Estre Ambiental

Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.

Project number	26512
Country	Brazil
Sector	Utilities
Department	Infrastructure
Company name	Estre Ambiental S.A.
Environmental category	B
Status	Active

Date ESRS disclosed	February 3, 2009

Previous Events	Invested: August 31, 2009 Signed: June 19, 2009 Approved: June 10, 2009

View Summary of Proposed Investment (SPI), click here

Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

IFC reviewed a series of documents describing Estre Ambiental’s (Estre or the Company) environmental, health, and safety and social management systems as well as corporate social responsibility programs, including:

- Presentations on business activities and investment plans;
- Environmental licenses for some operations;
- Employee Code of Conduct;
- 2006 Annual Report;
- Informational Bulletins from corporate social responsibility activities (for dates in 2007 and 2008);
- Project Design Documents (PDDs) for Paulínia, Itapevi, Terrestre and CDR Pedereira landfills; and
- ISO 14,001: 2004 certificates for some operations.

IFC representatives visited several of Estre’s ongoing concerns located in the State of Sao Paulo, including the sanitary landfill operations at Paulinia, Pedreira, and Itapevi, a soil bioremediation operation located adjacent to the Paulinia landfill, an electronics dismantling and recycling facility, and Estre’s environmental education center known as the Estre Institute, also located in Paulinia. IFC interviewed key management staff involved in the company’s environmental and social management and representatives from a consulting firm, Destra, providing technical support in these areas.

Project description

The project consists of financing Estre’s 2008-2010 investment plan (Investment Plan). The Investment Plan includes financing to support the company’s capital expenditure and growth strategy to:

- upgrade and expand Estre’s existing landfill facilities and associated landfill gas (LFG) collection and combustion systems,
- develop new sanitary landfills, including deployment of LFG collection and combustion systems,
- acquire and expand solid waste management related businesses,
- develop LFG-fired power generation projects in selected landfills, and
- enhance corporate management information system.

IFC's review of this project identified the following environmental, social, health and safety issues: management systems to assess environmental and social impacts, implement mitigation programs and undertake community relations; labor and working conditions of employees and contractors; leachate management and groundwater resource protection; management of hazardous and non-hazardous wastes; management of litter, dust, odors, and noise; potential occupational exposures to chemicals, pathogens, and vectors; land acquisition; and biodiversity conservation.

Key environmental and social issues and mitigation

PS1: Social and Environmental Assessment And Management Systems

- Environmental and Social Assessment - In the development of all new projects, Estre undertakes an environmental and social assessment of the aspects and impacts, both negative and positive, in the project’s zone of influence in accordance with applicable federal and state environmental laws. The environmental and social assessment cycle begins at the earliest stage of the project planning effort, particularly with regard to the identification of new landfill sites where Estre combines its concern for the financial viability of the project based on project location with the environmental and social viability of potential project sites. Estre’s preliminary assessment includes a review of the applicable legal framework and zoning laws, including those which could affect the possibility of receiving waste originating in other municipal jurisdictions. The State of São Paulo, where most of Estre’s current and proposed business concerns are located, has a well regulated, stepwise licensing process applicable to all industrial activities and entailing the preparation of feasibility studies in order to obtain preliminary licenses. This is normally followed by more detailed environmental and social impact assessments required to obtain first, a construction license (based on the regulator’s review of project impacts and mitigation measures), followed by an operating license that is issued after regulatory inspection of the fully constructed project, just before initiation of operations.

- Management Program – At the corporate level, Estre has a well articulated environmental policy focusing on: compliance with applicable environmental regulations; application of the principle of continuous improvement; maintenance of management programs that ensure positive environmental outcomes; and improvement of capacity on environmental practices of business partners. The company manages labor and occupational health and safety aspects also at the corporate level, based on a program organized, staffed, and implemented by the human resources department. This program includes a series of human resource management procedures designed to ensure compliance with applicable regulatory requirements in the areas of labor (i.e. hiring and compensation issues) and occupational health and safety (i.e. training, health monitoring, etc). Environmental management programs are mainly organized at the divisional level with the support of an external technical consultant who assists Estre in the preparation of environmental management plans and procedures. Also at the divisional level, Estre has achieved environmental certification of two of its principal landfill operations, CGR Paulínia and CDR Pedreira, under the international certification standard of ISO 14001. For Itapevi landfill, Estre is planning to get the certification in 2009. In 2010, the company plans to get the certification for Terrestre and CGR Guatapará. Regarding the other units, Estre has achieved the international certification of ISO 14001 for the soil bioremediation plant, electronic dismantling and recycling facility (Oxil), biogas collection and flare system and for the recycling cooperative of Estre Institute. Estre will review the Environmental and Social Management Plan (ESMP) to ensure consistency with applicable IFC Performance Standards and Environmental, Health, and Safety (EHS) Guidelines.

- Organization – Responsibility for the management of environmental aspects at the Corporate level is retained first by the company CEO and then assigned to line managers and employees through inclusion in their job descriptions. The company CEO relies on the strategic advice provided by the head of the consulting firm Destra (a former Secretary of Environment for the State of Sao Paulo). Estre also relies on the services provided by Destra to help ensure compliance with regulatory requirements mainly in environmental permitting (including assessment of environmental and social impacts), leachate management, groundwater monitoring, and community relations. In the landfill business, the company is adequately staffed with professionals dedicated to such aspects as landfill gas collection, leachate management, and waste screening activities and who support the main operational activities. Occupational health and safety aspects are coordinated at the Corporate level by specialized occupational health and safety technicians reporting to the Corporate Human Resources Department. Community engagement activities (described under the “Client’s Community Engagement” section below) are mainly organized and managed through Estre Institute, a well staffed Corporate-sponsored not-for-profit entity.

- Training – Training programs are planned and organized by the Corporate Human Resources department based on yearly evaluations of staff training needs and on the job characteristics and associated risks of employees. Examples of training topics covered in the 2008 period include ergonomics management; adequate use and care of personal protective equipment (PPE); fire prevention and response; and internal accident prevention training. Company employees providing environmental services for major clients (such as Petrobras) also undergo training under those clients’ EHS requirements.

- Monitoring – Estre has a well established monitoring program covering key environmental, health, safety and social indicators applicable to its operations. Environmental monitoring activities cover diverse aspects such as landfill gas generation and flaring (using a computerized real time data logging system); quantity and quality of landfill leachate; environmental media such as surface water and groundwater, soil, air, as well as fauna and flora. Estre’s landfill operations in the State of Sao Paulo are further monitored by state environmental regulators who also collect and analyze groundwater samples from perimeter monitoring wells. Occupational health and safety (OHS) monitoring activities include workplace exposures to noise, elevated temperature and chemical agents consistent with Brazilian Regulatory Norms. Estre has instituted a government required joint health and safety committees (CIPA) with representatives from the workers and management who supervise and report on health and safety issues encountered during work. CIPA committees are also responsible for investigating and analyzing occupational accidents, incidents, and health issues.

- Reporting – Environmental monitoring results from landfill operations are compiled into reports submitted to the State Regulatory Agency on a quarterly or semi-annual basis depending on regulatory requirements. Estre further reports on the results of its landfill gas capture and flaring activities for submittal to a qualified independent entity for the purpose of generating certified emissions reduction credits (CERs) under the United Nation’s Framework Convention on Climate Change (UNFCCC) protocol. The results of OHS monitoring activities are compiled into internal reports that are reviewed by the Operational Manager and the CEO who have ultimate operational responsibilities.

Estre has included a summary of environmental, health, safety and social program activities in a Corporate Annual Report (last report covering the period of 2006). The Annual Report includes a summary of environmental practices associated with landfill operations, general information about health and safety training programs, and a summary of corporate social responsibility programs. Since December 2007, the company has also published a periodic information bulletin (Boletim Informativo do Instituto Estre de Responsibilidade Socioambiental) highlighting its corporate social responsibility activities.

PS2 - Labor and Working Conditions

- Human Resource Policy and Management – The company has a total of 739 employees, 74% of who are dedicated to operational activities with the remainder dedicated to administrative functions (i.e. accounting, human resources management, etc). Company operations have grown significantly over recent years, resulting in an overall employee increase of almost 200% since 2006. The company currently communicates employee rights and responsibilities through employment contracts and through a Company Code of Conduct. The Code of Conduct covers company policy regarding occupational health and safety; conflict of interest; gifts from external parties; discrimination; confidentiality of information; sexual / moral harassment; political activities; company property; drug and alcohol abuse; use of information technology and telecommunications; dress code; corruption; accounting integrity; and communications with the press. The company will develop a formal Human Resource Policy consistent with local labor law and IFC’s Performance Standard 2 to complement the information provided to employees through the labor contracts and Code of Conduct. The Company will ensure that the Human Resources Policy clearly communicates to employees such aspects as: entitlement to and payment of wages; permissible wage deductions; overtime payments; hours of work and any legal maximums; entitlement to leave for holidays, vacation, illness, injury, and maternity and other reasons; entitlement to benefits; employees’ right to form and join workers’ organizations of their choosing and to bargain collectively with the employer; disciplinary and termination procedures and rights; conditions of work; promotion requirements and procedures; and vocational training opportunities.

- Worker’s Organizations – Estre supports employees’ rights to freedom of association and collective bargaining in compliance with Brazilian law. Estre is a member company of the Association of Waste Management companies which has a collective agreement with the union of waste management workers of the State of Sao Paulo (SIEMACO – Sindicato dos Trabalhadores e Empresas de Prestação de Serviços de Asseio e Conservação e Limpeza Urbana de São Paulo.

- Grievance Mechanism – The company employees are currently able to lodge complaints internally through the Human Resources department and company management, although there are no written procedures or formal mechanisms, and externally through the public Labor Rights system (Justica de Trabalho). The company will create and implement a formal internal grievance process which will allow: (a) any employee grievance by individuals or groups (including anonymous complaints) to be presented verbally or on in writing, without the risk of reprisals; documented and reviewed by company management and subject to a timetable for formal response and resolution; (b) workers the opportunity to meet with management, accompanied by a representative or companion; and (c) an appeal mechanism. The company will make the grievance procedure available to all existing and new employees at the time of hire (as part of its Human Resource Policy or other document).

- Protecting the Work Force – The company complies with legal minimum age of work requirements by requesting valid documentation of age in the employee contracting process. Access to all company operated landfills is carefully controlled and none of the company operations allow informal scavenging of recyclable waste materials. Through one of its community engagement programs, Estre sponsors a recycling cooperative at the Paulinia Landfill which includes a formal recycling system equipped with reception facilities, sorting and storing equipment, weather protection, and sanitary facilities.

- Occupational Health and Safety – Estre has an OHS program which includes a set of operating objectives based on the identification and quantification of workplace risks coupled with applicable legal and other requirements. To prevent workplace accidents and promote the health of its employees, Estre implements Brazilian Regulatory Norms (NR) applicable to its operations including those related to the identification and monitoring of chemical and physical hazards through a Workplace Environmental Risk Prevention Program or PPRA (“Programa de Prevenção de Riscos Ambientais”), use of personal protective equipment (PPE), emergency preparedness and response, and medical surveillance (PCMSO or “Programa deControle Médico de Saúde Ocupacional”).

PS3: Pollution Prevention and Abatement

- Solid Waste Landfill Operations –Estre’s landfill operations include five facilities in the State of Sao Paulo and one facility in Argentina receiving an approximate daily total of 18,500 tons of solid waste. During the development phase, Estre’s solid landfills are carefully sited away from dense urban population centers and protected areas, and taking into account the prevention of potential impacts to soil and groundwater resources. Additionally, they are designed, built, and operated with leachate and landfill gas collection and control systems. The bottom liner design includes a 1 meter layer of compacted clay with a permeability of 1x10-7 centimeter/second, a 2 mm layer of high density polyethylene (HDPE) geotextile membrane and a 0.6 meter layer of compacted clay over the geotextile membrane (installed following state-of-the-art quality assurance and control procedures). On top of the second compacted layer of clay, mounded rock drains are constructed with an HDPE pipe inserted in the rock drain. Landfill leachage is collected in storage tanks and transported for final treatment at government operated sanitary and industrial wastewater treatment plants. Groundwater monitoring systems include wells located upgradient and downgradient. Landfill operations are designed and permitted to receive non-hazardous solid waste. The company carries out inspections of all incoming wastes to ensure compliance with contractual requirements from waste transporters and clients.

The company maintains a well controlled open working front in its landfills in order to minimize the attraction of wildlife (such as birds) and to prevent the spread of odors and windblown dust and litter. Access roads and internal areas are continuously sprayed with water during the dry season to minimize dust generation.

In order to minimize the release of methane gas from Estre’s solid waste landfills, methane is captured through a controlled collection system and flared through a high efficiency flaring system. Methane generation is projected to increase over time with the growth of Estre’s main landfills, reaching a peak and then declining following landfill closures after they reach their waste holding capacity. Total current generation of landfill gas at Estre’s three largest landfills (Paulinia, Pedreira, and Itapevi) is approximately 1.4 million tons CO2-equivalents annually, 70% of which is captured and flared, resulting in an approximate emission of about 400,000 tons CO2-equivalents from these facilities.

Estre plans to develop landfill gas (LFG)-fired electric power generation projects, first in the Paulinia Landfill, followed by projects in Itapevi, CDR Pedreira and Terrestre Ambiental. The project concept includes installation of a facility with an electric generation capacity of 9MW in Paulinia and 3 MW in Itapevi, depending on the incremental availability of landfill gas over the operating life of the landfills, using a series of 1.5 MWe reciprocating engines. Emissions from these facilities include nitrogen oxides (NOx) and carbon monoxide (CO) and less significantly sulfur dioxide (SO2) and particulate matter (PM). Combustion plant emissions will comply with applicable regulations as well as IFC combustion source emissions guidelines (from IFC’s General EHS Guidelines).

- Hazardous Waste Management Activities - Estre’s hazardous waste management businesses are centered on the in-situ and ex-situ treatment of hydrocarbon contaminated soils, typically through the use of a patented German bioremediation technique acquired by the company. Contaminated soils which are classified as a hazardous waste are biologically treated, reducing hydrocarbon levels to a point which render the soil non-hazardous and apt for disposal at Estre’s solid waste landfills. The enclosed soil bioremediation facility located adjacent to the Paulinia landfill protects stored soil materials from the rain and prevents the generation of contaminated liquid effluents. The facility generates atmospheric emissions in the form of volatile organic compounds (VOCs) generated from soil handling and bioremediation activities which are captured via a ventilation system and treated through air bio-filters.

- Electronic Waste Recycling Operations – Estre has recently acquired and plans to expand an electronic waste recycling business (known as Oxil) which dismantles household electronics, such as computers and computer displays, and appliances, such as refrigerators. These operations dismantle and separate non-hazardous components, such as plastics and metals, into segregated recyclable materials, and separate and dispose of hazardous materials from the waste stream. Examples of hazardous materials found in electronic waste disassembled at this facility are chlorofluorocarbons (CFCs) and lubricating oil containing compressors from old refrigerators and small quantities of lead-containing dust from computer terminal monitors. These materials are sent to specialized, licensed service providers for final treatment and disposal.

PS4: Community Health, Safety and Security

Access to Estre’s operating facilities is restricted only to authorized persons or accompanied visitors under strict supervision and safety procedures. Transport of waste materials to Estre’s facilities are mainly conducted by third parties subject to Brazilian road safety and driver licensing laws. However, environmental and safety issues associated with waste transport activities such as noise, odors, litter, and excess quantity and speed of traffic are among the concerns being expressed by one of the communities through which waste transport vehicles transit in their way to and from one of Estre’s landfill operations in Paulinia. Estre will evaluate and address these concerns in discussions with the municipality, community and transport companies.

PS5: Land Acquisition and Involuntary Resettlement

Some of Estre’s existing landfill operations have required the purchase of land which the company has conducted based on mutual agreements with the landowners. Land values used in the negotiations have been based on market value for the location and use of the land. Past purchases, such as for the Paulinia landfill site, have included the displacement of approximately three to five families who lived as tenants and/or employees of former landowners. The company will review the negotiation and compensation processes applied to these former tenants and the relocation and other livelihood restoration assistance provided by the former landowner, if any and will implement any potential corrective actions to ensure compliance with PS5, if required. As Estre’s immediate business expansion plans may include the need for additional land acquisition and greater potential for resettlement (including possible interest in development of pipeline projects), Estre will develop a formal land acquisition procedure to ensure these activities are conducted in compliance with IFC requirements.

PS6: Biodiversity Conservation and Sustainable Natural Resource Management

During the site selection process prior to project development, Estre ensures that new facilities are not located within or in proximity to legally protected areas or sites of high biodiversity value. New landfill sites are typically located in land previously developed for other purposes such as cattle grazing or rock quarrying. Land acquisition for new developments includes a legally required buffer zone that must be developed and maintained as a “green belt”. Estre maintains a tree seedling nursery located in Paulinia which produces about 80,000 seedlings per year and supplies all the necessary stock for plantation of green belt areas. The seedlings consist of carefully selected local (non-invasive) native tree species, grown without the use of pesticides or other agrichemicals. Landfill construction and operation activities include detailed plans for slope stabilization of closed sections using native grasses.

Client's community engagement

The environmental permitting process in Brazil and in the State of Sao Paulo specifically, to which all of Estre’s existing facilities are subjected to, includes a comprehensive public consultation process which begins with the publication of a summary of the environmental and social impact studies in the local government offices, such as municipal offices, for a period of public review, together with an announcement soliciting comments from the public. This publication and announcement are followed by dissemination of project information to residents of potentially affected communities and invitation for a public audience held before the environmental regulatory agency responsible for the issue of environmental license. Records of the consultation and permitting processes are kept by the relevant regulatory agency and are available to public inquiries. Copies of environmental licenses for the landfill operations are posted on the company’s website at: http://www.estre.com.br/br/operacoes.html

Over the last three years, Estre has also created an ambitious community engagement program through the creation and sponsorship of Estre Institute. The Institute includes an Environmental Education Center focusing on aspects of waste prevention, waste re-use and recycling, and among others. The Institute’s tree nursery also provides the seedlings used in urban reforestation projects and is used as part of the environmental education program by Estre Institute. In conjunction with the Paulinia landfill and the Cooperlinea solid waste recycling facility situated at the same location, the Institute has also organized a recycling and waste prevention education program which includes access to the landfill for observation and education to the community about its operation. Through CDR Pedreira (located near Guarulhos), Estre supports an educational project in Cantareira State Park focusing on the environmental preservation of the park.

The total financial contribution by the company for the implementation of community engagement and environmental education programs is approximately US$1.5 million per year.

Over the last year, the company has received complaints from communities located along the access road to the Paulinia landfill due to concerns about such issues as truck traffic noise, odors, litter, and excess speed. The company has informally engaged with the community in response to these concerns, although such complaints have continued to surface in the local media. In addition to the availability of a general telephone number through which members of the public can contact the company to lodge complaints, the company is also planning a pilot project in the vicinity of the Paulinia landfill to have a patrolling vehicle which will circulate public roads, prominently displaying the name of the company and the telephone number. The company will complement these efforts with the preparation and implementation of a formal community grievance process (complaint mechanism). The process shall document grievances received and responses provided (such as the name of the individual or organization; the date and nature of the complaint; any follow up actions taken; the final decision on the complaint; how and when relevant project decision was communicated to the complainant; and whether management action has been taken to avoid recurrence of community concerns in the future), and reported back to the affected communities periodically. The company will designate a point of contact, such as a community liaison officer (or another experienced and qualified person within the institution not directly involved with the operation of the facilities under question), to whom project-related views and concerns of the affected community can be addressed.

Local access of project documentation

Any inquiries and/or comments about the project may be directed to:

Leonardo Santos
Chief Financial Officer
Estre Ambiental S.A.
Av. Presidente Juscelino Kubitschek, 1830
Torre IV - 4º andar - Itaim Bibi
04543-900 - São Paulo – SP
Tel: 55 (11) 3709-2300 / Fax 55- (11) 3078-3355
e-mail: leonardo.santos@estre.com.br

IFC PROJECTS

RECENTLY DISCLOSED