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
Environmental and Social Assessment and Management System: CoJ operates under an ESMS aligned with the requirements and objectives of IFC PS1 and the national legislative framework, including the National Environmental Management Act (NEMA) and National Water Act (NWA). As a component of IFC's previous investment, and with the technical assistance support of a European development finance institution, CoJ developed a comprehensive ESMS Manual (Rev. 0), which was presented to Council. At its meeting of 30/31 March 2026, Council formally noted the development and implementation of the ESMS Manual, as well as the associated implementation and reporting requirements linked to the ESMS and to DFI-financed capital investment projects.
To further strengthen its institutional framework, the ESMS is currently undergoing additional enhancements (Draft Rev. 3, February 2026). These enhancements introduce qualification and core competency requirements for E&S roles within the CoJ, an annual ESMS self-assessment tool, a centralized ESMS KPI Dashboard, and standardized management templates for high-risk operational impacts, including labor, traffic, and community health and safety.
Within the EISD, the ESMS framework delineates two functional pillars: a Compliance Monitoring and Enforcement unit responsible for regulatory oversight, site inspections, and environmental authorization advisory services; and a newly formalized ESG Compliance & Reporting unit responsible for the day-to-day administration of the ESMS, including E&S screening of new investments, maintenance of legal and document registers, and internal system audits across the City's municipal entities.
Johannesburg Water has developed an E&S Management Plan (ESMP) that will apply to the project and is generally aligned with PS1 requirements; contractors and sub-contractors are required to adopt and apply the ESMP. The ESMP defines roles and responsibilities, monitoring and reporting, contractor requirements, and training. The effective implementation of this ESMP by Johannesburg Water is the primary mechanism for managing contractor occupational health and safety (OHS), community safety, and operational risks across the project's brownfield scope.
Identification of Risks and Impacts: CoJ's identification of risks and impacts at a project level is governed by the ESMS Manual (December 2025). The February 2026 ESMS enhancements introduce a formalized two-step E&S screening process (Concept and Project E&S Screening) for capital expenditure projects. Undertaken by the EISD ESG team, this process utilizes desktop GIS, national environmental screening tools, and site inspections to evaluate physical, biological, social, occupational health and safety (OHS), and climate-related risks. Screening determines an activity’s risk categorization and whether it triggers listed activities requiring a Basic Assessment (BA) or a full Scoping and Environmental Impact Assessment (EIA) under NEMA regulations.
As noted above, the project scope is confined exclusively to brownfield and rehabilitation works within the existing footprints of operational municipal water infrastructure, road reserves, and servitudes. The legally binding Use of Proceeds exclusion framework will ensure that any activity encroaching on natural or critical habitats, resulting in physical or economic displacement, or triggering a full Scoping and EIA process under NEMA is ineligible for financing. The permitted scope is therefore limited to activities that either do not trigger NEMA listed activities or require, at most, a routine Basic Assessment.
While E&S risks are anticipated to be site-specific and largely reversible, the widespread linear nature of the pipe replacement program presents operational risks that require continuous identification and management. These include contractor OHS, community safety, traffic disruptions, and the handling and disposal of hazardous waste, including existing asbestos cement pipes. These risks will be managed through the implementation of site-specific Environmental Management Program reports (EMPrs) developed by contractors.
Organizational Capacity: CoJ comprises 13 municipal entities (e.g., City Power, Johannesburg Water, Metrobus, Social Housing) and 22 administrative departments. While day-to-day oversight of the project will fall under Johannesburg Water and its dedicated Safety, Health, Environment and Quality (SHEQ) resources, the overall management, coordination, and enforcement of E&S risks and impacts sits within the Environment and Infrastructure Services Department (EISD).
An independent audit of the City's E&S management conducted in February 2024 confirmed that CoJ possesses the institutional knowledge and procedures to manage E&S risks across its operations. The audit also identified opportunities to strengthen internal capacity, particularly with respect to linkages between EISD and municipal entities, role definition, and staffing levels within the EISD Compliance Monitoring and Enforcement unit, where seven (7) of fourteen (14) approved Senior Specialist positions are currently filled. These findings are formally acknowledged in the ESMS Manual, which establishes a structured governance framework to address them.
In accordance with the ESMS Manual, CoJ will formalize its E&S governance structure through the appointment of a dedicated Head (Deputy Director): ESG Compliance & Reporting within EISD, supported by a multidisciplinary team of ESG Senior Specialists, and the nomination of at least one ESG Representative/Focal Point within each municipal entity, including Johannesburg Water. To maintain the integrity of the existing Compliance Monitoring and Enforcement function during this transition, CoJ will concurrently backfill environmental officer vacancies within both Johannesburg Water and the EISD Compliance Monitoring and Enforcement unit (see ESAP #1). To support field oversight and auditing of the project (in the due diligence, construction and operational phases) and until the City has operationalized the internal E&S capacity structure (see ESAP #1), the City will appoint an external E&S support consultant (see ESAP #2). These services will be retained for a period of three years, or until all internal E&S roles mandated under ESAP #1 have been filled and operationalized, whichever occurs earlier. The consultant's scope will include quarterly monitoring of ESMS implementation, field auditing of works, and an ongoing capacity-building and training program for City E&S staff (see ESAP #2).
Emergency Preparedness and Response: In accordance with the Disaster Management Act, CoJ has developed a Disaster Management Plan within its Integrated Development Plan (IDP) to coordinate responses to macro-level hazards such as flooding and fires, with the City's Disaster Management Centre guiding municipal entities in disaster risk reduction. At the project level, emergency preparedness is managed at the site level. In alignment with the ESMS Manual, Johannesburg Water's ESMP requires contractors to develop and implement site-specific Emergency Preparedness and Response Plans (EPRPs) addressing operational emergencies, including confined space incidents, utility strikes, hazardous material spills, and worker security threats.
Monitoring and Review: Monitoring activities operate at two complementary levels. At the City level, the February 2026 ESMS enhancements introduce an annual ESMS Self-Assessment tool and a centralized ESMS KPI Dashboard to evaluate overall system maturity and institutional E&S performance. At the operational level, the ESMS requires municipal entities to define project-level E&S performance indicators to track contractor compliance during routine site inspections.
As the permitted scope of the project is confined to brownfield activities that do not trigger environmental authorization requirements under NEMA, statutory independent audit obligations do not apply. Primary responsibility for ongoing field oversight of contractors across the pipe replacement, metering, and reservoir sites therefore rests with the City. As defined above, the City will operationalize a dedicated internal E&S capacity structure (see ESAP #1), supported during the transition period by an external E&S consultant for field auditing and capacity building (see ESAP #2). Overall project E&S performance, including contractor compliance, incident logs, and grievance tracking, will be consolidated by the City and submitted to IFC through a customized Annual Monitoring Report (AMR).
PS 2: Labor and Working Conditions
CoJ currently employs over 41,000 workers across its 22 administrative departments and 13 municipal entities, of whom 89.5% are directly employed on a permanent basis. The balance includes workers employed through the government's Expanded Public Works Program (EPWP), interns, temporary workers, and apprentices. Human resources (HR) within the City are managed through Group Human Capital Management (GHCM), which forms part of the Group Corporate and Shared Services (GCSS) directorate. GHCM manages employee assessment, performance management, compensation and benefits, labor and trade union relations, and employee safety, welfare, and health, and oversees compliance with applicable labor legislation including the Basic Conditions of Employment Act, Employment Equity Act, Skills Development Act, Labour Relations Act, and respective Collective Bargaining Agreements (CBAs). While CoJ manages a substantial internal workforce, construction of the physical works associated with the project will rely predominantly on third-party contractors procured through Johannesburg Water.
Human Resources Policies and Procedures: CoJ has developed and implemented a suite of GHCM policy frameworks, aligned with IFC PS2, covering remuneration, talent acquisition, disability management, employment equity, anti-harassment, and leave, which municipal entities are expected to adopt. GHCM has also developed an overarching People Centric Strategy governing its approach to labor and working conditions. As the project's physical works will be executed predominantly by third-party contractors, the primary mechanism for managing HR risks at the project level is the ESMS Manual. The February 2026 ESMS enhancements introduce specific Contractor Management Guidance, which mandates the development of a Framework Contractor Environmental and Social Management Plan (C-ESMP) and a Code of Conduct addressing Gender-Based Violence (GBV) and Sexual Exploitation, Abuse, and Harassment (SEA/SH) for all third-party implementers. These instruments are aligned with PS2 requirements for the management of contracted labor.
Labor and Working Conditions: Labour and working conditions within CoJ are managed in accordance with South African labor legislation, including the Labour Relations Act, Basic Conditions of Employment Act, Employment Equity Act, and OHS Act. The existing Collective Bargaining Agreement (CBA), originally signed in 2015 and extended to date, remains in force and defines labor and working conditions for municipal workers, covering housing allowances, severance pay, hours of work, leave, benefits, and medical aid, consistent with PS2 requirements. Workers are provided with written contracts upon commencement of employment in accordance with the Basic Conditions of Employment Act. IFC's appraisal did not identify any labor compliance concerns or large-scale retrenchments within the City over the preceding two years.
As the project's construction workforce will consist predominantly of contractor personnel, the primary mechanism for managing labor conditions at the project level is the approved ESMS and Johannesburg Water's procurement protocols, under which third-party contractors are legally bound to comply with national labor laws and maintain working conditions aligned with PS2. The February 2026 ESMS enhancements introduce specific contractual clauses requiring contractors to submit monthly labor compliance reports. Furthermore, while CoJ has developed an internal Workplace Skills Plan under the Skills Development Act to govern training across the City's operations, the enhanced ESMS mandates equivalent training and capacity-building obligations for contractor personnel.
Workers Organizations: CoJ respects workers' rights to freedom of association and collective bargaining in accordance with Sections 18 and 23 of the South African Constitution. The majority of CoJ workers are unionized across two recognized unions — the Independent Municipal and Allied Trade Union (IMATU) and the South African Municipal Workers Union (SAMWU). The City is a member of the South African Local Government Association (SALGA) and engages and bargains with the respective unions under the SALGA bargaining council. In addition, CoJ has established a Local Labour Forum (LLF) to facilitate worker relations at the City level, which convenes monthly. Under national law and the project's enhanced ESMS, contractors engaged for the project will extend equivalent rights to freedom of association and collective bargaining to their own workers.
Non-Discrimination and Equal Opportunity: Non-discrimination and equal opportunity within CoJ are managed in accordance with the Employment Equity Act, which promotes equal opportunity and fair treatment through the elimination of unfair discrimination. CoJ has defined annual KPIs relating to gender, disability, transformation, and employment equity targets. GHCM is responsible for overseeing the City's achievement of these targets and has developed a range of supporting measures across City departments and entities, including an Employment Equity and Skills Development forum, employment equity awareness campaigns, and sexual harassment workshops. These measures are consistent with PS2 requirements. Given that the project's physical works will be executed by third parties, the approved ESMS Manual requires contractors to extend non-discrimination, equal opportunity, and anti-harassment principles to the contractor workforce. The February 2026 ESMS enhancements further require contractors to implement a Code of Conduct (CoC) addressing Gender-Based Violence (GBV) and Sexual Exploitation, Abuse, and Harassment (SEA/SH), aligned with PS2.
Grievance Management: The existing CBA establishes a grievance mechanism for direct municipal workers, providing for the submission of grievances to an immediate superior, head of department, or the municipal manager. Workers also have access to the Commission for Conciliation, Mediation and Arbitration (CCMA) for external labor-related complaints. Recent appraisal feedback indicates that the City's internal mechanism currently lacks formalized resolution timeframes and alternative submission channels.
As the project's physical works will be executed by third parties, worker grievance management at the project level is governed by the contractor-specific mechanisms mandated under the February 2026 ESMS Contractor Management Guidance. This requires third-party contractors to establish and maintain their own anonymous, accessible grievance channels for their workers, with an explicit prohibition of retaliation, consistent with PS2. Contractors are required to submit monthly grievance logs as part of their compliance reporting. These logs will be reviewed by the respective departmental project focal points and the ESMS Committee to track resolution, identify recurring trends, and inform adaptive management.
Occupational Health and Safety: CoJ has defined an OHS policy aligned with the requirements of the OHS Act and PS2. Implementation and oversight fall under the GCSS directorate. The policy requires the identification of project-specific risks, nomination of health and safety representatives (at a ratio of 1:50), incident reporting, and monthly audits. For the project, contractors are contractually required to complete mandatory OHS prerequisites prior to commencement, including a baseline risk assessment, medical screening, and designation of a safety officer. These requirements are consistent with PS2.
Key operational OHS risks associated with the project include deep excavations, handling of existing asbestos cement (AC) pipes, confined space entry, and worker security threats in high-risk urban areas. To manage these, the enhanced ESMS requires contractors to undergo a joint HSE plan review and develop site-specific Emergency Preparedness and Response Plans (EPRPs) addressing both operational and security risks. OHS incidents are required to be reported immediately to the relevant City OHS department and subsequently to the labor inspector. The City maintains an overarching incident log; over the period July 2023 to March 2025, sixty lost time injuries and one fatality were recorded — the latter involving the shooting of a security officer during an equipment theft in April 2024. These incidents inform the project's security risk management approach under PS4 and the enhanced ESMS requirements for contractor EPRPs.
Workers Engaged by Third Parties: The management of labor and OHS aspects of the contractor workforce is governed by the Municipal Finance Management Act, the City's Supply Chain Management policy, and the ESMS Manual. The February 2026 ESMS enhancements introduce specific Contractor Management Guidance embedding contractual clauses that require third-party service providers to comply with relevant legislation and CoJ policies, align with IFC PS2, and maintain worker grievance mechanisms.
At the project level, contractors are required to maintain a safety file, an OHS Management Plan, a letter of good standing, and to adopt Johannesburg Water's generic ESMP. Contractors engaged in the pipe replacement programme are additionally required to handle and dispose of existing asbestos cement pipes in accordance with the protocols set out under PS3. Contractor E&S and labor performance will be monitored by the City through mandatory monthly compliance reports, regular site inspections, and performance audits conducted by departmental project focal points and the EISD ESG team.
PS 3: Resource Efficiency and Pollution Prevention
Resource Efficiency and Greenhouse Gases: CoJ has implemented a Climate Action Plan (CAP) setting out the City's approach to low-carbon development, resilience planning, and a net-zero emissions target by 2050, consistent with PS3 objectives. In December 2024, CoJ completed a Climate Investment Opportunities Diagnostic (CIOD) to support CAP implementation and identify priority investments. CoJ is a member of C40 Cities and uses the Global Protocol for Community-Scale Greenhouse Gas Emission Inventories (GPC) for emissions accounting. The 2021 GHG inventory estimated the City's annual emissions at 22.2 million tons of carbon dioxide equivalent (MtCO2e), driven primarily by electricity use, with the transport sector accounting for 19.2% and waste and wastewater for 11%. The February 2026 ESMS enhancements introduce a formalized procedure for GHG accounting and monitoring at the individual project level, aligned with PS3. Given that the project's operational phase consists of gravity-fed water distribution, metering, and existing reservoir storage without material new pumping requirements, project implementation is not anticipated to impact the City's GHG emissions or trigger the 25,000 tCO2e/year reporting threshold.
Water Consumption and Sustainability: CoJ has developed a Water Security Strategy defining the City's approach to water management and long-term sustainability, aligned with its Water Conservation and Water Demand Management Framework and consistent with PS3. CoJ currently loses approximately 9.7 million kiloliters per annum from real losses attributable to leaks and infrastructure deficiencies, with direct impacts on potable water delivery and operating expenditure. The designated use of IFC proceeds is to address this challenge directly. Through the pipe replacement program, bulk and prepaid metering installation, and rehabilitation of leaking brownfield reservoirs, the project is expected to reduce real water losses and improve network efficiency without requiring additional bulk water extraction.
Waste Management: Waste management is governed by the National Environmental Management: Waste Act (NEMWA) and the ESMS Manual (December 2025). The project's operational phase generates minimal waste; the construction phase — specifically the pipe replacement program and reservoir refurbishments — will generate construction rubble, spoil, and hazardous waste, including existing asbestos cement (AC) pipes. In accordance with the CoJ OHS Specification, contractors are prohibited from cutting AC pipes and must adhere to safe disconnection (clamping), wetting, and removal protocols using appropriate personal protective equipment (PPE), with disposal managed through registered sub-contractors and licensed Class A hazardous landfill sites. The February 2026 ESMS enhancements introduce a standardized Waste Management Plan framework that contractors are required to adopt, with mandatory submission of waste disposal manifests and safe disposal certificates to Johannesburg Water. Ongoing field oversight and auditing of disposal practices will be conducted by departmental project focal points and the EISD ESG team through regular site inspections and evaluation of monthly contractor compliance reports.
PS 4: Community Health, Safety and Security
While the operational phase of the project poses limited community risks, the construction phase — specifically the pipe replacement program, metering installations, and reservoir refurbishments — will occur within public road reserves, pedestrian walkways, and servitudes. This widespread linear scope presents material community health and safety risks, including open deep excavations, traffic disruptions, and the movement of heavy construction vehicles. Safe asbestos cement pipe removal procedures are addressed under PS3 above. To manage these impacts, the ESMS Manual and Johannesburg Water's OHS specifications require contractors to implement site-specific Traffic Management Plans, barricading protocols, and dust suppression measures. To address community risks associated with the influx of contractor personnel, the February 2026 ESMS enhancements require contractors to implement a Code of Conduct (CoC) addressing Gender-Based Violence (GBV) and Sexual Exploitation, Abuse, and Harassment (SEA/SH) in relation to affected communities, aligned with PS4. Contractor compliance with these community safety measures will be monitored through regular site inspections and performance audits conducted by departmental project focal points and the EISD ESG team.
Security: CoJ continually assesses site-specific security provisions at its operational sites, integrating physical infrastructure upgrades — including improved fencing, lighting, alarms, and guardhouses — into the standard scope of the ongoing reservoir refurbishment works. Reservoir security is provided by private security guards registered with the Private Security Industry Regulatory Authority (PSIRA), which governs training, conduct, and the proportional use of force, consistent with PS4 principles.
For the pipe replacement and metering programs, the deployment of contractors and municipal staff into high-crime urban areas presents distinct security risks. As noted under PS2, project incident logs have recorded threats to field staff including hijackings and armed robberies. In response, the enhanced ESMS requires contractors to develop Security Management Plans and site-specific Emergency Preparedness and Response Plans (EPRPs) covering armed intrusions, hostage situations, and civil unrest. This framework provides for the deployment of armed escorts and buddy systems in designated high-risk zones, and close coordination with the Johannesburg Metropolitan Police Department (JMPD) and Emergency Management Services (EMS) for safe evacuations during community unrest or service delivery protests.
