Fernandes Bakkerij N.V.

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Project Number: 
Expected Consideration Date by the Board: 
Date Posted: 
Fernandes Bakkerij N.V. (“FBV” or “the company”)
Sponsoring Entity: 
Fernandes Concern Beheer N.V.
Financing Requested: 
Loan of up to US$10 million
Food and Beverages
Scope Objective: 

FBV was founded in 1963. It produces and distributes baked goods, including different kinds of bread, pastries, and snacks for sale to retailers. 

The objective of the IIC’s participation is to finance the expansion of its production capacity and the modernization of existing production lines. The first phase will create a new line of sweets and snacks and a baked goods production line. The current facilities will be modernized and new lines of bread and pastry production will be built. In the second phase, capacity of the bread production lines will be expanded and a new oven will be installed.

Environmental Review: 

Environmental and Labor Issues:

According to the IIC Environmental and Social Sustainability Policy, this is a Category B project: potential environmental and social risks and impacts are limited to the project site, largely reversible, and can be mitigated via measures that are readily available and feasible to implement in the context of the operation. The main environmental and social issues related to this project are: (i) management of solid and liquid waste; (ii) food safety; (iii) wastewater treatment and discharge; (iv) emergency preparedness; (v) life and fire safety; and (vi) occupational health and safety risks during construction and operations.

Assessment and Management of Environmental and Social Risks and Impacts

Environmental and Social Assessment and Management System. The company has implemented an Integrated Management System (IMS) that encompasses management systems for aspects related to: environment, occupational health and Safety (OHS) and food safety.

Policy. FBV has an environmental policy that is consistent with the requirements of the International Finance Corporation (IFC) Performance Standard (PS) 1. It states its environmental objectives and principles, management responsibility for implementation, its commitment to continual improvement and compliance with local regulations. 

Identification of Risks and Impacts. The company complies with local environmental and labor regulations. EHS and quality personnel undertake periodic assessments of environmental, OHS, and food quality risks in order to identify areas of improvement. Findings and follow up actions are communicated and agreed with section managers and employees, and reviewed at least twice a year.

Management Programs. As part of their IMS system, the company has developed standard operational procedures for its main operational activities and undertakes Job Safety Analysis (JSA) for riskier and non-routine tasks. It is also in the process of strengthening its occupational health and safety management system in order to be ready for its certification against an internationally recognized standard in the future, if needed. Additionally, there are plans in place to manage: waste, food waste, accident investigation and implementation of preventive and corrective actions, among others.

Organizational Capacity and Competency. The company has a Quality, Health, Safety and Environment (QHSE) Manager to which a Quality Assurance coordinator, an EHS coordinator and three food quality coordinators report to. All of them are adequately trained to perform their respective functions.

Emergency Preparedness and Response. FBV has an Emergency Response plan for fire and earthquakes and has developed an evacuation plan of the premises, and it performs emergency drills. The facility has the local fire permit and the planned project’s expansion plans will be reviewed by the local regulator to obtain the necessary building and fire permits, as required by law.

Monitoring and Review. Quality management team undertakes periodic plant inspections covering quality, HSE and food safety issues. Managers of each production function at the factory review key performance indicators (KPI) related to operations, quality and HSE.

Stakeholder Engagement and Grievance Mechanism. Although the facility is located in an industrial area, there are some residential dwellings in one of the perimeters of the facility. The company states that it complied with legal requirements in terms of notification to all neighbors, and has good relationship with them. As part of the ESAP, the company will develop a mechanism to communicate with the community to provide information about current activities and future expansion plans. Such mechanism should also allow the company to provide a timely and adequate response to any grievance that may arise resulting from client activities.

Labor and Working Conditions

Working Conditions and Management of Worker Relationship. The company has 476 employees (August, 2015), out of which 71 (15%) are contractors; women constitute 23 % (113) of the workforce. Employee contracts at the FBV are under a Collective Labor Agreement (CLA). The agreement outlines working conditions, terms of employment, and employee rights and obligations. Labor arrangement regarding wages, working schedule, and minimum employment age are in line with local regulations.  The company also states that it follows International Labor Organization (ILO) conventions with regards to employee and labor relations.

Grievance Mechanism. Employees are informed that they can bring grievances to the attention of: their line manager, the Human Resources (HR) department and/or the union. Nevertheless, the company will implement a mechanism for employees to communicate any grievance so that is consistent with the requirement of PS2 on this matter.

Occupational Health and Safety. The company undertook an OHS risk assessment for workstations at the bakery. Each workstation has a list of required PPE which together with existing Standard Operating Procedures (SOP) contribute to reduce occupational health and safety hazards. As an example, a noise assessment study was performed that resulted in limiting employee exposure to noise in certain areas of the bakery. FBV regularly provide OHS related training to its employees, such as: PPE, incident reporting, noise induced hearing loss, ergonomics, food safety, defensive driving, first aid, and forklift safety, among others.

As part of its distribution operations, the company has a fleet of 50 trucks, out of which 25 are contracted to a distribution contractors. For the 25 trucks are owned, the bakery is in charge of the maintenance. Drivers go through driving safety training upon hiring.

Workers Engaged by Third Parties. The company has 75 contractors and 25 of them work as drivers on the products distribution functions. As part of the ESAP the company will monitor and ensure that both own and contracted drivers are periodically trained on driving safety topics.

Resource efficiency and Pollution Prevention

Greenhouse Gases (GHG) and Water. Annual GHG emissions at the bakery are due to electricity use and diesel consumption of: ovens, back-up electricity generator and truck’s fleet fuel. The company will monitor its annual electricity and fuel consumption and will explore ways to reduce its GHG emissions. Water is obtained from the municipal supply and its quality is monitored to ensure adequate quality for food production.

Pollution Prevention. The company has a system in place to separate fats from the wastewater, which are later collected and disposed by a licensed contractor. Wastewater is discharged to the municipal sewer line. 

Wastes. The company has an inventory of all the waste generated at the facility, and monitors quantities produced. Conventional waste is collected and disposed by the municipality in an area designated for this purpose.  During construction of the new bakery facilities, waste quantities are expected to increase considerably. FBV shall require its contractors to dispose construction waste appropriately.

Hazardous Materials Management. Hazardous waste at the factory (mainly oils) and at the distribution’s fleet maintenance center is collected by a licensed contractor and disposed according to local regulations. As part of the ESAP, the company will ensure that construction contractor will dispose its hazardous wastes appropriately

Community Health, Safety and Security

Emergency Preparedness and Response. Life and Fire Safety arrangements in the bakery are in compliance with local regulations. There are fire extinguishers, fire alarms and smoke detectors throughout the facility. As part of the ESAP, a suitably qualified professional will conduct a complete life and fire safety review of the current bakery and its future expansion project. Based on the review, if found necessary and in addition to the existing plan agreed with local authorities, FBV and IIC shall agree to implement an upgrade L&FS plan to mitigate identified risks. In addition, upon completion of the plan, a qualified L&FS professional shall review that measures are in place and in compliance with IIC’s sustainability policy requirements.