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
Environment and Social Management Systems: Dreame has established an Environmental, Health and Safety (EHS) management system and integrated it into its operations in China. The Company has developed an overarching Quality, Environmental and Safety Management Manual (the QES Manual), supported by a series of management guidelines and procedures covering key elements of EHS management as detailed in this section.
In addition, Dreame’s R&D center and three of its four factories in Suzhou have obtained ISO14001-2015 certificates for environmental management systems and ISO45001-2018 certificates for OHS management systems. These certificates are valid until October 2026.
However, the Company’s EHS management system will be improved in its social components and expanded to cover overseas operations as further discussed in this document.
Policy: Dreame is developing an Environmental, Social and Governance (ESG) policy but has not yet published it. As per ESAP #1, the Company will finalize and publish a policy commitment regarding environmental, health, safety and social (EHSS) matters in line with IFC PS requirements.
Identification of E&S Risks and Impacts: Under the overarching QES Manual, procedures for identifying, assessing and managing environmental and safety risks and impacts have been developed. The Company has specifically prepared a checklist as a main EHS management tool for factories based on the above-mentioned procedures. The checklist identifies key risks related to the EHS management system, production safety, occupational health, life and fire safety (L&FS), transport safety, pollution prevention and environmental protection, and emergency response. However, the EHS checklist does not cover R&D and retail activities. In addition, social risks and impacts, especially those potentially affecting communities, are not included in this tool.
As the Company builds up its business in Southeast Asia, Dreame will update the tool for identifying EHSS risks and impacts associated with the supply chain including the OEM, R&D centers, distribution channels and retail shops in the Target Countries as per ESAP #2. The updated tool should consider contextual risks in each Target Country.
Management Programs: At the Company level, a series of management guidelines and procedures have been developed under the QES Manual, covering OHS, pollution control, change management, fire safety, EPR, chemical management, construction and production safety, third-party and supplier management, and regulatory compliance. However, they are insufficient for managing potential risks associated with third-party and suppliers in the target countries, as discussed below.
Each of Dreame’s factories has established management programs that include manuals, standard operating procedures, training programs, OHS manuals, auditing, monitoring, and reporting mechanisms.
For non-production activities, such as R&D and retail, the Company has focused the management efforts on fire and electrical safety, regulatory compliance and office-area safety. However, these practices have not been formally incorporated into the written management system. As part of ESAP #2, the Company will develop management procedures specific for R&D centers and retail shops in the Target Countries.
Dreame has established contractor and supplier management procedures. The Company signs an “Environmental Protection and Safety Agreement” with contractors or suppliers which outlines general requirements for compliance with local legislation, pollution control, hazard prevention, risk control and safety management. For contractor management, Dreame reviews the bidders’ past performance and focuses on on-site management of selected contractors. As per ESAP #3, the Company will strengthen contractor management in line with IFC PS requirements by integrating EHSS criteria into the contracts (as detailed in the PS2 and PS4 sections); developing a Contractor Code of Conduct (CoC) and including it in the contractor contracts; and establishing regular supervision and inspection procedures tailored to different types of contractors in the Target Countries.
For supply chain management, the Company has established a procurement framework for selecting new suppliers and evaluating existing ones on an annual basis including overseas suppliers such as the OEM. This framework includes general EHS-related criteria such as regulatory compliance on fire safety, environmental permitting, environmental, OHS and labor management. As per ESAP #4, the Company will update the supply chain management system in line with IFC PS requirements by enhancing the EHSS evaluation criteria, as further discussed in the PS2 section. For the OEM in Vietnam, as per ESAP #5, the Company will apply the management programs implemented in Dreame’s Suzhou factories to the OEM’s production lines, to the extent that Dreame has influence.
Organizational Capacity and Competency: Dreame’s EHS Manager is responsible for the overall EHS management at the Company level, supported by a team of EHS personnel, including four production line EHS heads, factory EHS heads and EHS engineers for non-production operations at office areas. The EHS team has established and maintains the Company’s EHS management system, including integrating EHS into supply chain and contractor management. In addition, the Company has an EHS committee at the corporate level, led by the CEO, overseeing the work of the EHS team.
The Company’s EHS personnel have the knowledge, skills, and experience necessary to perform their roles. Each factory develops training programs, providing general and specialized EHS training for new and existing workers.
However, the EHS responsibilities for overseas non-production activities at R&D centers and retail shops are not clearly defined and no EHS training is planned for non-production personnel. As part of ESAP #2, the Company will assign personnel responsible for EHSS in the Target Countries and provide them with training, including host country's regulatory requirements.
Emergency Preparedness and Response: Dreame has established EPR procedures, tailored separately for production and non-production activities respectively, which are aligned with PS1 requirements. Each factory has its own EPR plan. As part of ESAP #5, the Company will review the adequacy of the Vietnam OEM’s EPR and, if any gaps are identified, apply the EPR practices in its Suzhou factories to the OEM factory.
Monitoring and Review: Dreame has established mechanisms to review its EHS management systems, including annual internal review, change review and external audits by third parties. These review mechanisms also include the development of corrective action plans, follow-up and verification by the EHS team. Dreame’s factories submit monthly EHS reports, which are consolidated at the production line level and then at the Company level. The EHS committee reviews the Company’s monthly EHS report and discusses major EHS matters at its monthly meetings. As part of ESAP #2, the Company will establish an EHSS reporting mechanism for the supply chain, R&D centers and retail shops in the Target Countries.
PS2: Labor and Working Conditions
Dreame has operated with a total of over 4,000 employees, of which approximately 20 are designated for Southeast Asia. With Dreame’s growth plan in the region, the regional workforce is expected to grow to approximately 120 over the next 2–3 years. This growth will be driven by the recruitment of additional staff for newly established R&D centres and retail shops in the Target Countries.
Human Resources Policies and Procedures: Dreame’s HR policy on working and living conditions, terms of employment, non-discrimination and no child/forced labor, overtime, and wages and benefits complies with regulatory requirements and are consistent with IFC PS2 requirements. HR information is provided in the form of an employee handbook at the time of induction.
Workers’ Organization: A workers’ union (the Union) has been established at Dreame in compliance with relevant Chinese labor laws. In accordance with the laws, the Union represents all Dreame employees collectively. The Union provides an additional channel through which employee issues or grievances can be presented to the management. At the time of IFC’s appraisal, no outstanding issues or grievances were reported nor identified.
Non-discrimination and Equal Opportunity: Dreame’s HR policy specifies non-discrimination and equal opportunity. All the hiring and promotion are merit-based. There is no difference in terms of salary for female and male employees with the same experience. Currently, 70% of the Company’s employees in Target Countries are male. With the planned establishment of flagship shops, the proportion of female employees is expected to increase to approximately 50%.
Retrenchment: The Company has not undertaken any retrenchment to date; and no retrenchment is anticipated in the foreseeable future. In line with its ongoing growth trajectory, the need for additional employees continues to rise.
Grievance Mechanism (GM): Dreame has implemented a Company-wide whistle-blowing policy and a multi-channel grievance mechanism, handled by the HR team, comprising physical drop boxes, an online platform (including WeChat and a designated website), and face-to-face meetings for raising concerns. Anonymous reporting channels are provided to protect the identity of complainants. No open GBVH-related cases were pending at the time of IFC appraisal. Moving forward, the Company will designate competent personnel to specifically handle matters related to GBVH, in line with IFC PS2 requirements to achieve a complainant-centric approach with full confidentiality as per ESAP #6.
Protecting the workforce. The Company does not employ workers under the age of 18. As part of the hiring process, Dreame’s HR team verifies birth certificates and, where applicable, school records to confirm age eligibility. No forced labor practices are used within the Company’s operations.
Occupational Health and Safety (OHS): As noted above, Dreame has implemented a documented OHS management system certified to ISO 45001:2018 and has appointed appropriate safety personnel.
The safety team in each factory carries out regular internal safety inspections and monitors and reports on various safety performance aspects monthly. The Company has also established an incident/accident investigation procedure. However, the current reporting system does not capture key OHS indicators such as lost-time injuries, first-aid cases or near misses and does not include reporting from its overseas activities.
Dreame’s contractor management focuses on construction safety and on-site supervision; however, OHS reporting does not include contractors’ performance. As per ESAP #7, the Company will include statistics on lost-time injuries, first-aid cases and near misses as well as contractors’ safety performance in the Target Countries into its EHSS reporting.
Workers Engaged by Third Parties: The Company will engage third parties for interior settings for new R&D centers and retail shops and for transporting components and products to and from the OEM factory. As per ESAP #3, the Company will incorporate national and PS2 requirements on labor and working conditions and a contractor CoC into contractor contracts, and, particularly where migrant workers are involved, require that the hiring process complies with applicable legislation and PS2 requirements, and establish regular inspection and reporting procedures.
Supply Chain: According to Dreame’s procurement framework, the Company evaluates new and existing suppliers including the OEM and their suppliers, using HR-related criteria. These criteria require compliance with host country’s national labor laws and regulations and address employment contracts, working hours, salary and benefits, overtime work and pay, internal grievance and complaint channels, and workers’ accommodation and cafeteria facilities.
However, the current criteria need to be further aligned with IFC PS2 requirements to explicitly include prohibition of the use of forced labor and child labor, and the provision of safe working conditions. As per ESAP #4, the Company will enhance its supply chain management system by incorporating evaluation criteria that specifically address forced labor and child labor, suppliers’ accident history, and significant safety risks in the working environment. The Company will also develop a Supplier CoC and include it in supplier contracts.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency: Electricity is the only major resource required for Dreame's R&D centers and retail shops. The Company sources 100% of its electricity from the public grid. Water consumption is limited to domestic purposes in offices, R&D centers and retail shops, and is supplied through the municipal network. Dreame has identified energy efficiency and water-use efficiency as Company-wide KPIs to support water resource protection and reduce carbon emissions. Each entity or department of the Company reports on these KPIs which are reviewed at the annual Company management meetings.
Greenhouse Gas (GHG) Emissions: Dreame ’s GHG emissions originate from the electricity consumption at the R&D centers and the retail shops. The estimated average emissions of the Project are about 109 tCO2/year. The Company will report the GHG emissions of its operations in the Target Countries annually.
Pollution Prevention: The Company’s operations generate domestic wastewater and solid waste from the R&D offices and retail shops. The Company’s EHS management system includes a checklist, management and monitoring procedures and KPIs for domestic wastewater and waste management. Wastes are segregated and stored in accordance with regulations which are aligned with PS3. Licensed third-party vendors collect, transport and dispose of the waste.
PS4: Community Health, Safety and Security
Life and fire safety at retail shops: Dreame’s EHS management system emphasizes compliance with fire safety legislations, implementation of fire safety measures, and the provision of relevant training and drills.
In the Target Countries, the Company typically leases retail spaces in existing shopping malls from mall owners. Prior to signing of a leasing contract, the Company verifies the validity of the mall’s life and fire safety (L&FS) permit. If renovation work is required in the leased space, Dreame will engage a contractor who is responsible for ensuring compliance with all L&FS requirements. These requirements will be specified in the contractor agreement.
Traffic Impacts and Transportation Safety: Dreame engages fleet vendors to transport components and products. Although the OEM factory is located in industrial areas away from communities, fleet operations may increase traffic congestion and raise the risk of accidents on community roadways.
The Company manages fleet vendors under its contractor management system. However, the traffic impact and transportation safety requirements are not currently included in vendor contracts. As per ESAP #3, the Company will evaluate vehicle fleet vendors’ performance on traffic safety, incorporate traffic management requirements, particularly those related to safety, into vendor contracts, and establish regular inspection and reporting procedures for traffic-related accidents.
Security Personnel: The Company will not use any security personnel in its operations in the Target Countries.
