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
Identification of E&S Risks and Impacts Assessment:
The Company identifies and manages E&S risks and impacts associated with its operations per applicable national standards, E&S regulatory permits and requirements. The existing identification of E&S risks and impacts and assessment system is generally in line with PS1 requirements. As per ESAP 1, the Company will develop and implement a screening procedure, in line with IFC PS requirements, for conducting E&S due diligence including climate risks of its overseas investments under the project.
As per the applicable legal requirements of People's Republic of China (PRC), the project activities related to the energy efficiency component are not required to conduct Environmental Impact Assessments (EIAs). The expansion of South East Asian countries will primarily include mergers/acquisitions or some greenfield developments. Depending upon the nature of expansion project, and applicable local regulatory requirements, Weigao will prepare all the required documentation for the regulatory permitting process, including EIA studies as necessary.
E&S Policy, E&S Management System and Program:
Weigao has corporate EHS policies and E&S management systems (ESMS) including those related to quality control, environment protection and energy management, fire and safety management, management of hazardous materials, emergency plans and accident investigation which are applicable to all its existing and future facilities.
Weigao has obtained ISO 9001 (Quality Management Systems), 14001 (Environmental Management Systems) and 45001 (Occupational Health and Safety Management) certifications. All the facilities have a documented safety manual based on the corporate Safety Management System with oversight from experienced EHS professionals. Argon Medical has its own E&S management system in accordance with the regulations of United States.
Organizational capacity and competency:
At the corporate level, Safety and Technology Department, including one manager position and around 20 staff, are responsible for supervision and implementation of EHS management. The department is also in charge of provision of EHS related trainings and supervision of contracted companies and workers.
At the factory level, Safe Production and Environment Officer at each production line is responsible for implementation, monitoring and reporting of safety management requirements as per the direction of the corporate Safety and Technology Department. The Company plans to assign the manager of the Company's Safety and Technology Department as a person in charge overseas project E&S management and monitoring.
Emergency Preparedness and Response:
Weigao has a documented Emergency Response Plan (ERP). The ERP included risk assessment, hazard prevention and preparedness, emergency organization, reporting and notification procedure, and provision of trainings. The ERP covers different scenarios of safety accidents including environmental incidents, operational safety, fire safety, applicable to all its existing and future facilities. Required training is provided on fire safety and emergency response including mock drills covering employees in all shifts as part of corporate Safety Management System.
Monitoring & Reporting:
The Company has developed monitoring guidelines which are implemented at each facility level. All facilities monitor number of quality and EHS related key performance indicators (KPIs) including record of accidents, potential hazards identified, compliance with legal requirements etc.
The KPIs are reviwed by Safe Production and Environment Officer and reported to the corporate Safety and Technology Department. For the planned overseas project construction and operations, multiple environmental and service performance indicators will be monitored and reported via regular written reporting and meetings including compliance with local regulations and the Company's E&S requirements.
PS2: Labor and Working Conditions
As of June 2024, Weigao has about 12,600 employees that are directly hired. Female employees make up roughly 43% of the total workforce. Around 1,670 persons are hired as temporary workers including cleaning staffs, security guards, gardeners, canteen services, and production lines.
HR Policies and Procedures, Working Conditions and Terms of Employment:
Weigao has a set of HR documents applicable to all its existing and future facilities including policies and procedures on recruitment, non-discrimination (based on race, religion, gender, ethnicity, pregnancy and handicap), humanitarian treatment (child labor, forced labor, abuse, violence and sexual harassment), in accordance with relevant laws and regulations on employment and labor, which are general consistent with IFC PS2 requirements.
The legal affairs department regularly reviews employment regulations to assess the Company’s HR management policies’ compliance versus the relevant labor laws and regulations. Similar review process will be established for the overseas projects.
Freedom of Association & Grievance Mechanism:
A labor union represents all the employees basically and there are no material labor related disputes or legal cases are reported in the past three years. Although retrenchment is not anticipated, as part of ESAP 2, the Company will update its HR policies and procedures to include a retrenchment procedure applicable to its oversea projects in line with IFC PS2.
The Company has formal grievance handling procedures applicable to each facility. The general grievance from an employee can be reported either to HR or Senior Manager. Direct hotline to CEO and grievance boxes are available, serving as a channel to receive anonymous grievances. Similar procedure is expected to be established for overseas projects. No material grievances, court cases, serious breach or misconducts are reported in the past three years.
Occupational, Health and Safety (OHS):
The Company has a documented OHS management system and procedures applicable to all existing and future facilities covering safety targets, accountability system, hazard identification and evaluation, occupational health and safety, incident reporting and investigation.
Trainings on OHS are provided to all employees including safety operation procedures, hot work, working at heights, traffic safety, personal and property safety etc. All workers including new employees, are required to have initial safety training. The technical trainings on safety response, usage of machinery and firefighting are provided in cooperation with relevant experts.
The Company conducts monthly OHS review meetings with senior management. The Company provides all the staff with personal protective equipment (PPE), such as boots, caps, masks, gloves, and/or working clothes, as would be relevant to the activity undertaken.
Workers Engaged by Third Parties:
Weigao indirectly hires security guards, gardeners, canteen services, and transportation service providers through specialized agencies. These workers are provided the similar access to grievance mechanism.
Weigao requires its contractors to follow the Company’s E&S management procedures including compliance with labor law, which is agreed in the contract and monitored by the Legal Affairs Department. Safety management department staff engages with the contractors to supervise hazard points and to monitor the implementation of relevant OHS procedures and mitigation measures. Similar management process will be established for overseas projects.
For overseas project, a construction worker’s accommodation may be provided by construction contractors. As part of ESAP 3, the Company will develop a worker’s accommodation standard in line with PS2 requirements and “Workers’ accommodation: processes and standards - A guidance note by IFC” which will be monitored by the Company, applicable to its oversea projects.
Supply Chain:
The Company has developed rules and regulations, evaluation system for new supplier selection, and relationship continuity. The Company requires the suppliers to have accredited qualification and good internal management system, stable quality, legal compliance, etc. As per ESAP 4, the Company will update the supplier control procedure articulating its commitment to prohibit child and forced labor practices; and update a procedure to assess supply chain E&S risks for its primary suppliers in line with IFC PS2.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency and Greenhouse Gas Emissions:
The Company has developed energy efficiency related rules and regulations applicable to all the facilities, identifying and reviewing the implementation of various measures on energy conservation and greenhouse gas (GHG) emission reductions.
The Company’s energy consumption is monitored and reported in the corporate Environmental, Social and Governance (ESG) report every year and resource efficiency is continuously improved based on the monitoring results. Some of the initiatives implemented for resource efficiency in the past few years include: installation of energy-saving lamps, rooftop solar, wastewater recycling facilities, and an energy efficiency management system. Accordingly, the estimated GHG emissions from current operations were reported to be about 102,000 tons Carbon Dioxide Equivalent (CO2e)/annum in 2023.
Energy Supply and Air Emissions:
Electricity is sourced from national grid for all the factories in operations. Steam is mainly used in heating supply, air conditioning, the sterilization process and drying of semi-finished products. The Company’s project facilities involve mainly assembly activities, and reagent production processes is expected to have limited amount of air emissions.
The Company has established a management system for air pollution prevention and control, stipulating the responsibilities of each department and installation of waste gas treatment equipment in line with applicable local regulations. The Company has operating procedures for various types of exhaust gas treatment equipment, where monitoring data and information were generally in compliance with the national air quality standards and World Bank Group (WBG) EHS Guidelines guidance values.
Water and Wastewater:
Water for the existing factories is sourced from local public water supply. The company has established a wastewater management system where wastewater is recycled through solvent recovery facilities, and treated water is stored in the water tanks adjacent to workshop as processing water source.
The Company has on-site sewage treatment plants (STPs) with membrane bio reactor as per the environmental permit condition. Treated effluent is discharged to the wastewater treatment center of Weigao Industrial Park for centralized treatment. A small amount of sludge is produced from the treatment systems, which is removed regularly by the contracted Company. The monitoring results were generally in line with required national standards and WBG EHS Guidelines guidance values.
Waste and Hazardous Materials Management:
The Company has waste management procedures covering all its facilities, including the system of appropriate collection, classification, storage and disposal, per the applicable legal requirements. Experts assist the waste management including preparation of internal rules and regulations.
At each manufacturing factory, segregated non-hazardous waste is collected and disposed by the responsible government agency. The hazardous waste is handled by licensed hazardous waste treatment service providers. The Company have signed contracts with hazardous waste treatment factories to report the transfer of hazardous wastes and establish relevant information management records.
Weigao has documented safety instructions for storage, handling and use of hazardous materials including solvents as part of its corporate Safety Management System. The hazardous materials are stored in separate secured areas with secondary containment. The used solvents are recycled through the wastewater recycling system.
PS4: Community Health, Safety and Security
Infrastructure and Equipment Design and Safety:
The Company has designed and implemented fire safety systems per the legal requirements including fire hydrant systems, fire extinguishers and fire alarm system. Additionally, smoke detectors and sprinklers are provided based on the special needs in certain areas. The fire safety systems are inspected on a regular basis by the engineering department and no material non-compliances nor fire incidents recognized in the past three years. The Company held fire drills and fire-fighting facility maintenance regularly. Similarly, the Company will design the layout and drawings including L&FS system of overseas facilities, to comply with local and international standards.
Weigao uses buses from Public Transport Groups of Weihai for transporting its employees to its manufacturing facilities and prepares emergency procedure for traffic accidents. The bus drivers take pre-job training provided by their respective companies. Weigao Logistics Department sets up occasional safe driving meetings for drivers and the public transport companies to emphasize safe driving.
Security Personnel:
The Company employs private unarmed security guards at its manufacturing facilities. Before the security guards are hired, their personal data is censored through official website of Chinese Public Security Ministry to ensure that the guard candidates do not have criminal records. All the guards are provided pre-job training, which includes managing daily tasks and behaving politely. For the oversees projects, unarmed security personnel expected to be hired and the Company will provide similar trainings.
