The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. Please delete this note when finalizing the document. Project Information Document (PID) Concept Stage | Date Prepared/Updated: 14-Jun-2022 | Report No: PIDC34368 Jun 14, 2022 Page 1 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name Bangladesh P178996 Sustainable Micro- enterprise and Resilient Transformation (SMART) (P178996) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) SOUTH ASIA Oct 26, 2022 Apr 28, 2023 Environment, Natural Resources & the Blue Economy Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Government of Bangladesh Palli Karma-Sahayak Foundation (PKSF) Proposed Development Objective(s) Promote and enhance adoption of green, climate-resilient, and inclusive business for MEs PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 375.00 Total Financing 375.00 of which IBRD/IDA 250.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 250.00 IDA Credit 250.00 Non-World Bank Group Financing Counterpart Funding 50.00 Borrower/Recipient 50.00 Jun 14, 2022 Page 2 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) Other Sources 75.00 Borrowing Agency 75.00 Environmental and Social Risk Classification Concept Review Decision Moderate Track I-The review did authorize the preparation to continue Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document. Other Decision (as needed) B. Introduction and Context Country Context 1. Bangladesh has made rapid social and economic progress in recent decades and reached lower middle-income status in 2015. Annual Gross Domestic Product (GDP) growth has averaged close to six percent since 2000. Strong labor market gains contributed to a sharp decline in poverty, with the national poverty rate falling from 48.9 to 24.5 percent between 2000 and 2016, while extreme poverty declined from 34.3 to 13.0 percent.i However, the pace of poverty reduction slowed in recent years even as growth accelerated, particularly in urban areas and in the west of the country. After a decade of improvements, progress on shared prosperity slowed between 2010 and 2016, with annual consumption growth of the bottom 40 percent trailing that of the overall population (1.2 versus 1.6 percent). 2. While growth decelerated in FY20, the country weathered the pandemic shock and the growth rebounded in FY21. The initial phase of the pandemic in early 2020 disrupted the supply of intermediate goods from China, reducing manufacturing output. As the pandemic intensified abroad, export orders from Europe and the United States declined precipitously. The government implemented control measures that resulted in a sudden stop of economic activity in many sectors. Consequently, real GDP growth decelerated to 3.4 percent in FY20. A recovery emerged in FY21 as after movement restrictions were progressively lifted. GDP growth rebounded to 6.9 percent in FY21. Exports grew by 9.2 percent as Readymade Garments (RMG) export orders were reinstated, and factories remained open despite recurrent lockdowns. On the demand side, growth was primarily supported by private consumption, underpinned by a recovery in labor income and robust remittance inflows. Growth in imports of consumer goods and capital goods point to a broad-based recovery. Declining imports and large official remittances inflows, which increased by over a third in FY21, contributed to a balance of payments (BoP) surplus in FY21. Inflation was contained, reaching 5.6 percent by the end of FY21. 3. The economy is expected to continue to recover gradually as Bangladesh navigates the persistent effects of the COVID-19 pandemic on domestic and export markets. GDP growth is forecast to reach 6.4 percent in FY22 before accelerating to 6.9 percent in FY24 as exports and consumption continue to recover. While external demand for Jun 14, 2022 Page 3 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) RMGs appears to be stabilizing, the recovery is fragile and could be vulnerable to new waves of COVID-19 infections. Sustaining the economic recovery and further reducing poverty will depend in part on mitigating economic scarring through well-targeted support to vulnerable households and businesses. 4. Bangladesh’s vulnerability to the effects of climate change further threatens its recovery and potential for future growth. The Global Climate Risk Index ranks Bangladesh as the world’s seventh most-affected country f 2000-2019ii. Rising temperatures, leading to more intense and unpredictable rainfalls, and the already high probability of catastrophic cyclones are expected to increase further, resulting in increased tidal inundation. The upcoming World Bank Country Climate and Development Report (CCDR) for Bangladesh recommends a transition to a green, resilient, inclusive growth model that would include greener infrastructure planning and development as drivers of productivity and growth. 5. Women and girls are disproportionately affected by climate change and disasters in the immediate aftermath as well as recovery. Countries with a high level of gender inequality generally have a higher vulnerability to the negative impacts of climate change and countries with high levels of gender inequality usually see lower levels of climate action.1 This is, especially, detrimental to women due to social norms, lack of access to education and land rights, women tend to stay in coastal, disaster-prone areas, as men tend to migrate to urban areas for jobs. During storms, agricultural jobs, mostly held by women are lost due to salinity intrusion, which has increased by 26 percent in the past 35 years in Bangladesh.2 6. Bangladesh is lagging in environmental performance indicators and needs to rebuild better, stronger, and greener, leveraging the World Bank’s Green, Resilient, Inclusive Development (GRID) approach. Rapid urbanization has brought negative externalities resulting in the significant degradation of environmental quality and natural resources with a substantial impact on human health and the achievement of a sustainable economy . The upcoming World Bank Country Environmental Analysis (CEA) 2022 for Bangladesh highlights that in 2019 275,000 people in the country died from the environmental health risks associated with ambient air pollution (AAP), household air pollution (HAP), lead (Pb) exposure in adults, scarcity of pure drinking water, lack of hygiene and sanitation (WASH). In short, pollution is responsible for over 32 percent of all deaths in the country. The report estimates the annual economic cost of the environmental health effects as Tk 4.0 – 4.8 trillion in 2019, equivalent to 15.8 – 18.8 percent of Bangladesh's GDP in 2019. Solid waste management is also a critical issue. Bangladesh's annual per capita plastic consumption in urban areas rose from 3.0 kg in 2005 to 9.0 kg in 20203. The country's development pathways currently rely on the intensive use of energy, water, and other natural resources. Unaddressed, these externalities will reduce the rate of return on investments, the growth rate, and jeopardize the achievement of Bangladesh's long-term development targets. While Bangladesh is striving to recover from the COVID-19 shock, this should follow a greener pathway. In the 8th Five Year Plan (FYP), the Government of Bangladesh (GoB) aims to promote green growth through resource- efficient technologies, protected natural capital, a low-carbon economy (LCE), improved waste management, and promotion of greener industries. Sectoral and Institutional Context 7. Micro-enterprises play a vital role in achieving greener economic growth in Bangladesh. Micro-entrepreneurs are a major engine of economic growth and drivers of employment generation in the national economy. Bangladesh 1 (Andrijevic, M. et al, 2020). 2 Bagri, Neha Thirani. “Bangladesh's Water Crisis: A Story of Gender.� Climate News | Al Jazeera, Al Jazeera, 25 Apr. 2017. 3 Plastic Action Plan Jun 14, 2022 Page 4 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) Bureau of Statistics Defines microenterprises with fixed assets, excluding land and buildings, valued at Tk 0.5 million - Tk 5 million, or with 10-24 workers or fewer workers, while cottage enterprises have fixed assets, excluding land and buildings, valued less than Tk0. For the past 35 years, poverty alleviation interventions have focused on supporting rural-centric micro-entrepreneurship development. Micro, cottage, small, and medium enterprises (MCSMEs) are estimated to account for 56 percent of total employment in the country and contribute about 25 percent of the national GDP. In Bangladesh, micro-entrepreneurs are often engaged in livestock, agriculture, fisheries, food processing, garments, trading, services and light manufacturing businesses. 8. Micro-enterprises, in aggregate, can induce significant negative environmental impacts. The growth of manufacturing, dominated by MSMEs, has driven natural resource usage and degradation, including air, soil, and water pollution. Rapid urban growth, and the rise of production and consumption, increased waste generation. PKSF data noted that while solid waste generation from individual manufacturing micro-enterprises ranges between 1.5 - 5 kg per day, the aggregated amount from all micro-enterprises in a cluster can range between 2,200 to 3,500 MT per day. While the impact of individual micro-enterprises on the environment is low, the aggregate impact is significant. Often, micro-enterprises do not use energy-efficient machines and electric equipment, which increases the cost of production, thus contributing to air pollution and GHG emissions. 9. Addressing climate and environmental-related challenges offers an opportunity to promote socio-economic development while fostering sustainability and environmental preservation. Shifts to green business models can accelerate their growth and resilience while creating new green jobs. By adopting green business models and green technologies, micro-enterprises can help maintain and restore the ecosystem and natural resources and improve the country's environmental quality. The government is pursuing many initiatives; specific instruments currently being discussed to foster green growth through micro-enterprises include greater access to green finance, green procurement, and the adoption of environmentally sustainable practices and technologies. 10. SEP paved the road with success stories for micro-enterprises in agribusiness and manufacturing clusters, focused on environmentally stressed areas. The ‘Sustainable Enterprise Project (SEP)’ is an ongoing project to increase the adoption of environmentally sustainable practices by targeted micro-enterprises. The project supports 64 sub- projects, comprising over 40,000 micro-enterprises, through 48 partner organizations in 38 districts of Bangladesh. Lessons learned from SEP suggest that scaling up high environmental results activities and increasing the spatial and sectoral coverage of SEP is necessary to maximize the benefits. MTR identified access to finance and green practice knowledge as the main constraint for MEs to adopt green business models. Occupational Health and Safety (OHS) issues remain a concern. There is a need for further capacity building and raising awareness campaigns on Resource Efficient and Cleaner Production (RECP) and adoption of innovative technologies/green business models. Digital services are required to guarantee access to finance for MEs. Eco-labelling and product certification will improve MEs’ access to premium markets. Relationship to CPF 11. The proposed project is aligned with the objectives of the World Bank Group Country Partnership Strategy FY16-20iii and directly addresses all three focus areas of the Country Partnership Framework: growth and competitiveness, social inclusion, and climate and environmental management. It is aligned with CPF objective 1.4 (Enhanced business Jun 14, 2022 Page 5 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) environment and trade facilitation) as it would promote green, energy efficient, cleaner business at ME level which are socially inclusive and enhance competitiveness through green/eco-labelling of products which would increase access to market to the green enterprises and support commons service facilities for better ES risks management. It would also support CPF objective 2.4: Enhanced rural income opportunities for the poor by strengthening and expanding livelihood opportunities for the microenterprises by supporting investment in activities that are environmentally sustainable. It supports CPF objective 3.1 (Increased Resilience of Population to Natural Disasters in Urban and Coastal Areas) through adoption/promotion of climate resilient ME business models. It supports CPF objective 3.3 (Increased adoption of sustainable agricultural practices) by providing support to MEs to undertake more sustainable agricultural practices. C. Proposed Development Objective(s) Note to Task Teams: The PDO has been pre-populated from the datasheet for the first time for your convenience. Please keep it up to date whenever it is changed in the datasheet. Please delete this note when finalizing the document. Promote and enhance adoption of green, climate-resilient, and inclusive business for MEs Key Results (From PCN) a. Increased number of MEs have access to concessional loan facilities for adoption of green, resilient business. b. Increased number of MEs have adopted green and climate resilient business models. c. Increased number of MEs have better ES risk management system. d. Increased number of MEs have Eco-labelling of their products. D. Concept Description 12. Building on the Sustainable Enterprise Project (SEP), Sustainable Micro-enterprise and Resilient Transformation (SMART) project will support microenterprises in agribusiness, manufacturing, and service sectors . The delivery model will scale up the effective mobilization of natural clusters of micro-enterprises based on the positive SEP implementation results. SMART project will further formalize resource use efficiency, cleaner production (RECP), ecological symbiosis, enhance natural capital, decrease pollution, particularly plastics and other industrial waste, through the integration of digital and green technologies into institutional capacity and operational design. The proposed project would cover all 64 districts, doubling the potential number of ME clusters, with a strategic focus on: more environmentally stressed geographic locations; addressing growing, or growth potential MEs; and sectors with greater opportunity to abate current and future pollution impacts. As SEP covered a small segment within a large cluster, the new project would continue working with clusters from SEP, to assure financial and environmental sustainability for MEs who received support under SEP to grow further. 13. The proposed project will consist of four components. Component 1 is intended to work through Partner Organizations (POs) of PKSF and MEs to aggregate the identification of green practices, green technology, resource efficiency, through the cleaner production (RECP) audits, green knowledge dissemination and creation, and knowledge management. The delivery model will engage business clusters and selected MEs to apply green, resource-efficient principles to promote greener production and a green value chain approach. This component will Jun 14, 2022 Page 6 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) inform investments, business support and enabling environment support in components 2 and 3. Component 2 is a line of credit facility that will increase access to finance for microenterprises adopting green, climate-resilient, and inclusive practices. Targeted microenterprises under this component will receive a loan and a package of services (Components 1 and 3). Component 3 will support access and green eco-labeling, and certification promotion of ME business to access premium markets. Component 4. Project management and M&E. Component 1. Promoting Green Business and building POs and MEs’ Capacity (US$28 million) 14. This component contributes to knowledge, capacity, operational skills supporting scale-up; new green businesses; or convert existing businesses to adopt and enhance green, climate- resilient, and inclusive practices at the Partner Organization (PO) and Microenterprise (ME) levels. Implementation will leverage the aggregate dissemination and distribution of POs to reach ME at scale, while reducing operational risks and decreasing transition costs to adopt green practices, including technology applications. This component will use grants to implement and adopt green technologies and better ES risk management in parallel to the micro-loan investments (Component 2). 15. This component will enhance climate resilience and efficiency by including value chain audits within community/cluster levels in one or multiple districts. This will be implemented by RECP, Business, ecological symbiosis, value chain audits to identify appropriate needs and investments. It will co-finance grants to common- services investments that abate environmental pollution while enhancing MEs’ productivity. Capacity building will include training in environmental management; audits and standards; assessing MEs on environmental opportunities and climate risk; using digital tools for project monitoring; and environmental indicators digital data. Activities will include supporting MEs in identifying and developing business models for climate-smart products and services, particularly in the inputs such as water, materials, plastics, energy, and outputs such as effluents or air pollution. 16. In addition to training POs and MEs on pertinent environmental issues, microenterprises will be provided access to knowledge on green technologies, resulting in greener, cleaner and more resource-efficient business practices with economic benefits. In addition, this component may support green practices and technology knowledge exposure, capacity building, and awareness-raising. Additional efforts will be made to reach MEs led by women. Component 2 – Green Financing to MEs to achieve Green, Climate-Resilient and Inclusive Growth (US$204 million) 17. Based on the adoption of Green, Climate-Resilient, and Inclusive business, eco-labeling, and certifications mentioned in Components 1, this component provides financial resources to foster ME’s capacity to adopt practices, develop new products and invest in common services resulting in positive environmental and business outcomes. Access to finance would be provided to MEs willing to green their business by taking up innovation, new practices, knowledge, and technologies to expand their operations in an environmentally sustainable way. 18. To transform and scale up climate and pollution abatement potential, this component will increase the coverage of green business adoption and access by expanding green finance to more cluster locations. This would improve access, reach and inclusivity, driving greener outcomes and longer-term impacts to more marginal districts. Hence, the project would operate both in the existing business clusters of SEP by scaling up the number of MEs who received support from SEP and operate in other potential business clusters spread across 64 districts for its enhancement. The MEs who showed significant performance with potential to grow further as MEs would get priority. 19. This component would be financing to help MEs to achieve greener business efficiency (time, logistics, fuel, resources, avoid loss of waste) through digital process solutions to streamline transactions, decrease storage time, Jun 14, 2022 Page 7 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) reduce need for commuting to physical payment services by integrating financial tech into their business operations. The component will use various green financing tools (e.g., start-up capital loans, working capital loans, RECP promoting tech such as solar for lease financing, common service loan), criteria and will be informed by Component 1 to achieve environmentally sustainable outcomes. This component would support data analytics tools to assess creditworthiness, the performance of POs and MEs and environmental targets. It would support reducing MEs borrowing costs by using innovative financing instruments (e.g., digital finance, mobile money, online based tracking system, psychometric testing, and other possible fintech solutions). The component will address the underlying barriers women entrepreneurs face in accessing credit. 20. This component will leverage financing for clusters of MEs to facilitate investment in shared services —i.e., common ETP, common recycling plants, resource-use efficient agri-food production, design labs, micro�storage with low carbon cooling tech, and organic composting services—to enhance microenterprises’ business efficiency, reduce environmental degradation. This is of major importance given microenterprises’ limited access to market/s. POs can undertake this activity through different means, such as doing it on their own, getting a ME to own and operate shared services, or using a hybrid approach that involves building, operating, and transferring the shared services/facilities after demonstrating viability. The overall guiding principle will be for these services to be financially viable at the field level. Component 3. Boost MEs’ competitive edge with eco-labeling, certification to access premium markets (US$3 million) 21. The domestic demand for environmentally friendly products in Bangladesh is growing.4 Therefore, international product certification including information on the product traceability is required to confirm to consumers the environmentally friendly status of business/product. Bangladesh lacks testing facilities, green certification and green eco-label products could not be sold in the premium market. This component would support and implement product traceability, environmental labels and green certificates for lead MEs/Cluster of MEs and POs. The project would engage a firm/institute to support and train MEs or group of MEs and POs in obtaining international certification. This support would be in the form of grant, eventually POs will take up formal processes and standards. PKSF will also work with relevant government agencies such as DOE, DLS, DFF, DAE, BSTI, Accreditation board to establish a national eco-labelling/product system considering life cycle assessment of the environmental footprint of the product. Based on the recent proposal to procure a portion of the Government purchase from MEs, the project would also work with the WB procurement team to work with the government to secure a certain percentage of government procurement to procure Green MEs. 22. This component would promote e-marketing and branding of green MEs product. The proposed project will support establishment of the online market platform for environmentally certified products manufactured by green MEs to target audience and generate public awareness for eco-friendly businesses. The created hubs will form a community of environmentally concerned audience and become platforms for public awareness raising. MEs will also receive capacity building in branding of their products and services. Component 4. Project management and Monitoring and evaluations (US$15 million) 4 Uddin, Burhan. (2021). Consumers' purchase behavior in Bangladesh: green products perspectives. Journal of Sustainable Tourism and Entrepreneurship. 1. 10.35912/joste.v1i4.475. Jun 14, 2022 Page 8 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) 23. This component will ensure that the project is being implemented in a timely and effective manner. It will build the capacity of PKSF and POs, facilitate communication and knowledge management. PKSF will implement to achieve the project targets. 24. Project management and monitoring and evaluation component will ensure the project staffing and the establishment of effective project management unit (PMU) to oversee the execution of project activities. A result- based monitoring and participatory M&E system will be developed to ensure the effective and real-time monitoring and evaluation of the project. 25. Capacity building of PKSF, partnering organizations, and member firms through training on environmental sustainability, improving resilience, building environmental criteria and indicators into lending operations, and conducting training/exposure visits to learn about new/innovative technologies/practices. Create a digital platform to monitor, measure and report the results/impact of the adoption of digital, environmentally/greener sustainable practices and technologies. 26. In the long-term, the objective of the project is to contribute to a more dynamic, lower polluting, resource-efficient and resilient micro-enterprise sector. The project aims to achieve this longer-term objective by supporting micro- enterprises to move increasingly towards green and climate resilient business models. Data management and technology will form an integral part of the project and determine to a large extent how efficient and effective MEs and POs can work in the future. This will also need to be measured to ensure that lessons can be learned and applied during the project implementation period. 27. As an important “co-benefit� the project aims to contribute also to increase the resilience of MEs to external shocks. However, there is currently no standardized practice to assess the resilience of MEs. It is suggested that the project initiates a process to develop a Resilience, Measurement, and Analysis Index for MEs (RIMA-ME), equivalent to the Resilience Measurement and Analysis Index (RIMA) applied by UN agencies to assess the resilience of households. The advantage of a standardized approach is that it can be applied across different districts, regions, and countries to measure changes in “resilience� over time. This would not only benefit the project but also contribute to assessing and enhancing resilience, including climate resilience, globally. 28. The project will deal with a significant number of data sets of targeted MEs, POs etc. This will require significant management and technical capacity at project management unit level. Therefore, the project will ensure sufficient resources are dedicated to regular project monitoring and evaluation. Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. Please delete this note when finalizing the document. Jun 14, 2022 Page 9 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts . Note to Task Teams: This summary section is downloaded from the PCN data sheet and is editable. It should match the text provided by E&S specialist. If it is revised after the initial download the task team must manually update the summary in this section. Please delete this note when finalizing the document. Environmental Risks: The Project does not envisage any significant or irreversible environmental/social risks. Overall, the project is expected to have positive environmental benefits as energy efficiency measures will be introduced and environmental management practices of MEs will be enhanced. From the nature of proposed MEs and likely activities, it is expected that there will be minor construction-related impacts from small improvements to existing facilities causing noise and dust, generate waste and involve risks regarding workplace and community health and safety and labor and workplace related risks. The project may also support the construction and operations of small-scale effluent treatment plants, cooling technologies, combined heat and power units, and material recovery facilities. The treatment efficiency and disposal of the wastes and effluents will need to meet the WBG and national standards. COVID -19 related OHS measures and waste management issues will also need to be addressed at enterprise level. The environmental risk of the project is rated ?Moderate? considering the impacts from (i) minor constructions/upgradation and community health and safety associated with the construction/upgradation activities; (ii) construction and operations of small-scale effluent treatment plants, cooling technologies, combined heat and power units , and material recovery facilities (including plastics and other recycling); (iii) labor and OHS related challenges in MEs and informal firms and (iv) capacity of the implementing agencies including PO to manage E&S risks. Social Risks: Based on the scale and nature of the project, capacity of the PKSF, anticipated risks and impacts for minor constructions/upgradation, and community health and safety associated with the construction/upgradation activities by the MEs, labor and OHS related challenges in MEs and informal firms, risk related to ongoing COVID situation, the risk of exclusion of Vulnerable and marginalized groups/women owned MSMEs, and community health and safety risks, and the context under which this project will be implemented, the social risk rating has been assessed as Moderate. The potential environmental and social risks, such as effluent management or labor or safety practices for sub-projects with elevated risk will be managed through existing ESMS (which will be updated to fit the specificities of this intervention), including with development of management plans and monitoring systems. The roles and responsibilities of POs will be included in the updated ESMS. POs will screen all the sub-projects according to ESMS. The PKSF with the support of POs will conduct a stakeholder mapping and analysis exercise to ensure that all vulnerable groups, including differently able and LGBT+ individuals are well consulted and well informed about the project benefits. The POs will also take required measures to ensure that the IPs/tribal/ethnic minority groups are well aware of the project and can benefit from it. PKSF’s existing ESMS has procedures and mechanism in place to address risks and impacts associated with land acquisition, resettlement, support to women and vulnerable MSMEs, community health and safety, E&S screening procedures etc. The ESMS also has a grievance mechanism that allows beneficiaries to lodge complaints with POs. Jun 14, 2022 Page 10 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) However, the updated ESMS will detail the grievance receipt and address procedures at local and project level and ensure its accessibility to all stakeholders including vulnerable MEs and IPs. PFIs will record all grievances and submit to PKSF with the quarterly monitoring reports. The GRM in the PKSF-ESMS will also adopt guidelines/procedures to manage SEA/SH related grievances. However, PKSF needs to integrate Labor Management procedures and OHS into the ESMS in line with WB ESS 2. Stakeholder’s engagement is part of the PKSF-ESMS but needs to be updated to cover ME’s owned/run by vulnerable groups and other relevant stakeholders. SEA/SH risks: A preliminary SEA/SH screening of the project using the educational Tool based on location, nature, scope of investments, beneficiaries and implementation approach, outlined in the concept note, suggests a moderate risk rating. The gender gap in labor force participation is wide in Bangladesh and the country has a particularly low share of female- majority ownership of formal enterprises a mere 1.7 percent of firms are owned by women. Women face constraints to accessing quality jobs and starting and operating businesses, including lack of access to finance, markets, information, and networks as well as safety and sexual harassment issues, deficient workplace infrastructure and harmful social norms. In this context, the risk of women facing SEA/SH in exchange for selection as recipients of the ME and during training and skills building activities must be considered. At this stage, there is limited information on the capacity of POs/PFIs to monitor and address SEA/SH risks induced by project activities. Moreover, there is an added layer of understanding the capacity of MSMEs on SEA/SH issues. The training activities especially with women, LGBTI+ and other vulnerable groups also raise concerns. SEA/SH risks resulting from supporting MSME investments and projects, particularly any requiring construction work by means of a temporary influx of workers to a vulnerable local community also exist. Project activities taking place in both rural and urban settings have been factored in for the assessment. As more information becomes available during preparation, the risk level will be reassessed. The project will build in strong mitigation measures to reduce the risk. The proposed SEA/SH mitigation measures are also easy to integrate in the design of the project and can further reduce the risk. These can include: i) Codes of Conduct; ii) Training and sensitization; iii) GRM responsive to SEA/SH with multiple contact points; and iv) SEA/SH Action Plan. Note: To view the Environmental and Social Risks and Impacts, please refer to the Concept Stage ESRS Document. Please delete this note when finalizing the document. . CONTACT POINT World Bank Eun Joo Allison Yi Senior Environmental Specialist Borrower/Client/Recipient Government of Bangladesh Jun 14, 2022 Page 11 of 12 The World Bank Sustainable Micro-enterprise and Resilient Transformation (SMART) (P178996) Implementing Agencies Palli Karma-Sahayak Foundation (PKSF) Zahir Uddin Ahmed Project Director md@pksf-bd.org 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 APPROVAL Task Team Leader(s): Eun Joo Allison Yi Approved By APPROVALTBL Practice Manager/Manager: Country Director: Mercy Miyang Tembon 21-Jul-2022 Note to Task Teams: End of system generated content, document is editable from here. Please delete this note when finalizing the document. i Household Income and Expenditure Surveys, 2000/01 and 2016/17. ii German watch (2021) Global Climate Risk Index 2021. iii Consistent with the WBG Country Partnership Framework (CPF) FY16 –FY20 discussed by the Board on April 5, 2016 (Report number: 103723-BD) and extended by the Program Learning Review to FY21. Jun 14, 2022 Page 12 of 12