| Overview of IFC's scope of review |
| The scope of review of Pantaleon’s compliance with IFC’s Performance Standards for existing operations and those under construction or expansion (ethanol plant, mills and plantations) included an assessment of the company’s management capacity of its environmental, health and safety and social performance in the development, expansion and operation of its mills and sugarcane fields; ensuring that social and environmental management processes are integrated into the company’s business management process; occupational health & safety and terms of employment in sugarcane plantation and harvesting operations as well as in operation of expanded milling facilities and power plants; life and fire safety; labor practices own operations and in the supply chain; ensuring quality and sustainability of potable water supply; management of air emissions from all sources including any bagasse-fired steam and co-generation activities; pest management in agriculture and raw material/product storage activities; management of solid, liquid and hazardous wastes from agriculture and processing activities; energy consumption and energy efficiency, including greenhouse gas emissions and carbon finance opportunities; community relationships and community development, and use of security forces; land acquisition process for sugarcane plantation development, facilities expansion, and land use permitting; and cultural heritage. The review also included an update on the status of the Environmental and Social Action Plan for the previous investment. |
|
| Project description |
Pantaleon Sugar Holdings Company Limited (“Pantaleon”) is the largest sugar producer in Central America, with mills located in Guatemala, Nicaragua and Honduras. It supplies raw and refined sugar to the domestic market in Guatemala, raw sugar to the domestic market in Nicaragua, and exports raw and refined sugar to the world market including the U.S. In addition, Pantaleon’s co-generation facilities supply power for sale to the national power networks in Guatemala, Nicaragua and Honduras.
The purpose of the investment is to support Pantaleon’s ongoing investment program which has and will include:
- expanding ethanol production capacity in Guatemala and building an ethanol distillery in Nicaragua; and
- expanding electricity co-generation capacity in Guatemala. |
|
| Identified applicable performance standards |
While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:
- PS 1: Social and Environmental Assessment and Management Systems,
- PS 2: Labor and Working Conditions,
- PS 3: Pollution Prevention and Abatement,
- PS 4: Community Health, Safety and Security,
- PS 5: Land Acquisition and Involuntary Resettlement,
- PS 6: Biodiversity Conservation and Sustainable Natural Resource Management,
- PS 8: Cultural Heritage. |
|
| Environmental and social categorization and rationale |
| This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it may create a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Corrective actions identified to address these issues are listed in the attached Environmental and Social Action Plan (ESAP). |
|
| Key environmental and social issues and mitigation |
The sponsor has presented plans to address these impacts to ensure that its operations will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations, the IFC Performance Standards and the IFC General Environmental, Health and Safety Guidelines. The information about how these potential impacts will be addressed by the sponsor is summarized in the paragraphs that follow.
Environmental and Social Assessment and Management Systems
Pantaleon has a process to assess the environmental and social impacts and risks of new expansions and projects. For all new projects the company needs to apply for an environmental permit under Guatemalan, Honduran, and Nicaraguan law. The scope of the evaluation includes pollution prevention and abatement at the mills, and applicable environmental laws and regulations from the countries where they operate. Pantaleon has also conducted an environmental and social impact assessment (ESIA) for the expansion at the distillery in Guatemala. As part of this investment and in line with the ESAP, Pantaleon will conduct an environmental and social impact assessment under IFC’s Performance Standards, for their new operation in Honduras, which include the mill and sugarcane plantations.
The three mills are ISO 9001 and HACCP certified. Pantaleon ISO 9001 since 2006 and HACCP since 2008, and Monte Rosa ISO 9001 since 2004, HACCP since 2005 and ISO 22000 since 2007. Operations in Guatemala and Nicaragua are integrating their quality, occupational health and safety, and environmental management systems to achieve certification. Detailed procedures for environmental and occupational health and safety performance have been implemented at the mill and EHS indicators have been included in the company’s scorecard. Each operation process is responsible for their EHS performance, performs continuous evaluations, reports monthly to senior management, and implements the necessary corrective measures. In accordance with the attached ESAP (Environmental and Social Action Plan), Pantaleon will implement an integrated management system at the corporate level that will provide a structured framework to consistently identify risks and opportunities in the management of its environmental and social responsibilities at all its existing facilities and future expansions or acquisitions. Pantaleon will also seek ISO 14001 certification and OHSAS 18001 by June 2011 for its operations in Guatemala and Nicaragua. Pantaleon has developed an EHSS (Environment, Health & Safety, and Social) policy, a corporate EHSS function, and clear EHSS responsibilities at all facilities and plantations in Nicaragua and Guatemala, and will develop one for Honduran operations, according to the ESAP schedule. This also includes environmental & social performance of future suppliers and third parties in Nicaragua and Guatemala, and will be soon prepared for Honduras as specified in the ESAP.
Labor and working conditions:
Labor and working conditions are an important consideration at Pantaleon’s operations. Pantaleon has more than 18,000 workers (4,400 in Nicaragua, 11,500 in Guatemala, and 3,420 in Honduras) including directly hired and contracted employees at their facilities and plantations. All employment relationships are in compliance with national labor law. Pantaleon ensures that no Child Labor or Forced Labor is used at their operations through their hiring and selection procedure.
The HR department is adequately structured and staffed at the corporate and country level. The Company has HR policy and procedures that cover all key aspects, including recruitment, induction and training, performance evaluation, promotion, disciplinary actions and dismissal. The company’s HR policy and procedures are provided to new employees and are readily available for review. A one week orientation program is provided to new hires.
The HR management department provides employees with clear terms of employment (position, salary and payment mode and time, benefits including bonuses, private health insurance, covering also employee’s family, general and special conditions, termination of service, change in conditions of service, and labor relations).
For all workers Pantaleon guarantees minimum wages which are approximately 10% higher than the minimum wage in the three countries. Annual leave is paid and overtime is paid 100% of hourly rates. Currently there are two shifts at the mills and Pantaleon is implementing a new scheme which will include three shifts per day and ensure one rest day per week during zafra and non-zafra periods.
Worker’s Organizations:
Each employee is free to join a worker organization, but there is no union active in the company. The company reports a stable labor relations climate, with no significant impacts in terms of strikes or work stoppage. Surveys of work climate and employee satisfaction are annually conducted among all employees and corrective actions are implemented by HR department and monitored by Senior Management.
Grievance Mechanism:
HR is responsible for managing grievances, and workers have different channels to raise their concerns, including the ethics committee. The company adopts an open door policy and a formal employees’ grievance mechanism exists. Employees can directly raise concerns to their managers and/or use the employee satisfaction survey. The survey allows for anonymous comments from participating employees.
Non-Discrimination and Equal Opportunity:
Pantaleon is an equal opportunity employer, promoting fair and equitable treatment of employees. The company complies with relevant legislative requirements. The HR department has developed training programs to support skills development. The latest initiative is related to capacity building of women in driving heavy machinery in their operations in Guatemala. Results have been encouraging and will be extended to Nicaragua.
Pantaleon has developed an excellent program for its migrant workers from highland Guatemala. In Guatemala, about 45% of the seasonal cane cutters come from highland regions and are of Mayan decent. Some of the actions Pantaleon has taken in order to ensure a good labor relationship with sugar cane cutters include: 1) eliminating the middleman contract labor boss in favor of direct hiring; 2) working directly with local community leaders in the highlands to organize the crews, 3) providing high nutritional and re-hydration food, 4) providing adequate housing, and 5) providing learning opportunities.
In Nicaragua and Honduras, all cane workers come from nearby communities. The average performance for a cane cutter at Pantaleon is 5-6 Tons of cane per day.
During the past year, Pantaleon voluntarily took part of a Corporate Social Responsibility initiative from The Coca Cola Company, which included a Labor Audit to Pantaleon’s operations. The company has agreed to the implementation of corrective actions suggested by Coca Cola in the areas of labor and working conditions.
Occupational Health and Safety (OHS): Pantaleon has an efficient occupational health & safety management system implemented at their facilities. OHS issues are managed effectively at the plant level by designated OHS managers who report to production and agricultural operations managers. The facilities are audited monthly by an internal team and results are reported to senior management. Accident statistics is an indicator in the company’s scorecard. Fire safety and signage is visible and adequate. PPE usage at the mill was consistently good at all the locations visited. Workplace air quality and noise is within acceptable limits. The mills and associated infrastructure are largely well maintained with minor housekeeping issues that Pantaleon is working on improving to ensure a safe and sanitary workplace environment. Pantaleon and Concepcion have a well established emergency preparedness and response plan. Each mill performs a drill every year. Pantaleon has a senior OHS manager for their operations at Guatemala and to oversee operations at Nicaragua. Based on work place analysis in Guatemala, Pantaleon will be shifting from a two shift to a three shift program for employees at the mill and mechanic cane harvesters to ensure efficient rest periods and reduce work-related fatigue.
They have implemented OHS procedures, and are monitoring performance at mills and plantations during harvest seasons in Guatemala and Nicaragua. The ESAP provides the schedule by which this will be done in Honduras. The information will be the baseline for future comparison and corrective measures. At all plantations, the company provides PPE (Personal Protective Equipment) to harvesters. They also have OHS supervisors who ensure that workers are properly hydrated during their working hours and who provide first aid. Pantaleon has instituted a comprehensive and mandatory hydration monitoring program for sugar cane harvesters to ensure a healthy work place.
Accident statistics provided by the company now include operations in Nicaragua and Guatemala and with a schedule to include those in Honduras. The company is implementing procedures in Nicaragua and Guatemala which ensure proper recording, reporting and mitigation of accidents at sugar cane plantations at both owned and operated plantations. Pantaleon monitors and reports accident statistics at their mills and plantations in Nicaragua and Guatemala and will add Honduras to this program.
Chronic Renal Insufficiency (CRI) concern: Despite the fact that the scientific community has investigated CRI causality for 18 years without finding clear root causes, Pantaleon has long been concerned and interested in understanding and finding ways to prevent this illness. In 2007 the Company started a hydration campaign including urine density tests taken before and after the work day. In addition to the dehydration mitigation campaign, the company monitors proper hydration of workers and supplies flavored oral rehydration salts, and high calorific value corn based food when necessary. Pantaleon has observed CRI only in Nicaragua, not in Guatemala. However, the mitigation techniques developed will be used in all Pantaleon operations. The company is developing systems and building its capacity to mitigate CRI with better hydration and nutrition and regular medical checkups, for higher CRI risks. In 2008, a climatization period will be phased in (during a 2 week period, only 2 hours work is allowed for the first day, then increasingly up to 6 hrs at the fields). The company has also hired an epidemiologist, who has worked on many CRI studies to accompany the progression of mitigation programs. According to this doctor, there are many causes for CRI. One of the main factors is home made alcohol consumption prevalent in this part of Nicaragua; in addition, poor nutrition and dehydration may cause serious CRI exposure. CRI is generalized in the rural work force in Nicaragua but not particular to the sugar industry nor significant in sugarcane regions in other countries. Chemicals used in the cotton industry and elsewhere (but not in sugar cane) may play a synergistic role.
Emissions to the Environment
Air emissions: Boilers are the single largest source of air emissions from Pantaleon’s operations. In accordance with IFC’s previous investment requirements, Pantaleon has implemented an air emission monitoring program for their operations in Guatemala and Nicaragua. Boilers burn bagasse during the harvesting season and bunker fuel the rest of the year. The stack emissions at Pantaleon and Concepcion mills are in compliance with IFC guidelines. The electricity generated is used at the mills and the excess is distributed to the national electricity grid. The La Grecia mill in Honduras operates a coal fired boiler, which uses 210 tons of coal per day. As part of this investment, Pantaleon will present an air emission monitoring report to IFC, which will include any necessary corrective measures, so that operations are in compliance with national requirements and applicable IFC Environmental, Health and Safety Guidelines for emission from power plants. The ESAP provides the schedule by which this will be accomplished for La Grecia, in Honduras.
Effluents: In the case of the Guatemalan and Nicaraguan operations, over the past year, Pantaleon improved its performance in managing its effluents and performed a detailed study to analyze their effluent streams and identify corrective actions to ensure compliance with national regulation and IFC Performance Standards. Effluents from these mills and the ethanol plant include (i) process wastewater from sugar/alcohol production, (ii) wastewater from cane washing, (iii) wet scrubber blow down from stack gas scrubbing, (iv) miscellaneous wastewaters, and (v) stormwater. Primary treatment systems and channels at the Pantaleon mill and at the Monte Rosa mill need to be improved and better maintained. Unlined sedimentation ponds and channels need to be reviewed and updated. At the three mills effluents are used in irrigating their fields. Although in Guatemala and Nicaragua groundwater monitoring is not required for land application of untreated effluent at the present time, Pantaleon is developing a groundwater monitoring program to quantify the impact from storage and irrigation with wastewater, and conducted a study of wastewater management at all facilities. Recommendations for wastewater management improvements are being implemented in an agreed timeline in Guatemala and Nicaragua. Sanitary wastewater is discharged to the municipal treatment system at Concepcion mill. At Pantaleon and Monte Rosa mills the company uses septic tanks which are well maintained and monitored. Cane washing is one of the steps in the process which requires large amounts of water. As part of their water sustainability program and in order to reduce the cost of effluent treatment at the end of the process, Monte Rosa has implemented in the past year a dry system to sort and clean the sugar cane. La Grecia also uses this type of system for cleaning and preparing the cane before the crushing process. As an opportunity for energy recovery from process wastewater, Pantaleon conducted a cost benefit analysis at all mills in order to identify alternatives available for generating methane, but the results did not merit the investment.
Wastes: Solid and hazardous waste from Pantaleon’s milling and ethanol operations are primarily bagasse, ash from wet scrubbers, sand and lime sludge from cane wash water treatment, empty plastic containers from miscellaneous uses such as degreasing solvents, oils, cleaners, etc. Bagasse is used for cogeneration at the mills; any excess bagasse is sent to other Pantaleon facilities. Ash, sand and lime sludge from cane wash water treatment facilities are disposed of on land in designated areas. Empty plastic containers are sold to licensed recyclers. Management of solid waste at Pantaleon and Concepcion mills complies with local regulations and is consistent with good international industry practice. Solid waste at the Monte Rosa mill is discharged to a nearby field which is used as a landfill. No municipal landfill exists in the area. In accordance with the ESAP, Pantaleon will continue with their implementation of a more efficient alternative to dispose their domestic waste at the Monte Rosa mill. Hazardous waste management at all facilities complies with local regulations. Hazardous materials including fuel and oil are stored in tanks with secondary containment walls and the fuel supplier is responsible for monitoring and maintenance.
Solid and hazardous waste from agricultural operations are typically those from harvesting operations and storage, transport and miscellaneous usage of farm chemicals including herbicides, fertilizers, fuel etc. Waste from harvesting operations (such as remnants of sugarcane) is left on the field as organic supplements for the soil. Empty hazardous material containers are collected by licensed recyclers. Chemicals and herbicides are stored in designated storage areas with restricted access.
Sustainability of Water Resources:
Sugarcane cultivation in Pantaleon’s operations relies on natural rainfall, and the use of mill wastewater for land disposal. Extraction of water from surface or groundwater sources for process operations is done at the three mills. No permit or payment has to be made to a government entity. Water usage is variable and ranges from about 12.06 m3/ton-cane at the Pantaleon mill, 19 m3/ton-cane at the Concepcion mill, about 1 m3/ton-cane for the Monte Rosa mill, and 1.9 m3/ton-cane at the La Grecia mill. Water conservation / reuse initiatives such as recycling of cane wash water after lime treatment and sedimentation have been undertaken to reduce fresh water usage. Although there is potential for greater efficiency in fresh water usage, low-cost or no-cost of water and sufficient availability make implementation of additional water conservation/reuse alternatives economically less attractive at the present time.
Greenhouse Gas Emissions:
Pantaleon generates all its energy from sustainable resources through cogeneration of electricity from burning bagasse which is a by-product from their milling operations. Estimated carbon dioxide emissions from the three mills (Nicaragua and Guatemala) exceed 300,000 tons annually. Pantaleon is developing a monitoring program to quantify GHG emissions from all its facilities on an annual basis, including the La Grecia facility in Honduras, where coal is burned during the non-harvest season.
Energy Efficiency:
Pantaleon’s operations comprise facilities with equipment of different energy efficiencies. Energy efficiency is tracked closely as a performance indicator for all facilities. Energy consumption at Pantaleon’s facilities varies from 31 kW/ton-cane at Monte Rosa, 22 kW/ton-cane at Pantaleon, 18 kW/ton-cane at Concepcion, and 36 kW/ton-cane at La Grecia. Pantaleon is working aggressively towards improving energy efficiency at all its facilities through review of energy consumption in the process. A significant amount of potential energy is lost through the disposal of untreated effluent to land. Pantaleon conducted a study to evaluate potential alternatives for energy recovery from wastewater in operations in Guatemala and Nicaragua and the results were not economically attractive at this stage.
Integrated Pest Management:
Integrated Pest Management is used at all plantations. Only approved chemicals and fertilizers are used, and application rates and methods are adapted to optimize usage. Pantaleon has a research center, and actively works to improve pest management on sugar cane plantations and minimize the use of chemical pesticides. Handling, storage and use of PPE for agricultural chemicals and herbicides complies with national regulations.
Community Health and Safety:
Potential risks to communities from Pantaleon’s operations are primarily from aerial application of herbicides. Most locations use aerial spraying of crops by licensed companies using crop dusting airplanes which comply with local regulatory requirements. To improve oversight of these operations and minimize risk, as part of the integrated management system, Pantaleon will develop policies and procedures to inform potentially impacted communities of the risks associated with aerial spraying of herbicides, how these risks will be managed, and implement a communication plan to inform communities in advance of spraying activity. These actions will be conducted in the three countries where Pantaleon operates.
Land Use and Acquisition:
There is no involuntary resettlement associated with this project. Pantaleon’s land acquisition is strictly one of willing buyer-willing seller purchases at prices mutually agreed. Purchased land must have a clear title, be free of any litigation or conflicts, and be appropriate for sugar cane cultivation. Pantaleon is not currently expanding land purchase in any of the four mills but rather relying primarily on rental of land and working with sugar cane suppliers (where costs are shared with land owner who plants cane to sell to Pantaleon).
Biodiversity Conservation and Sustainable Natural Resource Management:
No critical habitats are being converted or degraded by the project. Likewise, no known endangered species are affected by the projects operations. No invasive alien species have been introduced. No legally protected conservation areas are impacted. Pantaleon will use eucalyptus chips in their boilers in order to generate steam and phase out the use of bunker fuel. The lands used for reforestation activities are typically low productivity sugar cane fields that have been removed from cultivation and other, supplemental agricultural lands used by the company for planting. Trees are cut every 6 years. These plantations reduce the impact of using low productivity lands for sugar cane, which require much higher inputs (fertilizer and pest controls), and also significantly increase habitat and enhance biodiversity in the lands taken out of production. Pantaleon will develop a plan for achieving independent certification of sustainable forest management for their eucalyptus plantation
The eucalyptus and mixed hardwood plantations provide several net conservation benefits, as described above. In no case have native habitats been altered to create plantations. In all cases, marginally lands, previously used for pasture or annual crops were planted with trees. Plantations also help attenuate water and wind erosion. Pantaleon and Monte Rosa have planted 2,700 hectares of trees, which is an equivalent of 6% of the total sugar cane harvested area. Pantaleon will use the same ratios for their plantation program in Honduras.
Cultural Heritage:
No cultural heritage or archeological sites are impacted by the projects. The company has a policy of coordinating closely with the government’s agency for archeology and cultural heritage. The company has provided instructions that any archeological discoveries must result in a “stop work” order until the importance of the find can be determined and a strategy for protection proposed by designated government agents. The general area of Escuintla, Guatemala is of archeological importance and there is an archeological site near one of the company’s farms. The company has been given permission by the national cultural institute to help protect the El Baul area. The project areas in Nicaragua and Honduras are not in areas of known archeological sites. |
|
| Client's community engagement |
In both Nicaragua and Guatemala, Pantaleon continues to be viewed as leaders in local corporate social responsibility. Pantaleon has carried out surveys of external stakeholders (by professional opinion survey companies) that confirm a high level of recognition and acceptance. Pantaleon is the sponsor for significant social programs in Guatemala and Nicaragua, through the mills administration, Fundación Pantaleon and Fundazúcar. La Grecia also supports several social activities in the department of Choluteca, Honduras. Pantaleon will increase these programs in Honduras over the next two or three years, as it did when it acquired the Monte Rosa operation.
The grievance process is well understood locally and utilized as necessary in both Nicaragua and Guatemala. To ensure a clear protocol to follow when registering queries, Nicaragua has developed a detailed formal protocol. Guatemala is currently in the process of doing the same. Honduras will also begin preparation of a formal grievance process similar to the one available in Nicaragua.
Pantaleon works with a wide range of civil associations, including the volunteer health program, and supported one of the largest public hospitals in Guatemala, Hospital Roosevelt. Other programs supported include over 12 school programs, a local home for young mothers from the country-side, medical volunteer programs, local trash recycling, day care for poor working mothers from nearby towns. Other benefits to workers and former workers include low-interest loans and scholarships for technical and university education. |
| Local access of project documentation |
Contact Persons (in each of the 3 countries):
Pantaleón Guatemala:
Name: Juan Carlos Acosta G.
Address: Km 86.5 carretera al Pacífico. Siquinalá. Escuintla
Phone number: 7879 4020
Time: 07:00 - 18:00
Pantaleón Nicaragua:
Name: María Alejandra Zurita
Address: Kilómetro 148.5, carretera El Viejo – Potosí. El Viejo. Chinandega
Phone number: 342 9040
Time: 07:00 - 18:00
Pantaleón Honduras:
Name: Fredy Arias R.
Address: Marcovia. Km 21 carretera a Cedeño. La Grecia. Choluteca
Phone number: 782 0627 / 29
Time: 07:00 - 18:00
Local disclosure will be made available at the following locations:
Nicaragua – Chinandega
Name: Instituto Nacional Miguel Angel Ortez y Guillen
Address: Carretera al Viejo, frente a Colonia Santa Ana
Phone number: (505) 3417735 ó (505) 3410941
Time: 09:00 – 17:00
Nicaragua - El Viejo
Name: Casa Cural de la Basílica del Viejo
Address: Del mercado central 1 calle al Este.
Phone number: (505) 3442285
Time: 09:00 – 17:00
Nicaragua – nuevas áreas de expansión
Name: Centro de Salud El Higueral
Address: Villa 15 de Julio, 200 metros, Carretera a Somotillo
Phone number: no hay teléfono disponible
Time: 09:00 – 17:00
Guatemala - Santa Lucía Cotzumalguapa
Name: Biblioteca Municipal del Banco de Guatemala
Address: 5ª. Calle 3-39 zona 1
Phone number: (502) 78825443 Extensión 120
Contact: Luz María Tubac
Time: 09:00 – 17:00
Guatemala – Escuintla
Name: Centro Cultural de Escuintla
Address: 3ª. Avenida 9-00 zona 1
Phone number: (502)78892219
Contact: Luis Maldonado
Time: 09:00 – 17:00
Guatemala – Siquinalá
Name: Biblioteca Municipal
Address: 8ª. Calle 2-36 zona 1
Phone number: (502) 78802387 ó (502) 78802103/04
Contact: Gorety Soma
Time: 09:00 – 17:00
Honduras – Choluteca
Name: Centro Comunal de la Iglesia Espiritu Santo
Address: Aldea de Monjaras, Marcovia, Choluteca, Honduras
Phone number: (504) 7762120
Contact: Mery Flores Soriano
Time: 09:00 – 17:00
In addition, the ESRS and ESAP will be displayed on the corporate web site (www.pantaleon.com).
Announcements will be published in the following national newspapers:
- Guatemala - Diario Prensa Libre
- Nicaragua - La Prensa y El Nuevo Diario
- Honduras – El Heraldo |
|
|