Beraca Ingredients

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	26747
Country	Brazil
Sector	Industrial & Consumer Products
Department	Global Manufacturing & Services
Company name	Beraca Ingredients
Environmental category	B
Status	Pending Approval

Date ESRS disclosed	April 11, 2008

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

This is a Category B project, according to IFC’s procedure for environmental and social review of projects. The review of this project consisted of appraising environmental and social information submitted by the project sponsor and assessing the company’s operations through site visits conducted by the project team. The following potential environmental, health and safety, and social issues were analyzed:

- existence and operation of integrated environmental, social, and health and safety management systems;
- natural resource use (non-timber forest products) and cultivation management practices and policy;
- air, water and solid waste emissions from processing facilities;
- compliance with national food product safety requirements;
- occupational health and safety issues for the workforce;
- supply chain, labor and commercial relations with local Amazon communities;
- social programs, including training, capacity building, and community engagement; and
- hazardous materials management at the bleach plants.

Project description

Beraca (Beraca or the company) is a small family-owned company generating products from the Brazilian rain forest. Beraca refines oils from non-timber forest products (NTFPs), such as fruits, seeds, resins, nuts, bark, pulps harvested from native forests or cultivated by farmers. Most of these NTFPs or planted fruits come from the Brazilian Amazon, with a smaller percentage coming from Piaui state, outside of the Amazon. Para State accounts for about 60%, Amazonas State 30%, and Rondonia and Amapa States 10% of overall Amazon production.

The company sells these oils to the cosmetic, health care, and perfume markets, with clients such as Natura and Boticário (Brazil), Rocher (France), Boots (UK) and Givodan (Switzerland). The company manages a Biodiversity Enhancement Program, whose basic pillars are people (working with communities) and forest (sustainability, conservation, and certification (working with FSC, Fair Trade (TransFair), and organic (IFOAM/Ecocert).

Beraca also produces chlorinated materials for water treatment and operates treatment facilities throughout Brazil.

Key environmental and social issues and mitigation

The sponsor has presented plans to ensure compliance of Beraca’s projects with applicable host country laws and regulations and IFC requirements as presented in the paragraphs below.

- PS1: Social and Environmental Assessment and Management Systems

The company has a good capacity to deal with its environmental, occupational health and safety, and social management responsibility. The facilities dealing with the extraction, refining and distillation of oil from non-timber Amazon products have a small environmental footprint and limited occupational health and safety risks.

In NTPF collection activities, Beraca has appropriate separate protocols for different products. However, the company now needs to integrate and systematize these separate procedures while developing a plan to enhance and take the current program to the next level. Beraca will ensure that all products are either FSC or Ecocert certified, where applicable certification protocols exist. In circumstances where a product’s origin does not fit an existing certification protocol, Beraca will document principles of such use so that future certification can be obtained if appropriate protocols are developed. The limitations of existing certification protocols to Beraca’s business are described further in the section of this ESRS that describes the project’s compliance with PS6.

The risks associated with the plants producing chlorinated water treatment materials are assessed regularly according to procedures set up in the PRODIR process, described below. On the basis of such assessments, the company developed and is implementing programs for the prevention of environmental and occupational risks.

Consistent with PS1 requirements, Beraca implements a series of management systems at corporate level and in various operations depending on their respective line of business, and has the following current certifications:

- The company has SA 8000:2001 certification for Corporate Social Responsibility – this program is also consistent with the Global Reporting Initiative.
- Sites manufacturing water treatment products have “Certificado de Empresa PRODIR” (Processo Distribuiçăo Responsável) - PRODIR is an initiative of the Brazilian chemical industry consistent with Responsible Care ©.
- The company is also a member of the Chlorine Institute (www.chlorineinstitute.org/AboutCI/) since September 9, 1991.

The Chlorine Institute Inc. (CI) founded in 1924, is a technical trade association of companies that are involved in the safe production, distribution and use of chlorine, sodium and potassium hydroxides and sodium hypochlorite, and the distribution and use of hydrogen chloride. Because of chlorine’s nature and its widespread and varied use, the promotion of its safe handling has long been an accepted responsibility of its producers, packagers, distributors and users. The Institute is the focal point for their combined efforts.

- Chain of Custody Certificate by SmartWood as per FSC principles and criteria - Beraca Sabará Químicos e Ingredientes Ltda
- Certificate of Conformity from ECO-CERT for E.U. Third-Country Organic Products – Beraca Sabará Químicos e Ingredientes Ltda.
- SA 8000:2001 for Corporate Social Responsibility – Beraca Sabará Químicos e Ingredientes Ltda. This program is also consistent with the Global Reporting Initiative

In accordance with the corresponding standards, the above programs include adequate organization capacity, training, community engagement, monitoring and reporting.

- PS2: Labor and Working Conditions

Labor and working conditions are an important consideration for Beraca, as illustrated by its SA 8000 Corporate Social Responsibility certification. Beraca has a Human Resources policy and employment relation that comply with Brazilian government legislation. In compliance with IFC’s Performance Standard 2, Beraca is an equal employment opportunity employer. Its Human Resources policy includes provisions covering prohibition of sexual harassment and child and forced labor, and in support of non-discrimination, freedom of association, fair salaries, local hiring, an employee grievance procedure, recruitment transparency, and health and safety. Other examples of progressive features of Beraca’s human resources policies include an attractive benefits package, periodic independent studies carried out among Beraca staff to measure the level of commitment and satisfaction; and an HIV-AIDS prevention in the workplace program. Furthermore, labor turn-over rates are low.

Beraca has an agreement with the Ministry of Labor to include a certain percentage of handicapped people in workforce. For the last 2 years, Beraca has held discussions on the harmful aspects of child labor with its staff and suppliers. When Beraca identifies new communities or individual suppliers, the avoidance of harmful child labor is part of the initial protocol before a community can become a Beraca supplier.

Processing of non-forest products, food storage and distribution, and administrative activities do not pose a significant risk to the company’s workforce. Beraca has adequate OHS procedures in its various installations although not in a systematic management system yet. At the water treatment product plants risks are greater because of the use of highly hazardous materials, such as chlorine liquid and gas, caustic soda, hydrochloric acid and others. To avert potential exposure of the workforce and the community to hazardous chemicals the company is implementing the PRODIR process, which consist of a number of health and safety programs as follows:

- PPRA: Prevention of Environmental Risks Program, which regulates the activities of Beraca’s Accident Prevention Committee (CIPA) and Emergency Preparedness and Response Plan.
- PCMSO: Medical and Occupational Health Control Program, which contains the LTCAT (Technical Record of Environmental Working Conditions) recording system.

- PS3: Pollution Prevention and Abatement

There are two plants dedicated to the extraction, refining and distillation of oil from non-timber Amazon products such as seeds, leaves and roots, both located in the Ananindeua municipality in Belem de Pará. One of the plants is a rented facility which is currently being decommissioned and will be consolidated into the newly constructed facility. The footprint of the Ananindeua plant (the new installation) is relatively small and it has no significant environmental issues.

Heat for drying the raw material will come from an efficient biomass-fueled oven. Steam required for refining and distillation of the raw materials will be produced by a new gas-fired boiler. Given their small size of the oven and the clean fuel of the boiler, during normal operation both are expected to comply with IFC air emission standards.

The refining area produces an emulsion that will be treated using a compact flotation system that renders the wastewater suitable for irrigation within the plant. There is no external discharge of industrial wastewater. Sanitary effluent will be treated in a septic tank whose waste will be regularly taken away for treatment by an accredited company.

Solid waste has several destinations: spent clay from refining and wastewater solids will be disposed of at a sanitary landfill; woody cake from oil extraction and refining will be treated by third parties in Sao Paulo for the production of bio-scrubs and for the extraction of other useful elements; a small part of the waste will be used as bio-fuel.

The water treatment products plants do not use boilers or heaters and produce no emissions during normal operations. There is no industrial wastewater discharge, and sanitary effluent is treated in a septic tank whose waste is regularly taken away for treatment by an accredited company. Solid waste for treatment of sludge from the washing of chlorine tanks is disposed of by a licensed company in a sanitary landfill. Management of emissions, wastewater and solid waste are in material compliance with PS3.

- PS4: Community Health, Safety and Security

Given the small footprint of the plant, its location in a predominantly industrial area and its adequate management of waste PS4 is not applicable to the Ananindeua facility.

Community health and safety are key issues at the water treatment product plants because of the use of highly hazardous materials, such as chlorine liquid and gas, caustic soda, hydrochloric acid and others. Beraca’s chemical plants are in mixed land-use areas with neighboring industries, warehouses, and communities (including a penal community in the vicinity of the Itapissuma plant). Beraca has adequate procedures for the prevention and control of emergencies, such as chlorine leak detection, absorption systems, competent emergency brigades, and external communications in the event of significant leaks. The company has a good track record in relation to accidents (e.g. up to 2300 days without loss-time accidents at Itapissuma). No accident with exposure outside the boundaries of the company has occurred in over 30 years. Beraca has not registered security issue problems with its property. Factory operations are protected by locally hired security firms.

- PS6: Biodiversity Conservation and Sustainable Natural Resource Management

Beraca refines oils from fruits, seeds, resins, nuts, bark, pulps harvested from native forests or cultivated by farmers. Most of these non-timber forest products (NTFPs) come from the Brazilian Amazon. Para State accounts for about 60%, Amazonas State 30%, and Rondonia, Amapá, Piauí States 10% of production. Beraca created the Biodiversity Enhancement Program (BEP) to manage this program. The program, which has 3 full-time staff, and will soon expand with additional staff, focuses on the nexus between the social environment (local communities) and forest/agricultural product sustainable use.

In addition to Beraca’s own FSC Chain of Custody certification, the company attempts to work with each community or supplier to obtain the most appropriate and available certification and when this is not available, a score card system is used. This includes for different products FSC, Fair Trade (in process) and TransFair (obtained), and organic (Ecocert).

When Beraca identifies suppliers, a determination is made during site visits that producers are not using harvesting methods that could negatively affect the natural habitats and that the producers are willing to work toward certification and comply with any specific state regulations. Beraca then invites relevant certifying organizations to visit the site.

Certifiers (like Ecocert) require suppliers to sign agreements to comply with the criteria of the certification. Additionally, land owners must have title, and must be regularized with any environmental legislation. All producers must avoid harmful child labor. No plants considered vulnerable according to the International Union for Conservation of Nature and Natural Resources (IUCN) Red Book listings are harvested. Beraca’s policy is to certify or purchase from certified producers whenever possible and necessary. Beraca is developing standards for new situations. For example, flood plain communities can often not be certified because certifiers (like FSC) require land title and all the floodplain lands belong to the Brazilian Navy. Beraca’s purchasing efforts provide much needed supplemental income for rural communities. Suppliers that follow Beraca’s requirements receive value-added processing training (drying, oil extraction) that allow these communities to earn more income by local value-added processing.

A significant percentage of the nuts and seeds sold are not gathered from the forest itself but are found on the shores of beaches and rivers as they have washed up (having fallen from forests many miles away). The only certification available here is organic, such as Ecocert. Ecocert has criteria for biodiversity protection in the context of harvesting NTFPs. Both certifiers and company specialists feel that beach refuse scavenging does not present a known risk to the survival of the species. Such beach piles are periodically burned by municipal officials to “clean” the beaches.

In order to enhance the current environmental and social management of its Biodiversity Enhancement Program (BEP), Beraca will review and systematize its procedures while developing a plan to take BEP to the next level (see the attached Environmental and Social Action Plan). This plan will include both products that are certified and those for which no certification system yet exists. Beraca will continue to contribute to the dialogue on evolving certification systems for non-timber forest product ingredients and continue certify as appropriate certifiers are readily available.

Client's community engagement

Beraca, founded in 1956, gives preference to hiring locally and employs over 300 direct employees and indirectly, 1, 700 individual rural community producers. One of Beraca’s goals is to be able to use its relationship with communities as an instrument for economic development whereby communities working with Beraca become part of a sustainable supply network. Beraca works with a range of producers, communities, and cooperatives. In these relationships, Beraca seeks to promote community relationships involving open dialogue, transparency, fair market prices, training and technological assistance for improved processing, certification support, and support for forming community associations. As communities become trained in value-added processing and better organized, they get increased prices for their products. Beraca will also help communities purchase the equipment required. Beraca, as part of its environmental and social action plan (ESAP), will enhance its social and environmental management system (SEMS) (see attached ESAP for details).

At the corporate level, Beraca is a participant in the corporate social responsibility initiatives of the Instituto Ethos (Brazil’s most well-known Corporate Social Responsibility NGO). Beraca will also start to publish an annual social balance sheet (Balanço Social) focusing on its commitments in the UN Global Reporting Initiative (GRI). Beraca also became signatory of Global Compact (United Nations), where it is committed to aligning its operations and strategies with ten universally accepted principles in the areas of human rights, labor, the environment and anti-corruption.

Beraca has received a number of awards recognizing its innovative work with communities and its commitment to sustainability. Beraca was chosen as a finalist for the World Challenge 2007, an annual competition hosted by the BBC, Shell, and Newsweek to recognize business projects that support sustainable social development of communities. Beraca was recognized for its programs known as “Out of The Forest” which works with a cooperative of rural women on Marajo Island, at the mouth of the Amazon river, who collect andiroba seeds washed up on the beaches on the island to process for oil. Beraca was also recognized by the German-Brazil Chamber of Commerce as a first place winner of the Karl Friedrich Von Martius Sustainability Award for Beraca’s innovative technologies to sustainably develop non-timber forest products for the global cosmetic market that could help sustain the standing forest.
Internal and external communications are important for Beraca. This includes both consultations with communities where fruits and plants are gathered or grown. Concerns from external groups or members of the local community are currently directed toward the contact person assigned to each project in Beraca’s organization. Concerns or complaints at the corporate level are channeled to the department or plant in charge of the specific issue or closest to the area of the complaint. Currently Beraca has not received any such complaints. Beraca’s plant operations also have a community engagement protocol which will be reviewed and formalized as per the attached action plan.

Beraca does not work with suppliers who cannot operate according to its requirements. Beraca’s suppliers fill out a questionnaire that reviews issues relevant to Beraca’s environmental and social principles. Beraca assists its suppliers in the development of assessment and screening procedures as it works to formalize this procedure. Beraca’s action plan is outlined in the attached environmental and social action plan.

Local access of project documentation

Beraca headquarters:

Av. Engenheiro Luiz Carlos Berrini, 1297 – CJ. 51
Săo Paulo – SP – Brazil

Ananindeua site:

Rodovia BR 316, KM 08 s/nş Quadra 3 – Lote 3
Ananindeua – PA – Brazil

Anápolis site:

Via Principal, 5400 – DAIA – Distrito Agroindustrial de Anápolis
Anápolis – GO – Brazil

Website: www.beraca.com.br

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