Environmental and Social Policies. PAN is committed, through its existing Environmental, Social and Governance Responsible Investment Policy to the promotion of sustainable investment. It seeks to optimize ESG attributes within the scope of its investments through resource efficiency, environmental stewardship and certification of management practices defined in Vietnamese legal and regulatory requirements and voluntary agro-commodities standards. This commitment to meeting these performance-based requirements has been validated during appraisal. Existing environmental, OHS, Food Safety and Social related policies at the level of the subsidiaries encompass a mix of internal (e.g. Staff Handbook and Occupational Health and Safety) and external (sector standard related, e.g. HACCP or ISO22001 and ACS/Global GAP) policies. Going forward, as set forth in the ESAP, PAN will develop, approve and implement its own set of corporate EHS policies which will include; i) reference to performance-based requirements based on Vietnamese?s laws and regulations, IFC?s Performance Standards, applicable WBG EHS Guidelines, ISO22001 or HACCP (food/fish processing) and ASC / Global GAP / MSC (aquaculture?s primary production and sourcing operations) requirements. These corporate policies will be applicable to all PAN?s existing and future subsidiaries; ii) assigning a corporate and full-time E&S coordinator at the holding level as well as defining an accountability framework (Board of Director?s Sustainability/ESG Sub-Committee) in its organogram for effective implementation of PAN?s corporate EHS policies at subsidiary level; iii) officially assigning a  E&S coordinator in each of its subsidiaries; iv) ensuring an EHS communication strategy to all direct employees, subsidiaries? other workers, primary suppliers, contractors and partners, including an explicit reference of sustainability initiatives on its website; and, v) ensuring corporate-level internal audit mechanism for assessing performance level of all its subsidiaries, including meeting quantifiable EHS performance targets and key performance indicators. 

Environmental and Social Assessment. PAN has demonstrated systematic risk identification and impact assessment of its subsidiaries? operations. Specifically, in accordance with Vietnam?s 2005 Law on Environmental Protection and its Decree N?29/2011/ND, SSC, ABT and Lafooco have conducted Environmental Impact Assessment (EIA) Studies or made Environmental Protection Commitments, including the definition of structured ESMP or stand-alone mitigation measures at their respective operations. The scope of these risk assessments has also encompassed P&C requirements of voluntary agro-commodity standards. These studies were available for review at all sites. Terms and conditions of environmental certificates, as issued by the Provincial Department of MONRE, included requirements for: (i) effective implementation of the ESMPs during operational phase; (ii) preparation of quarterly and semestrial report on EHS performance, including compliance with Vietnamese?s effluents, air emissions, noise; (iii) notifying authorities about occurrences of unforeseen events; and, (iv) undertaking and reporting internal/external environmental audits on a quarterly/semestrial basis. Fulfillment of these provisions at all subsidiaries appraised has been validated. In addition to the environmental licenses, all subsidiaries have successfully complied with other regulatory requirements (e.g. fire certificate, Workplace OHS Committee, quality control certification for seed, certificate of compliance with food safety regulation on fishery business operation from National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD). Going forward, as set forth in the ESAP, PAN will establish a process to review and update legal and regulatory compliance status for all its existing and any future subsidiaries and will report updates annually to IFC.  

EHS Management System and Programs. PAN has not yet established an integrated corporate environmental and social management system for all its subsidiaries. This being said, building blocks for such corporate system already exist at subsidiary level. Significant progress has been noted at all subsidiaries in term of defining management systems commensurate with E&S risks and impacts. Specifically, SSC (for Cuchi seed station) obtained ISO 9001 certification of its quality assurance management system. Environmental procedures and management programs associated with SCC?s operations encompass solid waste management, including hazardous waste (e.g. chemical containers) disposal, integrated pest management, air emissions and wastewater monitoring, emergency preparedness and response, and energy efficiency. PAN?s operations do have quality assurance management systems certified compliant with ISO 9001, while ABT also observes Control Points and Compliance Criteria for Integrated Farm Assurance and ASC Pangasius certification and Chain of Custody (CoC) certificate (for its white clam sourcing). Lafooco has HACCP and Good Manufacturing Practices (GMP) certification. Sample of follow-up audits and CAPs were provided. Main regulatory management plans, aside from standards? audit, CAPs and follow-up audits, encompass food safety, provision of safe working conditions to workers, including establishment of OHS Committees, use of Protective Personnel Equipment (PPEs), solid and hazardous waste management, efficient use of water & energy resources, collection and treatment of liquid effluents from on-site WWT plant, emergency preparedness plan, including life and fire safety, air emissions monitoring from boilers, and biodiversity management plan at aquaculture farms. 

IFC?s appraisal found that these management systems at subsidiary level: 1) aside from ABT, management systems are driven by external audits, especially in Lafooco and SSC. This risk assessment and management process needs to be further internalized in each subsidiary; 2) recognizing that the scope of management systems adopted is commensurate with EHS risks and impacts of each subsidiary operations, there is a need to further mainstream OHS and social issues into overall management systems as well as further mainstreaming specific IFCs PS-related requirements (e.g. contractor OHS oversight and E&S requirement applicable to primary suppliers). As set forth in the ESAP, PAN and its subsidiaries will strengthen the corporate and subsidiary-level EHS management framework through the development of its own set of EHS policies, as mentioned above, and finalize the development and implementation of subsidiary-based SOPs and annual EHS management plans - consistent with ISO 14001, OHSAS 18001, HACCP or ISO22001, and ACS/Global GAP/MSC requirements. Furthermore, this integrated management system will be in compliance with IFC?s PS1 requirements (especially as it relates to supply chain risk assessment and management) and compliant with applicable WBG General and Sector-specific EHS Guidelines, as technically and financially feasible for existing associated facilities (e.g. all on-site WWT plants). 

Organizational structure and technical capacity. PAN has not yet assigned an EHS coordinator and/or EHS team to effectively manage its corporate EHS requirements. This being said, EHS responsibilities in all subsidiaries have been assigned to Director/Head of Operations. Specifically, for ABT, the Deputy General Director is the E&S coordinator. This responsibility is explicitly identified in his job description. For Lafooco, IFC?s appraisal team was informed of two officers in the Quality Assurance team who are responsible for EHS monitoring and standards compliance. As set forth in the ESAP, PAN and its subsidiaries (especially Lafooco and SSC) will assign/confirm a competent EHS coordinator for management oversight of EHS legal, regulatory and voluntary EHS obligations. PAN will also establish a Sustainability/ESG Sub-Committee of the Board of Director?s with representation from all PAN?s subsidiaries in its organogram for ensuring implementation of PAN?s corporate EHS policies. 

Training. Training plans were provided for each subsidiary. Need assessment for the preparation of the training plan is aligned with each subsidiary?s legal and regulatory EHS requirements and licenses. Going forward, as set forth in the ESAP, upon completion of the integrated EHS Management System?s policies at the corporate level, PAN, in coordination with its subsidiaries, will define a comprehensive and multi-year training plan, for IFC review, including center of responsibilities and budgetary allocation for its staffs (permanent and seasonal) and contractors at the food processing plants (ABT, Lafooco), aquaculture (ABT) and farms (SSC) operations in order to support effective implementation of its integrated EHS management system? policies. 

Monitoring and Reporting. PAN has not yet defined or implemented a comprehensive corporate EHS monitoring and reporting system procedure. This being said, PAN has started, with the support of an external consultancy firm, to prepare a consolidated Sustainability/ESG annual report, using Global Reporting Initiative (GRI) framework. This GRI report is tentatively scheduled to be disclosed in April 2015. It will be important for the proposed Sustainability/ESG Board Sub-Committee to have oversight over this reporting process and to inform PAN?s Board of Directors on EHS performance at corporate and subsidiary-level. In accordance with their environmental licenses, all subsidiaries prepare quarterly/semestrial monitoring reports to Provincial Environmental Authorities which cover analysis of parameters, such as air emissions, effluents, solid/hazardous waste characterization, volume and disposal, energy and water consumption and efficiency, noise levels, etc. IFC reviewed examples of these monitoring reports at all sites. The scope of these reports covers the majority of the required monitoring as included in the WBG EHS Guidelines; exceptions include lost-time accident statistics, estimation of GHG emissions, customers and community complaints, primary suppliers and contractors? EHS performance and corporate social responsibility (CSR) initiatives. Adoption of the GRI framework at corporate and subsidiary level will address these gaps. 

PAN?s subsidiaries are subject to follow-up audit of voluntary standards in order to demonstrate continuous improvement in EHS performance, productivity and resource efficiency.  Major customers also undertake third-party audits against industry standards. Ad-hoc inspections from various Vietnamese authorities (e.g. MONRE, NAFIQAD, fire safety, etc.) also take place. Based on information provided during appraisal, PAN and its subsidiaries did not incur over the last three years any material regulatory penalties, fines or sanctions for contraventions or non-compliance with statutory obligations, nor any reported fatalities at any of its processing plants/aquaculture/farm operations. Going forward, as set forth in the ESAP, PAN will define a  set of Key Performance Indicators (KPIs) to meet the reporting gaps described above, in order to monitor on a monthly basis the following EHS parameters at each subsidiary: a) Safety ? Lost Time Incidence Frequency Rate (LTIFR), Accident Free Days; b) Sustainability ? total energy consumption usage and efficiency (kWh/ton), water usage consumption and efficiency (kiloliters/ton) at processing and aquaculture/farm operations, wastewater monitoring effluents, noise, air emissions parameters from boilers (if heat input capacity is more than 3MWth), use of Crop Protection Products (CPPs) and fertilizers; c) Staff ? Retention/turnover and training days. 

Emergency Preparedness and Response. PAN?s processing plants and aquaculture/farming operations have risks associated with diesel storage and use and CCP spills. All subsidiaries have defined an Internal Operational Procedure (IOP) for emergency preparedness and response and have obtained fire certificates from Provincial Police Department. All subsidiaries perform annual fire drills as well as a first aid training session. During the site visit, newly installed fire prevention systems, including fire hydrants, hoses and extinguishers, were seen at all subsidiaries. OHS committees at processing plants and aquaculture/agriculture farms have been established and are responsible for fire prevention, response and training. Extinguishers are available at the SSC farm operations. Evacuation plan and fire accident meeting points are defined at ABT and Lafooco?s processing plants and employees are made aware of these plans. Going forwards, as set forth in the ESAP, PAN will provide IFC, for review,  supporting evidence of: i) the IOP for all sites; ii) fire prevention procedure and certificate for all sites; and iii) OHS Committee role and responsibility in emergency response, including fire brigade composition at all sites and annual emergency/fire training. 

Stakeholder Engagement Plan. As indicated above, the majority of PAN?s subsidiaries are located in industrial parks. As such, there is no requirement for these operations to develop a Stakeholder Engagement Plan (SEP) as there is no direct operational interface with any community. However, such a requirement does apply to ABT?s processing and aquaculture farms, Lafooco?s packaging plant as well as SSC farms which are located adjacent to residential areas. IFC appraisal findings did identify the existence of a community engagement mechanism with surrounding communities at ABT?s Conban farm as well as the existence of a community grievance mechanism which is distributed to community leaders. Minutes of the annual meetings with local residents to obtain their opinion on the effects of ABT?s aquaculture operations was made available. Such pro-active community consultation and stakeholder engagement has not yet been replicated at all applicable sites, especially at ABT?s processing plant, Lafooco?s packaging plant and SSC farm operations. This community engagement process needs to be strengthened and formalized to identify and manage the social risks and challenges. As set forth in the ESAP, PAN?s subsidiaries will prepare a combined Stakeholder Engagement Plan (SEP) and Community Relation Plan for all applicable sites, in accordance with IFC?s PS1, including identification of stakeholders, determination of their level of interest and influence in the project (by importance and relevance), establishment of appropriate methods for engaging each group, and identifying strategic and forward looking programs and activities to support and partner with affected communities. EHS coordinator at PAN?s subsidiaries level should be assigned as community liaison officer. The objective of the plan will be to strategically manage engagement and relations with project stakeholders and locally affected communities on a medium-long term basis.  

Supply Chain Risk Assessment and Management. Based on subsidiaries? operations and associated agro-commodities sourcing practices, applicable scope of supply chain risk assessment encompass SSC?s contracted farmers for rice and corn seeds (sourced from smallholders over more than 2,000 ha), ABT?s contracted fingerling farm (23 ha), ABT?s sourcing of white clams in the Mekong Delta, and Lafooco?s raw cashew nut (RCN) sourcing in Africa and Vietnam. The Global Map for E&S risks associated with agro-commodity production (http://www.ifc.org/GMAP) and the US Department of Labor?s ?List of goods produced by child labor or forced labor? were reviewed to assess supply chain risks for these combinations. GMAP does not cover Vietnam / cashew, corn, rice and clam risk assessment combinations while US DoL didn?t report any social risks for these combinations. 

In order to assess applicability of PS-related supply chain requirements, management control and leverage of PAN?s subsidiaries over its primary suppliers was assessed during appraisal. IFC was informed that SSC?s contracted farmers grow seeds on their own farms (typically less than 0.5 ha in size), using SSC?s comprehensive manual of procedures (including explicit condition of not using banned pesticides) and with monitoring oversight of SSC?s agronomic engineer and the Ministry of Agriculture. SSC undertakes due diligence of its suppliers using ISO 9001 standard framework against technical criteria, such as soil and weather conditions, water availability for irrigation, farmers? technical capacity and community assessment. ABT?s contracted fingerling farm closely follows ABT?s manual of procedures (being ASC or Global GAP certified) and is closely monitored by ABT?s technical staff. ABT?s white clam sourcing has been certified by MSC for CoC and compliance with MSC?s principles and criteria for sustainable harvesting of hand-gathered clam from Fishermen?s Co-operatives within Ben Tre Province since November 2009. In addition, more than 50% of the clam sourcing in the north (Thai Binh, Nam Dilh) and southern (Ho Chi Minh City, Cen Gio, Tien Giang) provinces is certified by NAFIQAD (as clams are being harvested by smallholders not organized into cooperative). Lafooco sources 15,000MT of Raw Cashew Nut (RCN), 50% in Africa (Guinea Bissau, Ghana, Indonesia, Ivory Coast, Tanzania, etc.) from traders (e.g. Olam) over which Lafooco has no leverage while 50% is being sourced within Vietnam through local traders. Lafooco has indicated that it does not have management control over these traders and confirmed that there is no direct relationship with cashew cooperatives. Lafooco includes technical/quality specification within its contractual agreement with local cashew traders but no specific E&S requirements are included. Going forward, as set forth in the ESAP, Pan Pacific will develop and implement, as best practice, for its subsidiaries, as applicable - especially for the cashew sourcing due to potential biodiversity risks, a management procedure for mapping and assessing biodiversity risk of its supply chain, which will include the development and implementation of a Suppliers? Code of Conduct. Implementation of this Code will be done through subsidiaries? EHS coordinator and/or sourcing team. Enforcement of Suppliers? Code of Conduct should be carried out by internal and external auditors.