9132 - La Universal, S.A.

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Environmental & Social Review Summary

Project Number

9132

Company Name

La Universal S.A.

Date ESRS Disclosed

Feb 5, 2010

Country

Ecuador

Region

Latin America and the Caribbean

Last Updated Date

Dec 31, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jan 8, 1999
Signed : Jun 17, 1999
Invested : Jul 19, 1999

Sector

Diversified Edible Agricultural Crops Production

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

October 21, 1998

Environmental Review Summary (ERS)

Project Name ECUADOR: La Universal

Region Latin America and Caribbean

Sector General Manufacturing

Project No. 009132

1. La Universal is one of Ecuador’s leading confectionery and food manufacturers. Its main products are chocolate and consumer cocoas, hard and soft candy, crackers, wafers and pasta. This project involves the restructuring and expansion of its existing operations by: (i) upgrading existing equipment and eliminating bottlenecks (mainly in wrapping); (ii) the reorganization and re-engineering of the company’s production layout to improve efficiencies; (iii) a new warehouse facility; (iv) reducing its permanent labor force; and (v) retailoring of short-term debt. The restructuring and expansion is expected to be completed by December 31, 1999.

2. This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Technical and Environment Department staff. The following potential environmental, health and safety impacts of the project were analyzed:

· current and past land use;
· social impacts from workforce reductions;
· liquid effluents;
· solid waste disposal;
· air emissions;
· power and water supply;
· use of appropriate refrigerants;
· hygiene and housekeeping;
· workers safety and training;
· emergency response; and
· fire protection.

The sponsor has presented plans to address these issues and demonstrate that the proposed project will comply with applicable governmental and World Bank requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.

3. La Universal’s existing factory is located in the south section of the City of Guayaquil and is surrounded by the Guayas river. The proposed expansion will be developed in an existing three level building with an area of 5000 m2. The new warehouse facility will be located in an unhabited lot one mile away from the existing factory in an area of 7000 m2.

4. La Universal’s Management discharged all union employees and paid all required separation and other wages due, for a total cost of US$7.4 million. The management decision was precipitated by prohibitive work rules developed by the union over many years, excessive benefits demanded beyond industry standards, and high wages. The discharged of union employees reduced La Universal’s workforce by 210 people from 560 to 350 today.

5. Liquid waste generated during the cleaning of the manufacturing areas, and sanitary uses will be discharged to the municipal sewer system for its treatment. La Universal’s Biochemical Oxygen Demand (BOD) parameter is not in compliance with World Bank guidelines. La Universal has agreed to prepare a Corrective Action Plan (CAP) to address this issue, which will be resolved by December 31, 1999.

6. The solid waste generated include: wrapping and packaging materials (2,500 kg/yr.); cacao by-products (980 tons/yr.); chocolate waste (4,250 kg/yr.); candy waste (1100 kg/yr.); and pasta waste (6,500 kg/yr.). The by-products are sold for fat extraction purposes, the candy, pasta and chocolate waste are sold to industries for the manufacturing of animal feed, and the wrapping and packaging materials are recycled. The domestic waste is collected and disposed of according to local regulations.

7. Air emissions from the cocoa roasting area will be recirculated and discharged through a dust collection system. Personal protective equipment such as dust masks will be provided to employees in areas susceptible to air borne non-toxic food dust.

8. Potable water is brought in tanks to the company on a daily basis. The company has planned the installation of a 400 m3/day water treatment plant to filter water from the adjoining river. This plant will include a reverse osmosis system. The electrical power is supplied by the municipal utility, however, the company will install a substation with a capacity between 69,000 to 13,800 volts.

9. La Universal will develop an emergency and preparedness program for its facility. The training programs will include fire protection, use of fire fighting equipment, housekeeping and hygiene, and general health and safety procedures. A fire brigade will be formed. The factory is equipped with fire extinguishers and smoke detectors. Additionally, the improvement plans for fire safety includes the installation of a complete water system with an electric pump and a gasoline stand-by pump, which will cover the entire factory.

10. A medical first aid department is available on the premises and the company uses a local medical clinic for minor injuries or illnesses.

11. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project is being designed to meet Government of Ecuador requirements, and World Bank policies, and environmental, health and safety guidelines.

12. IFC will monitor ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by the sponsor and by conducting periodic site reviews during project supervision.

\\StreetTalk\Shared Data@CTENET@IFC\wpeu\Mainstream Projects\Ecuador\La Universal-9132\ERS.doc
October 21, 1998 3:46 PM

Environmental and Social Mitigation Measures

Broad Community Support

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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