Grupo Poma 2009

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

28463

Country

Central America Region

Region

Latin America and the Caribbean

Sector

Construction and Real Estate

Department

Reg Manufact, Agri & Services, CAF/CLA

Company name

Grupo Poma

Environmental category

Status

Pending Signing

Date ESRS disclosed	February 24, 2010
Last Updated Date	February 8, 2012
Previous Events	Approved: April 12, 2010

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’s review comprised meetings and discussion of human resources and environmental and safety issues with corporate staff of Grupo Poma’s real estate and hospitality subsidiaries, site visits to malls in El Salvador, Panama and Costa Rica and visits to operating hotels in El Salvador, Colombia, Costa Rica and Panama and to the construction site of the future J. W. Mariott hotel in Bogota, Colombia.

IFC’s review also considered environmental assessment information developed to support the JW Marriott Guanacaste project, information available from ongoing supervision of existing IFC investments in ISCH malls in Honduras, El Salvador and Nicaragua, fire safety audits of several mall properties and energy audit reports for three hotels.

Project description

Grupo Poma (“the Group”) is an El Salvador based company with diverse business interests in real estate development, construction and operation of shopping malls, hotels, office complexes and housing, as well as manufacture of construction products and automobile distribution. The Group has 19 shopping malls operating under Unicentro, Metrocentro, Metromall and Multiplaza brands occupying some 600,000 m2 gross leasable area (“GLA”) in six Central American countries. These malls are owned by the Group through International Shopping Center Holdings (“ISCH”) and managed by the Group subsidiary Grupo Roble (“Roble”). The Group, through Hospitality Services (“HS”) owns, and manages some 3,400 rooms in 17 hotel properties throughout Central America and in Colombia, the USA, Mexico and the Dominican Republic. These properties are operated under a variety of internationally-recognized brands by the Group subsidiary Real Hotels and Resorts (“Real”).

The purpose of the project is to provide funding for ISCH and HS to be used for debt refinancing and to support investment in new hotel and retail properties in Central America and Colombia.

Key environmental and social issues and mitigation

The sponsor has presented plans to address these impacts so as to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations, IFC Performance Standards, and IFC environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. Further information is provided in the attached Environmental and Social Action Plan (ESAP).

Social and Environmental Assessment
Greenfield and expansion projects are subject to social and environmental assessment meeting the requirements of the country of operation of the asset. The scope of this assessment depends upon the nature of the development and the environmental in which it is located, and is more detailed for a greenfield resort hotel than for a mall expansion in an urban area.
Following completion of assessment, construction permits are issued which contain an environmental management plan sanctioned by the country’s environmental ministry. These management plans define measures to be adopted to mitigate environmental impact throughout construction (for example, mitigation measures can be related to access, excavation, materials storage, construction safety) design standards, routine operations and emergency response.

Social and Environmental Management
Mall Operations
Grupo Roble is a highly respected operator of shopping malls throughout Central America. Over the last few years, it has paid considerable attention to systematic management of operational quality in the malls, with professional management of occupational health and safety, public safety and environmental issues considered to be subsets of high quality management practices. During this time, Grupo Roble has supplemented internal resources by using consultancy assistance for specialist advice, initially in developing its quality management system and then in developing its occupational health and safety systems and more recently in supporting life and fire safety activities. The flagship Multiplaza Mall in San Salvador and the Costa Rican malls have a quality management system certified compliant with ISO 9001, and equivalent practices, though not certification, have been extended to other countries’ operations. Operations in Panama have not been supported from El Salvador in this manner, and in some respects will be improved through adoption of these otherwise standardized practices.
Adequate resources are available for management of environmental and social matters. Technical issues, for example relating to electrical safety, energy efficiency or routine maintenance of catering fume extracting systems, are managed by in house staff reporting to mall managers, who in turn report to country operations managers. Monitoring routines are defined in quality and maintenance manuals and are respected.
Contingency plans define emergency response to fire, how to evacuate the building and provision of first aid. These are rehearsed regularly.
Hotel Operations
Hospitality Services’ properties carry a variety of internationally respected brands, such as Marriott and Intercontinental and are managed to a high standard in accordance with the requirements of these companies. Issues covered include mechanical services and property maintenance, safety of potable and swimming pool/spa water, food hygiene practices and ongoing assurance of fire protection routines.

Labor and Working Conditions
Human Resources (HR) Policy
Human Resources policy is defined at Grupo Poma level, though Grupo Roble and Real Hotels and Resorts have adapted the policy to meet the different legal requirements in different countries of operations, and in the case of Real to meet requirements of the hotel brands represented.
Within Grupo Roble, the HR policy is defined in a “Welcome to Roble” manual which is provided in hard copy to managers for use in staff briefing, and which is available to all staff via the company’s Intranet – computer terminal access is provided to all staff. The HR policy covers issues such as hiring procedures, rights and responsibilities of the employee and employer, an introduction to the company, working hours and salary and non-salary benefits. This is supplemented by an “Internal Working Rules” document which is legally required.
Real’s HR policy is defined by themes such as an overarching introduction Human Resources, Selection, Training, Safety and Security and Health, and the “Esencia Real” – a corporate value set which stresses respect for individuals and customer service.

Working Relationship
This is defined in an initial meeting upon taking up employment and in a written contract between employee and employer, which is explained to and signed by the employee. The contract makes reference to the HR policies but also covers individual arrangements for example concerning salary. Copies of the contract are retained by the company and the employee.

Working Conditions and Terms of Employment
Salary levels are based upon country conditions and minimum salaries comfortably exceed legal minima in the other countries in which Grupo Poma operates, and are set somewhat above the local market levels in order to attract and retain high caliber employees. Grupo Poma also offer a wide range of non-salary benefits which meet or exceed country requirements, for example a shorter than legally required working week, sick pay matching salary, payment for overtime (normally required for holiday working), statutory maternity leave, but also paternity leave, support in the event of bereavement, a Christmas bonus, retirement fund and life insurance for all employees. The Poma companies also provide basic medical care through access to a clinic and has an optional employee saving fund. The companies emphasize training: training needs are defined by work task and an allocation of 5 hours/month per person is the aim. All regular workers are full-time employees; no contract labor is used for day-to-day jobs, although the hotel companies retain a roster of pre-selected staff, perhaps former employees or those suited for part time and casual work to meet seasonal fluctuations in activity.

Workers’ Organizations
There is not a trade union within Grupo Roble’s malls, but the Group has stated that it would not prohibit union membership among staff where this is permitted by law. There are some applicable legal restrictions however: for example, in some countries of the region armed guards are prohibited by law from trade union membership. Most of the hotels do not have a union, though one is present in the property in Puebla, Mexico.
Employees have multiple means available to make their views known. The first of these is the normal line management channel. In addition, Human Resources department staff make regular pre-announced visits to the malls and hotels, and are available for discussion with staff, in this respect forming a well-working grievance mechanism. Staff are aware that complaints may also be made to country Labor ministries. Lastly, the Grupo Poma has an annual survey in which the views of staff are solicited. These surveys have high response rates, and overwhelmingly favorable response. Grupo Roble has won a “Great Place to Work” competition organized by a Latin American business publication.

Non-Discrimination
The Sponsor has a policy of non-discrimination on the basis of any characteristic not related to a person’s ability to meet job requirements. Recruitment and advancement is solely merit based, and a 6-monthly performance evaluation process is used to appraise performance on an objective basis. The two operating companies recruit talented staff, train well, promote from within and provide career opportunities.

Protecting the Work force
The identity of all potential employees is checked and minors are not employed, except that trainees of 17 years old may be employed in a manner consistent with local legal practice. There is no use of forced labor.

Occupational Health and Safety (OHS)
Occupational health and safety in the malls is managed within the context of Roble’s quality assurance system, and in the hotels according to the requirements of the international operators. In the malls, OHS audits were completed by external consultants, at which time action plans were developed and implemented by the Roble with the consultant’s assistance. Equivalent operating practices have been developed in the hotels, using the experience of the international operating companies. The OHS manuals define safe working practices for a variety of tasks required in the properties, fire response, correct use of machinery and so on.
Future construction contracts will include contractual provision upon building contractors to provide a safe workplace for their employees and subcontractors.

Pollution Prevention and Abatement.
Liquid Effluents
Liquid effluents from all properties are discharged to city sewer networks, meeting local standards, or are treated by property operated effluent waste water treatment systems before discharge to surface waters. Not all waste water treatment systems are functioning effectively – remedial action to be undertaken is defined in the attached ESAP.
Resource Efficiency
Electricity use in common areas of the malls is relatively modest except in Panama where these are air-conditioned. More generally, air conditioning is provided in the food court and financial center, but otherwise mall common areas are ventilated but not cooled. Store air conditioning is the responsibility of tenants. Grupo Roble operates an energy efficiency campaign, with automation of some lighting, and limiting operating hours of escalators, and has reduced electricity use markedly through these efforts which will be continued, and by applying solar control film to glazed areas, reducing air conditioning loads. Use of solar photovoltaic systems has been considered but is not yet considered cost effective though the technology will be kept under review.
In the hotels, energy audits have been undertaken recently at three properties. Real is preparing to implement selected recommendations and will extend the auditing program throughout the estate.

Refrigerant Selection
Phase out of HCFC-22 refrigerant in air conditioning systems has commenced, it being replaced by a drop-in non ozone-depleting substituteR407.

Community Health and Safety
Life and Fire Safety
Malls are compliant with applicable local fire safety requirements as confired by permits, though fire protection standards differ according to the age of the property and in some cases the country of operation. Properties have multiple, readily available exits, alarms and hose-reel based fire suppression systems. In addition, in all mall properties constructed or extended since 2004 the new construction has been designed for compliance with NFPA fire safety codes, and features sprinkler coverage throughout. In some cases, exit signage and emergency lighting can be enhanced. Grupo Roble contracts maintenance of the fire safety systems to a suitably qualified contracting companies, and has well-established emergency response procedures which are practiced regularly. Roble also draws on qualified fire safety engineers in review of its fire safety provision.
Roble imposes regulation and inspections, intended to safeguard against fire risk, upon its mall clients. For example, tenants are prohibited from undertaking any electrical or hot-work unless approved by and conducted under the direct supervision of Roble staff. Electrical currents drawn by tenants’ systems are checked regularly to ensure there is no overloading. Restaurant extract system grease filters are maintained by Roble at regular intervals.
Fire and life safety in Real hotels was incorporated into property designs and is maintained according to the requirements of the international operators involved. In all cases these operators require compliance with national law and the NFPA fire safety code, thus meeting IFC guideline requirements.

Potable Water
Where city water is potable it is used without further treatment. If city water quality is not reliable, then additional treatment based on chlorine dosing has been introduced; in both cases, water quality is assured through regular checks.

Security Guards
The Group employs armed security guards at the malls, which is common practice throughout the region. These guards are subject to a rigorous selection procedure; which includes background checks, and polygraph tests. Grupo Poma also prefers to employ persons who are not familiar with guns and to train them. The security guards receive regular training in the use of arms, and in conduct expected of an armed guard, and are subject to strict supervision by Group staff. Guns used by the guards are the property of the Group and remain on Group premises at all times.

IFC PROJECTS

RECENTLY DISCLOSED