An equity investment of up to €80 million into “Lafarge Aggregates Holding Eastern Europe”, a regional holding vehicle to be created by Lafarge SA to hold the existing quarry and distribution operations in Ukraine and pursue further developments in Ukraine, Russia, Serbia, Belarus and other selected EBRD countries of operations. This dedicated vehicle is co-owned solely by EBRD and Lafarge SA.
The project objective is to support the development of Lafarge's aggregates business, which assists in the development of local companies in the eligible sectors, enhances their performance and improves their environmental standards.
(i) Setting standards in the areas of environmental management, including efficient use of transport, land recultivation and biodiversity
(iii) Setting standards in the areas of health and safety , including social responsibility
Lafarge, founded in 1833, is the world's leader in building materials with leading positions in all of its businesses (cement, aggregates and concrete and Gypsum).
Equity investment of up to €80 million.
Total project cost of up to €300 million.
Environmental classification and rationale
In line with the Bank’s Environmental and Social Policy (2008), the project, a multi-site operation seeking equity investment, has been screened as B, requiring a corporate environmental and social audit.
Due diligence undertaken and outcomes
An international consultant has undertaken an Environmental and Social Due Diligence (ESDD), of the Company. The ESDD has confirmed that the Company has a good environmental and social management system and has the capacity to fully implement the Bank’s Performance Requirements (PRs).
The main environmental and social issue is associated with the environmental performance of existing quarries and possible environmental and social impacts of future investments, relate mainly to waste management and fugitive dust emissions from quarry operations. A programme is being developed by Lafarge to address this in line with best practice and Lafarge corporate standards as well as Bank Performance Requirements (PRs). In terms of health and safety the Company has devoted significant resources in developing best practice and has a good management system in place in Ukraine. Lafarge Group and the 2009 sustainability ambitions was to reduce the Lost time Injury Frequency Rate and the Company will benchmark all operations against the Group Safety Key Performance Indicator (KPI) target of 0.94 for Lost Time Injuries (LTIs).
The ESDD also included an Environmental Analysis of the future investment programme, including ongoing visit to some of the quarries destined for future acquisition in Russia. The ESDD has identified the need for further institutional strengthening in terms of EHS management in Russia once the new assets are acquired. This has been included in the agreed Environmental and Social Action Plan (ESAP). In terms of future investment programmes, and in line with the agreed Multi Project Facility (MPF) the Company will undertake additional Environmental and Social Impact Assessments (ESIA) for each sub project as and when it is developed.
The ESAP addresses among others, the environmental, health and safety improvements including implementation of a corporate environmental, health and safety management system, improvements to waste management and measures aimed at reducing fugitive dust emissions and resource use.
This is inline with Lafarge Corporate practices and policy. Lafarge will implement Lafarge corporate sustainability ambitions (http://www.lafarge.com/05252007-press_themabook-Sustainability_Ambitions_2012-uk.pdf), inclusive of implementing Environmental, health and Safety management systems, biodiversity assessments as well as focusing on the improvements of health and safety at exciting sites.
It is expected that standards that reach beyond the prevailing industry standards in the region and reaching international best practice will be established. Information on Lafarge Corporate Environmental Policy can be obtained on www.lafarge.com
The implementation of the current investment programme and the Environmental and Social Action Plan (ESAP), will enable the Company to meet the Bank’s PRs.
The Company is developing a stakeholder engagement plan, in line with the Bank’s PR 10. This includes the requirement of publishing an annual corporate report for the regional operations. Lafarge corporation is a world leader in terms of corporate reporting and is an active member in developing best practice guidance for the sector under the World Business Council for Sustainable Development.
The Bank will monitor the implementation of the project, and an independent audit will be required every three years to assess the status of implementation of the project.
Frank Bauduin, Lafarge A&C, VP Development North and Central Europe.
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