1 Georgia Relief and Recovery for Micro, Small, and Medium Enterprises Project ENVIRONMENTAL and SOCIAL COMMITMENT PLAN (ESCP) November 18, 2021 2 Environmental and Social Commitment Plan 1. Georgia (the Borrower) shall implement the “Georgia Relief and Recovery for Micro, Small and Medium Enterprises” Project (the Project). The overall implementation of the Project shall rest with the Ministry of Economy and Sustainable Development (MoESD). Enterprise Georgia (EG), a state agency under the MoESD and the National Bank of Georgia (NBG) shall be the Project Implementing Entities (PIEs). Project activities shall be implemented with the involvement of the following agencies: Ministry of Finance, Ministry of Justice, the Public Service Delivery Agency and the National Agency for Public Registry. The International Bank for Reconstruction and Development (the Bank) has agreed to provide financing for the Project. 2. The Borrower shall implement the Project and cause the project to be implemented by EG and NBG in accordance with the Bank’s Environmental and Social Standards (ESSs). This Environmental and Social Commitment Plan (ESCP) sets out material measures and actions, any specific documents or plans, as well as the timing for each of these actions to be carried out or caused to be carried out by the Borrower, including timeframes of the actions and measures, institutional staffing, training, monitoring and reporting arrangements, grievance management and the environmental and social (E&S) assessments and instruments to be prepared or updated, disclosed, consulted, adopted and implemented under ESCP and the ESSs, all in a manner acceptable to the Bank . 3. The Borrower shall and shall cause EG and NBG to ensure that the Project is implemented in compliance with all requirements of the ESCP, in a manner acceptable to the Bank. The Borrower shall also ensure compliance with any other E&S documents required under the Environmental and Social Framework (ESF) and referred to in this ESCP, such as Environmental and Social Management Framework (ESMF), Environmental and Social Management System (ESMS) including Labor Management Procedures (LMP) and Stakeholder Engagement Plans (SEP), and the timelines specified in those E&S documents. 4. Implementation of the material measures and actions set out in this ESCP shall be monitored and reported to the Bank by the Borrower as required by the ESCP and the conditions of the loan agreement, and the Bank will monitor and assess progress and completion of the material measures and actions throughout implementation of the Project. 5. As agreed by the Bank and the Borrower, this ESCP may be revised from time to time during Project implementation, to reflect adaptive management of Project changes and unforeseen circumstances or in response to assessment of Project performance conducted under the ESCP itself. In such circumstances, the Borrower as represented by the PIEs – EG and NBG - shall agree to the changes with the Bank and shall update the ESCP to reflect such changes. Agreement to changes to the ESCP will be documented through the exchange of letters signed between the Bank and the Borrower as represented by the PIEs. The Borrower as represented by the PIEs shall promptly disclose the updated ESCP. 3 MATERIAL MEASURES AND ACTIONS TIMEFRAME RESPONSIBILE ENTITY/AUTHORITY MONITORING AND REPORTING A REGULAR REPORTING Every six months throughout Enterprise Georgia Prepare and submit to the Bank regular monitoring reports on the Project implementation, environmental, social, health and safety (ESHS) performance of the Project, starting from the Effective including but not limited to the implementation of the ESCP, status of Date. implementation of the Project ESMS, stakeholder engagement activities, and functioning of the grievance mechanism(s) and ESMS implementation. B INCIDENTS AND ACCIDENTS Notify the Bank within 48 hours Enterprise Georgia Promptly notify the Bank of any incident or accident related to the Project after learning of the incident or which has, or is likely to have, a significant adverse effect on the environment, accident. Additional notification affected communities or workers, including those related to occupational and reporting to the Bank, as accidents that may result in death or serious injury, falls and vehicle accidents, required, during project and sexual exploitation and abuse and sexual harassment (SEA/SH). implementation. Require Contractor Organizations, Selected Participating Financial Institutions (PFIs), Eligible Firms, MSME Beneficiaries, Selected MSME Beneficiaries, to provide sufficient detail regarding the incident or accident, indicating immediate measures or corrective actions taken or that are planned to be taken to address it, and any information provided by any contractor and supervising entity, as appropriate. Such reporting should be undertaken in compliance with national law, as well as applicable requirements in the ESMF and ESSs. Subsequently, prepare a report, based on the information provided by Selected PFIs, Contractor Organizations and sub-borrowers, on the incident or accident and propose any measures to prevent its recurrence. Specify in subsidiary loan agreement (Interest Co-Payment Participation Agreement and PCG Participation Agreement as applicable) with Selected PFIs and Selection Contracts signed with Selected PFIs and Contractor Organizations that prompt notification of accidents and incidents are to be included under Selected PFIs ESMS adapted from Enterprise Georgia’s project- 4 wide ESMS. Obligate Selected PFIs and Contractor Organizations to submit a notification to EG on the incident, within 5 business days, including a brief description of the incident and expected next steps for dealing with the incident. This notification would be followed by a first incident report, to be submitted no later than 20 business days after the notification, which would include, where possible, a preliminary root cause analysis, as well as preventative, remedial, and any compensation measures taken. A final report to be submitted during project implementation. ESS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS 1.1 ORGANIZATIONAL STRUCTURE Prior to disbursement of Part A Enterprise Georgia Recruit and retain at least one Environmental Specialist and at least one Social funds. Specialist within the Project Implementation Team. Said specialists shall be responsible for ensuring full compliance with the ESSs, ESCP and relevant Thereafter retained throughout instruments and shall be retained throughout Project implementation. Project implementation. Maintain the organizational structure as necessary throughout Project implementation. 5 MATERIAL MEASURES AND ACTIONS TIMEFRAME RESPONSIBILE ENTITY/AUTHORITY 1.2 ENVIRONMENTAL AND SOCIAL ASSESSMENT Throughout the Project Enterprise Georgia Comply with and update as necessary in a manner implementation. acceptable to the Bank, an Environmental and Social Management Framework (ESMF) for the Project which was prepared, disclosed, consulted upon and adopted on March 23, 2021. 1.3 Finalize, adopt, and disclose, in a manner acceptable to the Adopt the ESMS no later than 120 days Enterprise Georgia Bank, the Project Environmental and Social Management after Effective date, in a manner System (ESMS) in line with the requirements of ESS 9, that is satisfactory to the Bank and acceptable to the Bank. The ESMS shall include documents implemented throughout the Project and procedures to ensure that its lending activities are implementation. compliant with the WBG Exclusion List, the applicable national laws and the relevant Environmental and Social Standards. No activities shall be carried out until said ESMS is adopted. Obtain No Objection from the Bank Notify the Bank for a No Objection prior to making changes before making changes to the ESMS. to the Project ESMS throughout the Project’s life. 1.4 Ensure that either Contractor Organizations procured for the Throughout operation of the micro- Enterprise Georgia Project or, when they are not involved, EG will undertake a grants scheme. simplified E&S risk screening of micro-grant applications Contractor Organizations under Part A.1 of the Project and the EG and the Contractor Organizations will integrate screening outcome into the grant approval process as described in the Project ESMF and Project ESMS. 6 1.5 Ensure that all Selected PFIs adopt and implement an ESMS Selected PFIs adopt ESMS prior to Enterprise Georgia in accordance with 1.3 above, satisfactory to the Bank and signing Participation Agreements conduct E&S due diligence assessments for activities of each (Interest Co-Payment Participation Selected PFIs MSME Beneficiary (under Part A.2) and Selected MSME Firm Agreement or PCG Participation (under Part A.3) financed by the Project in line with the Agreement as applicable) with the EG. Exclusion List, national laws, the Project ESMF and Project Selected PFIs maintain ESMS and ESMS. adhere to it throughout the Project The Bank will undertake prior review of the environmental implementation. and social instruments for the Selected PFIs’ subprojects. Prior review will continue for at least the first six months after the Project Effective Date and will be extended until EG is fully able to assume this responsibility, at which time the Bank and the Borrower will review whether to continue with prior review or move to post review. 1.6 Exclude from Project financing subprojects rated as High for Throughout the Project Enterprise Georgia environmental and social risk, subprojects requiring implementation. involuntary resettlement and subprojects with activities that Selected PFIs are included in the WBG Exclusion List. Subprojects rated as Substantial will prepare environmental and social instruments in accordance with the requirements of the Project ESMF and Project ESMS. Subprojects rated as Low and Moderate will adhere to national law and regulations, as well as the WBG Exclusion List. ESS 2: LABOR AND WORKING CONDITIONS 2.1 LABOR MANAGEMENT PROCEDURES Adopt LMP no later than 120 days Enterprise Georgia and National Adopt, implement, and update the LMP as part of the after Effective Date. Bank of Georgia Project ESMS in a manner consistent with the ESS2 and the 7 national legislation of the Borrower Follow LMP throughout the Project implementation. 2.2 Ensure that Selected PFIs and Contractor Organizations have Prior to signing Participation Enterprise Georgia HR policies and procedures consistent with requirements Agreements (Interest Co-Payment under national law and ESS2. Participation Agreement or PCG Participation Agreement as applicable) with the Selected PFIs and prior to signing Selection Contracts with Contractor Organizations. 2.3 GRIEVANCE MECHANISM FOR PROJECT WORKERS For Enterprise Georgia - Adopt a Enterprise Georgia Establish, maintain, and operate a grievance mechanism for Grievance Mechanism no later than Project workers, as described in the LMP and consistent with 120 days after the Effective Date and ESS2. Ensure that employers of contracted workers have in maintain it throughout the Project place a functioning grievance mechanism for their Implementation. employees, including for grievances related to Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH). For contracted workers – ensure grievance mechanism is available and functional prior to commencement of works by the respective contractor. 2.4 OCCUPATIONAL HEALTH AND SAFETY (OHS) MEASURES Include OHS requirements in ESMS no Enterprise Georgia Adopt as part of the ESMS, implement and update later than 120 days after Effective occupational, health and safety (OHS) requirements for the Date. Project in a manner acceptable to the Bank and in compliance with the national legislation of the Borrower. Comply with OHS requirements - throughout the Project implementation. 2.5 Ensure that Contractor Organizations and Selected PFIs have Prior to signing Selection Contract with Enterprise Georgia OHS procedures consistent with requirements under Contractor Organizations and national law and ESS2. Participation Agreements (Interest Co- Payment Participation Agreement or PCG Participation Agreement as applicable) with Selected PFIs. 8 Monitor adherence to OHS requirements throughout the Project implementation, and report to the Bank through semi-annual progress reports. 2.6 Ensure that Eligible Firms, MSME Beneficiaries, and Selected Ensure presence of satisfactory LMP Enterprise Georgia MSME Firms implementing activities with Substantial prior to approving loan to MSME. environmental and social risk develop and implement the Selected PFIs LMP, including OHS Plan, consistent with ESS2, and cause Ensure adherence to LMP throughout any contractors and sub-contractors hired by them to sub-project implementation. adhere to LMP and OHS requirements. ESS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION AND MANAGEMENT 3.1 Ensure that Selected PFIs apply ESS3 requirements to For Substantial risk sub-projects, Enterprise Georgia Substantial risk sub-projects, and that their ESMS and E&S assess relevance of ESS 3 requirements due diligence procedures are adequate for risk management prior to approval of loan to the MSME. Selected PFIs and monitoring of resource use and pollution. Monitor consistency with ESS3 throughout sub-project implementation. ESS 4: COMMUNITY HEALTH AND SAFETY 4.1. COMMUNITY HEALTH AND SAFETY For Substantial risk sub-projects, Enterprise Georgia assess relevance of ESS 4 requirements Ensure that Selected PFIs apply ESS4 requirements to prior to approval of loan to the MSME. Selected PFIs Substantial risk sub-projects, and that their ESMS and E&S due diligence procedures are adequate for risk management Monitor impacts on community health and monitoring of impacts on community health and safety. and safety throughout sub-project implementation. ESS 5: LAND ACQUISITION, RESTRICTIONS ON LAND USE AND INVOLUNTARY RESETTLEMENT This standard is not considered relevant at Project Appraisal. ESS 6: BIODIVERSITY CONSERVATION AND SUSTAINABLE MANAGEMENT OF LIVING NATURAL RESOURCES This standard is not considered relevant at Project Appraisal. ESS 7: INDIGENOUS not PEOPLES / SUB-SAHARAN AFRICAN HISTORICALLY UNDERSERVED TRADITIONAL LOCAL COMMUNITIES This standard is not relevant in the context of Georgia. ESS 8: CULTURAL HERITAGE 9 This standard is considered not relevant at Project Appraisal. ESS 9: FINANCIAL INTERMEDIARIES 9.1 ESMS Selected PFIs adopt ESMS prior to Enterprise Georgia Ensure that, where this has not been done already, each Selected signing Participation agreements PFI adopts, maintains, and implements an ESMS consistent with (Interest Co-Payment Participation the Project ESMS and acceptable to Enterprise Georgia and the Agreement or PCG Participation Bank. Agreement as applicable). Ensure that Selected PFIs maintain and implement ESMS throughout the Project implementation. 9.2 FI ORGANIZATIONAL CAPACITY Selected PFIs establish organization Selected PFIs Establish and maintain an organizational capacity and competency capacity prior to signing Participation for implementing the ESMS with clearly defined roles and Agreements (Interest Co-Payment responsibilities, including appointing officers responsible for sub- Participation Agreement or PCG project screening, risk assessment and monitoring, all to the Participation Agreement as applicable) satisfaction of Engerprise Georgia and the Bank. with EG. Maintain organizational capacity throughout the operation of the schemes supported by the Project. 9.3 SENIOR MANAGEMENT REPRESENTATIVE: Selected PFIs designate representative Selected PFIs Designate within a senior management representative to have prior to signing Participation overall accountability for environmental and social performance of Agreements (Interest Co-Payment schemes supported by the Project and of FI subprojects to be Participation Agreement or PCG financed Participation Agreement as applicable) with EG and maintain until Project completion. ESS 10: STAKEHOLDER ENGAGEMENT AND INFORMATION DISCLOSURE 10.1 STAKEHOLDER ENGAGEMENT PLAN PREPARATION AND Adopt SEP before Appraisal and Enterprise Georgia IMPLEMENTATION implement throughout the Project Adopt, implement, and update the SEP. Implementation. 10.2 Ensure that the Instant Payments System (IPS) is developed in an Consultations on the IPS are completed National Bank of inclusive manner, with adequate consultations with the public. prior to the launch of the system. Georgia 10 10.3 PROJECT GRIEVANCE MECHANISM: Adopt Grievance Mechanism before the Enterprise Georgia Adopt, implement and update the Grievance Mechanism. Effective Date and operate it throughout the Project implementation. 10.4 Ensure that Selected PFIs maintain External Communications ECM is adopted by Selected PFIs as part Enterprise Georgia Mechanism (ECM) as part of their corporate ESMS, including a of their ESMS prior to singing Selected PFIs functioning grievance mechanism accessible to the public. Participation Agreements (Interest Co- Payment Participation Agreement or PCG Participation Agreement as applicable) with Selected PFIs. ECM is maintained throughout operation of the schemes supported by the Project. CAPACITY SUPPORT (TRAINING) CS1 As part of Project launch activities, conduct comprehensive ESF Prior to disbursement of Project Enterprise Georgia, training for staff of Enterprise Georgia proceeds under Part A of the Project. supported by World Bank CS2 Training for Contractor Organizations and Selected PFIs on all E&S Prior to disbursement of Project Enterprise Georgia commitments under the Project proceeds under Part A of the Project. CS3 Training and awareness sessions for extended staff of Selected Commence prior to implementation of Selected PFIs PFIs and Contractor Organizations of Part A of the Project on E&S Par A of the Project and throughout requirements Project implementation. Contractor Organizations