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
E&S Policies. The companies will adopt an Environmental and Occupational Health and Safety (EHS) Policy to (i) meet applicable local legal and regulatory E&S requirements, (ii) align their E&S performance against IFC PS requirements for the existing and new service centers and operations, (iii) avoid/minimize hazards risks at workstation; (iv) continuously improve their E&S performance through the establishment of a PS-compliant E&S Management System (ESMS). To effectively implement this EHS policy and ESMS, the companies will define an Implementation Plan for 2025-2028 with Key Performance Indicators (KPIs) (ESAP#1).
Identification of E&S Risks and Impacts. As per local legislation, an Environmental Impact Assessment (EIA) is not required for the construction of new service centers in Kazakhstan and Kyrgyz Republic. As part of the ESAP#1 mentioned above, the companies will develop and implement a PS-compliant risk assessment procedure as part of the ESMS to identify potential E&S risks associated with the construction and operation of the four proposed service centers.
E&S Management System and Programs. The companies identify and manage E&S risks and impacts associated with the distribution center and maintenance of the machinery through compliance with applicable national legislation and E&S regulatory permits. The companies will establish corporate ESMS, aligned with IFC PS1 requirements (ref. ESAP#1). The ESMS will apply to the companies’ head offices and all existing and new service centers. The framework documents will include, as a minimum, Labor and Working Conditions Management, Resource Efficiency and Responsible management of Solid/Hazardous Wastes, Land Acquisition and Involuntary Resettlement, and Stakeholder Engagement Plan (SEP) and Community Grievance Mechanism. The framework documents will address, inter alia, the approach to E&S risk and climate risk assessment, mandatory stakeholder engagement and implementation requirements, risks associated with the use of contracted workers and in the supply chain, details of how workers organizations can be established amongst Engineering, Procurement and Construction (EPC) contractors’ workforce, and any approach to economic and physical resettlement, if applicable. The framework documents will detail the approach to be used when IFC PS requirements are triggered with respect to the above issues.
For each new service center, the companies will develop Construction Phase E&S Management Plans and Standard Operating Procedures (ESMPs/SOPs) to address risks and potential impacts identified through the E&S risk assessment process in line with IFC PS1 and provide framework guidance to the EPC contractors and its subcontractors (ESAP#2). The companies will request, through contractual arrangements, that, prior to start of construction, the appointed EPC contractors will develop and implement an ESMS and ESMPs that mirror the companies’ Environmental, Health, Safety and Social (EHSS) management systems and plans. The companies will also contractually require the EPC contractor to appoint and retain a competent and qualified EHSS supervisor/coordinator during the construction phase (ESAP#3).
Organizational Capacity/Competence. Within EG KZ, the OHS Department is responsible for managing and carrying out OHS duties. Currently, one Health, Safety, Environment (HSE) Engineer carries out OHS and environmental management activities including OHS trainings, monitoring, reporting and waste management at the Kokshetau Service Center. Within EG KG, the Head of After Sales Division is responsible for managing and carrying out OHS duties. In view of the new service centers, each company will hire an EHSS Manager/Director at the corporate level to oversee the preparation of the corporate ESMS, to support the implementation of the E&S site screening procedure and impact assessments, to provide guidance across the respective country of operations on relevant IFC PSs aspects, and to oversee the ESMS implementation at all service centers including contractors’s management during construction (ref. ESAP#1). The companies will assign trained service engineers responsible for carrying out environmental and OHS duties (ESAP#4).
E&S Training. As part of the corporate ESMS, the companies will provide OHS refreshment trainings and periodic courses on ethics code, gender equality awareness, domestic violence, responsible solid and hazardous waste management, and emergency preparedness to all direct and contracted workers as part of the ESMS (ref. ESAP#1). The training status of the employees will be monitored by the HR department.
Emergency Preparedness and Response. EG KZ and EG KG have adequate resources to respond to an emergency and put in place appropriate actions when required. For each service center, the companies will prepare an Emergency Preparedness and Response Plan (EPRP) for their operations in line with IFC PSs. The plans will be based on the ESMS (ref. ESAP#1) and national regulations and engagement with regulatory agencies and communities, as appropriate. The EPRP will include identification of risks including the climate risks and the maximum extent of an emergency, roles and responsibilities, notification procedures (towards state agency, communities etc.), available equipment and indicate the circumstances that may require an escalation of the response activities through the involvement of the public service providers.
Monitoring and Reporting. Internal OHS audits of the existing service centers are conducted, and findings are reported to senior management annually. The companies will develop a Performance Monitoring Management Plan (PMMP) which will indicate an internal and external audit review schedule, including quarterly E&S performance review meetings and biannual management review meetings, focused on the review of ESMS performance and associated elements (e.g., policy, objectives, targets, management/monitoring programs). KPIs will be used to track E&S performance, with agreed controls and mitigation measures. KPIs will be linked to specific targets based on companies’ objectives, national regulations, and PS requirements. The PMMP will be embedded in the ESMS (ref. ESAP#1).
Supply Chain Management. The companies` primary suppliers are John Deere with 85% sales share followed by Vaderstad, Grimme, JCB and Lindsay. John Deere adopted and implemented a code of business conduct, dealer code of conduct and supplier code of conduct publicly available and covering principles on OHS, environment, human rights, forced/child labor, prevention of discrimination and harassment, and information security. Vaderstad, JCB and Lindsay also have policies/codes of conducts covering sustainability, OHS, human rights, equal opportunities, and forced/child labor. The companies will (i) develop a stand-alone supplier evaluation program under the Supply Chain Management Plan to address Child Labor (CL), Forced Labor (FL) and significant OHS risks associated with its primary suppliers, and (ii) include contractual clauses requiring compliance with the Supplier Code to require its primary suppliers to prohibit use of child labor and forced labor and significant OHS risks in their operations and their own supply chains, and undertake annual verification audit (ESAP#1).
PS2 Labor and Working Conditions
EG KZ currently employs 592 direct workers, of which 154 are female. The Project is expected to result in more than 350 new employees to be hired at the three new service centers. EG KG employs 12 direct workers, of which four are female. The total number of employees is expected to be around 35 after the construction of the new service center in Bishkek. Female workers are mainly hired for administrative and cleaning services.
Human Resources Policies and Procedures. EG KZ has adopted HR policy and procedures, developed as per the national law requirements and generally in line with IFC PS2. EG KZ has an HR Department, responsible for all workers. EG KG is supported by the EG KZ team for managing HR issues in the Kyrgyz Republic. EG KG will assign a HR manager to undertake HR duties and develop a HR policy and procedures manual (ESAP#5), ensuring alignment of IFC PS2 and covering recruitment, probation, wages, non-discrimination, leave, freedom of association, benefits and other labor related aspects.
Working Conditions and Terms of Employment. Workers employed by the companies are provided with written contracts defining their labor and working conditions in accordance with the labor legislations of the Republic of Kazakhstan and Kyrgyz Republic, which regulate salaries, overtime, benefits, leave and working conditions. The companies do not hire migrants or seasonal workers. All workers are provided with indefinite employment contracts. The workers that will be involved in the construction of the new service centers will be employed by the selected EPC contractors.
Workers’ Organization. There is no restriction on workers’ unionization within the companies. According to senior management, no workers currently belong to a union.
Non-discrimination and Equal Opportunity. EG KZ, as reflected in its Code of Business Conduct and Individual Ethics, does not discriminate against employees based on their language, race, color, gender, political opinion, belief, religion, age, or physical disability and offers them equal opportunities. EG KG follows the same approach and will formalize a policy to reflect these principles. The companies will develop a corporate Gender Based Violence and Harassment (GBVH) policy to demonstrate their commitment for the protection of women in the workforce. The policy will be implemented at each service center through multiple communication channels (ref. ESAP#5).
Grievance Mechanism. As per local legislation, both companies have a Conciliation Commission who is responsible for assessing and resolving individual labor disputes. All workers can report their grievances through their department heads, HR department and higher management. However, the workers do not have yet a formalized process to submit their grievances. The companies will develop and implement a formal Workers Grievance Mechanism compliant with national legislation and PS2, available to all workers, including contractors (ref. ESAP#5). The mechanism will be based on multiple communication channels and the grievances will be dealt with in an impartial, confidential, and transparent manner. Specific measures will be put in place to deal with grievances requiring special protection measures, such as reports of GBVH events, including protection from reprisals. The companies will inform workers in writing about such mechanism during induction and will make it easily accessible. The mechanism will allow for anonymous grievances to be raised and addressed.
Occupational Health and Safety (OHS). The companies will develop and implement, as a component of their ESMS, an OHS policy and an OHS Management Plans / SOPs aligned with the requirements of the IFC PS and WBG EHS Guidelines (ref. ESAP#1). At each service center, one Service Engineer is trained and assigned to carry out HSE duties under the supervision of the HSE Engineer. The companies rely on public service providers in case of medical emergencies. Therefore, no medical personnel or medical facilities are present at the service centers. Internal OHS audits are conducted at existing service center by the OHS engineer and the related reports are presented to senior management on a yearly basis. The companies will develop and implement a system to collect statistics on OHS in compliance with national regulations and PS2 and will use the data to set leading and lagging OHS KPIs e.g. Lost Time Injury Frequency Rates (LTIFR) and other parameters at each service center, including reporting to senior management (ref. ESAP#1).
Workers Engaged by Third Parties. EG KZ will have a continuous contract agreement with a local assembly company (the assembly contractor) for carrying out re-assembly of some of the vehicles that will be sold at the service centers. The assembly contractor has a comprehensive occupational health, safety, and environmental management system that follows a structured approach to planning, implementation, monitoring, and improvement of HSE processes in accordance with local regulatory requirements. The assembly contractor’s management system outlines procedures for risk management and oversight. Workers receive training, personal protective equipment, and medical examinations related to health and safety. Fire drills are conducted in compliance with local law, and emergency response plans are established. EG KZ will extend its own grievance mechanism to serve workers engaged by the assembly contractor (ref. ESAP#5).
PS3 Resource Efficiency and Pollution Prevention
Resource efficiency. In 2023, 1,031,885 kWh electricity and 49,601 m3 natural gas was consumed at the existing service centers of EG KZ. In addition, 2,089,077 l of gasoline and 609,228 l of diesel fuel were consumed by the company vehicles in 2023. Currently, EG KG does not keep record of resource consumption as these expenses are included in its monthly rental fee. Water demand of both EG KZ and EG KG is supplied from the city networks. Bottled water is used as drinking water. Water consumption at three service centers of EG KZ was reported at 381,528 m3 in 2023. The companies apply energy and resource efficiency measures such as using light emitting diode (LED), motion sensors and lighting control systems and water saving devices in the toilets. The companies are considering installing sewage treatment and water recycling systems in the workshops to reuse water as well rainwater purification system at the new service centers. The companies will develop/implement a monitoring system to collect energy and water consumption data and will use the data to set KPIs for resource efficiency at each service center, including reporting to senior management (ref. ESAP#1).
Greenhouse gas (GHG) emissions. The companies do not yet have a protocol in place to calculate emissions of GHGs from their operations and the company vehicles that are used by service engineers for on-site tasks. The companies will quantify direct emissions from the facilities owned or controlled within the physical Project boundary (Scope 1) as well as indirect emissions associated with the off-site production of energy used by the project (Scope 2), if applicable. Quantification of GHG emissions will be conducted annually, using internationally recognized methodologies (ESAP#6).
Pollution Prevention. There are no significant air or noise emission sources at the service centers. Occupational exposures such as indoor workplace air quality, dust, temperature, humidity and noise are monitored regularly by an accredited third-party laboratory. The companies’ operations follow local regulatory requirements. A gas boiler will be installed at the new service center in Astana. EG KZ will ensure that the boiler is designed to meet the WBG EHS Guidelines limit values and local regulatory requirements (ESAP#7). This will apply to all new service centers where boilers will be installed. The companies will conduct periodic monitoring of the air emissions for compliance with national and WBG EHS Guidelines limit values. Wastewater generated at the existing service centers is discharged to the city sewerage network in line with the local legislative requirements. According to local regulations, no preliminary treatment is required prior to discharge. Hazardous waste generated at the service centers are limited to tires, lamps, batteries, antifreeze, used oils, and other materials. Hazardous waste is discarded in special containers with secondary containment for collection by specialized companies. Non-hazardous solid waste that is generated at the service centers is stored at the temporary waste storage areas and collected by contracted waste management companies. Recycling, where applicable, is the responsibility of the waste management companies. Implementation of good housekeeping measures, installation of dedicated storage areas in the warehouses with necessary safety measures and secondary containment and keeping material safety data sheets (MSDS) near the storage areas, which will be included in the ESMS (ref. ESAP#1), will reduce risks associated with hazardous material management.
PS4: Community Health, Safety and Security
Community Health and Safety. Existing and planned new service centers are located in industrial/commercial areas, where there are no residential buildings. At EG KZ service centers, fire safety audits covering fire safety measures and systems as well as compliance with the authority requirements are conducted by accredited third parties on behalf of the Ministry of Internal Affairs of the Republic of Kazakhstan Fire Fighting Department. Annual fire drills are conducted to ensure the functionality of the firefighting systems. Life and fire safety measures will be integrated into the design of new service centers, including features such as physically isolated rooms for chemical storage, multiple emergency exits, fire extinguishing systems, sprinklers, fire-resistant blankets, warning signs, and labeling.
Security Management. The companies currently employ their own unarmed security personnel. Background verification of security personnel is carried out through the internal affairs authorities. The companies will develop a training program for security personnel aligned with PS4 requirements and the Voluntary Principles on Security and Human Rights (ref. ESAP#1).
