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
Manuka’s Sustainability Strategy embodies its commitment to environment stewardship, community, financial feasibility, animal welfare, and people. The strategy highlights key pillars such as sustainable, pasture-based production, including waste management, carbon footprint, care for native forest and water streams, soil management and renewable energy projects. Manuka has Animal Welfare and Grass-Fed certifications by Certified Humane and Food Safety and Animal Health Management by the Chilean PABCO program (“Programa de Planteles Animales bajo Certificacion Oficial”), a local certification system for dairy production and animal raising. Moreover, Manuka has the “Chile Origen Conscience”, a local certificate for sustainable management of farms.
Environmental risk and impacts are identified through a corporate E&S risk matrix, following production and operation processes, activities, aspects, impacts and local regulatory requirements. The Company engages external consultants to identify potential E&S risks, conduct fauna and flora surveys, undertake E&S impacts and risk identification, develop environmental impact statements, environmental management plans, with specific management programs, such as waste and hazardous waste management plans. To systematically manage E&S risks and impacts in alignment with the requirements set forth in IFC PS, Manuka will, as per ESAP item #1, develop and implement an E&S Management System (ESMS) for the Project, consistent with national regulations, IFC PS, the World Bank Group (WBG) General Environmental, Health and Safety (EHS) Guidelines (2007), and the WBG EHS Guidelines for Mammalian Livestock Production (2007). The ESMS will include: i) an E&S policy with an explicit commitment on biodiversity conservation and adherence to IFC Performance Standards; ii) expand the E&S matrix to include the identification and assessment of social risks and impacts (including SEAH risks), defining commensurate management controls and monitoring; iii) establish E&S monitoring KPIs that will inform Manuka’s Senior Management on key E&S metrics and overall E&S performance; and iv) since Manuka has several families with children living within the Company’s premises, develop and implement a child protection policy covering SEAH intended to assess the best way to implement any required children safeguarding practices.
Manuka’s People and Corporate Affairs Manager is responsible for overseeing E&S, Human Resources, Occupational Health and Safety and Communications. There is a designated person responsible for each one of these areas, with the main function of overseeing compliance with environmental licenses and permits, legal regulations, general E&S commitments and communities and stakeholders’ relations. The Company relies on experienced external consultancy firms to conduct E&S studies, surveys and permits processing.
Manuka has developed an Environmental Management Procedure (EMP), which is generally aligned with GIIP for managing pollution risks typical of dairy and livestock operations. The EMP establishes clear objectives, scope, and internal responsibilities for environmental control, and provides operational procedures for solid and hazardous waste, manure and wastewater (purines) management, controls related to the use of agrochemicals and fuels. The EMP includes controls for carcass disposal, minimum distances from water bodies, and immediate burial requirements following necropsy. To further align the EMP to IFC Performance Standards the Company will, as part of ESAP item #2, update the EMP by explicitly incorporating the pollution prevention hierarchy and developing measurable performance indicators for key E&S risks and controls, including manure and wastewater management, hazardous waste storage, and hazardous substances. The updated procedure shall integrate resource efficiency considerations, particularly water and nutrient management, references to the WBG EHS Guidelines, and formalize arrangements for E&S monitoring, training, and periodic management review.
The Company has developed an Emergency Preparedness and Response Procedure (EPRP) that establishes a structured and organization-wide framework for disaster risk management, including prevention, preparedness, response, and recovery. The Company also has Emergency Response Plans at site level, which identify the location, workforce characteristics, vulnerable groups, working shifts, and physical layout. The EPRP and Site Level plans provide detailed, threat-specific response procedures for a wide range of scenarios, including natural hazards, technological incidents, security events, and OHS accidents.
Manuka has 43 contractor companies with 134 employees associated with their operations. The largest concentration of contractors corresponds to agricultural field services, including tractor operators and the use of agricultural machinery. As per ESAP item #3 the Company will build upon its existing contractor management practices to develop and implement a corporate Contractor Management Procedure. This procedure will include E&S screening for contractors, establishing minimum E&S management including OHS, labor, environment and working conditions, and reporting requirements with KPIs, and defining roles and responsibilities for Manuka to oversee contractors E&S performance.
Manuka’s operations rely on a primary supply chain typical of largescale dairy production in Chile, including agricultural suppliers, service contractors, and logistics providers supporting feed production, on-farm activities, and product transport, noting that Manuka’s dairy production rely on its own operation. Potential labor-related risks may exist within Manuka’s primary supply chain, particularly among agricultural contractors and third-party service providers involved in seasonal or labor-intensive activities. Supply chain-related biodiversity risks may arise from feed sourcing practices, particularly if primary suppliers engage in land conversion or agricultural expansion affecting natural or modified habitats. Further details related to supply chain and required controls are developed in the sections below.
PS2: Labor and Working Conditions
By December 2025, Manuka directly employed 636 permanent workers, of whom 77% are men and 23% are women. There are six areas with milk-producing farms including “Los Rios”, “Purranque”, “Coihueco”, “La Junta”, “Maitenes” and “Laguna Bonita”, where 69% of the totality of the permanent workers are engaged in milk-production. The Company also employs 180 seasonal hires and 134 indirect workers from 43 subcontractors. These workers support agricultural field services, including tractor operators and the use of agricultural machinery.
Manuka’s workforce management procedures are aligned with Chilean labor laws, which include OHS, prevention of sexual harassment, workplace harassment, and any type of violence in the workplace. Moreover, the Company has a diversity and inclusion policy. To further align to IFC PS, the Company will, as per ESAP item #4, i) strengthen its HR policies vis-a-vis IFC PS2 requirements, include in the Code of Conduct zero-tolerance provisions for child and forced labor; iii) update Manuka’s Employee Handbook, summarizing rights, obligations, and workplace rules for staff and contractors; and iv) align working conditions and employment terms with PS2 requirements, covering topics such as voluntary overtime and acceptance of extra shifts, review shift and task assignment practices, review of disciplinary and termination procedures, define requirements applicable to permanent and seasonal workers, documentation of terms (leave, social protection, benefits, and deductions), and others. Updated HR policies and procedures will be provided to all workers in an accessible format at the time of signing contracts.
Manuka provides permanent accommodation to workers under two modalities, residential housing for workers with families, and guest housing for single workers. Each modality accommodates 280 families and 80 individuals, respectively. All accommodation is provided at no cost for workers. As per ESAP item#5, Manuka will develop and implement an Accommodation Management Plan in line with national regulations, PS2 and the provisions set forth in IFC/EBRD’s Guidance on Workers’ Accommodation.
Manuka employes are organized in a union since 1985 and have had current collective bargaining agreements since 2024. These agreements include provisions on benefits, annual bonuses, housing, work implements, personal protective equipment (PPE) and medical insurance.
Manuka has an OHS Management System included as part of its Internal Safety and Health Regulations. Key provisions include PPE, accident investigation, OHS training, UV light exposure prevention, OHS incident reporting, prevention of Musculoskeletal Disorders (MSDs), assessment of psychosocial risks, occupational noise, as well as health surveillance for workers that might be exposed to Q fever, which is caused by bacteria usually found in cows. There is a joint OHS committee in charge of keeping employees informed of workplace hazards. The Company carries out internal OHS audits to implement any required corrective action. As per ESAP Item#6, the Company will update its OHS Plan to include provisions to align it to the WBG EHS General and Mammalian Livestock Production Guidelines.
Manuka has established a grievance mechanism addressing SEAH and workplace violence. The mechanism is compliant with Chilean laws. To further align this mechanism to IFC PS, the Company will update it, as per ESAP item #7, to ensure it allows anonymous complaints following a survivor-centered approach. The Company will disseminate the reporting channels across employees, contractors, and third-party workers, through awareness sessions and display materials in designated areas.
PS3: Resource Efficiency and Pollution Prevention
Manuka relies on two main energy sources: the local power grid and fossil fuels, with an average annual energy consumption of 24,725,693 kWh in 2025. Manuka sources 0.4% of the electricity demand from renewable energy sources and is implementing two PV solar plants with 830kW of capacity as part of its energy efficiency initiative, that aims to use 40% of the energy produced by these plants and the remaining 60% to the national grid. For the 2024-2025 period, Manuka reported 1.2 KfCOe/Kg Fat and Protein Corrected Milk (FPMC) without excluding meat emissions.
Manuka’s dairy operations use manure and urine for grass-crop bio-fertilizer through a collection system that includes wash yard, manure pipes and earth-banked lagoons with pumping systems for irrigating pasture plantations adjacent to the milking farms. The lagoons are fenced to prevent access, and the Company follows protocols including safety distances from housing and water streams. The Company also uses fertilizers periodically, mainly urea as a supplement to manure, to improve the performance of pasture crops in its operational processes. As per ESAP item #8, Manuka will augment the environmental monitoring of rivers and water streams crossing its area of influence and make sure that levels for Nitrogen, Phosphorus and other relevant parameters are within the standards set forth in EHS General and Mammals Livestock Production guidelines. If the augmented environmental monitoring identifies parameters above the established limits, Manuka will develop and implement the necessary mitigation and controls measures to ensure no adverse effects to the environment from their operations.
The Company sources water from 85 deep wells, along with rainwater, which is primarily used for animal raising and drinking, cleaning milk parlors, and domestic use at workers accommodations in each milking center. Since 2024, Manuka implemented water usage log at each operations center, resulting in an average annual usage of 52,000 m3 and 181 L/cow-day. These results have allowed the Company to establish performance parameters, identify leaks and implement good practices and efficient use of water practices.
Manuka implements formal procedures for the management of solid waste generated across its dairy and livestock operations, with controls differentiated by type of waste. Domestic and non hazardous industrial wastes, including silage plastics and packaging materials, are segregated at source and stored in designated, contained area, named Ecocentro, designed to prevent dispersion, vector proliferation and odors.
Organic solid waste, such as bedding residues and solids recovered from slurry management systems, are accumulated only in approved locations, with controls on storage duration, signage, and separation from incompatible materials. Hazardous waste, including agrochemical containers without triple washing, veterinary sharps, and hydrocarbon contaminated materials, are stored in dedicated, restricted access facilities and transferred to authorized third parties for final disposal. Recycling is prioritized where feasible, particularly for properly rinsed agrochemical containers, in line with national regulations and internal environmental controls. As part of ESAP item #2, Manuka will introduce quantitative tracking and performance indicators for solid waste and strengthen controls for temporary storage of hazardous waste at production centers.
Manuka’s pesticide use is limited to products authorized under national regulations, with clear classification by active ingredient, crop use, dosage, and WHO toxicity class, and that higher-toxicity products (WHO Classes I and III) are recognized and differentiated from lower-risk products. Moreover, Manuka does not use or stores WHO Class 1a and 1b pesticides, consistent with PS3 requirements.
PS4: Community Health, Safety and Security
Manuka is located on a milk farm comprising 28,847 acres in the Los Lagos region. The closest municipalities are Puerto Octay and Osorno, located 23 km and 37 km away, respectively. Manuka’s own laborers, who live on the premises, are the 280 families that interact with the company along with 80 individuals housed in the guest house. Considering the scale and size of Manuka’s premises, the nature of operations, and the distances between the operations and neighboring communities, OHS risks and impacts to communities are considered to be low. No road accidents have been reported so far and communities have not raised complaints regarding road safety.
Manuka employs a private security contractor to secure the premises with two watchmen, focusing primarily on the company's perimeters rather than the entirety of the property. For the admin buildings, Manuka has its own watchman. Neither the contractor nor Manuka’s watchmen are armed. As per ESAP Item #1, Manuka will develop and implement a formal Security Policy consistent with the requirements of PS4, which defines principles and procedures for management of security forces, standards for engagement with public and private security personnel.
PS5. Land Acquisition and Involuntary Resettlement
Approximately 30 hectares within company’s premises are occupied by 30 families. These families have been in the parcels since the 1970s due to a legacy process with a previous milk cooperative, and multiple subsequent processes related to land tenure amid the agricultural reform in Chile. Families that left the parcels received monetary compensation by the Government under the agricultural reform framework, but so far, 30 families still live on plots within Manuka's domain, and approximately, eight members from these families are employed by the Company. Since 2022, between 5 to 7 families have left the parcels voluntarily and Manuka paid monetary compensation with additional in-kind support such as houses dismantling and transportation of goods and people.
As part of ESAP #9, the Company will conduct a review to understand if the most recent land recovery process from 2022 was aligned with statutory requirements. If any significant residual risk and vulnerabilities are identified, the Company will develop and implement a social assistance program to support project affected people to improve their living conditions with a focus on vulnerable people. Potential grievances related to past resettlement will be addressed through the Company's grievance mechanism, which will be available to all stakeholders.
The Company plans to acquire or lease approximately 250 hectares near exiting farms to increase its production for next two years, though the specific land has not yet been identified or assessed. To better address any potential impact or risks related to land acquisition and involuntary resettlement, Manuka will as part of ESAP item #10, develop a Land Acquisition & Resettlement Framework (LARF) in line with PS5, which will include: i) provisions for mapping of potential stakeholders and communities that could be impacted, need to establish a social baseline and a characterization of affected households with due consideration of vulnerability, ii) assessment of potential land acquisition related impacts, including economic displacement, iii) determination of compensation measures and livelihood restoration vis-a-vis PS5, and iv) implement a Resettlement and Livelihood Restoration Plan, as needed, including monitoring KPIs and completion audits.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
Manuka farms cover 30,000 ha in historical agricultural zones with 22,900 ha in permanent pastures, stretching 200 km north to south along the flat depression between the Coastal and Andean Cordilleras from Valdivia to Puerto Montt in the Valdivian Temperate Forest ecoregion (WWF). Much of the depression’s rainforest had been converted to pastures and agriculture early in the last century. Manuka pastures are not overlapping any Legally Protected Areas. One farm sits within the Transition Zone of the Bosques Templados Lluviosos UNESCO-MAB Biosphere Reserve, where sustainably managed pastures are allowed.
In addition to the lands Manuka has managed long-term (at least over five years), the Company recently leased another 200 ha and plans to expand operations by up to 250 ha in the future, all in historical agricultural zones. Priority biodiversity values associated with the Project’s pastures include the globally Endangered Rufous-tailed Hawk (Buteo ventralis) and Darwin's Fox (Lycalopex fulvipes). As part of ESAP item #11, Manuka will enhance Biodiversity monitoring protocols to include these species and their importance on the landscape communicated to farm workers. Critical Habitat was not identified. In addition, many threatened and endemic species are associated with the natural forest habitat outside the project areas, highlighting the importance that Manuka, as per ESAP item #1, will develop and implement a Natural Habitat screening process for future land expansions or acquisitions.
Manuka produces grass silage and milk from 60,000 head of dairy cattle on permanent pastures. In terms of internationally recognized certification, Manuka has Certified Humane (Raised and Handled, and Animal Welfare), Certified Humane Grass-Fed and approximately 30% of Manuka’s land is certified by Nestle as Regenerative Agriculture, based on its nutrient management practices, proper manure handling, high pasture biodiversity, and use of nitrogen fixing microbes. Nationally, Manuka participates in the PABCO Program (Programa de Planteles Animales bajo Certificacion Oficial) and has Conscious Origin Chile certification certified by a third party, which apart from some sustainable farm management aspects, does include some biodiversity conservation aspects. To demonstrate alignment with industry specific certification requirements under PS6, Manuka will, as per ESAP item #12, benchmark their practices to Global SLP (Smart Livestock Practices) standards and adapt to results, as feasible.
Manuka’s strategy is to maximize pasture use and produce their own silage in order avoid supplementation with off-farm feed sources where possible, and part of the use of proceeds for the Fertility Correction Program will further reduce external feed and concentrate purchases. Currently the main supply chain elements are feed (concentrate, dry-cow feed and silage) and soil fertilizers and amendments. Sourcing of feed is limited, however to control risk of natural habitat conversion, Manuka will, as part of ESAP item #1, enhance its policy committing to only purchase products that verifiably lack natural habitat conversion risks and, as per ESAP item #13, undertake a Supply Chain Risk Assessment and adapt controls through Codes of Conduct and verification based on risk level.
