The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) Appraisal Environmental and Social Review Summary Appraisal Stage (ESRS Appraisal Stage) Public Disclosure Date Prepared/Updated: 03/29/2022 | Report No: ESRSA01979 Mar 30, 2022 Page 1 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Brazil LATIN AMERICA AND P178339 CARIBBEAN Project Name Progestão Mato Grosso: Public Sector Management Efficiency Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Governance Investment Project 3/29/2022 5/24/2022 Financing Borrower(s) Implementing Agency(ies) State of Mato Grosso SEFAZ - Mato Grosso, Secretariat of Finance - Mato Grosso Public Disclosure Proposed Development Objective Improve efficiency in public resource management in selected departments of the State of Mato Grosso. Financing (in USD Million) Amount Total Project Cost 50.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] The proposed IPF operation follows the overall Progestão approach of providing technical assistance around the whole-of-government functions to the State of Mato Grosso to improve efficiency in the management of public resources and through targeted actions in the Health, Social Protection and Environment sectors. The Progestão Program recognizes that the subnational fiscal crisis is largely a result of structural problems in public sector management. The Program, available to all Brazilian States regardless of their fiscal situation, will provide technical assistance to help participating States modernize and improve the following whole-of-government functions Mar 30, 2022 Page 2 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) through investments in management reforms and information systems: human resource management; pensions; public procurement; public investment; debt management; state-owned Enterprises; and asset management. The Program also supports investments in management reforms and information systems in four strategic sectors: health, education, social assistance, and environment. The Progestão Mato Grosso Project will include the following components and sub-components: Component 1: Whole-of-Government Management Systems (US$ 38.5 million) 1.1: Human Resource Management. Activities financed under this subcomponent mainly target the central HR management of the State of Mato Grosso, but also support departments and agencies. Activities include: (i) development of a strategic workforce planning system and functional reviews to identify the competencies needed and plan organizations’ staff recruitment and deployment in all State departments and selected agencies; (ii) design and implementation of selection processes for senior management positions, aiming to increase women’s participation; (iii) design and implementation of measures to strengthen harassment reporting mechanism using the government’s grievance redress mechanism; (iv) design and implementation of a management analytics system and artificial intelligence for automated wage bill audits; (v) functional review of the public administration careers and positions; (vi) periodic staff surveys to assess reform implementation and support change management; and (vii) communications and capacity building to support the rollout and implementation of new tools. 1.2: Pensions Management. Activities financed under this subcomponent include: (i) development and Public Disclosure implementation of an actuarial impact calculation system; (ii) design and implementation of a pension financial asset and liability management system implemented to balance public accounts; (iii) a full financial audit of all pension benefits and payments (iv) design and implementation of a pension fund investment management strategy to maximize the State’s portfolio and integrate Environmental Social Governance (ESG) factors in the investing strategy (v) procurement of energy efficient hardware to support the deployment of these systems; and (vi) communications and capacity building to support the rollout and implementation of new tools. 1.3: Public Procurement. Activities financed under this subcomponent support procurement in central and sectoral areas of procurement in the State of Mato Grosso. Activities include: (i) development and implementation of a sustainable procurement strategy, which addresses environmental, climate and gender equality considerations, and an implementation plan to help embed sustainable procurement across the State's purchases; (ii) development and implementation of a centralized e-procurement system, including green and climate sensitive procurement and the redesign and automation of key processes to ensure cost-effective acquisitions; (iii) development and implementation of a stock management system integrated to procurement, including an e-marketplace portal; (iv) design and implementation of a strategic sourcing methodology to help identify demand for goods and services across the government; (v) application of artificial intelligence using electronic invoices and to identify and reduce fraud and corrupt practices; (vi) establish a women-owned business definition (>51 percent ownership/stake by a woman/women; women as CEO/COO; or women-sole-proprietors; (vii) development and implementation of a system that certifies enterprises owned by women and automatize data aggregation by the gender attribute; (viii) capacity building program for officials working in procurement across the state; and (ix) procurement of energy efficient hardware to support the deployment of these systems. Mar 30, 2022 Page 3 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) 1.4: Public Investment Management and Budgeting. Activities financed under this subcomponent are focused on enhancing public expenditure efficiency and effectiveness through : (i) development and implementation of a public investment system, integrating environmental and climate change considerations in project preparation, screening, and appraisal; (ii) development and implementation of tools to support environmental and climate change risk assessment and project screening; (iii) development and implementation of an electronic tool for the management of the portfolio of technically appraised, implementation ready projects to support Mato Grosso’s development, environmental and climate change objectives; (iv) design and implementation of a governance strategy to manage the project portfolio execution; (v) development and implementation of a management system for the transfer of resources from the State of Mato Grosso to municipalities, allowing for digital monitoring of the preparation and implementation stage; (vi) review of budgeting practices to embed green and gender budgeting practices; and (vii) procurement of energy efficient hardware to support the rollout and implementation of new tools. 1.5: Asset Management. Activities financed under this subcomponent include: (i) contracting of technical support to assess and update information on the state’s real estate properties, including geospatial data, area, occupation rate, valuations and registry status; (ii) development and implementation of a comprehensive public asset management system that includes a climate risk assessment of each real estate asset; (iii) energy audits based on CCB methodology for selected government properties, focused on reducing energy consumption or GHG emissions; (iv) development and implementation of a system for mapping costs of information and communication technologies (ICTs), including identification of synergies between government-to-government systems, interoperability, and a governance strategy for new acquisitions and maintenance; (v) capacity building on asset management practices and support the rollout and implementation of new tools; and (vi) procurement of energy efficient hardware to support the rollout and Public Disclosure implementation of new tools. Component 2: Management Systems in Strategic Sectors (US$ 9.5 million) 2.1: Health. Activities financed under this subcomponent include: (I) development of an expenditure review to identify cost structure and assess budgeting practices in the state's public health units; (ii) implementation of systems to support budgeting and expenditure management in the State's health units; (iii) introduction of communication and capacity-building to support the rollout and implementation of new tools; and (iv) procurement of energy efficient hardware to support the rollout and implementation of new tools. 2.2: Social Assistance. Activities financed under this subcomponent support SETASC management activities and contribute indirectly to monitor implementation in municipalities. Activities include: (I) design and implementation of an integrated management system to facilitate the execution of social assistance programs, including financial management, cash transfer programs and management of other benefits, as well as internal registries; (ii) development and implementation of a transparency panel to support decision-making in social assistance; (iii) digitalization and automation of social protection services, providing faster access to services and reducing operational costs; (iv) communication and capacity-building to support the rollout and implementation of new tools; and (v) procurement of energy efficient hardware to support the rollout and implementation of new tools. 2.3: Environment. Activities financed under this subcomponent intend to reduce emissions and improve ecosystem services to enhance climate resilience. Activities include: (i) design and implementation of the electronic module for filling and payment of environment taxes and fees; (ii) development and implementation of a system module for fishery monitoring; (iii) technical assistance to improve the geospatial database; (iv) communication and capacity Mar 30, 2022 Page 4 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) building to support the rollout and implementation of the new tool; and (v) procurement of energy efficient hardware to support the rollout and implementation of new tools. Component 3: Project and Change Management (US$ 2 million) 3.1: Project Management Unit. Activities financed under this sub-component include: (i) project management, including procurement, financial management and environmental and social safeguards (staff, equipment, and operating costs); and (ii) communications and capacity building to support project management functions. 3.2: Change Management. Activities financed under this sub-component support the development a transversal change management strategy encompassing incentives, processes and skills, which include: (i) change management activities to support the design and implementation of management reforms across the various beneficiary agencies, training, auditing services, and monitoring and evaluation capacity; (ii) just-in-time support, as needed and as agreed with the Bank, including problem solving advisory services to technical teams during implementation, including the Procuradoria, CGE and the Tribunal de Contas do Estado (TCE), and knowledge exchange activities; (iii) consulting services, studies and surveys to support project implementation; and (iv) communications and capacity building to support the rollout and implementation of new tools. The Project proposed aligns well with the Brazil FY18-23 Country Partnership Framework (CPF). The Project is expected to support CPF’s Focus Area 1 & 2 (Fiscal consolidation and government effectiveness and Private sector investment and productivity growth) by helping the adoption of policy reforms necessary to improve service delivery, Public Disclosure reestablish fiscal stability and strengthen fiscal management, as well as setting up institutional arrangements that can attract, leverage, and secure private sector investment in the State of Mato Grosso. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] The proposed operation will have statewide relevance and will focus on technical assistance activities. No site-specific interventions are expected, but some elements of the project would have positive effect across the state by improving the delivery of public services by the state government. Located in the West-Central region of Brazil, Mato Grosso is the 3rd largest state by area (903,357 km2) and home to nearly 3.6 million people (1.6% of the Brazilian population). Demographic density is low (3.4 inhabitants/km²) and the urbanization rate equals 81.8%. The average nominal monthly household per capita income (as of 2020) is the 8th highest among Brazilian states (at BRL 1,401). The state population includes 43 Indigenous Peoples in the State of Mato Grosso, including one Isolated or Recently Contacted Indigenous Peoples (the Tupi Kawahiv) already identified and seven under identification. The indigenous Peoples population in the state totals 42,538 people (13.7% living in urban areas). The state occupies a prominent position on the national scene due to the natural wealth of three important Brazilian biomes: 53% of its territory is located in the Amazon biome, 40% in the Cerrado and 7% in the Pantanal biomes areas Mar 30, 2022 Page 5 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) correspond to 40% and 7% of it, respectively. The extensive environmental capital is threatened by agricultural expansion (which has historically taken place through clearing of natural vegetation),.growing deforestation, large forest fires and other phenomena related to climate change – such as more frequent and intense droughts. Average deforestation post-2010 has been 75% below its 2001-10 average, but Mato Grosso still has the 2nd highest level of deforestation in the Amazon biome (1,739.92 km2 deforested in 2020, accounting for 17% of total deforestation in the Brazilian Amazon biome) and the 4th highest deforestation rate in the Cerrado biome (726.97km2 in 2020). The expansion of the agriculture frontier into forests has been a leading contributor to carbon emissions in the state, has come at the detriment of higher productivity and can undermine economic progress. These factors justify the concerns of the state government in improving environmental management systems (Sub-Component 2.3). D. 2. Borrower’s Institutional Capacity The Project implementation will be led by Mato Grosso’s Secretariat of Finance (SEFAZ). The Project Management Unit (PMU) hosted within SEFAZ will be composed of technical staff from agencies in the state government and hired consultants (as needed), which will work on the management and implementation of the Project. The PMU will coordinate, supervise, control, and manage the project's environmental and social risks. The primary agencies involved in the co-implementation of the project are: (i) the State Secretariat of Planning (SEPLAG) that will implement the majority of Component 1 products; (ii) Secretariats of Health, Environment, and Social Assistance that will be responsible by the implementation of Component 2; and (iii) SEFAZ who will lead Public Disclosure component 3, with change management and project management activities. As co-executing bodies, these secretariats will be responsible for the direct implementation of the program, provide support on contracting, develop ToRs, inspect and supervise the implementation of program components, with close oversight from the PMU at SEFAZ. A Program Support Cluster (NAP for its acronym in Portuguese) will be established inside each co- implementing agency. Individual agency NAPs consist of a coordinator to monitor and support the execution of the program. The State of Mato Grosso has recently completed the Mato Grosso Fiscal Adjustment DPL (P164588) aimed at to support the state to regain fiscal sustainability and increase institutional capacity for sustainable agriculture, forest conservation and climate change mitigation. Brazil has advanced environmental laws, reflecting a political culture of environmental protection. The Borrower at the national level has also an adequate environmental legal framework, institutional capacity, the expertise required, and commitment to manage the negligible project-related risks. However, at the state level, the implementation of this regulatory framework has faced challenges and there is room for improvements in operating procedures for environmental compliance and enforcement in general. The previous DPL operation has tackled issues related with the lack in transparency and efficient control mechanisms and the proposed project will contribute to improve further service delivery in this sector. The Borrower and the implementing agency have no previous experience with the World Bank’s Environmental and Social Standards. An environmental and social specialist will be assigned to the Project Management Unit and will be responsible for overseeing project implementation with the specific attributions of: (a) ensuring the Terms of Reference, work plans and any other document defining the scope and outputs of technical assistance activities will be drafted so that the advice and other support provided is consistent with ESS 1-10; (b) ensuring the adequate Mar 30, 2022 Page 6 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) disclosure of relevant information about each technical assistance activity is disclosed to their interested parties; (c) overseeing the operation of the Project’s Grievance Mechanism; and (d) reporting to the Bank on the environmental and social risk management in the semiannual progress reports. The Environmental and Social Commitment Plan (ESCP) - including detailed measures, actions, and completion dates - has been discussed and previously agreed with the Borrower. The ESCP also incorporates a capacity building strategy for ensuring appropriate environmental and social risks management throughout project implementation. II. SUMMARY OF ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Low Environmental Risk Rating Low The project will support only technical assistance (TA) activities to improve state government services delivery and complement other initiatives at the state level to build and enhance institutional processes and capacities to appropriately scale existing electronic systems (both internal and external facing) and modernize and support governmental strategy and delivery. Project investments are not aimed at financing infrastructure works or other on-the-ground activities with potential environmental impacts and risks that need to be managed. No future construction of physical infrastructure investments, spatial plans, and natural resources management regulations is expected due to technical assistance activities supported by the project. Overall, the proposed activities do not Public Disclosure present environmental complexity; project activities will be implemented in an office environment and are not expected to endanger living natural resources. The project is not expected to pose a risk of environmental pollution and degradation of natural resources (air, soil, water). It is not expected to affect biodiversity or habitats, either positively or negatively, directly or indirectly, or depend upon biodiversity for its success. The Progestão project is expected to provide the opportunity to increase the Borrower’s capacity for improving governance of biodiversity and ecosystem services, while also simultaneously meeting other objectives, such as job creation and climate change mitigation. The project is expected to have a positive impact on the environment through: (i) the development and implementation of a sustainable public procurement strategy; (ii) rationalizing the movable assets and identifying opportunities to shift to electrify and improve energy efficiency; (ii) reductions in consumables, travel time and energy consumption through the digitalization of public administration services; and (iii) improved geospatial database and electronic tools for monitoring natural resources. The environmental risks and impacts assessment (ESIA) indicates that this technical assistance operation will not have large-scale, significant, and irreversible adverse direct impacts and/or downstream implications on society and the environment in the state. The assessment also indicates that the existing government office facilities meet the requirements of the ESSs. Social Risk Rating Low This Technical Assistance operation is expected to have positive outcomes at the state level in the medium and long run. These positive outcomes include, among others: reduced state fiscal deficit; increased fiscal transparency; improved delivery of good quality public services; and improved enabling environment for doing business. Project activities are not expected to have adverse social impacts. These activities neither require land acquisition nor will they lead to restrictions on land use. They are not expected to have adverse impacts on Indigenous Peoples and other vulnerable and disadvantaged social groups. On the contrary, increased efficiency on public expenditures in Mar 30, 2022 Page 7 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) the different sectors may mostly benefit vulnerable/disadvantaged social groups – those at the bottom of society who heavily rely on public services to have access to health services and social protection networks. There was some concerns about the potential impact that the context-risk factor of the digital divide could have, excluding disadvantaged and vulnerable social groups from fully benefiting of the changes towards e-government. The environmental and social impact assessment carried out by the Borrower has minimized such risk given the high level of access to the internet in the state of Mato Grosso (where, in 2018, the last year for which official data is available, 78.5% of the households had access and used the internet and 84.4% of the population owned a smartphone) and, principally, because the referral agencies for providing access to these services and programs (the network of Social Protection Referral Centers – CRAS by its Portuguese acronym) will remain open and operating, providing face-to-face attendance and carrying out outreach activities. There was also some concerns that the roll- out of cash transfer programs could raise concerns about inequities or perceptions of inequities or favors in their distribution and lead to the exacerbation of social conflicts. However, this risk is not expected because the Project’s support to the design and implementation of a system to facilitate the execution and control of cash transfer programs this activity will not change the rules of eligibility and criteria of selection of these programs that are broadly known and widely accepted for many years in Brazil. B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Public Disclosure Overview of the relevance of the Standard for the Project: The project will finance technical assistance investments, including digital systems, digitalization, government process and procedures formulation, modeling of performance systems, and other studies focused on addressing fiscal imbalances, enhancing expenditure efficiency, and improving services delivery. To avoid or minimize potentially adverse environmental risks and impacts, the Borrower screened all proposed activities in accordance with the Environmental and Social Standards (ESSs) and prepared an Environmental and Social Impact Assessment (ESIA) report, to be followed throughout the project life cycle. Project activities are expected to bring minimal or no environmental and social risks or adverse impacts as the project will neither support feasibility studies for future infrastructure investments, nor construction works. The focus is on institutional capacity building. The technology and information systems proposed under the project are well-established and understood and are expected to favor energy-efficient equipment. The project would support environmental innovation consisting of new or modified processes, techniques, systems, and products to provide accurate, accessible, timely, updated, and location-specific information to avoid or reduce environmental harms and ensure compliance with environmental laws and regulations. There is no indication that quantities of electronic waste (or e-waste) will experience an increase due to project activities. There is a potential for environmental gain and climate co-benefits arising from lower consumption of paper and energy and reduced travel for effective public management. Finally, improvements in public services in the Health and Social Protection sectors must benefit the poor, disadvantaged and vulnerable social groups who rely the most on public networks. Mar 30, 2022 Page 8 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) The Borrower has shown a strong commitment to applying national and international best practices with the potential to mainstream environmental sustainability in the activities proposed under the Progestão. Furthermore and following the project’s ESCP requirements, when designing and hiring technical assistance activities, the Borrower will: (i) apply environmental and social risk management measures as relevant and appropriate to the nature of the envisaged risks and impacts of the activities, (ii) promote broad stakeholder engagement and participation in a manner proportionate to the direct, diffuse and induced social and environmental impacts and downstream implications envisaged as potential outcomes of the activities; (iii) promote – whenever financially and technically feasible – the sustainable use of resources (including energy, electronic material, and paper), by including requirements to address resources efficiency and e-waste management throughout the project life cycle; and (iv) ensure that the terms of reference, work plans or other documents defining the scope and outputs of these activities are drafted so that the final products of the technical assistance activities are consistent with the World Bank Environmental and Social Standards 1-10. During project implementation, the Borrower will undertake due diligence of the potential downstream implications of the project's outputs on environmental and social risk management, on disadvantaged and vulnerable social groups (including Indigenous Peoples), and gender-related concerns. It will also comply with requirements related to the labor and working conditions that apply to workers engaged for carrying out the Technical Assistance activities themselves. Public Disclosure ESS10 Stakeholder Engagement and Information Disclosure This standard is relevant. Throughout project implementation, the Borrower will disclose project information to allow stakeholders to understand the purpose, nature, and scale of project activities, their duration, their potential downstream environmental and social implications, and the channels available for providing feedback and raising grievances related to project activities. The Borrower will also keep an open channel for consultation and gathering feedback from key stakeholders and will broadly advertise and operate a Grievance Mechanism (GM) that is designed to ensure: • Different ways in which users can submit their grievances (anonymously or not), which may include submissions in person, by phone, text message, mail, e-mail, or via a website; • Accessibility by disadvantaged and vulnerable social groups in a culturally appropriate manner; • A log where grievances are registered in writing and maintained as a database; • Publicly advertised procedures, setting out the length of time that users can expect to wait for acknowledgment, response, and resolution of their grievances; • Transparency about the grievance procedure, governing structure, and decision-makers; and • An appeals process (including the national judiciary) to which unsatisfied users may be referred when a grievance resolution has not been achieved. Mar 30, 2022 Page 9 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) This GM will also be able to track project-related complaints and provide periodic reports on these complaints. It will be able to flag incidents and accidents related to environmental, social and SEA/SH issues that must be communicated to the Bank within 48 hours of acknowledgment. Considering the scope of project-supported activities and level of social and environmental risk, the key elements of a Stakeholder Engagement Plan (SEP) have been included as part of the Environmental and Social Commitment Plan (ESCP). B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions This standard is relevant. Some core functions of the project will be executed by the state government civil servants who will remain subject to the terms and conditions of their existing public sector employment agreements. ESS2 will not apply to them, with the exception of the provisions related to the Protection of the Work Force and Occupational Health and Safety. Project activities will also require the hiring of full-time, part-time or temporary consultants, trainers, and others as Public Disclosure contracted workers. The project is not expected to engage primary supply or community workers. Project activities will be carried out inside the premises of the Government of the State of Alagoas and project workers are not expected to be exposed to occupational health and safety risks. They will not work in remote locations or areas hard to supervise. They will not handle chemical, physical and biological substances and agents or hazardous materials. They will be provided with facilities appropriate to the circumstances of their work. The Project’s Environmental and Social Commitment Plan includes the following provisions that are core elements of ESS 2: • Assurance that project workers directly engaged by the state government or through third-parties to work specifically in relation to the project and/or perform work related to core functions of the project (direct and contracted workers) will be hired based on principles of non-discrimination and equal opportunity, no-harassment, and freedom of association; • Assurance that these project workers would be provided with information and documentation that is clear and understandable regarding their terms and conditions of employment, their rights under the well-established national labor and employment laws (including payment of wages and deductions, periods of rest and leaving, written notice of termination and severance payments, among others) at the beginning of the working relationship or whenever a material change to the terms or conditions of employment occurs. • Assurance of adoption of appropriate occupational safety and health measures at the working places of the technical assistance activities, considering an assessment of the potential risks associated with the tasks to be carried out and including special bio-safety protocols for protection against COVID-19 transmission as issued by the Ministry Mar 30, 2022 Page 10 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) of Health, Secretariat of Labor and Employment Inspection (under the Ministry of Economy), the State Secretariat of Health, WHO, and the World Bank; • Assurance of adoption of measures against practices related to sexual harassment, abuse and exploitation in the labor environment/relationships, including the dissemination of the referral services available in the state and in the country to respond to such behaviors; • Prohibition of child labor as well as forced labor, per ESS2 definitions; • Establishment and operation of a responsive Grievance Mechanism to allow workers to quickly inform management of labor issues and raise workplace concerns and labor-related matters – including SEA/SH issues and concerns related to work situations that they believe are not safe or healthy – without retaliation. This mechanism may use the same uptake channels of the project's overall Grievance Mechanism but will follow separate avenues for the resolution of labor-related complaints. ESS3 Resource Efficiency and Pollution Prevention and Management This standard is relevant. Based on the report of the environmental and social impact assessment (ESIA), it is not expected that the activities supported by the proposed TA IPF operation will pose a risk of environmental pollution and/or degradation of natural resources (air, soil, water), or generation of significant volumes of waste, including e-waste. Public Disclosure The proposed activities will not involve construction works/service operations that may lead to adverse impacts related to pollution and resource efficiency. There will be some activities related to the procurement of some ICT software and hardware to increase the existing performance of the government services system. Still, it is not expected to generate significantly more e-waste than would be the case in the absence of the project. The National Policy on Solid Waste established by Federal Law No. 12,305/2010 establishes that solid waste management (including e-waste) must be carried out in a sustainable manner that considers environmental and social dimensions involved in solid waste management at the national level. The designations under Federal Law No. 12,305/2010 are expanded within the scope of the federal decree no. 9,373 of May 11, 2018, which provides further instructions for the appropriate collection, transportation, recycling, and treatment of solid waste in the context of national and sub-national public administration. Further provisions on the handling of e-waste are made through Federal Decree No. 10.240 of Feb 12, 2020, which requires sub-national governments to apply the principle of "reverse logistics" to promote the management of e-waste by putting in place processes that enable planning, implementation and controlling of the backward flow of e-waste and raw materials to manufacturing and distributing companies. At the national level, the Brazilian Ministry of Environment (MMA) is responsible for monitoring the implementation of the National Policy on Solid Waste, and information on progress and compliance on implementation is available publicly through the National Information System on Solid Waste Management (SINIR). During project implementation and following the ESCP, the State Government will consider measures to promote efficient use of energy as well as avoid the generation of e-waste, including a focus, where relevant, on reuse, recycling, and recovering of e-waste in a manner that is safe for human health and the environment. Moreover, the Mar 30, 2022 Page 11 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) preparation studies and terms of reference for the project and interventions resulting from this TA will consider issues such as use, disposal, and/or recycling of material related to the electromobility systems. The project environmental and social management procedures include principles of sustainability as energy efficiency, reuse, recycle and recovery of e-waste, and transparency that are compliant with this ESS. ESS4 Community Health and Safety This standard is not currently relevant. The Progestão Mato Grosso operation will only support technical assistance activities and is not expected to involve activities that may lead to direct or indirect adverse impacts on community health and safety. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement This standard is not currently relevant. The technical assistance activities supported by the Progestão Mato Grosso IPF Operation will not require land acquisition or lead to restrictions on land use that may have adverse impacts related to involuntary resettlement. These activities are not expected to have downstream implications leading to such adverse impacts. Activities under Public Disclosure Subcomponent 1.5 Asset Management related to public buildings only comprise improvements to the system of registry of real-estate assets. During project implementation, the team will monitor if these improvements may or not have implications for eventual informal users of these buildings, and will ensure that the principles of ESS5 are reflected in the Project’s technical assistance. ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources This standard is relevant. The IPF operation will not potentially affect biodiversity or habitats, either positively or negatively, directly or indirectly, or depend upon biodiversity for its success. The project does not intend to invest in the forest sector, will not support any forest related activities, or purchasing natural resources commodities, including food, timber, and fiber that are known to originate from areas where there is a risk of significant conversion or significant degradation of natural or critical habitats. The expected establishment of digital government systems and a comprehensive procurement system by the Borrower would help reduce government paper consumption and establish verification processes and procedures to evaluate compliance with environment regulations for sustainable management of natural resources by the primary suppliers and government agencies. Mar 30, 2022 Page 12 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) The project is not anticipated to lead to any negative impact on living natural resources, including native or non- native species. But by using resources (like paper, energy, and public offices) more efficiently, the project may directly benefit living natural resources. Activities under Subcomponent 2.3 related to environmental management only comprise the deployment of an digital module of fishermen registry and fishery monitoring system. The SEMA/MT will use this electronic tool to monitor registration eligibility and to identify fishery participants, and monitoring sustainability of fisheries. Following this ESS, the proposed digital module will addresses sustainable fisheries management, primary production and harvesting, as relevant. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities This standard is relevant due to the presence of 43 Indigenous Peoples in the state of Mato Grosso, including one Isolated or Recently Contacted Indigenous Peoples (the Tupi Kawahiv) already identified and seven under identification. These Indigenous Peoples belong to the Apiaká, Apurinã, Arara, Aweti, Bakairi (Kurã), Bororo (Boe), Chiquitano, Cinta Larga, Enawenê-Nawê, Guató, Irantxe (Manoki), Juruna (Yudja), Kaiabi (Kawaiwete), Kalapalo, Kamayurá, Kanela (Krahô), Karajá (Iny), Kayapó (Mebêngôkre), Kisêdjê, Krenak (Maxakali), Kuikuro, Matipu, Mehinako, Munduruku, Nafukwa, Nambikwara, Naruvotu, Panará, Paresí (Haliti), Rikbaktsa, Surui (Paiter), Tapayuna, Tapirapé (Apyãwa), Terena, Trumai, Txicão (Ikpeng), Umutina (Balotiponê), Waurá, Xavante (A’uwe), Yawalapiti and Zoró (Pangyjêj) Peoples. Public Disclosure Most of the Indigenous Peoples population in the state live within the 78 Indigenous lands in the state territory, holding an area of 20.2 million hectares. These lands are located in 55 of the 141 municipalities of the state. In addition, two Indigenous Lands for Isolated or Recently Contact Indigenous Peoples (IRCIP) in the state: Kawahiva do Rio Pardo (412,000 ha) and Piripkura (243,000 ha). Other IRCIPs are found within the Indigenous Lands Apiaká do Pontal, Apiaká-Kayabi, Arara do Rio Branco, and Escondido. The standard is relevant (a) regardless of the technical assistance nature of the activities supported by the project – which aims to strengthen the Borrower's institutional capacity to address fiscal imbalances and improve expenditure efficiency and (b) irrespective of (i) whether Indigenous Peoples are affected positively or negatively, or (ii) the significance of any their impacts and downstream effects, or (iii) the presence or absence of discernible economic, political or social vulnerabilities. The Borrower has carried out a social assessment of the Indigenous Peoples living in the state of Mato Grosso, considering (i) the regulatory and institutional framework as well as (ii) the potential impacts and downstream effects of the envisaged technical assistance activities on Indigenous Peoples. With regards to the regulatory and institutional framework of the state government of Mato Grosso, the assessment (incorporated in the Project’s ESIA) highlights the Superintendence of Indigenous Affairs (SAI), located within the structure of the Civil House of the Governorship Office. SAI has the mission of cooperating, providing assistance, intermediating, implementing and developing policies applicable to indigenous peoples, aiming at the well-being and Mar 30, 2022 Page 13 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) peaceful understanding of indigenous and non-indigenous peoples. Due to its attributions, SAI can play a relevant advisory role in Project implementation. With regards to the potential impacts and downstream effects of the envisaged technical assistance activities on Indigenous Peoples, the assessment concluded that: a) No adverse impacts on Indigenous Peoples are expected from the supported activities. None of these activities will have adverse impacts on land and natural resources subject to traditional ownership or under customary use or occupation. None of them will cause relocation of Indigenous Peoples from land and natural resources subject to traditional ownership or under customary use or occupation. None of them will have adverse impacts on Indigenous peoples cultural heritage that is material to the identity and/or cultural, ceremonial or spiritual aspects of the lives of the Indigenous Peoples located in the state of Alagoas. And none of them will use the cultural heritage of Indigenous Peoples for commercial purposes. b) In all relevant sectors, there are properly operating and well-established instances of consultation with Indigenous Peoples that can be used to: (i) get Indigenous Peoples feedback on the scope and scale of potential risks and impacts that the supported technical assistance activities may have on them; (ii) explore opportunities and alternatives that not only avoid adverse impacts, but also enhance benefits for Indigenous Peoples; and (ii) ensure that they can contribute to promote sustainable development benefits and opportunities for Indigenous Peoples in a manner that is accessible, culturally appropriate and inclusive. Considering (i) these conclusions, (ii) the technical assistance nature of the Project supported activities and (iii) their Public Disclosure low social and environmental risks, a standalone Indigenous Peoples Planning Framework is not deemed necessary. Instead, the Environmental and Social Commitment Plan requires that during project implementation: • The Borrower assess opportunities and barriers, design and implement the Project in a manner that will ensure that Indigenous peoples' concerns or preferences are addressed and that Indigenous Peoples would have fair and equitable access to project benefits; • Indigenous peoples are consulted in a proportionate and culturally adequate manner in matters of their interest; and • All appropriate measures necessary to achieve results consistent with the requirements set by ESS 7 are taken and followed during the implementation phase. ESS8 Cultural Heritage This standard is relevant. The Mato Grosso IPF Operation is not expected to include site-specific activities and technical activities to be supported will not include, directly or indirectly, excavations, demolition, movement of earth, flooding, or other changes in the physical environment. The activities supported under Subcomponent 1.5 Asset Management will identify public buildings of cultural and historical value and the Government of Mato Grosso will implement documentation and protection of these historical and architectural assets in compliance with the requirements of this Mar 30, 2022 Page 14 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) standard and in compliance with the guidelines defined by the National Institute for Historical and Cultural Heritage (IPHAN), which are consistent with this ESS. ESS9 Financial Intermediaries This standard is not relevant. C. Legal Operational Policies that Apply OP 7.50 Projects on International Waterways No OP 7.60 Projects in Disputed Areas No B.3. Reliance on Borrower’s policy, legal and institutional framework, relevant to the Project risks and impacts Is this project being prepared for use of Borrower Framework? No Areas where “Use of Borrower Framework” is being considered: Public Disclosure None. IV. CONTACT POINTS World Bank Contact: Kjetil Hansen Title: Senior Public Sector Specialist Telephone No: +1-202-458-4871 Email: khansen1@worldbank.org Contact: Daniel Ortega Nieto Title: Senior Governance Specialist Telephone No: 5761+1054 / 55-61-3329-1054 Email: dorteganieto@worldbank.org Borrower/Client/Recipient Borrower: State of Mato Grosso Implementing Agency(ies) Implementing Agency: SEFAZ - Mato Grosso Implementing Agency: Secretariat of Finance - Mato Grosso Mar 30, 2022 Page 15 of 16 The World Bank Progestão Mato Grosso: Public Sector Management Efficiency (P178339) V. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects VI. APPROVAL Task Team Leader(s): Daniel Ortega Nieto, Kjetil Hansen Practice Manager (ENR/Social) Genevieve Connors Cleared on 07-Mar-2022 at 08:13:22 GMT-05:00 Public Disclosure Mar 30, 2022 Page 16 of 16