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.
PSE&S Management Systems (ESMS). Agrofertil has in place an ESMS (“Sistema Integrado de Gestion Ambiental, Social y de Salud y Seguridad”or SIGASS for its Spanish acronym) and an ESMS Manual aligned with PS1 requirements that regulates Agrofertil’s operations. The ESMS includes procedures for staff recruitment, selection & induction; internal audits; grievance mechanism; EHS monitoring; environmental impact assessment; GHG accounting; assessment of land use of new clients and expansion of existing clients; solid waste management; resources efficiency; hazardous waste management; assessment & management of social risks; training; OHS procedures, pesticides management (including response to spills), confined work, dust exposure, a stakeholder engagement plan and grievance mechanism for workers and the community. The Company performs an audit of the ESMS operation annually.
To further align the ESMS to the Project being financed by IFC, the Company will prior to the construction of new silos as per ESAP #1, will develop and implement an ESHS Contractor Management Plan, describing the environmental, health, safety and social considerations that contractors have to follow during construction, including contractor safety manuals, construction procedures, solid and hazardous waste management, air emissions and ambient air quality, water use and groundwater abstraction, traffic safety ESHS training, and monitoring and reporting procedures, aligned with the WBG EHS General Guidelines (2007) and IFC PS.
E&S Policy. The Company has an overarching E&S policy in line with IFC PS1 that establishes the corporate commitments to carry out proper management of the E&S aspects of its operations, including adequate organizational capacity, having an emergency response plan and a grievance mechanism, a commitment not to manufacture, store, produce or trade WHO class Ia or Ib pesticides, among others.
Identification of E&S risks and impacts. The Company has in place procedures for the identification of E&S risks and impacts that include a risk matrix for environmental issues (including solid waste, liquid effluents, atmospheric emissions, noise, inputs, water use, electric energy & other energies sources); social issues (that assesses risks related to workers, Board involvement, women’s participation, stakeholders & affected parties), and OHS. Once a risk is identified, a mitigation plan is developed and implemented.
Agrofertil operates in compliance with applicable Paraguayan legal and regulatory requirements and all facilities have valid environmental permits. The Company submits the Basic Environmental Questionnaire and the Environmental Control Plans for all distribution centers and silos to the Paraguayan authorities. The Company provides regular reports and updates to the local regulators as defined in the permits granted. The Environmental Control Plans have been disclosed locally through newspapers in compliance with Paraguayan regulations.
Organizational capacity. Agrofertil’s organizational structure includes an Environmental Unit composed of a coordinator, an analyst and an assistant. Social aspects are managed by the Sarabia Foundation, part of the Sarabia Group, which includes a coordinator and two assistants. The Company has an OHS Unit with a coordinator and an analyst, as well as an HR Department. In addition, an ESMS Committee which includes a Board Member representative and provides oversight of ESMS implementation.
The Company implements a training plan for all personnel in charge of E&S management. Two OHS professionals are responsible for conducting monthly facility inspections and training of operational staff in distribution centers and silos. The environmental team focuses on verifying third-party suppliers through the land verification procedure to assess new clients and existing clients with expanding operations into new farmland. This team is also responsible for regulatory compliance, ensuring that all required environmental documentation and studies are duly submitted to authorities and that all facilities have valid environmental licenses and permits.
As per ESAP #2, Agrofertil will strengthen its OHS capacity by increasing the number of dedicated OHS personnel to adequately support the expansion of its operations, including the construction of new silos, to ensure effective coverage across its operations.
E&S management and monitoring programs. The Company’s Environmental, Social and Health & Safety Monitoring Plan includes occupational noise and air quality in critical workstations; water quality for human consumption; safety grounding systems monitoring. Whenever the measured values exceed the limits of the legislation or the corresponding IFC guidelines, a plan is prepared with the corrective measures to prevent recurrence.
Agrofertil monitors a set of KPIs that includes frequency and severity index of accidents of own and contracted personnel; incident records and verification of working conditions in wood handling operations in drying facilities; management records of occupational diseases; number of labor complaints received and resolved; number of community complaints received and resolved; amount of water, energy and inputs consumed and waste generated; content and number of training courses provided; and the use of firewood based on native wood (target: < 5%).
Emergency Preparedness and Response Plan (EPRP). Agrofertil has in place an EPRP that covers emergencies such as fire, climatic phenomena (rain, hail, wind, lightning), chemical spills, personal accidents and structural collapse. The Company performs periodic drills covering fire, evacuation, and management of hazardous materials among other topics. A fire drill in each silo and distribution center takes place once a year.
PS2: Labor and Working Conditions
Human Resources Policies and Procedures: Agrofertil’s Human Resources (HR) Policy is aligned with PS2 requirements, and covers recruitment and selection processes, payment of wages, staff development, performance evaluation, capacity building and training, support to workers, women participation, workers grievance mechanism, respect for Human Rights, among others. The HR policy also includes provisions for non-discrimination and equal opportunity and explicitly prohibits any type of discrimination based on race, nationality, sex, age, marital status, physical capacity, religion, sexual orientation, gender identity, social class, political affiliation, pregnancy, among others.
The Company has in place a Code of Ethics (CoE) that addresses issues such as equal opportunities, non-discrimination and sexual and workplace harassment. An Ethics Committee oversees the implementation of the CoE and is composed of one Counselor, a representative from HR and other collaborators who are approved by the Board. Depending on the severity of the complaint, other Directors/Board Members may be incorporated in the committee. It is the responsibility of the committee to analyze infractions or violations of the Code and to propose to the Board corrective actions and/or sanctions, as needed. The CoE is applicable across the board, to all locations, employees, contractors, subcontractors, suppliers and business partners and is communicated to all employees during induction.
Working Conditions and Terms of Employment. Agrofertil workforce includes direct and temporary employees. Both types of employment contracts comply with local regulations, which establish the rights and obligations of each party. In addition to the benefits required by local legislation, the Company offers additional benefits to its workers, such as private health insurance, free lunch, life insurance, uniforms, training, awards and commissions for results and good performance.
The Company provides accommodation for certain positions that, due to the nature of their functions, require this benefit. It has established an accommodation plan, aligned with IFC/EBRD guidelines that regulate quality standards, management arrangements, and the provision of basic services, ensuring adequate and safe conditions for the workers. Employees can freely form, join or participate in unions and exercise their right to collective bargaining, in accordance with current labor legislation.
Workers Grievance Mechanism. Agrofertil has in place a workers’ grievance mechanism aligned with PS2 requirements; complaints can be sent through the Company’s webpage or email; they are received by the HR Department. The timeframe for a definitive response does not exceed 20 calendar days, counted from the date of receipt, and anonymous claims are allowed. As per ESAP #3, the Company will update its grievance mechanism procedure for both workers and the community to include specific procedures for handling GBV/SEAH-related complaints in a timely, confidential, and survivor-centered manner. The Company will also provide targeted training on these procedures to members of the Ethics Committee and other personnel involved in the management of such complaints.
Occupational Health and Safety (OHS): The Company applies standardized health and safety procedures that include topics such as operation and use of forklifts, working at heights, pesticide spills, work in confined spaces, hot works, defensive driving, hazard identification and risk assessment, dust exposure, accident investigation, lockout and tagging, emergency management, firewood handling in drying rooms, occupational diseases.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency. Agrofertil’s activities are restricted to commercialization of products (e.g., pesticides, herbicides, fertilizers, soil amendment, seeds) and grains. The Company’s storage operations do not require large volumes of water use or energy. The silos have driers that operate during the harvest season, that are operated using firewood. Electricity is used to force air into the silos to maintain the optimal temperature to ensure the integrity of the grains and for lighting purposes in all the facilities. The Company has in place a procedure for the “Use of Resources” that establishes E&S guidelines for the efficient consumption and measurement of water, electric energy, fuels for vehicles and machinery and firewood.
GHG Emissions: Greenhouse gas (GHG) emissions of the operations are associated with electricity consumption and fuel for the fleet used to distribute the products and for technical assistance. Up to 2024, The GHG emissions of the Agrofertil operations have been estimated as 6,824 tCO2eq, derived mostly from the Company’s fleet, since electricity in Paraguay is primarily from renewable sources, and GHG emissions from wood/biomass are considered carbon neutral.
Pollution Prevention and Waste Management: Air emissions are derived from the distribution fleet and vehicles used for sales purposes. The dryers on the silos use firewood, which result in carbon-neutral emissions since the source is biomass. The dryers using wood as fuel are small (40-60metric ton/h) and operate for about five months a year. Agrofertil replaces the Company’s fleet every five years. In addition, it has a preventive maintenance program to ensure proper operation of vehicles, including combustion processes and safety operation.
Waste generated from Agrofertil’s operations is basically domestic waste and packing materials. Regarding solid waste management, all operational units implement a system of source segregation, using containers differentiated and identified by colors according to the type of waste generated. Once segregated, the waste is temporarily stored in designated areas and later collected by municipal collection services. Agrofertil carries out the management of hazardous waste through a specialized provider authorized by the Ministry of Environment and Sustainable Development (MADES). A procedure for Management of Hazardous Waste establishes measures for the segregation, storage and final disposal of hazardous waste.
The use of agrochemical products is performed by the Company’s clients involved in primary production of grains. Agrofertil provides training on the proper use of pest control products, which includes tripled washing and puncturing the plastic containers. In addition, as part of the Empty Containers Management System (SIGEV for its Spanish acronym), Agrofertil provides designated storage areas for agrochemical empty plastic containers and actively collects these from its clients as well as other producers in the areas where the company operates.
Pesticide Use and Management: Agrofertil stores and transports fertilizers and agrochemicals in compliance with local regulations and Good International Industry Practices. All products are approved by the local authorities and have the permits and licenses for trading and use in Paraguay. Near 60% of agrochemicals sales correspond to products containing active ingredients that are unlikely to present acute hazard in normal use (Class U) or are slightly hazardous (Class III); based on the classification of active pesticide ingredients from the World Health Organization (WHO, 2019). Since 2015, the Company has not traded or stored any WHO Class Ia or Ib pesticides.
PS4: Community Health, Safety and Security
Community Health and Safety: Agrofertil’s facilities are not accessed by the public. The Company seeks to ensure that its operations do not cause negative environmental or social impacts on surrounding communities by complying with environmental legislation, controlling operational risks and adopting good environmental practices. Moreover, the Company’s operations do not involve effluents, emissions or other activities that could enhance community exposure to diseases. Local authorities conduct audits to inspect production practices and other community health, safety and security-related issues.
Infrastructure and Equipment Design and Safety and Emergency Preparedness and Response: Agrofertil has emergency preparedness and response at each distribution center and silos with emergency brigades. EPRPs include actions to prevent and respond to fire, climatic phenomena (rain, hail, wind, lightning), chemical spills, personal accidents, structural collapse. Training is provided to employees in distribution centers and silos. The Company’s facilities are located in peri-urban and urban areas and can request support from local fire departments.
As per ESAP #4, the Company will update its procedures for handling pesticide spills and for the transport of agrochemicals to include measures to manage pesticide spills outside its facilities during transportation and distribution.
Transportation and road safety. The Company stores and transports fertilizers and agrochemicals in compliance with local regulations and Good International Industry Practices. All drivers are trained in emergency response and phone numbers are available to report events. Vehicles that transport agrochemicals have GPS and communication devices to facilitate response in case of an emergency. Contracted drivers are trained in the management of emergencies; documentation on the materials being transported is provided and a kit for emergencies with protective personal equipment is placed in all vehicles.
Security: Agrofertil contracts security guards through a recognized security company, which trains the employees to guarantee adequate use of the firearms and follow up procedures. There have not been complaints or reports regarding abusive behavior or improper use of the arms. Going forward, as per ESAP #5, the Company will assess the risks associated with the use of security forces in its facilities and will develop and implement a security management procedure aligned with the IFC Good Practice Handbook “Use of Security Forces: Assessing and Managing Risks and Impacts”. The procedure will be shared with contracted security firms and will be used for the security guards induction.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
Agrofertil receives grains (soybean, corn, wheat) as payment for agricultural inputs provided to independent farmers. The farms currently supported by the Company are located in the Eastern Region of Paraguay, in Atlantic Forest ecoregion and are characterized by a mosaic of natural and modified habitats. In this region of Paraguay, deforestation is illegal under national legislation since 2004; however, there continues to be some evidence of habitat conversion.
Agrofertil has a procedure to assess and exclude grain producers that have caused significant conversion of natural habitat and/or are located in legally protected and internationally recognized areas. This is supported by a traceability system that links the grains received to their sites of production using geographic coordinates of the farms. The procedure includes a May 2009 cutoff date for natural habitat conversion, and verification processes are carried out monthly.
Sustainable management of living natural resources. To dry grains in the silos, Agrofertil uses firewood as fuel, sourcing wood from approximately 350 hectares of eucalyptus plantations on its own properties as well as from third party plantations. All the firewood used in the silos comes from the Eastern Region of Paraguay, where deforestation has been prohibited by law since 2004.
Going forward, as per ESAP #6, the Company will commission an external audit of Agrofertil-owned eucalyptus plantations to verify that management practices are in line with a recognized international forestry standard for sustainability, such as Forest Stewardship Council (FSC) or similar, and provide a timetable of implementation of the audit’s resulting recommendations.
In addition, related to third-party firewood suppliers, as per ESAP #7, Agrofertil will prepare a roadmap to i) stop sourcing native wood, and ii) expand its current monitoring program to avoid sourcing wood plantation from regions at risk of natural habitat conversion.
