scope of the company's leasing contract. Still, Element Mexico, as part of its QMS and Vendor CoC established the policies and procedures to ensure the safety of vehicles within its fleet.

 The company publishes an Annual Sustainability Report to inform stakeholders about its performance. Additionally, it has provided a contact channel on its webpage (Contact Element: Drivers, Fleet Professionals, & Suppliers) for drivers, fleet professionals, and suppliers to receive support, ask questions, file complaints, or address any other issues related to fleet operations.

 Contact Person: David Steinhauer

Company Name: Element Fleet Management Corp.

Address: 161 Bay Street, Suite 3600 Toronto, ON M5J 2S1, CA

Email: dsteinhauer@elementcorp.com

Phone: (416) 646-4350