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
TTI has implemented an Environmental and Social Management System (“ESMS”) that aligns with the IFC Performance Standards. This system ensures effective management of environmental and social risks, encompassing policy and management programs, organizational capacity, and monitoring mechanisms. The ESMS, procedures and activities described below, and corresponding day to day practices are adopted at all operating TTI’s facilities in Viet Nam, and the same will be implemented at the greenfield plant financed by IFC.
Identification of Risks and Impacts:
As per Viet Nam’s environmental permitting requirements, and as per the Company’s Corporate Standard Operating Procedure (“SOP”) on identification of E&S risks and impacts, TTI has commissioned a qualified third-party institute to undertake the Project facility’s environmental impact assessments (“EIA”), leading to an approved Environmental Permit (“EP”), as well as OHS and L&FS approvals on the Project facility from the authorities. TTI’s operating factories in Viet Nam have also obtained regulatory approval of facility EIAs, the required EPs, and OHS and L&FS approvals. The Company regularly monitors compliance status at its operating facilities in Viet Nam to verify ongoing conformance with approval conditions.
Policy and Management Programs:
Under each global BU of TTI, the Company’s ESMS at the Corporate level comprises key elements and documentation as follows: (a) the Environmental Manual (developed by TTI to be consistent with ISO 14001:2015 environmental management and ISO 45001 OHS management system requirements and which is designed based on principles of the 5S and Kaizen Total Productivity Systems); (b) the Group level Safety and Responsibility Policy; (c) Environmental, Health, and Safety (“EHS”) and OHS SOPs; (d) EHS/OHS objectives, key performance indicators (“KPI”), and KPI targets; (e) performance monitoring and corrective action implementation procedures and mechanisms; (f) and roles and responsibilities of E&S teams, team members, and their reporting relationships.
The above ESMS elements and functions cover key EHS/OHS risks and required mitigation measures prevalent in the sector in which the Company operates and are regularly reviewed and updated at TTI to align with evolving regulatory requirements in countries where TTI operates. IFC’s review found the ESMS to be consistent with Good International Industry Practice (GIIP). TTI facilities in Viet Nam are required to adapt the corporate level policy and manual, and develop finetuned EHS/OHS SOPs which reflect local conditions and regulatory requirements, which are then submitted to TTI headquarters for review and clearance. As per ESAP 1-PS1, the Company will develop an EHS/OHS operating manual applicable to construction and operational activities of the Greenfield Project facility(s) within Saigon High-Tech Park (and in the broader Ho Chi Minh City and Dong Nai province areas) which will utilize IFC’s SLB proceeds.
Organizational Capacity:
TTI Board supervises and endorses sustainability strategies, objectives, and targets through the ESG Executive Committee. The ESG Working Committee, in collaboration with TTI global EHS teams and EMS committees, drives the development, execution, and awareness of TTI employee training programs. Within each BU, designated sustainability leaders take on key responsibilities. These roles may include an environmental leader focused on overseeing Key Performance Indicators (KPIs) and decarbonization efforts, or a social leader dedicated to enhancing community relations and monitoring social KPIs related to diversity, health and safety, and employee metrics. At the BU level, these leaders actively assess, review, and monitor climate-related concerns as part of the ESG Working Committee.
At TTI’s facilities in Viet Nam (including the greenfield Project facility to be financed by IFC), each functional department (e.g. production department; facility EHS/OHS department; equipment maintenance and energy/water efficiencies; etc) has annually assigned EHS/OHS KPIs and staff with corresponding responsibilities who carry out EHS/OHS related tasks (e.g. OHS site inspections). They report monthly performance data to the head of facility, whose office in turn compiles and reports summary EHS/OHS performance information to the corporate EHS department.
In addition to such line reporting, EHS/OHS officers at facility-level functional departments also interact with headquarters’ EHS team members to seek technical guidance, with the latter supervising their work directly through phone conferences, document reviews, and internal site audits. The OHS teams at each TTI’s facility in Viet Nam are supported by a team of site-based nurses who attend to any potential first aid OHS cases. All TTI’s employees in Viet Nam, including part-time staff and contractor staff, receive onboarding and refresher training (both classroom-based and on-site risk-scenario based modules) on the local regulatory and TTI’s facility- and corporate-level EHS/OHS requirements. All training sessions end with written tests to ensure knowledge uptake. Toolbox meetings are held every morning at each facility to discuss daily operational and EHS/OHS targets and requirements.
Monitoring and Reporting:
TTI uses various tools and procedures to monitor the effectiveness of its ESMS programs. At each BU, the EHS/OHS team, along with the EHS/OHS Committee, ensures compliance with in-country E&S legal requirements and TTI corporate requirements, by conducting 1-2 announced and unannounced internal site audits per year of a sample of the Company’s global facilities (including those in Viet Nam). Any non-compliances or deviations from KPI targets lead to time-bound requirements at a facility to take corrective actions and report on implementation status to the BU corporate EHS team.
In day-to-day operations, TTI’s facilities in Viet Nam regularly collect and monitor data on waste generation and disposal and conduct regular audits to ensure compliance with local regulations and TTI’s corporate level ESMS requirements, which are consistent with GIIP. As per its corporate level SOP, based on audit findings, the Company updates its ESMS (i.e. SOPs, work instructions, etc.) to ensure the ESMS adheres to audit recommendations.
OHS guidelines are in place for monitoring health and safety violations and implementing corrective action plans as per annually established OHS KPI targets. Quarterly meetings are held to address concerns and take action to improve working conditions for employees. Complaints, if any, are monitored and addressed through a whistleblower process and internal audits. TTI monitors and reports its Scope 1, 2, and 3 GHG emissions, and discloses environmental and climate-related performance information through CDP and other reporting frameworks.
Emergency Preparedness and Response (“EPR”):
Each TTI’s facility in Viet Nam implements the EPR plans (“EPRP”), which begin with comprehensive risk assessments of potential emergency scenarios at each facility location, with clearly defined roles and responsibilities including EPR chains of command to manage each identified emergency scenario should they transpire. At TTI’s factories in Viet Nam, scenario-based drills are conducted biannually, with one drill taking place during the day shift and another during the night shift. L&FS drills are carried out jointly with local fire brigades.
Supply chain management:
All TTI suppliers are required to comply with the relevant laws and regulations in their jurisdictions, such as minimum wage requirements, and with TTI’s standards and policies, such as anti-corruption policy, and policies related to unethical labor practices. TTI expects their suppliers to have policies that align with ISO standards. Suppliers are required to demonstrate that they possess functional and adequate EHS/OHS management systems and relevant certifications.
At the headquarters BU level, TTI implements a Social and Environmental Responsibility (“SER”) Compliance and Auditing Program to monitor the E&S performance of suppliers. The SER assessments cover a variety of subjects, including OHS, prohibition of child and unethical labor practices, ethics and integrity, and environmental protection, with an emphasis on human rights protection, and these requirements are included in procurement contracts signed with suppliers. Suppliers are subject to audits, conducted either by TTI’s internal audit teams (from the U.S. headquarters and by regional supply chain audit team of TTI Viet Nam based in Ho Chi Minh City) or by qualified external third-party auditors engaged by TTI and/or by TTI’s global customers, every 12 to 18 months to verify ongoing compliance. Suppliers with non-compliances are required to develop and demonstrate implementation of Corrective Action Plans (“CAP”) and are subject to more frequent audits and additional training requirements.
PS 2 – Labor and Working Conditions
TTI implements policies aligned with principles of the International Labour Organization (“ILO”) and requirements of IFC PS2. This ensures compliance with both national and the Company’s corporate HR requirements including those on human rights, recruitment, working hours, wages and benefits, health and safety standards across all its facilities.
Working Conditions, Human Resources Policies, and Management of Worker Relationships:
As of the end of 2023, TTI employed 42,846 people worldwide. IFC visited four facilities in Viet Nam, with headcounts of approximately 2,200, 500, 3,880, and 2,130 respectively. Most workers and staff are locally hired and reside in local residential areas away from industrial parks. The male-to-female ratio is about 7:3, reflecting talent availability in the sector in Viet Nam in which TTI operated. During the peak construction period of the greenfield Project, up to 500 construction workers are expected on site, and after commissioning and when operating at full capacity, up to 3,000 full-time staff are expected.
TTI’s headquarters HR policies are aligned with the International Labour Organization’s core labor standards and related norms, and each facility adopts these policies and make adjustments to ensure that they also comply with local labor laws. TTI HR policies include those related to promoting fair labor treatment, equal opportunities, non-discrimination, respect for fundamental human rights, prohibition of unethical labor practices, and anti-harassment and anti-gender-based-violence requirements. IFC’s review finds TTI HR policies and practices (e.g. working hours and overtime hours) to be consistent with IFC PS2 requirements. All staff sign an employment contract with TTI whose terms comply with national labor regulations and TTI corporate HR requirements.
TTI’s facilities in Viet Nam also engage third party labor agencies to supply additional frontline workers during peak business seasons. At the agency screening/selection stage and during ongoing interactions with selected agencies, the Company’s HR department closely monitors their labor practices (e.g. through random interviews with workers dispatched to TTI’s facilities in Viet Nam to work) to ensure their compliance with the Viet Nam labor laws and TTI corporate HR requirements. Seasonal workers enjoy the same terms of employment as direct hires and have full access to TTI’s employee grievance redress channels and mechanisms.
Workers’ Organizations and Grievance Mechanisms:
TTI’s facilities in Viet Nam adhere to the principles of freedom of association in compliance with local regulations and TTI corporate HR requirements. Most staff are members of the labor union at TTI’s facilities in Viet Nam with membership being completely voluntary. Labor union secretariat members are appointed through elections by all staff, and labor union worker representatives engage in regular discussions and negotiations with HR and heads of facility on worker rights and topics related to wages, benefits, working hours, safety protocols, and other aspects of employment terms.
TTI has implemented a Complaint Resolution Policy and Procedure. The Company encourages any individual to report any action, situation, or circumstance that appears to be in violation of the Company’s Code of Conduct or any local laws. Complaints and suggestions can be submitted either non-anonymously or anonymously, via a telephone hotline, by email to HR or directly to the head of each facility, or through suggestion boxes placed inside the factories. The HR department also regularly conducts employee interviews and anonymous and non-anonymous satisfaction surveys to understand staff views. No labor litigations transpired in the past 2 years at TTI’s facilities in Viet Nam. Grievance logs and records are maintained by the HR department.
Occupational Health and Safety (OHS):
At each facility’s pre-commissioning stage, TTI conducts thorough hazard point identification and risk rating assessments to identify and mitigate workplace hazards and risks, with a matrix of preventative and mitigative actions developed to address risks specific to each risk point throughout the production floor. During operational stage, regular inspections and risk assessments by assigned staff OHS inspectors are conducted to ensure compliance, and that any corrective actions, if needed, have been implemented promptly.
TTI’s EHS and occupational hazard management procedures adhere to all applicable legal requirements in Viet Nam and align with the ISO 45001 standard. Workers receive training on safety protocols, receive workstation specific OHS work instructions, including the proper handling of hazardous materials and first aid, Cardiopulmonary Resuscitation (“CPR”), and firefighting where relevant. All staff undergo pre-assignment and subsequent annual health checkups, with checkup content reflecting specific risks they face in their workstations.
TTI monitors and reports both leading and lagging health and safety indicators. The LTIFR (number of incidents/200,000 hours worked) for TTI global entities in 2023 was 0.81, achieving the pre-set KPI target of less than 1 and which was significantly below the 2023 US electrical equipment manufacturing industry benchmark of 2.2, as per the US Bureau of Labor Statistics. All incidents, should they transpire, undergo thorough investigation, with preventive and corrective actions taken to prevent recurrence. No Loss Time Accidents (“LTAs”) were reported at TTI’s factories in Viet Nam in 2024, which track near-misses to serve as an early detection of potential signs of LTAs.
PS 3 – Resource Efficiency and Pollution Prevention
TTI's resource efficiency and pollution control measures comply with Vietnamese national regulations and align with IFC Performance Standard 3. TTI has adopted various good industry practices to enhance energy and water efficiencies, reduce greenhouse gas emissions, and manage waste, wastewater and air emission effectively.
Energy and Water Efficiencies and Greenhouse Gas (“GHG”) Emissions:
Electricity comprises approximately two-thirds of the energy consumption necessary to power TTI’s global facilities, with the remaining energy derived from other fuels such as natural gas. All TTI’s facilities in Viet Nam (including the greenfield Project facility) consume only grid electricity and no other fuel/energy sources (except the Hand tools factory located at Dau Giay Industrial Park which consume small amounts of natural gas) and also limited quantities of water (mainly for sanitary rather than production purposes) given the assembly-oriented nature of factory operations.
TTI conducts energy assessments at global facilities and implements energy reduction action plans, aiming to decrease energy consumption and enhance overall energy efficiency across their operations. In 2023, TTI's total energy consumption was about 520,000 MWh, with 19% procured from renewable energy sources. The greenfield facility is estimated to consume about 8,560,000 kWh of grid electricity per year once operational.
In 2023, TTI reported a total of 171,984 tonnes of CO2 equivalent of total Scope 1 and 2 GHG emissions (based on audit results by a qualified third-party auditing firm conforming with ISO16064 requirements), achieving an 8% reduction in GHG emissions intensity and a 4% reduction in absolute GHG emissions relative to 2021 levels. TTI has set a goal to continue reducing its global Scope 1 and Scope 2 GHG emissions by the year 2030. The greenfield facility, at full operating capacity, is expected to have a combined GHG Scope 1 and 2 footprint of 3,260 tCO2e. The Company will explore financially and technically feasible options (e.g. rationalization of production schedules) to continue reducing GHG emissions at its Vietnamese facilities including at the greenfield Project facility.
Pollution Prevention (Air Emissions, Wastewater)
TTI’s facilities in Viet Nam primarily assemble components to manufacture finished electrical equipment. The only process that produces air emissions is soldering, which generates limited amounts of Volatile Organic Compounds (VOCs) and dust. These are collected using induced hoods and treated with HEPA filters and activated carbon before being released into the atmosphere.
The wastewater generated at TTI’s facilities in Viet Nam are primarily from sanitary sources, and there is minimal process wastewater. All wastewater undergoes initial treatment at the in-house wastewater treatment plant, which includes equalization, anoxic, biological anaerobic treatment, deposition, and disinfection treatment stages before being directed to the industrial park’s centralized wastewater treatment plant for further processing to meet national discharge standards.
Pollution Prevention (Hazardous and Non-hazardous Materials and Wastes):
TTI collects and monitors waste-related data regularly and conducts internal audits, working with third-party auditors to review solid waste management practices. In 2023, TTI generated 65,331 tonnes of non-hazardous waste and 1,558 tonnes of hazardous waste globally, increasing by 4% and 21% from 2022 due to production expansion. In 2023, the Company globally recycled 80% of non-hazardous solid wastes, sent 14% to landfill, combusted 5.3% for energy, and composted 0.7%. TTI operations, including those in Viet Nam, use/generate limited types and quantities of hazardous materials/hazardous wastes. Of the limited hazardous wastes generated, globally, 49% was recycled, 42% was sent to landfill, and 8% was combusted for energy.
TTI globally has a set a goal to continue reducing the amount of non-hazardous solid wastes going to landfills by 2030, by continually exploring recycling and waste-minimization options, particularly in relation to packaging materials. By 2023, TTI globally has reduced the amount of solid wastes going to landfills by 85% compared to 2021 levels.
PS 4 – Community Health, Safety and Security
All TTI facilities in Viet Nam are situated within industrial parks, on average at least 1km away from residential areas. Additionally, the use of chemicals and fuels is very limited, which minimizes the risk of fire, explosion, and spills impacting nearby communities. These facilities employ non-armed security guards to secure Company premises, who are bound by TTI global codes of conduct in discharging their duties, which as per IFC’s review are consistent with PS4 requirements. There have been no known security incidents at TTI’s facilities in Viet Nam in the past 2 years.
TTI’s Corporate Chemical Management Standard Operating Procedure defines the roles of departments and staff in safely handling chemicals, covering purchasing, transportation, storage, disposal, and usage of hazardous and non-hazardous substances. It also includes emergency response for leaks, contamination, or fire, and what essential information must be presented on material safety data sheets. As described under PS1 section, TTI’s facilities in Viet Nam carry out regular scenario-based EPR drills in concert with local fire brigades and as per TTI Corporate level EPR requirements.
