The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) Appraisal Environmental and Social Review Summary Appraisal Stage (ESRS Appraisal Stage) Public Disclosure Date Prepared/Updated: 03/29/2022 | Report No: ESRSA01695 Mar 30, 2022 Page 1 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Brazil LATIN AMERICA AND P177070 CARIBBEAN Project Name Progestão Alagoas: 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 Alagoas SEFAZ/AL, Secretariat of Finance - State of Alagoas Proposed Development Objective Public Disclosure Improve efficiency in public administration and public expenditure in the State of Alagoas. 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 project is the first operation in a Series of Projects (SoP) under the Progestão Program designed to assist Brazilian States implement reforms that will improve efficiency in public expenditure. 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 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 Mar 30, 2022 Page 2 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) investments in management reforms and information systems in four strategic sectors: health, education, social assistance, and environment. Progestão Alagoas Project will help tackle public sector management and public sector inefficiencies through investments in management reforms and information systems in: human resource management; pensions; public procurement; public investment; and asset management. Progestão Alagoas also supports investments in management reforms and information systems in four strategic sectors: health, education, social assistance, and environment. The Progestão Alagoas Project will include three components: Component 1: Whole-of-Government Management Systems includes activities related to human resources management, pensions management, public procurement, public investment management and budgeting, and asset management. The component includes five subcomponents: 1.1: Human Resource Management. 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; (iii) design and implementation of measures to strengthen government capacity using the government’s grievance redress mechanism; (iv) Implementation of a transactional HRM information system; (v) design and implementation of a management analytics system and artificial intelligence for automated wage bill Public Disclosure audits; (vi) periodic staff surveys to assess reform implementation and support change management; and (iv) communications and capacity building. 1.2: Pensions Management. Activities financed under this subcomponent include: (i) design and implementation of a pension fund investment management strategy to maximize the State’s portfolio and integrate Environmental Social Governance factors in the investing strategy; (ii) development of a pension management information system to implement the new benefits scheme and capacity-building to improve management of pension benefits; (iii) procuring energy-efficient hardware to support the deployment of these systems; and (iv) communications and capacity building. 1.3: Public Procurement. Activities financed include: (i) development 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; (iii) development and implementation of an integrated digital system for processing and analyzing data and managerial information in public procurement and contract management, including data aggregation with gender attributes; (iv) development and implementation of digital systems that support contract management functions and the procurement low value, non-complex goods and services; (v) development and implementation of a system that certifies enterprises owned by women and automatize data aggregation by the gender attribute; (vi) offer training for women participate in public procurement process; (vii) development and implementation of e-marketplace solution for procuring off-the-shelf goods, stationery and products through an online platform that integrates state’s agencies and suppliers; (viii) capacity building, Mar 30, 2022 Page 3 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) Sub-Component 1.4: Public Investment Management and Budgeting. Activities financed include: (i) development and implementation of a public project management system for State’s investments, 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) preparation of a portfolio of technically appraised, implementation ready projects to support Alagoas’ 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 internal integrity and audit system, including data analytics, to identify potential fraud in expenditures; (v) development and implementation of a contract and transfer management system to monitor and evaluate projects financed at the municipal level, including systems accessible to the public to monitor physical and financial progress, and provide feedback; (vi) design and implementation of a public expenditure review, including gender equity and climate change considerations; (vii) design and implementation of budgeting practices to embed green and gender budgeting practices; (viii) capacity building for state and municipal government officials on public investment and expenditure management practices, to support the rollout and implementation of new tools and the integration of gender and climate change considerations; and (ix) periodic staff surveys to assess reform implementation and support change management. 1.5: Asset Management. Activities include: (i) hiring of technical support to assess up-to-date information of real estate properties, including geospatial data, area, occupation rate, valuations and registry’s status; (ii) development and implementation of a comprehensive public asset management system that includes a climate risk assessment of real estate assets (ii) energy audits based on CCB methodology for selected government properties, focused on reducing energy consumption or GHG emissions; (iii) acquisition and implementation of a system for identification Public Disclosure and recording of movable assets; (iv) rationalizing the movable assets and identifying opportunities to shift to electrify and improve energy efficiency; (v) 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; and (vi) capacity building on asset management practices and support the rollout and implementation of new tools. Component 2: Management Systems in Strategic Sectors includes four strategic sectors – education, health, social assistance, and environment – focusing on the highest priority management systems that can impact on the efficiency of resource allocation. 2.1: Education. Activities financed include: (i) development and implementation of IT systems to ensure digitalization and improve enrollment and class formation for students, allowing procedures to be performed online, including reliable contact of student parents, georeferencing of students, and efficient and automated creation of classes at the beginning of the school year, considering the local pedagogical criteria; (ii) design and implementation of a teacher allocation system, covering over 6,800 teacher assignments, allowing procedures to be performed online, including alerts to teachers of available classes and the integration and automation of this procedures with the enrollment system; and (iii) communications and capacity building. 2.2: Health. Activities financed include: (i) expenditure review to identify cost structure and assess budgeting practices in Alagoas’ public hospitals; (ii) development and implementation of systems to support budgeting and expenditure management in the State's five new regional hospitals and the additional five that are being planned; and (iii) introduction of communications and capacity building. Mar 30, 2022 Page 4 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) 2.3: Social Assistance. Activities financed include: (i) development and implementation of systems to support cash transfers and agreements with 102 municipalities to implement social programs which targets the poor and vulnerable to climate impacts and other external shocks; (ii) digitalization of service delivery of internal operations, leading to a substantial reduction in travel over the municipalities and material use; and (iii) communications and capacity building. 2.4: Environment. Activities financed include: (i) mapping land use, natural vegetation cover, and climate stressed areas - using satellite imagery and geospatial data; (ii) deploying digital systems and IT tools to measure natural vegetation cover and environmental management data and metadata; (iii) communications and capacity building to support the rollout and implementation of the new tool. Component 3: Project and Change Management includes activities to support and facilitate project implementation. 3.1: Project Management Unit. Activities financed include: (i) project management, including procurement, financial management, and environmental and social safeguards (staff, equipment, and operating costs); (ii) development and implementation of a grievance redress mechanism and management information system, in coordination with the Comptroller General (CGE) the institution mandated with this function; and (iII) communications and capacity building to support project management functions. 3.2: Change Management. Activities financed include: (i) consulting services, studies, and surveys to support project implementation; (ii) carrying out process reviews before information systems are developed; (iii) just-in-time support, Public Disclosure as needed and as agreed with the Bank, including solving advisory services to technical teams during implementation, including the Procuradoria, and knowledge exchange activities; (iv) support in process reviews before the development of information systems; and (v) communications and capacity building to support the rollout and implementation of new tools. Alagoas’s Secretariat of Finance (SEFAZ) will lead project implementation. Specific implementing arrangements include: a Steering Committee; a Project Management Unit (PMU); interagency agreements for implementation; and inter-state thematic working groups for the learning agenda. The Project will support regulatory reforms, business process changes, information systems, capacity building and change management activities in all areas of engagement. These institutional reforms are expected to put in place routines, review and oversight arrangements that will help sustain reforms. Engagement with key internal and external stakeholders through project design and implementation is expected to increase ownership. 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. Mar 30, 2022 Page 5 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) 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. The proposed IPF will be implemented in the State of Alagoas. Located in the Northeast region of Brazil (NEB), Alagoas is a small state with a surface area of about 28,000 km2 and 3.2 million inhabitants, of which 74% are concentrated in urban areas (IBGE, 2020). The city of Maceió, the state capital, presents the highest number of inhabitants across the 102 municipalities and concentrates 30% of the population in the state. Furthermore, the Instituto Brasileiro de Geografia e Estatística (IBGE) population projections show an expected 5.7% increase by 2030. IBGE statistical data (PNAD Contínua 2018 – Pesquisa Suplementar) also shows that 71.2 percent of the population had access to internet and 93.4 percent to smartphones, among whom 99.6 percent used their smartphones to have access to the internet. Alagoas is one of the largest producers of sugarcane in Brazil, and agriculture and livestock constitute the basis of its economy. The Gross Domestic Product (GDP) of Alagoas currently ranks 21st among states at the national level. The services and public administration sectors make for the most substantial share of the GDP (31% and 25% respectively), followed by the business sector (18%), agriculture and livestock (12%), and industry sector (14%). Over the last decade, Alagoas has shown persistent worsening of socioeconomic indicators, whether these are economic or social. The state has the lowest Human Development Index (HDI) in the country (0.6310). Fifteen percent of the state population live in extreme poverty (assuming a poverty line of US$ 1.9 PPP a day), and 47.2% live in Public Disclosure poverty (using a poverty line of US$ 5.5 PPP a day). The State of Alagoas has 97% of its households with access to piped water, but only 30% of households have sewage or septic tanks, the lowest rate in the Region, and 68.2% have access to direct trash collection. Alagoas shows the highest illiteracy rate amongst states in the Northeast region of Brazil. While illiteracy rates fell from 25% in 2008 to 21% in 2013, the state still presents average numbers substantially above regional (16.9%) and national (8.5%) averages. A total of 32.97% of households in the state have internet access (0.36% below the national average, 19th place in the national ranking). Alagoas can be divided into three natural zones with distinct geoclimatic, geomorphological, and phytogeographical qualities: (i) the coastal zone, including the Atlantic Forest; (ii) the sertão, an arid region covered with underbrush and cacti (caatinga) in the western extreme; and (iii) a transition zone, called agreste, in between the other two, shrubby savanna parkland (cerrado). In the eastern parts of the state and in the coastal areas, the climate is tropical humid. To the West and the interior, the climate is semi-arid. The State of Alagoas has 22.5% of its territory (6,256 Km2) affected by desertification and land degradation, where climate variability and change, soil erosion, increased water scarcity, and loss of natural vegetation have been putting additional strain on important biological, social, and economic resources. Alagoas ranks 25th in total greenhouse gas (GHG) emissions at the state level in Brazil, with average gross emissions at 8.4 Metric tons of carbon dioxide equivalent (MTCO2e) per year between 2010-2019. The breakdown of emissions per sector in Alagoas for 2019 shows agriculture and livestock responsible for 40% of total emissions (BRA 28%), followed by the energy sector with 33% (BRA 19%), waste sector at 19% (BRA 4%), LULUCF at 7% (BRA 44%), and industry at 1% (BRA 5%). Mar 30, 2022 Page 6 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) D. 2. Borrower’s Institutional Capacity The Project implementation will be led by the Secretariat of Finance of Alagoas (Secretaria da Fazenda do Estado de Alagoas – SEFAZ). This arrangement is expected to build on SEFAZ's technical expertise, institutional mandate, and experience in implementing programs focused on reform and modernization of the state-level service delivery (e.g., Profisco Alagoas, funded by the Interamerican Development Bank). The primary agencies involved in the co-implementation of the project together with SEFAZ are the Secretary of State for Planning, Management and Heritage (SEPLAG), the Department of Social Security, the Agency for Process Management Modernization (AMGESP), and State General Auditing Agency (Controladoria Geral do Estado - CGE). SEPLAG Alagoas has had experience implementing projects of complementary nature to the Progestão. As co- executing bodies, these departments 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) 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 Secretariat for the Environment, and the Water Resources and the Environmental Institute (IME) are the two main government agencies responsible for environmental protection and planning. In 2020, the Government of Alagoas allocated 0.17% of its total budget to agencies working on the environment. A breakdown of the budget reveals that agencies used public financing, in its majority, to pay staff salaries (84%), fund physical infrastructure maintenance and running costs (11%), cover costs associated with policy implementation and law enforcement (3%), capacity enhancement (0.29%), and agency modernization (0.005%). Public Disclosure The PMU hosted within SEFAZ will be composed of technical staff from agencies in the state government, who will work on the management and implementation of the Progestão Alagoas. The PMU will coordinate, supervise, control, and manage the project's environmental and social risks. Nevertheless, the Borrower has no previous experience with the World Bank Group Environmental and Social Framework (ESF) and its Environmental and Social Standards. Nonetheless, Brazil has advanced environmental and water management laws, reflecting a political culture of environmental protection. The Government of Alagoas has an adequate environmental legal framework, institutional capacity, the expertise required, and commitment to manage the low project-related risks. During project preparation, the Bank team assessed the adequacy of the capacity of the primary agencies responsible for the management of ES risks and impacts and confirmed that no additional E&S staff are needed in the PIU. All E&S issues have discussed with the Borrower included the detailed measures, actions, and completion date as included in the Environmental and Social Commitment Plan (ESCP). II. SUMMARY OF ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Low Environmental Risk Rating Low Mar 30, 2022 Page 7 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) The Alagoas IPF operation will support only technical assistance (TA) activities to improve state government services delivery. The Progestão Alagoas complements other initiatives at the state level to build and enhance institutional processes and capacities to appropriately scale existing 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. The Alagoas IPF operation will support only technical assistance (TA) activities to improve state government services delivery. The Progestão Alagoas complements other initiatives at the state level to build and enhance institutional processes and capacities to appropriately scale existing 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 are expected due to technical assistance activities supported by the project. Anticipated project activities are the design and implementation of specialized software and digital platforms; electronic procurement management systems; and proposals for the passing of relevant legislation targeted at modernizing and streamlining processes within public procurement, asset and staff management, and pension systems. Overall, the proposed activities do not 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 environmental risks and impacts assessment (ESIA) carried out during the preparation indicates that this technical assistance operation will not have significant and irreversible adverse direct impacts and/or Public Disclosure downstream implications on society and the environment in Alagoas. The assessment also indicates that the legal environmental framework meets 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 of public services in the different sectors may mostly benefit vulnerable/disadvantaged social groups, those at the bottom of society that heavily rely on public services to have access to health, education and social protection networks, and those who live in violence and crime-ridden "hot spots." There was some concern about the potential risk that the digital divide could exclude these disadvantaged and vulnerable social groups from fully benefiting of the changes towards e- government. This risk is, however, minimal given the level of access to the internet in the state and, principally, the fact that state offices will continue to be open, operating and providing assistance and services to the state population in the Social Protection, Education and Health sectors. Finally, activities related to human resources management are not expected to adversely affect the existing public servants. On the contrary, technical assistance in this area may increase the sustainability of the state pension system. The social risks, adverse and positive impacts and downstream implications of project-supported activities will be further assessed during preparation, taking into consideration distributional effects on the most vulnerable groups and adopting a gender-sensitive lens. Mar 30, 2022 Page 8 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) 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 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 there will be no construction works and the focus is on institutional capacity building. The project will not support feasibility studies for future infrastructure investments. The technology and information systems proposed under the project are well-established and understood and are expected to favor energy-efficient equipment. The project will 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 from more effective public Public Disclosure sector management. Finally, improvements in public services in the Education, Health and Social Protection sectors must benefit the poor, disadvantaged and vulnerable social groups who rely the most on public networks. The Government of Alagoas 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 State of Alagoas 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 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. During the implementation, the Borrower will also 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. ESS10 Stakeholder Engagement and Information Disclosure Mar 30, 2022 Page 9 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) This standard is relevant. Throughout project implementation, the Government of Alagoas 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 Government 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 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 grievances may be referred when a grievance resolution has not been achieved. This GM will also be able to track project-related complaints and provide periodic reports on these complaints. It will Public Disclosure 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. During project preparation, the Bank team assessed the existing and operating system within the structure of the State Government (the Ombudsman Office) and considered it suitable for the project, avoiding the unnecessary duplication of structures. These Stakeholder Engagement commitments 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 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 require the hiring of full-time, part-time and temporary consultants, trainers, and others as contracted workers. The project is not expected to engage primary supply or community workers. Mar 30, 2022 Page 10 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) 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 their 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 Public Disclosure 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 environmental and social assessment report (ESA), 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 e-waste. Mar 30, 2022 Page 11 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) The proposed activities will not involve construction works/service operations that may lead to adverse impacts related to pollution and resource efficiency. 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). The Government of Alagoas, through the State Secretariat for the Environment and Water Resources (SEMARH), has developed state-level plans for the implementation of the National Policy on Solid Waste, with specific provisions related to the management of e-waste within state jurisdiction. The Solid Waste State Plan (PERS) for Alagoas was established in 2015 and is a mandatory condition that applies to states to have access to additional financial allocations from the central government aimed at the management of solid waste. Public Disclosure 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 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. 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 project environmental and social management procedures include principles of sustainability, energy efficiency, reuse, recycle and recovery of e-waste, and transparency that is compliant with this ESS. ESS4 Community Health and Safety This standard is not currently relevant. The Alagoas IPF 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. Mar 30, 2022 Page 12 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement This standard is not currently relevant. The technical assistance activities supported by the Alagoas 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 Subcomponent 1.5 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 not currently relevant. The Alagoas 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 of 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 Government of Alagoas would help reduce government processing time, 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. Public Disclosure 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. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities This standard is relevant due to the presence of eleven Indigenous Peoples in the state of Alagoas. They are the Aconã, Jeripankó, Kalankó, Karapotó, Kariri-Xokó, Karuazu, Katokinn, Koiupanká, Tingui-botó, Wassu, and Xucuru- Kariri. Together, they account for a population of 12,763 people, spread over eight municipalities (Água Branca, Inhapi, Joaquim Gomes, Palmeira dos Índios, Pariconha, Porto Real do Colégio, São Sebastião, and Traipu). They count for a total of 14,509 people (about 0.4% of the state population), of which 4,486 live in indigenous lands and 10,023 outside these lands. 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. Mar 30, 2022 Page 13 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) The Borrower has carried out a social assessment of the Indigenous Peoples living in the state of Alagoas, considering the regulatory and institutional framework as well as the potential impacts and downstream effects of the envisaged technical assistance activities on Indigenous Peoples. This assessment (incorporated in the Project’s ESIA) 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. c) And, considering (i) these circumstances, (ii) the technical assistance nature of the Project supported activities and (iii) their low social and environmental risks, a standalone Indigenous Peoples Planning Framework is not deemed necessary. Instead, the Environmental and Social Commitment requires that during project Public Disclosure 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 Alagoas 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. However, Subcomponent 1.5 Asset Management will support a survey of state office buildings. Through the TOR for the building survey and measures included in the Environmental and Social Commitment Plan, the potential impacts of the survey and use strategy to be developed by the proposed technical assistance activities on any public buildings of cultural or historical value will be determined and the Government of Alagoas will implement documentation and protection of historical, architectural assets in compliance with the requirements of Mar 30, 2022 Page 14 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) this 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 no OP 7.60 Projects in Disputed Areas No 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 Public Disclosure Areas where “Use of Borrower Framework” is being considered: None. IV. CONTACT POINTS World Bank Contact: Daniel Ortega Nieto Title: Senior Governance Specialist Telephone No: 5761+1054 / 55-61-3329-1054 Email: dorteganieto@worldbank.org Contact: Kjetil Hansen Title: Senior Public Sector Specialist Telephone No: +1-202-458-4871 Email: khansen1@worldbank.org Borrower/Client/Recipient Borrower: State of Alagoas Implementing Agency(ies) Implementing Agency: SEFAZ/AL Mar 30, 2022 Page 15 of 16 The World Bank Progestão Alagoas: Public Sector Management Efficiency (P177070) Implementing Agency: Secretariat of Finance - State of Alagoas 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): Kjetil Hansen, Daniel Ortega Nieto Practice Manager (ENR/Social) Genevieve Connors Cleared on 01-Mar-2022 at 17:34:2 GMT-05:00 Public Disclosure Mar 30, 2022 Page 16 of 16