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
Balfin Group has established a corporate Environmental and Social Management System (ESMS), formally adopted in June 2025 with support from an IFC Advisory engagement and currently being implemented across the Group and its subsidiaries, including the TEG Expansion Project. The ESMS is aligned with IFC Performance Standards and establishes a framework for identifying, assessing, managing, and monitoring environmental and social (E&S) risks and impacts across existing operations and future developments, including E&S screening and risk categorization, identification of applicable IFC Performance Standards, integration of E&S requirements into project planning and design, ESIA/ESMP processes, thematic management plans, contractor obligations, and ESG Committee oversight.
The Group has developed corporate E&S policies and procedures under the ESMS framework applicable to the operational TEG shopping mall and its future expansion, including an ESG Policy, Code of Ethics and Professional Conduct, Stakeholder Engagement Policy, Grievance Redress Mechanism, GBV/SH Policy, Supplier Code of Conduct, Supplier ESG Due Diligence Procedure, and contractor management procedures. These policies establish commitments relating to labor and working conditions, ethical conduct, non-discrimination, prohibition of child and forced labor, stakeholder engagement, grievance management, supply chain oversight, and responsible contractor management. The ESMS also incorporates training and capacity-building measures to support implementation across the Group and TEG operations, expansion project, contractors, and suppliers. While TEG currently operates under the Group ESMS framework, a company-level ESMS tailored to retail operations, including TEG, is under development, with drafting and rollout planned for November 2026. This will further strengthen and formalize ESG management at the operational level and support the continued implementation of Group ESG requirements across retail operations.
The TEG Expansion Project has been supported by a project-specific ESIA and ESMP package (finalized in January 2026), supplemented by thematic management plans including a Traffic Management Plan, Occupational and Community Health and Safety Plan, Waste Management Plan, Emergency Preparedness and Response Plan, Life and Fire Safety Plan, Supply Chain and Migration Management Plan, Stakeholder Engagement Plan (SEP), and Grievance Redress Mechanism (GRM). These project-level instruments operationalize the Group ESMS and provide site-specific measures for managing E&S risks and impacts associated with the expansion. The Project has also undergone the Albanian EIA and permitting process, completed in December 2024, including public consultation requirements, and has obtained the relevant environmental permit, while fire safety documentation has been reviewed and approved by the competent national authorities.
E&S management for the TEG Expansion Project will be implemented by Balfin Construction Sh.p.k., the envisaged general construction contractor, under the oversight of the Project Manager and Balfin Group's ESG function. Balfin Construction will be responsible for construction management, site supervision, contractor oversight, and implementation of applicable environmental, social, health and safety (ESHS) requirements during construction. Balfin Construction operates under an integrated management system and is certified to ISO 9001:2015 (Quality Management Systems), ISO 14001:2015 (Environmental Management Systems), and ISO 45001:2018 (Occupational Health and Safety Management Systems). Balfin Construction is currently developing a company-level ESMS tailored to its role as an EPC contractor, which is intended to consolidate and operationalize construction-phase E&S management, including contractor oversight, ESHS implementation, monitoring, and reporting. The first draft is planned for July 2026, followed by rollout and associated training in September 2026. This process is expected to further strengthen implementation capacity and address areas identified for enhancement as the Project transitions into construction. During commissioning, Albanian Commercial Real Estate Management (ACREM), a Balfin Group company, will support operational readiness activities, including occupational health and safety, emergency preparedness, and life and fire safety systems.
Balfin Construction may engage specialized contractors, subcontractors, and suppliers for specific scopes of work, all of whom will be required to comply with the Project's ESIA package and associated management plans. Together, these documents define the mitigation, monitoring, and management measures applicable to the key environmental and social risks and impacts associated with the TEG Expansion Project during construction and operation. The ESIA package has been developed in accordance with applicable IFC Performance Standards and will be incorporated into bidding documentation and contractual agreements to ensure that the Project's environmental and social requirements, including applicable IFC Performance Standard obligations, are effectively communicated and implemented throughout the contractor and subcontractor chain.
As part of ESAP #1, Balfin will ensure that project-specific environmental and social requirements derived from the ESIA, ESMS, and associated management plans are incorporated into procurement and contractual documentation for construction contractors and relevant subcontractors, commensurate with the scope of work and associated E&S risks. The approved ESIA package and associated management plans will form part of the contractual requirements for the EPC contractor (Balfin Construction) and relevant subcontractors. Following contractor selection, and prior to mobilization and commencement of works, Balfin Construction will prepare and submit for Balfin approval a Construction Environmental and Social Management Plan (CESMP), applicable also to subcontracted workers, that operationalize ESIA requirements at site level and are aligned with Project requirements and applicable IFC Performance Standards. The CESMP will be reviewed, approved, and formally signed off by Balfin and IFC prior to commencement of works and will include, as relevant, measures relating to labor and working conditions, occupational and community health and safety, traffic management, emergency preparedness and response, waste management, life and fire safety, stakeholder engagement, grievance management, incident reporting, subcontractor management, monitoring, inspections, audits, and corrective action tracking. Balfin will establish oversight arrangements to monitor and verify contractor compliance throughout construction and commissioning.
Balfin has established supplier and contractor screening and due diligence requirements under the Group ESMS framework, including a Supplier Code of Conduct, Supplier ESG Due Diligence Procedure, contractor prequalification processes, and verification of business licenses, labor compliance, worker permits, social insurance registration, and OHS requirements. The ESMS also includes commitments relating to prohibition of child labor and forced labor, non-discrimination and equal opportunity, ethical business conduct, and responsible supply chain management, supported through contractual obligations, monitoring, and corrective action procedures applicable to contractors, subcontractors, suppliers, and service providers engaged under the TEG Expansion Project.
The TEG Expansion Project is managed under Balfin’s Group-wide ESMS and project-specific ESIA/ESMP framework, which establishes management and monitoring measures for key IFC PS1 risk areas during construction and operation, including occupational and community health and safety, life and fire safety, contractor management, waste management, emergency preparedness, and stakeholder engagement. Implementation is supported through inspections, audits, KPI reporting, incident and grievance tracking, and contractor supervision by the ESG function, Project Manager, Balfin Construction, and ACREM, with contractors required to implement ESMP and thematic management plan requirements through contractual obligations and site-level oversight.
PS 2 – Labor and Working Conditions
At the operational TEG Shopping Mall, Balfin currently employs 59 direct employees, all Albanian nationals, of which approximately 29% are female, with women also representing around half of management-level positions. All of TEG’s employees workers are employed on permanent unlimited contracts following a probationary period, and no migrant workers are currently employed at TEG. In addition, ACREM supports TEG operations through an approximately 85-person workforce (not exclusively dedicated to TEG), responsible for facility management, maintenance, operational support, tenant coordination, security, and health and safety functions across the asset. 89% of ACREM employees are engaged on permanent contracts and 11% are engaged on temporary/fixed-term contracts, predominantly workers engaged for the summer season at Green Coast Hotel. The TEG Expansion Project is expected to involve construction contractors, subcontractors, suppliers, operational personnel, and facility management staff, with potential engagement of migrant workers depending on contractor selection and workforce requirements.
Balfin has established a broader labor and HR management framework through its Group ESMS and supporting policies and management plans, including the Occupational and Community Health and Safety Plan and Supply Chain and Migration Management Plan, which collectively address several key IFC PS2 requirements such as recruitment and hiring practices, working conditions, grievance management, contractor oversight, non-discrimination, occupational health and safety, ethical recruitment, and labor risk monitoring. However, labor-management related provisions are currently embedded within the Occupational and Community Health and Safety Plan, which remains primarily health and safety focused, while labor-management requirements overall remain fragmented across multiple documents and are not yet fully integrated into a dedicated labor management section aligned with IFC PS2 and clearly signposted to relevant policies and procedures. In addition, while the Project may involve migrant workers depending on contractor selection and workforce requirements, accommodation-related provisions remain relatively high-level and do not yet demonstrate full alignment with IFC PS2 and GIIP requirements for worker accommodation management.
Accordingly, as part of ESAP#2, the Project will update and expand the existing Occupational and Community Health and Safety Plan into an Occupational, Community Health and Safety and Labor Management Plan, including a dedicated labor management chapter aligned with IFC PS2. The labor management chapter will include clear cross-references and signposting to relevant ESIA documentation, management plans, and applicable Balfin corporate policies and procedures to avoid duplication and ensure consistency. The Plan will be proportionate to Project workforce risks and activities and cover, at a minimum, address: recruitment and employment conditions including a zero-tolerance policy on worker-paid recruitment and employment-related fees and costs, and oversight and monitoring of labor providers and recruitment agencies; equal opportunity and non-discrimination; worker grievance mechanisms; code of conduct and worker behavioral expectations; prevention of child labor, forced labor, GBV/SH, child abuse and workplace harassment; contractor and subcontractor labor management and oversight; worker induction and training requirements; monitoring, reporting, and corrective action processes; and worker accommodation management measures, where accommodation is provided directly or through contractors/subcontractors, including minimum welfare, health, safety, and living-condition standards consistent with GIIP and IFC/EBRD requirements.
Balfin revised its grievance management and GBV/SH policies and procedures in 2026 as part of the Group ESMS updates, establishing a framework broadly aligned with IFC PS2 requirements. The framework applies to employees, contractors, subcontractors, consultants, suppliers, communities, and other external stakeholders, and establishes procedures for confidential and anonymous grievance submission, investigation, escalation, monitoring, and reporting. The system includes differentiated procedures for worker grievances, community grievances, and sensitive GBV/SH-related complaints, supported by multiple reporting channels, non-retaliation commitments, survivor-centered principles, and integration with HR, ESG, and contractor management processes.
While the GRM and GBV/SH framework are substantially aligned with IFC PS2 at policy level, implementation arrangements remain in the process of being operationalized and their effectiveness has not yet been fully demonstrated in practice, reflecting the early stage of implementation. Worker interviews indicated varying levels of awareness of formal grievance procedures, anonymous reporting channels, and certain HR/GBV-related policies, while grievance comment boxes referenced in the procedures had not yet been installed at TEG. Implementation efforts are ongoing to strengthen workforce awareness, visibility of reporting channels, and practical rollout across TEG operations and contractors. In addition, although the GBV/SH framework establishes confidential and anonymous reporting mechanisms and commits to survivor-centered support, the procedures do not yet fully define GBV/SH-specific case management timelines or establish a documented referral pathway, including identification of appropriate medical, psychosocial, legal, and protection service providers and arrangements for maintaining up-to-date referral information. Further refinement of these arrangements would strengthen operational effectiveness and should be implemented in a manner proportionate to the Project's risk profile and local context.
As part of ESAP#3, Balfin will: (i) strengthen implementation and operational effectiveness of the existing GBV/SH grievance procedures by further refining and operationalizing documented survivor-centered case management arrangements for both workers and community members, including confidential reporting mechanisms, measures to protect complainant safety, defined response timelines, designated responsible personnel, and formal practical referral pathways, proportionate to the Project risk profile and local context, to appropriate medical, psychosocial, legal, and protection services; and (ii) further implement and operationalize the GRM and GBV/SH framework across the existing TEG operational mall, future TEG Expansion Project, and associated contractors, and project-affected communities, including workforce awareness and training, contractor integration, designation of grievance focal points, communication of reporting channels, maintenance of grievance registers, monitoring of grievance trends and resolution effectiveness, and periodic ESMS reporting, consistent with IFC PS2 and PS4.
The Company’s labor framework recognizes workers’ rights in accordance with applicable legislation, including freedom of association and collective bargaining where applicable. Balfin has also established a zero-tolerance approach toward discrimination, harassment, child labor, forced labor, and GBV/SH under its ESMS and Code of Conduct framework, supported through induction, training, contractor obligations, grievance procedures, and age-verification checks during the recruitment process. No material labor disputes, strikes, retrenchment programs, or significant worker grievances associated with TEG were identified during the review.
The Project’s labor and occupational health and safety management framework is established through the Group ESMS and project-level Occupational and Community Health and Safety Plan (OCHSP), supported by associated thematic procedures. The framework establishes contractor and worker management requirements, worker welfare and training measures, permit-to-work controls, emergency preparedness, grievance procedures, incident reporting and Corrective and Preventive Action (CAPA) tracking, inspections, audits, stop-work authority, and workers’ rights to refuse unsafe work, aligned with IFC PS2, IFC PS4, and WBG EHS Guidelines. No material OHS incidents, fatalities, or lost time injuries have been reported at TEG during the past three years, covering TEG employees, ACREM staff, tenants, third party contractors and service providers operating across the TEG premises.
Under the TEG Expansion Project, Balfin has established labor-focused supply chain and contractor management controls through the Supply Chain and Migration Management Plan, Supplier Code of Conduct, and Supplier ESG Due Diligence Procedure. These frameworks establish requirements relating to ethical recruitment, prohibition of child and forced labor, non-discrimination, worker documentation and age verification, work permits, social insurance registration, OHS compliance, worker grievance access, and contractor monitoring through risk-based supplier screening, ESG due diligence, audits, corrective action procedures, and ongoing labor and OHS compliance monitoring across contractors, subcontractors, suppliers, and service providers.
PS 3: Resources Efficiency and Pollution Prevention
The TEG Expansion Project has incorporated resource efficiency and pollution prevention measures into the project design in alignment with IFC PS3, the World Bank Group General EHS Guidelines, Albanian regulatory requirements, and the Balfin Group ESMS framework.
The extension is designed as an integrated continuation of the existing TEG Shopping Mall, utilizing shared utility infrastructure, HVAC systems, wastewater systems, life and fire safety systems, waste management infrastructure, and Building Management Systems (BMS). The project design also considers climate-related and operational factors including stormwater management, localized flood risk, drainage infrastructure, ventilation demand, traffic management, and emergency access requirements.
Electricity supplied from the national grid remains the primary energy source for TEG operations, supported by integrated Heating, Ventilation and Air Conditioning (HVAC) systems and backup generators monitored through the Building Management System. The TEG Expansion Project has been developed with a focus on energy efficiency and alignment with internationally recognized green building certification standards. TEG has also implemented rooftop photovoltaic solar panels as part of previous upgrade and refurbishment activities, with approximately 20% of current electricity consumption reportedly supplied through solar generation. Resource efficiency commitments are further reflected within Balfin’s Group ESG Policy, including commitments to optimize resource use, improve energy efficiency, reduce waste generation, and adopt innovative resource-efficient technologies across operations and supply chains.
Balfin does not currently maintain a formal Group-wide GHG accounting framework, however, the TEG Expansion Project is not expected to exceed the IFC PS3 threshold requiring detailed annual GHG reporting. Resource efficiency and energy consumption monitoring are expected to continue to be strengthened through ESMS implementation in line with GIIP.
Water supply during construction and operation is provided through the municipal network, while domestic wastewater is discharged to the municipal wastewater collection system in accordance with applicable regulatory requirements. The ESIA and Project Waste Management Plan include measures relating to water management, wastewater handling, drainage controls, spill prevention, and pollution prevention measures during construction and operation phases.
The TEG facility includes established waste management infrastructure and operational procedures for segregation, temporary storage, collection, recycling, transfer documentation, and disposal of waste streams through licensed third-party contractors. The Waste Management Plan establishes requirements for waste minimization, segregation at source, hazardous waste handling, spill prevention, recycling, contractor compliance, monitoring, audits, and implementation of the waste hierarchy in alignment with IFC PS3 and Albanian waste management legislation. Waste management requirements are also incorporated into contractor obligations and tenant operational procedures.
The ESIA identifies the principal construction and operational pollution risks associated with the Project, including dust emissions, noise and vibration, construction and demolition waste, hazardous materials, wastewater, traffic-related impacts, and accidental spills. Diesel fuel storage and generators will be managed through secondary containment and spill response measures to minimize contamination risks, while HVAC systems will incorporate refrigerant leak prevention and maintenance measures, with lower-GWP refrigerants considered where feasible. The same approach will be applied, where relevant, to refrigeration equipment associated with the Project. Mitigation and monitoring measures are established through the ESMP and supporting thematic plans, including procedures for waste handling, hazardous materials management, spill prevention, emergency preparedness, inspections, contractor supervision, monitoring, corrective actions, and continuous improvement. Balfin and TEG Sh.p.k retain overall responsibility for IFC PS3 compliance, supported by the company's ESG function, the Project Management Team, Balfin Construction, and ACREM, together with contractors, in accordance with the ESMS framework.
PS 4: Community Health, Safety and Security
Community health, safety, and security risks associated with the TEG Expansion Project have been assessed through the ESIA and supporting management plans, including the Occupational and Community Health and Safety Plan (OCHSP), Traffic Management Plan (TMP), Emergency Preparedness and Response Plan (EPRP), and Life and Fire Safety Plan (LFSP). The assessment considers risks to workers, visitors, nearby communities, road users, tenants, vulnerable groups, and emergency responders during construction and operation, including traffic and transport impacts, public access and interface risks, emergency events, fire and smoke hazards, hazardous materials, service disruptions, crowd management, and weather- or natural hazard-related events.
Construction-phase risks are managed through physical segregation, controlled access, traffic routing, signage, pedestrian protection, emergency preparedness, contractor obligations, and community-interface controls. The TMP and OCHSP establish measures relating to haul routes, access and gate management, vehicle scheduling, driver competency requirements, incident reporting, stakeholder communication, access continuity, emergency coordination, monitoring, inspections, audits, corrective actions, and KPI tracking.
Life and Fire Safety (L&FS) arrangements for the TEG Extension are addressed through a dedicated LFSP and supporting fire protection design package. The building permit application remains under review by the local authorities, while the L&FS strategy and sprinkler design have already been approved by the Ministry of Internal Affairs of Albania. An independent L&FS assessment of the TEG shopping mall and proposed extension, together with a high-level review of the Green Coast Hotel as a reference site, found that core L&FS systems are in place and generally consistent with an operating public facility. The review also identified opportunities to further align design and operations with local codes and GIIP, particularly as the TEG project progresses through permitting, construction, and future tenant changes.
As part of ESAP#4, Balfin will: (i) Designate or engage appropriately qualified and experienced L&FS personnel with clearly defined responsibilities and authority to oversee L&FS performance during both construction, commissioning and operation of both the existing TEG shopping mall and the TEG Extension; (ii) Prior to commencement of construction, obtain an independent review and verification of the TEG Extension L&FS design to demonstrate alignment with local codes, GIIP and internationally recognized standards. The independent review will cover, at a minimum, the egress strategy, smoke control strategy, fire protection systems, fire stopping/compartmentation approach, and applicable design criteria, and shall define testing and commissioning requirements. Balfin will also prepare and implement a construction-phase LFS egress plan to maintain safe egress and emergency access of the existing building during the extension works; (iii) Develop a risk-based L&FS Action Plan for the existing operational TEG shopping mall based on the findings of the independent L&FS Assessment. The Action Plan will include: (a) prioritization of recommendations according to risk and materiality, including estimated completion timelines and assignment of responsible persons/parties; (b) strengthened operational controls for higher-risk activities; (c) management-of-change procedures for tenant modifications; and (d) a documented procedure and schedule for periodic compliance reviews. The Action Plan will be submitted to IFC for review and approval prior to implementation. Where capital improvements are identified, these will be evaluated and incorporated into the asset planning and budgeting process, as appropriate.
Balfin maintains a Group-wide Grievance Redress Mechanism (GRM) for local communities, project-affected persons, and other external stakeholders. The mechanism provides a structured process for receiving, investigating, resolving, and monitoring grievances related to environmental, social, health and safety, and project-related impacts, with grievances recorded and tracked through a centralized system under the ESMS. The existing framework includes confidential reporting channels and survivor-centered principles applicable to GBV/SH-related complaints. As part of ESAP#3, the existing GRM will be further strengthened and operationalized to further integrate and refine GBV/SH grievances involving community members and project-affected persons, including confidential reporting channels, survivor-centered case management procedures, measures to protect complainant safety, and practical referral pathways and case management arrangements, proportionate to the Project risk profile and local context, to appropriate support services.
The Project remains at the design stage, and the future tenant mix and operational concepts have not yet been defined. Accordingly, it is not currently known whether the TEG Extension will include child-focused facilities or services. While Balfin's ESG Policy commits to maintaining child protection safeguards across its operations and supply chains, the Group has not yet established a standalone child safeguarding framework aligned with GIIP for identifying, managing, and responding to potential risks involving children and other vulnerable persons. As part of ESAP#5, Balfin will: (i) incorporate child safeguarding provisions into the Retail ESMS, including defined relevant Codes of Conduct, reporting and response procedures, contractor requirements, and security arrangements, proportionate to the operational risks of the TEG shopping mall and TEG Expansion Project and aligned with GIIP; and (ii) communicate the relevant child safeguarding requirements to direct and contracted workers, as appropriate. The Retail ESMS will include defining safeguarding responsibilities, Codes of Conduct, reporting and response procedures, a child-sensitive grievance channel, training requirements, and measures for identifying, managing, and responding to risks involving children and other vulnerable persons, including any risks associated with future child-focused facilities, services, tenants, or customer-facing activities.
TEG maintains both direct and contracted security personnel to support site safety, visitor management, access control, emergency response coordination, and protection of the operational facility during both normal operations and construction activities. Community health, safety, grievance escalation, and emergency coordination interfaces are addressed through the OCHSP, EPRP, GRM, and site operational procedures. However, the reviewed documentation does not currently establish security-specific training requirements relating to GBV/SH prevention, child safeguarding, or interactions with vulnerable persons. As part of ESAP#6, Balfin will: (i) develop security personnel training and procedures covering GBV/SH prevention, child safeguarding, appropriate interactions with vulnerable persons, and reporting and response requirements for safeguarding-related incidents, as part of the planned Retail ESMS supplementary package; and (ii) roll-out training to all security personnel.
