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
At the time of the appraisal, AM was in the process of defining the company’s E&S policies and ESG strategy. Kerzner, who is the hotel operator for the SIRO hotel, was also in the process of supplementing Kerzner’s global E&S policies and procedures with additional SIRO E&S policies and procedures, to comply with local regulatory requirements and AM’s standards as set forth in the Hotel Management Agreement (HMA). As per ESAP#1, AM will develop and implement E&S policies and procedures on GBVH (including human trafficking) and CPS, FoA and collective bargaining and anti-retaliation against workers, in accordance with national regulatory requirements and IFC PSs, and provide the relevant trainings to its workforce.
The company has elements of an ESMS in place. Existing E&S management plans and procedures are structured to address operational E&S risks of different business units, such as marina operations. The company undertakes ESIAs as required under Montenegrin regulations to identify potential E&S risks, impacts and implement mitigation measures associated to brownfield developments. With regard to the project development and site, an ESIA (2009) was prepared by an external E&S consulting firm, prior to the initial developments at the project site (2010) in compliance with national regulations and laws. This assessment included all planned developments.
AM will develop and implement a company-wide ESMS to oversee and manage E&S risks and performance across all operational and future assets and business units of the project, consistent with IFC PSs and implementing GIIP per relevant and applicable parts of the WBG General EHS Guidelines and EHS Guidelines for Tourism and Hospitality Development. Once established, the ESMS will include: (i) company’s E&S policies (including the outlined in ESAP#1), procedures and plans relating to their operations; (ii) an E&S risk screening/assessment procedure for new developments and regular operations where the scope will be expanded in line with IFC PSs requirements; (iii) a Change Management Procedure; (iv) a Contractor Management Plan (CMP) to ensure consistent contractor management during construction and operations; (v) E&S monitoring procedure for its operations including the activities carried out by contractors and sub-contractors as well as operators and third party employers; (vi) emergency preparedness and response; (vii) supply chain management; (viii) a company level Stakeholder Engagement Plan (SEP) and (ix) grievance mechanism (ESAP#2). The company assess climate-related risks such as coastal flooding in the design of its properties. The E&S risk assessment procedure will include identification of climate E&S risks and relevant mitigations. The company requires from its contractors and sub-contractors to follow the national laws, regulations and GIIP for health and safety (H&S) matters as part of a contractual agreement which include but are not limited to, the development and implementation of a dedicated construction H&S Management Plan and monthly H&S and labor management performance report. Moreover, the company assigns a site-level H&S coordinator to supervise and ensure effective implementation of the plan in day-to-day operations, including site inspections. For assets to be constructed under this investment, AM will develop and implement a construction E&S management plan to manage requirements related to applicable PSs according to GIIP commensurate with the risk (e.g., WBG EHS Guidelines) (ESAP#3).
As defined in the HMA, Kerzner, as the operator, has exclusive supervision and control of SIRO hotel and residence operational management, including the development and implementation of all administrative policies and procedures. Kerzner follows global standards and local regulatory requirements relating to environmental compliance, food safety H&S, L&FS and security and has a documented labor management policies and procedures.
At the time of the appraisal, EHS risk management and quality control at the company was managed by the representatives in each business unit supported by specialized consulting firms on L&FS, OHS and environment. In the meantime, the company restructured their corporate E&S management team and assigned an E&S Manager, who will be responsible for developing and implementing the ESMS, supported by a dedicated working committee representing different disciplines including EHS, LFS, HR and legal.
At the corporate level, E&S oversight is led by, amongst others, a Senior Manager, supported by a dedicated working committee representing Environmental and Social matters. This committee collaborates closely with specialized and certified consulting firms, leveraging their expertise in L&FS, OHS and environmental technical domains. Moreover, SIRO’s day-to-day E&S operations will be managed by the maintenance engineer and HR with ongoing E&S oversight, support and monitoring function under the Hotel’s General Manager.
The company monitors its EHS performance based on local regulations and conducts internal audits supported by external parties, such as a safety expert. As part of the ESMS, under ESAP#2, AM will develop and implement a documented E&S monitoring and review procedure to ensure E&S performance of all facilities are managed in line with GIIP and aligned with ADM’s E&S policies and procedures and IFC PSs requirements, including regular internal audits and review mechanisms to implement corrective actions. The monitoring program will also include the oversight of construction and operations contractors E&S activities in line with to be developed CMP and operators e.g., Kerzner.
AM has a corporate template for an EPRP for all facilities, covering possible emergency scenarios based on a risk analysis including fire, earthquake, violent person and terrorism, accidents, and natural disasters. All assets have been provided with emergency power (back-up) systems. The company provides the training on it to all staff and third-party contractors (engaged for long-term daily work) and performs periodic practice fire drills. AM requires its tenants to manage their operations in accordance with all national regulations, and reviews tenant’s permits, certificates and licenses as part of the agreement.
The company has a documented procurement policy that defines internal rules and procedures guided by AM’s codes. However, currently, each business unit individually manages the selection process for contractors and suppliers in accordance with this procurement policy. As part of its ESMS (ESAP#2), AM will integrate a project procurement and supply chain management and monitoring procedure for all primary suppliers.
PS 2 – Labor and Working Conditions
As of September 2025, AM had a total of 272 workers (41 percent female), comprised of 87 percent directly engaged staff, most of whom are employed in operations, marina, corporate services, HR, IT and project management, and 13 percent agency workers, engaged through a staff leasing agency who has a physical entity in Montenegro, most of whom are employed on fixed term contracts in operations to meet seasonal demand. In accordance with Montenegrin law, companies cannot lease staff who are not local/Montenegrin, so therefore, all leased staff at AM are Montenegrin.
As of September 2025, SIRO employs 144 workers (full-time and seasonal). All SIRO workers are hired directly on permanent or fixed term temporary contracts, if joining for the six-month summer season and are all provided with written contracts, terms of employment and working conditions in accordance with Montenegrin Law. Additionally, the company outsources personal trainers, cleaning and security services from external third-party companies, who are contractually expected to implement labor standards for workers in strict compliance with Montenegrin Law.
The company has corporate-level HR policies and procedures, which all AM employees and agency workers receive training on when they join and periodically. These policies and procedures, aligned with the Montenegrin labor law and generally consistent with IFC PS2, include an Employee Handbook, Work Rules, Code of Conduct (CoC), Employment Termination, Payroll Management and Administration, Recruitment and Selection, Compensation Benefits, Residence and Work Permits, and Whistleblowing. As part of ESAP#1, AM will also develop policies and procedures on GBVH, child protection and safeguarding, anti-retaliation against workers, and freedom of association (FoA) and collective bargaining in accordance with Montenegrin Law and IFC PS.
AM’s CoC outlines the ethical standards and professional behavior expected from its employees, contractors, and operators. This document broadly addresses child labor and forced labor, non-discrimination, sexual harassment, H&S, FoA, and full adherence to national labor laws. Additionally, the company has a whistleblowing policy that provides a formal mechanism for employees to report concerns about violations of the company’s codes.
The company implements an anti-violence and anti-harassment policy and procedure with defined reporting channels and monitoring procedure. As part of ESAP#1, AM will complement its anti-violence and anti-harassment policy and procedure with a GBVH and CPS policy to include clear definitions and examples of prohibited behaviors, a reporting structure, guarantees of a survivor-centered approach, and a training and implementation plan. In addition, AM will update its CoC to address GBVH and CPS, and to include clear disciplinary measures for both perpetrators and for responsible staff who fail to act upon receiving such complaints. AM will provide GBVH and CPS-related onboarding and periodic training to all staff on procedures to follow, where there are cases or non-compliance.
AM’s corporate-level permanent employees have indefinite contracts detailing the terms of the employment and working conditions, in accordance with Montenegrin Law, with workers typically working 40 hours per week, which is usually divided into five 8-hour days, based on the provisions of the Labor Law. Temporary workers are also provided with a written employment contract detailing the terms of the employment and working conditions and are engaged through six or twelve months employment agreements. If temporary workers are engaged for a total of more than 24 months, they are offered an indefinite employment agreement, in accordance with Montenegrin Labor Law. Employees leased through an agency are paid by the labor agency; however, AM stipulates the worker’s salary, working hours, sick leave and holiday leave, is equivalent to AM employee terms and conditions. Workers leased through an agency also typically work 40 hours per week, and depending on the job type, some workers work on a rotation/shift work basis, in accordance with Montenegrin Labor Law.
At AM, overtime is uncommon, voluntary, and within the national limits of 50 hours per week maximum and paid at a premium +40% of standard pay rate in accordance with Montenegrin Law. Workers work between five and six days per week, depending on their job position with at least one rest day off per week in accordance with law. All workers are social security registered and receive paid holiday and sick leave and are entitled to social security contributions, in accordance with national legislation.
The Montenegrin labor law and AM recognizes FoA and the collective bargaining rights of workers. Workers are not required to disclose their union membership to their employer and the law prohibits any retaliatory actions on account of join and/or participation in union activities. There is no company trade union, however, there are Montenegrin state and branch level unions, including the Independent Union of Workers in Tourism and Hospitality of Montenegro, which workers are free to join. The company works in accordance with the General Collective Agreement of the Official Gazette of Montenegro (2022), which includes requirements, aligned with Labour Law, on working hours, leave, pay and compensation.
The company has a whistleblowing policy and procedure, with details provided on the company website (https://www.portomontenegro.com/whistleblowing/). As part of ESAP#4, AM will also develop a Worker Grievance Management Procedure (WGM), accessible to the company’s employees and all workers engaged via hotel operators, contractors and third parties, in accordance with IFC PS2 and national law, and ensure that all workers are trained on and aware of the process. The WGM will provide various channels, through which workers can raise grievances, if preferred anonymously. The mechanism will define a grievance tracking system to capture and handle all project grievances and ensure that all grievances are investigated and resolved within stipulated timelines, including a mechanism to report back to complainants in a timely manner on the status and resolution of the complaint/issue. The company will have an appointed and trained grievance officer who will act as the key focal point and oversee the implementation of the process. The mechanism will also effectively address GBVH (including human trafficking) and CPS complaints, in line with a survivor-centered approach. A trained GBVH focal point will be designated to receive workers and contractors’ complaints, multiple options for reporting, the possibility to choose who to report cases to, and referral pathways for survivors.
Given the use of recruitment agencies for the hiring of permanent and temporary workers for AM’s operators, AM will develop and cascade down to all operators, a Recruitment and Hiring Policy to define: a) requirements for using a labor agency to recruit workers, including workers from overseas; b) clear communication of AM and operator employment conditions to workers in home country before travelling to Montenegro to start assignment: c) prohibition of agency service placement or transportation fees for workers travelling from overseas; d) prohibition of retaining passports or wages; and e) full reimbursement of inbound and return flights at the start and end of the assignment. The company will assess compliance with this policy as per requirement reflected in the contracts with labor agencies and contractors (ESAP#1).
AM provides accommodation to workers when required. SIRO also provides accommodation to its workers, aiming to limit occupancy to two workers per apartment. There are SOPs in place to ensure the quality and standard of the accommodation. As part of ESAP#1 and its ESMS, AM will develop an Accommodation Policy, establishing the basic requirements for accommodation, for both AM direct and contracted workers, to meet Montenegrin regulations, and IFC PS2, and in line with GIIP as per the relevant IFC's and EBRD's Good Practice Note on Workers' Accommodation. The implementation of the policy will be a contractual requirement for the company’s contractors. AM will undertake periodic inspections of the worker accommodation facilities before occupancy, to assess the accommodation facilities' compliance with the policy, including whether they are designed, constructed and operated in accordance with internationally accepted L&FS standards, and ensure adequate considerations related to security and gender aspects.
The company works with contractors to construct new projects. The company undertakes E&S screening of contractors pre-contract award and integrates E&S requirements to the agreement. As part of ESAP#2, AM will develop a Contractor Management Plan (CMP) aligned with AM’s labor-related requirements for contractors and subcontractors, Montenegrin Labor Law and AM’s HR policies and procedures and undertake regular monitoring/audits of contractor and subcontractor labor management performance for the construction projects.
As stated in the Hotel Management Agreement between AM and Kerzner for SIRO, the management and operation of SIRO by Kerzner is under the supervision and control of AM. AM’s current monitoring of operators includes some onboarding at the start of their engagement on AM’s policies and procedures, and review of operator’s key policies and procedures when there are changes. As part of ESAP#2, AM will develop and implement a project procedure for managing and monitoring the performance of the third-party employers, such as Kerzner, in relation to the requirements of PS2. The procedure will monitor and report on the effective implementation of the employer’s ESMS and alignment with AM’s standards, policies and procedures, Montenegrin law and PS2, including on the use of agencies, workers’ accommodation, and grievance management including on prevention of child labour and forced labour, GBVH and CPS, human trafficking, harassment and discrimination, freedom of association, grievance management, OHS, recruitment, accommodation, employment termination, contractor management, and labor management monitoring/KPI tracking. Additionally, AM will undertake an external/internal assessment of labor management and periodic monitoring at SIRO hotel and residences operations when policies and procedures are in place, to review, monitor and report on compliance with the local labor law, IFC PSs and AM’s policies and procedures.
With respect to occupational health and safety (OHS), AM’s operations are managed in line with the local regulations including identification of OHS risks, job hazard analysis for each position, implementation of controls with operational procedures, and monitoring of working conditions and working environment, and recording accident/incident statistics and investigation by an authorized and certified external OHS expert. In addition, there is a designated OHS coordinator on all construction projects, who is responsible for the preparation of project documentation, and the execution of works on the construction site. The required protective protection equipment is provided. Employees are required to report accidents/incidents including near-misses and unsafe acts to facilitate their analysis and the identification of corrective measures to prevent accident occurrence. As part of ESAP#2, AM will integrate its OHS plans and procedures in the ESMS to ensure consistent approach followed by each business unit and their contractors operating for the project.
PS 3: Resources Efficiency and Pollution Prevention
Energy and resource efficiency measures are integrated at the design phase of new developments and include the installation of energy efficient technology and equipment. Electricity is sourced from the public grid, with diesel-powered backup generators available in case of grid failure. There are no boilers. The company estimates its annual greenhouse gas (GHG) emissions for its operations which is not expected to be above 25,000 tonnes of CO2-equivalent.
Water used for sanitary purposes during construction and operation of assets is provided through the municipal network and the quality is monitored regularly by the municipality. Domestic wastewater is discharged to municipal sewage network for treatment. Well water quality is monitored and is acceptable to use for the landscaping of decorative plants as per the local regulatory requirements. Marine water quality is also monitored periodically by the company and in compliance with the local regulatory requirements. SIRO has an in-house laundry facility. As part of ESAP#2, AM will monitor the adequacy of the pollution prevention management procedures and implementation by Kerzner i.e., water quality monitoring (i.e., swimming pools).
As indicated above, the project site is located on land which was previously used as a military shipyard. Under the concession agreement with the Montenegrin Government, AM carried out the site clean up during 2010, removing historic pollution involving contaminated soil and other waste material, and managing the excavated waste material in compliance with the national regulations. Post-remediation soil quality assessments carried out by the company as required by the local authorities indicated soil contamination levels within acceptable levels, making the land suitable for residential use per local regulations.
The company has procedures for managing hazardous and non-hazardous waste, including sorting, storage, and disposal in line with legal requirements. Solid waste, mainly cardboard, plastic, and wooden packaging, is segregated and handed over to authorized recyclers. Food waste is collected for disposal in municipal landfills. Hazardous (e.g., medical waste) and non-hazardous wastes are collected by authorized public service agencies in the project site. Contractors are required to handle solid waste separately using licensed waste management companies. As part of ESAP#2, AM will develop and implement monitoring of all waste disposal related contractors' activities, including the use of third-party licensed waste management companies.
Hazardous materials stored/used on-site include disinfectants and cleaning detergents, used in limited quantities and in compliance with national regulations. Marina has three underground tanks for fuel storage, equipped with proper systems to prevent leaks (e.g., concrete vaults). These tanks and pipes are periodically inspected and maintained by licensed external companies and monitored electronically by the company.
The company follows local regulatory requirements and relevant European Union (EU) Directives for pesticide management and storage, using agents compliant with EU Directives to control harmful organisms.
PS 4: Community Health, Safety and Security
AM has implemented stringent design and construction standards to mitigate seismic risks at the site, as approved by state authorities through construction permits. Furthermore, the company has devised L&FS master plans for the project, adhering to national fire regulations that align with EU fire codes, and which have already received approval from local authorities.
The company has established a corporate L&FS standard procedure that mandates the involvement of qualified L&FS professionals approved by the Montenegrin government to periodically conduct reviews of the facilities. These reviews ensure that all systems are operational, and any potential risks are identified. The company develops enhancement plans to minimize L&FS risks and ensure compliance with legal and national code requirements.
The facilities visited during the appraisal are equipped with L&FS infrastructure and systems including fire extinguishers, fire detection and alarm systems with centralized control panels, sprinkler systems, fire hydrants, fire hose reel systems, water storage tanks with fire pumps, and public address systems from a centralized secure location at each site. Additionally, the means of egress, such as corridors and staircases, are protected with fire-resistant construction and equipped with smoke control systems like stair pressurization systems in high-rise buildings. The future outpatient clinic will be designed in accordance with the national regulations.
As per ESAP#1, AM will update its policies and procedures, Code of Conduct and protocols to address GBVH (including human trafficking) and CPS cases involving users of their properties; as well as a grievance mechanism allowing for safe and confidential complaints procedures for users, and options for anonymous reporting and referral pathways for survivors. AM will also conduct awareness raising initiatives for users of their properties on unacceptable behaviors and how to report incidents.
All properties are guarded with unarmed security guards from licensed private security companies. Regular training programs are conducted for the security workers on the standard operating procedures for their job including L&FS trainings. As per ESAP#2, AM will communicate to private security providers the relevant measures per the contractor management plan and will require the providers to carry out GBVH and CPS training and awareness campaigns for security staff.
PS8: Cultural Heritage
The project site is located in the buffer zone of UNESCO listed Natural and Culture-Historical Region of Kotor which includes Tivat, Herceg Novi, and the rest of the Boka Bay. Prior to the initial developments, a detailed cultural heritage assessment for the project area was undertaken in accordance with the national laws on Cultural Heritage Protection in Montenegro and the Environmental and Cultural Heritage Protection of Kotor, including a field-based survey. Several buildings and pieces of industrial equipment with cultural importance were identified.
In this process, the company relocated some heritage items following the permits requirements issued by the respective local authorities and established a Naval History Museum in a former sawmill to exhibit these items. The company strictly follows the respective national legal requirements both during the construction of its properties, such as ceasing activities when necessary, and in the management of the unearthed heritage items.
