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.
Identification of Risks and Impacts
The Malvar 1&2 projects were subject to an Initial Environmental Examination (IEE) in 2022 and was granted an Environmental and Compliance Certificates (ECC) from Philippine authorities in 2022, followed by a Building Permit for the commencement of construction in 2024. A Fire Safety Permit and Hazardous Waste Authorization was issued for the Project also in early 2024. An electrical inspection was conducted by the local authorities and approved in November 2024. The ECC certificate covers key E&S issues, including building and engineering construction, management of waste, hours of construction and operation, traffic and utilities. The ECC requirements generally comply with IFC PS for this type of facility.
For the BTS site project, it has not currently been subject to an environmental and social impact assessment. An EIA under local Philippine regulations was prepared for the industrial park, including the extension that will play host to the data center. To comply with IFC PS, YCO will be required to prepare an Environmental and Social Impact Assessment (ESIA) for the Project as well as associated facilities [ESAP #1]. Based on IFC’s review of the project, the transmission line, water supply and wastewater treatment system are likely to be associated facilities as they are being constructed for the sole use of the BTS site project.
Environmental and Social Management System
YCO is currently developing an ESMS and intends to seek ISO certification when the documentation is finalized. Currently, an Environmental and Health System (EHS) is in place to manage risks during the start-up phase for the Malvar sites. The EHS Manual covers key topics including risk identification, stakeholder management, communities, emergency preparedness, safety and resource efficiency. The EHS document is complemented by a Hazard Impact and Risk Assessment Matrix (HRAC) that identifies facility risks associated with occupational health and safety (OHS), water and electricity use, hazardous and non-hazardous waste management as well as emergency hazards. The EHS manual and HRAC are required to be updated to adequately address risks during the data center’s establishment and operation, including for labor management, OHS management, operational governance and monitoring, management of contractors and supply chain. To comply with IFC PS, YCO will be required to develop and implement an ESMS [ESAP #2] in compliance with the IFC’s ESMS Implementation Handbook, relevant World Bank Group (WBG) Environment, Health and Safety (EHS) Guidelines for Telecommunications and WBG EHS General Guidelines. The ESMS is to apply to both the Malvar sites and the BTS site when completed.
Organizational Capacity and Competency
YCO currently has an EHS committee in place and a dedicated team. YCO has 3 staff on the EHS committee consisting of senior managers, and one person dedicated to EHS and sustainability compliance. There is an operational team member who coordinates EHS at a site level for the Malvar sites. There is no current reporting on E&S matters to the Board. Job descriptions currently do not list E&S objectives and responsibilities. To comply with IFC PS1 and as part of the ESMS preparation, organizational capacity to manage E&S risks is to be embedded within the organizational structure, reporting systems, and job descriptions [see ESAP#2]. A dedicated E&S resource is to be established to oversee the contractor during construction of the BTS site and is to continue during construction to develop and implement the ESMS.
Emergency Preparedness and Response
YCO’s HRAC includes measures to manage emergency situations and includes training, coordination with authorities, and emergency procedures. To comply with IFC PS, YCO is to prepare an Emergency Preparedness and Response Plan (EPRP) in compliance with IFC PS1 and relevant WBG and IFC guidelines [see ESAP#2]. The EPRP will need to provide clear identification of risks/hazards, emergency procedures, communication, training, as well as safety drills and community/stakeholder engagement.
Monitoring and Review
YCO’s HRAC includes measures to monitor and review facilities in relation to OHS, waste, electricity and water consumption, and in response to ECC requirements. The HRAC will need to be updated when the ESMS is developed to include a risk-based approach to monitoring, development of appropriate KPIs and reporting requirements, and a regular inspection protocol. Reporting mechanisms to management will also be required, as well as continuous improvement commitments [see ESAP #2].
Supply Chain
As part of the ESMS preparation [see ESAP #2], a supply chain management procedure is to be developed that undertakes risk assessments of suppliers, undertake supply chain mapping and verification and enable corrective action plans where risks are identified. The management procedure will manage PS1 and PS2 risks associated with child and forced labor and OHS with a particular focus on the construction of the BTS site.
PS 2 – Labor and Working Conditions
YCO has business operations within the Philippines, with their main officers located in Manila. Across the companies’ facilities, YCO employs 17 staff, with approximately 41% male and 59% female. Contractors deployed on a daily basis for security, cleaning, and maintenance are employed at the Malvar 1 and 2 sites consisting of 3 males, with more personnel added as needed. Once BTS site begins construction, it is expected that the site will contract construction to a main contractor. The workforce proposed for the construction has yet to be defined and will be assessed as part of the ESIA for the project. There are gaps identified within YCO’s existing Employee Toolkit which are outlined below and are to be addressed through review and update to comply with IFC PS2 [ESAP 3].
Human Resources Policies & Procedures
YCO has an Employee Toolkit that includes requirements related to recruitment that conforms with the Philippine Labor Code. The Toolkit includes covering aspects such as recruitment and onboarding, terms and conditions, performance management, privacy, training and development, competency, promotion, and grading. The policies also incorporate provisions on non-discrimination, sexual harassment and equal opportunity. Leave requirements also include special allowances for family leave. A Medical Insurance Policy is also taken out for all direct employees. All new hires are required to sign a formal Employment Agreement that lists wages and conditions of employment. The Toolkit is required to be updated to comply with PS2 as outlined below.
Workers Organization
To comply with PS2, the Employee Toolkit is to be updated to enable employees to form unions/ workers’ organizations.
Non-Discrimination and Equal Opportunity
YCO’s Employee Toolkit includes measures that include an Anti-Sexual Harassment Policy, and a policy on non-discrimination for hiring and employment related to race, religion, sexual orientation, gender identity, age, civil status, physical or mental disability. Specific policies are also in place to support women in the workforce. Training in relation to non-discrimination and equal employment opportunity is to be completed as part of workers' inductions and ongoing through employment. The Toolkit should be reviewed against IFC PS2 requirements to ensure consistency as part of the HR Toolkit update [see ESAP #3].
Occupational Health and Safety (OHS)
YCO’s Employee Toolkit includes provisions to protect employees from OHS risks. A basic framework is in place to prevent injuries and continually improve companies’ operations to prevent OHS risks. A companywide OHS risk assessment has not been completed, and specific Job Safety Analyses (JSA) have not been prepared for employees or contractors. YCO will be required to prepare a specific OHS Plan that enables risk assessments and JSA’s. OHS requirements are also to be outlined and stipulated by contractors. Detailed training requirements are also to be outlined to ensure that staff are adequately trained to manage OHS risks. Measures to collect and analyze OHS data are also to be developed [See ESAP #3].
Grievance Mechanism (GM)
YCO has a Grievance Policy and Mechanism that is within the YCO Employee Toolkit. The GM is overseen by the Grievance Redress Committee (GRC). The whistle blowing mechanism is in place for employees and contractors and enables anonymous submission through to the legal department. The GM enables evaluation by the GRC and redress to the complainant. Currently, the GM does not cover contract workers or tenants and hence it is to be reviewed and updated to comply with IFC PS2. The GM is to be updated as required by ESAP #3.
Workers Engaged by Third Parties
Currently workers are employed through contractors for security, cleaning, and maintenance. The Employee Toolkit currently is not specific in the application of labor and working condition policies for third party workers and contractors. The Toolkit is to be updated to apply relevant requirements to these workers, including contractor oversight, stipulating obligations under Philippine labor law, reducing risks of gender-based violence and harassment, pre-engagement screening of contractor and subcontractor labor practices, and monitoring of compliance. Third party workers are also to be made aware of and have access to GM and whistle blowing procedures [See ESAP #3].
PS 3 – Resource Efficiency and Pollution Prevention
Resource Efficiency
The HRAC includes measures to promote resource efficiency and efficiency. The Malvar 1&2 sites total 50MW and the BTS site will be 250MW. YCO is sourcing energy through contracts with local electricity suppliers, with a requirement for renewable energy. YCO has also stated that all internal lighting will be LED lights, and the installation of motion detectors for lights at the Malvar facilities. Further assessment of resource efficiency application is to be conducted during the design of the BTS facility as part of the ESIA process [See ESAP #1].
Pollution prevention
YCO’s HRAC includes commitments related to complying with ECC requirements and reducing offsite impacts from stormwater runoff. The Project also operates GenSets and associates fuel tanks at the Malvar sites that are bunded to prevent impacts from accidental spills. Additional measures to manage pollution risks are to be outlined within the ESMS [see ESAP #2]. Pollution prevention is to be further assessed during the preparation of the ESIA for the BTS site.
Wastes
Methods are in place to manage hazardous waste, including electronic waste and small batteries at the Malvar sites. A certified waste contractor is in place to collect and dispose of these wastes. Further assessment of waste generation and opportunities to reduce waste will be required at the Malvar sites and during ESIA preparation for the BTS site.
Noise
There is currently no external noise monitoring of the Malvar sites for both external noise and OHS noise. The ESMS is to be updated to include specific measures to monitor and manage noise at the Malvar sites. The ESIA will be required to assess potential noise impacts from the BTS site.
Water
There is limited water used for cooling at the Malvar sites; however, water cooling may be used at the BTS site. Dedicated groundwater sources and a water treatment plant are proposed for the BTS site and will require assessment during the ESIA process.
Wastewater
All domestic wastewater generated at the Malvar sites is discharged to a sewerage system operated by the industrial park. It is understood that the industrial plant’s wastewater treatment plant (WTP) complies with relevant Philippine standards. A dedicated WTP will be installed for the BTS site, which will be required to be assessed as part of the ESIA process as an associated facility.
Air
Back-up generators (gensets) are in operation at the Malvar sites which are tested on a regular basis. The gensets are maintained in accordance with manufacturers' standards. There is no exhaust testing currently at the Malvar site, and it will be required to be implemented as part of the ESMS [see ESAP #2].
GHG Emissions
Malvar One, Two and BTS (with an expected rating of 250 MW) are expected to be designed with PUE of 1.35, using 2.1 million MWh of electricity per year. 100% of this electricity is contracted from renewable sources, resulting in project emissions of 0 tCO2e per year. In the baseline, datacenters in ASHRAE zones 0-2A have a design PUE of 1.95 and powered by the grid, leading to emissions of 1.4 million tCO2e per year. Therefore, the Project is expected to lead to emissions reductions of 1.4 million tCO2e per year.
PS 4 – Community Health and Safety
Infrastructure and Equipment Design, Life and Fire Safety
The Malvar project has been designed according to Philippine design standards for structural integrity and life and fire safety. These local standards comply with relevant international standards to manage ongoing risks. The BTS site is currently being designed with the same standards applied which will be further assessed during the ESIA developed for the Project [See ESAP #1].
Traffic Impacts and Transportation Safety
Traffic for the Malvar sites is minimal as the project is in operation. For the BTS site, the number of workers and construction traffic will be required to be assessed as part of the ESIA [See ESAP #1].
Community Health and Safety
At the Malvar sites, there are currently no community health and safety measures in place. There are no residences within 2km of the site, however there are other industrial facilities nearby. For the BTS site, there are residences located less than 1km from the boundary of the site, which will need to be assessed for risks and a plan prepared, particularly in relation to potential impacts from the workforce on the community during construction. As part of the development of the ESMS, a community health and safety plan is to be developed that includes a community GM, human rights commitments, rules of engagement, and potential risks related to gender-based violence and harassment (see ESAP #1].
Security Personnel
Security personnel are currently contracted at the Malvar site who manage site access. These staff are trained to manage risks from community interaction; however, this will be required to be updated as part of the update of the HR Manual [See ESAP #3]. There are currently security staff contracted by the industrial estate for the construction of the BTS site. These staff will be required to be appropriately trained and assessed as per the updated HR Manual.
PS5 – Land Acquisition and Involuntary Resettlement
There are no land acquisition risks associated with the Malvar sites as land is located within an industrial park that has been established for over 10 years. For the BTS site, the industrial park proposes to acquire land of around 2500 square meters in size on a willing buyer/willing seller basis to build an access road of approximately 150 metres in length for the site proposed for construction of the data center. Land acquisition is to be assessed as part of the ESIA, compliant with IFC PS5. There has currently been no assessment of potential dependencies on the land, and no social baseline has been completed. The assessment undertaken for the ESIA will be required to consider IFC PS5 requirements during the acquisition process [See ESAP #1].
