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: KFP’s Sustainability framework includes Environmental Management and Occupational Health and Safety Policies. In addition, each group company has its own Human Resource Management and Environmental and Occupational Health and Safety (EHS) Policies. Going forward, KFP will strengthen its E&S Management System (ESMS) in line with the requirements of IFC PS1, and commensurate with the risks and impacts of its food production operations (ESAP#1).
Identification of E&S Risks and Impacts: KFP and group companies implement an E&S risk identification, avoidance and mitigation system covering regulatory compliance and implementation of corporate EHS Standard Operating Procedures (SOPs). Local regulatory compliance is monitored through a register including requirements against environmental permits and OHS and labor laws and regulations. Compliance status is verified annually by local environmental authorities. Corporate EHS SOPs consists of risk assessment procedure and verification audits as part of KFP’s management systems. As per ESAP#1, KFP will undertake a gap analysis of its EHS SOPs against the applicable and relevant IFC EHS Guidelines and develop a plan to implement required corrective measures on operations of the target companies.
As per Environmental Code of Kazakhstan, an environmental impact assessment (EIA) by a third party is required to be conducted and updated every 5 years or more frequently in case there are any changes in operations, which might cause a change in E&S risks and impacts within the frame of Industrial-Environmental Control Process.
In line with this requirement, Bayan Sulu completed Environmental Impact Assessment (EIA) of construction and operation of the new expansion as part of detailed design and obtained approval from the State Environmental Expertise on 28 August 2024. The EIA study for the AAF expansion is on-going and will be submitted to the State Environmental Expertise as part of construction permission process.
ESMS and Programs: As part of its corporate OHS Management System, KFP developed procedures for handling OHS accidents, EHS monitoring, and emergency response that are implemented at the subsidiary level. Both Bayan Sulu (BS) and Asia Agro Food (AAF) maintain ISO22000 (Food Safety Management System), ISO45001 (Occupational Health and Safety Management System) and ISO50001 (Energy Management System). In addition to these, AAF has ISO14001(Environment Management System) in place.
E&S Organizational Structure: KFP established a two-tier EHS organizational structure at the corporate and subsidiary level. Each group company has an EHS team composed of OHS Manager/supervisor, Environmental Specialist and OHS foremen. A Professional Development Program, based on professional needs assessment, is implemented to build and maintain the competency of KFP’s EHS organizational structure.
E&S Training: All direct and contractor workers receive mandatory induction training that consists of corporate and workplace risk assessment, SOPs, work permit and sustainability targets. The company’s training plan includes regular refresher and specialized trainings (e.g., first aid, handling of weight, working at height, manlift operations, management systems, waste management, food safety, etc.).
Emergency Preparedness and Response: KFP has an Emergency Preparedness and Response (EPR) framework covering emergency and fire preparedness and intervention procedures, and earthquake/explosion protection plans in place. In addition, all subsidiaries have facility specific emergency response plans that define roles and responsibilities of the Emergency Response Team, communication and collaboration requirements with local authorities/neighboring communities in case of emergency situations. Annual fire risk assessments are conducted at both BS and AAF facilities in addition to the fire drills that are conducted quarterly. Both facilities have adequate resources and are stationed with trained firefighting teams working in shifts and fire-fighting trucks and equipment. A medical team formed of doctor and nurse is also present at each facility. Target companies will upgrade their Emergency Response Plans (ERP) and develop IFC PS compliant Emergency Response and Preparedness Plans (EPRP) to identify and mitigate risks associated with the expansion facilities in line with IFC PSs (ref. ESAP#1). The EPRPs will include identification of 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.
Both AAF and BS operations are at risk of dust explosion for which preventive measures are in place such as prevention of dust accumulation, grounding and bonding, use of intrinsically safe electric equipment, use of anti-static equipment and temperature control. Warehouses and other premises are equipped with fire alarm systems, primary fire extinguishing equipment, fire hydrants and fire shields. Target Companies will conduct an Atmosphere Explosible (ATEX) assessment to identify, evaluate, and control the risks of explosion in workplaces and develop a time bound corrective action plan (ESAP#1).
E&S Monitoring and Reporting: Internal OHS audits are conducted regularly and findings are reported to the senior management of KFP. Each subsidiary has a Performance Monitoring Management Plan (PMMP) focusing on ESMS performance through Key Performance Indicators (KPIs) and implementation of controls and mitigation measures. KPIs are linked to specific targets based on the KFP’s objectives, national regulations, and international standards. Requirements for internal and external audit schedules, quarterly E&S performance review meetings and biannual management review meetings are defined in the PMMP. The target companies will update their PMMPs in order to integrate with KFP`s updated ESMS and KPIs (ESAP#1). Workplace air quality, dust, temperature, humidity and noise are monitored every five years by an accredited third-party laboratory in line with local regulatory requirements and reported to be in line with regulatory limits. All workers that are exposed to excessive noise levels are provided with personal protective equipment such as earplugs and muffs.
Supply Chain Management: Bayan Sulu sources a variety of raw materials, including cocoa and derivatives, wheat, flour and derivatives, sugar, vegetable oils, nuts (peanut) and packaging materials. The sourcing of raw materials i.e. cacao (from Ghana and the Ivory Coast), peanuts (from China), sugar (from Russia) is considered medium to high risk associated with risks such as child labor, OHS and significant conversion of natural habitat. KFP, as part of its procurement management procedures, verifies certifications of its existing and new suppliers in terms of quality, food safety and occupational safety systems. As per ESAP#2, KFP will (i) adopt a IFC PS2/PS6 Supply Chain Policy which will define the environmental, social and ethical responsibilities that KFP expect from its primary suppliers and include contractual clauses requiring compliance with the Supply Chain Policy; (ii) develop and implement a Supply Chain Management System and supplier evaluation program to address E&S requirements focusing on Child Labor (CL), Forced Labor (FL), OHS and biodiversity risks associated with its suppliers; and (iii) undertake annual verification audit for its primary suppliers.
PS2 Labor and Working Conditions
There are 3,111 employees with a female ratio of 47% employed by KFP group companies. AAF employs 500 workers 26% of which are females. At Bayan Sulu, there are 1,390 employees with an overall female ratio of 64% while this ratio reaches up to 66% for blue-collar and 80% for administrative personnel. There are no contractor workers at these facilities.
Human Resources Policies and Procedures: KFP has a PS2 compliant Code of Conduct and HR Policy which is applicable to all group companies and workers. The policy addresses fair and equitable wages, benefits and working conditions in line with local laws, freedom of association, anti-harassment, and prohibition of forced and child labor. In addition, BS and AAF implement their facility specific HR Policy and Code of Conduct in compliance with the corporate policy. HR Managers of the target companies report to KFP’s corporate HR Manager who oversees issues related with the HR and Code of Conduct and capacity building requirements.
Working Conditions and Terms of Employment: All employees are provided with written contracts defining workers’ rights, terms and conditions of employment including salaries, overtime, benefits, leave and working conditions in line with the Kazakhstan Labor Codes and IFC PS2 requirements. KFP group companies do not hire migrant or seasonal workers.
Workers’ Organization: There is no restriction on workers’ unionization within the company. There is a labor union at AAF company and Collective Bargaining Agreement (CBA) is formed in all group companies. The KFP Companies HR Department manages the relations with the AAF Union and CBA processes.
Non-discrimination and Equal Opportunity: KFP is committed to non-discrimination and equal opportunity through its Code of Conduct and Human Resources Policy and does not discriminate employees based on their race, gender, religion, and offers them equal opportunities. KFP will develop a corporate Gender Based Violence and Harassment (GBVH) policy to demonstrate commitment for the protection of women in the workforce. The policy will be adopted and implemented by target companies (ESAP#3).
Retrenchment: In case of future retrenchments, KFP and AAF will develop Retrenchment Policy in line with the local regulations, IFC PS2 and IFC’s Good Practice Note on Managing Retrenchment ensuring fair, transparent, and socially responsible treatment. The Policy will address, at minimum, consultation and communication with stakeholders including workers union, criteria for selection, support services, benefits and compensation, grievance mechanism, monitoring and reporting, timeline and key performance indicators (ESAP#4).
Protecting the Workforce: Both the Code of Conduct and the Human Resources Policy have provisions for the prohibition of child labor and forced labor. Furthermore, the minimum age of employment at KFP companies is 18 years.
Grievance Mechanism: Workers can address complaints to the HR Department and to their line managers directly. As per the local legislation, both target companies have a Conciliation Commission that is responsible for assessing and resolving individual labor disputes and grievances. The Conciliation Commission is formed of an equal number of employer and employee representatives. Along with structural units such as HR Department and Ethics Hotline that are responsible for identifying and preventing possible violations of Code of Conduct, KFP has assigned its Corporate Secretary as Ombudsman for resolution of disputes and conflicts. Target companies will develop and implement a formal Workers Grievance Mechanism compliant with national legislation and PS2 (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): KFP maintains an OHS management system to ensure measures remain in place on an ongoing basis while both AAF and BF obtained ISO 45001 certification in 2024. OHS committee meetings are held quarterly where facility level action plans are reviewed. In addition, OHS performance and action plan status are evaluated by the senior management during the board meetings. Within the scope of Iso 450001 certification, AAF reviewed and updated employee job descriptions and expanded responsibility areas for occupational health, industrial safety, and environmental protection. Both companies developed OHS risks assessment matrices, which is revised annually based on the results of internal OHS audits. As per Kazakh law, KFP contracts an independent firm to carry out an assessment of occupational hazards and risks identifying specific workplace hazards and associated risks once every five years at both facilities. The assessment evaluates jobs that have hazards associated with the use of chemicals, excessive noise, vibration, and possible exposure to radiation as well as engineering and administrative measures to eliminate or, where elimination is not possible, to reduce the risks to levels that can be managed so as to protect worker’s health and safety. Equipment inspections are carried out periodically as part of OHS inspections. Risk assessments are updated to reflect changing conditions at both target companies and actions are taken accordingly. Facility specific annual training and workplans are prepared and monitored regularly by the KFP E&S Manager. OHS compliance of the group companies are ensured through audits carried out by facility OHS Teams, corporate EHS manager, certification bodies and local authorities. No major non-compliance was noted based on the recent audits. All employees are provided with necessary personal protective equipment (PPE) and associated awareness trainings. As per ESAP#6, KFP will contract a third-party OHS labor audit at each subsidiary, develop, and implement a time-based corrective action plan with clear OHS programs acceptable to IFC to minimize the identified risks and to improve OHS management capacity of KFP group companies.
Workers Engaged by Third Parties: All workers involved in the companies’ operations are direct workers.
PS3 Resource Efficiency and Pollution Prevention
Resource efficiency: Both BS and AAF maintain energy management systems consistent with ISO50001. Scorecards for electricity and gas consumption, carbon emission per ton of production and water consumption are monitored against KFP’s targets and recorded in line with GIIP. AAF supplies water from three groundwater wells that are owned by the company with daily abstraction of 1,700 m3 water for production use. Bayan Sulu supplies water from the State Water Enterprise "Kostanay Su".
Greenhouse gas (GHG) emissions: KFP or group companies do not monitor GHG emissions arising from their operations. The project expansion will result in an increase in energy and accordingly GHG emissions. 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, if applicable. Quantification of GHG emissions will be conducted annually, using internationally recognized methodologies (ESAP#7).
Wastewater Management: Industrial wastewater generated at AAF site is treated via on-site wastewater treatment plant prior to discharge to Almaty Wastewater Plant. The wastewater treatment facilities are sufficient to handle the current wastewater stream. The State Environmental Authority conducts periodic sampling at the discharge point. BS wastewater is directly discharged into the city sewerage system as per existing permit. Kostanay Water Utility Company conducts monthly sampling at the discharge point to ensure compliance with the permit requirements. Both companies will continue to monitor the parameters and regularly submit the data (parameters and the corrective measures implemented in case of exceeded values) as part of annual monitoring reporting requirement to IFC.
Air Emissions: Air emissions from current operations are assessed in detail in the EIA documentation and then regularly monitored. Monitoring results for 2024 are compliant with the relevant provisions of the WBG EHS Guidelines. In line with local regulatory requirements and IFC EHS guidelines, KFP follows the recommendations, and monitors emissions to make sure those are within the admissible limits calculated for the facilities. These measures are accounted for in the company’s action plans and regularly reported internally and to the local authorities.
Waste Management: Waste types generated at AAF and BS consist of recyclable waste (e.g., plastic, cardboard, pallet, ingredient barrel, bags, can), non-recyclable waste (e.g., waste vegetable oil), hazardous waste (e.g., residual oil, wastewater treatment sludge) and food waste. KFP implements Waste Management Plans at all sites, aligned with its Environmental Policy, GIIP and IFC EHS Guidelines. The waste management plans identify hazardous and non-hazardous waste streams; quantities; management measures, monitoring / reporting requirements and final disposal facilities for each waste stream. Contracts with specialized companies are in place for collection, reuse, processing and treatment of waste streams.
Storage of Hazardous Materials: Small quantity of chemicals such as water treatment chemicals, oil/lubricant and laboratory reagents are used at the facilities. All chemicals are stored in dedicated storage areas with proper conditions and signs. Hazardous waste is discarded in special containers with secondary containment for collection by specialized companies.
Pesticide Use and Management: Both AAF and BS obtain regular pest control services from licensed service providers in line with ISO 22000 requirements.
PS4: Community Health, Safety and Security
Community Health and Safety: KFP’s facilities are in industrial areas far from communities posing minimal negative impacts. At AAF and BS facilities, fire safety audits verifying local regulatory compliance in terms of fire safety measures and systems are conducted by accredited third parties on behalf of the Ministry of Internal Affairs Fire Fighting Department. Quarterly 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 expansion units.
Food Safety: Both AAf and BS hold ISO 22001 (Food Safety Management System) certification in place and there are assigned a Product Quality and Food Safety Manager as well as Food Safety Experts and Technicians. Quality and Food Safety controls are carried out within the raw and pack material finish product laboratories at each facility.
Security Management: The companies employ their own unarmed security personnel. Background verification of security personnel is carried out through the internal affairs authorities.
