ENERGY ACCESS RELIEF FUND (EARF) ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM (ESMS) Updated April 2021 1 TABLE OF CONTENTS 1. LIST OF ACRONYMS 3 2. INTRODUCTION 4 3. ENVIRONMENTAL AND SOCIAL POLICY 4 3.1 Eligible Projects and Applicable E&S Requirements 5 4. E&S DUE DILIGENCE PROCESS AND SCOPE OF APPLICATION 7 4.1 Scope of the E&S Assessment 10 4.2 Compliance with Exclusion List | Check 10 4.3 E&S Risk Screening and Categorization 10 4.4 Reputational Issues | Check 14 4.5 Compliance with Applicable Laws and Regulations | Check 14 4.6 Additional E&S Due Diligence Items 14 4.7 E&S Appraisal Findings in Investment Proposal 15 4.8 Legal Documentation 15 4.9 Compliance Monitoring 16 4.10 Institutional Arrangements 16 5. STAKEHOLDER ENGAGEMENT & GRIEVANCE MECHANISM 18 6. EXTERNAL COMMUNICATION MECHANISM , GRIEVANCE MECHANISM AND WHISTLEBLOWING POLICY 20 Appendix A: Environmental and Social Exclusion List | EDFI / IFC-PS7 22 Appendix B E&S Self-Assessment Questionnaire 23 Appendix C. Environmental and Social Action Plan Template 30 Appendix D. Guidance for Minimum E&S requirements. 31 Appendix E. Job Protection Plan Template (for companies) 36 Appendix F -EARF Stakeholder Engagement Plan 38 Appendix G – Guidance to Solar Companies on Management of E-Waste 44 Appendix H – Annual Environmental and Social Monitoring Report (ESMR) (to Investors) 49 Appendix I – Environmental and Social Monitoring Report (ESMR) (Portfolio companies to EARF) 60 2 1. LIST OF ACRONYMS C&I – Commercial and Industrial (typically, refers to solar PV projects developed in those sectors) CITES - Convention on International Trade in Endangered Species of Wild Fauna & Flora DD - Due Diligence DFI - Development Finance Institution EARF- Covid-19 Energy Access Relief Fund E&S - Environment and Social EDFI – Association of European Bilateral Development Finance Institutions ESAP - Environmental and Social Action Plan ESDD - Environmental & Social Due Diligence ESMS – Environmental & Social Management System H&S - Health and Safety IC - Investment Committee IFC - International Finance Corporation IFC PSs - IFC Performance Standards on Environmental and Social Sustainability (January 1, 2012) ILO – International Labour Organization IP – Investment Proposal OHS - Occupational Health and Safety PCB - Polychlorinated Biphenyls SIMA – Social Investment Managers and Advisors, LLC XL – Exclusion List SHS – Solar Home Systems 3 2. INTRODUCTION In relation to the Green Climate Fund, Acumen is the Accredited Entity (AE) and Social Investment Managers and Advisors LLC (SIMA) is the Executing Entity (EE). SIMA is the investment manager of the COVID 19 Energy Access Relief Fund (EARF), an investment vehicle which will make loans to qualified off-grid solar companies, mini-grids and clean-cooking companies. As described below, the GCF is expected to invest in Climate C.V., a Netherlands -registered limited liability company that will participate in a portion of EARF loans, namely those which are ESG Category ‘I3 or C’ and are located in countries with a No Objection Letter (NOL).1 SIMA’s impact philosophy is at the core of its investment practices. SIMA strives to deliver attractive risk-adjusted returns and to generate a positive developmental impact while minimizing the negative, unintended risks of its investments. In accordance with the latter objective, this document outlines the Environmental and Social (E&S) procedures that the investment team will follow throughout the investment process to identify E&S risks alongside financial and business considerations in the Energy Access Relief Fund (EARF). SIMA will review this E&S procedure and update it as needed, to ensure continuous improvement of the E&S assessment and management process. 3. ENVIRONMENTAL AND SOCIAL POLICY The E&S context for this Policy is that the EARF will provide loans to private sector off grid solar companies, clean cooking and mini-grid companies (“Borrowers�) operating in countries located in Africa and Asia. The Borrowers are typically for-profit companies which distribute clean energy products such as solar lanterns, solar home systems, mini-grid connections or clean cooking to end-user customers. The Borrowers source these products from various manufacturers, and many of these products are Lighting Global certified. These off-grid solar Borrowers usually sell and distribute products to end-user customers on a cash or pay-as-you- go basis. These products and their related services typically allow end-user customers to improve their energy access. The end-users typically are low-income people with no or unreliable access to an electricity grid or other sources of clean energy or electricity. The borrowers must be “Eligible businesses� (as defined in clause 4.1) and demonstrate to the EARF that their business helps customers to reduce fossil fuel emissions. The regulatory and institutional context for this Policy involves several regulatory regimes. SIMA is the investment manager of the EARF and is registered with the US Securities and Exchange Commission and the AIFM. The EARF is a Netherlands B.V. and subject to the laws of the Netherlands. The EARF will provide debt financing and loans (Loans) to Borrowers located and operating in various respective countries in Africa and Asia. The EARF will accordingly require customary legal documentation for its Loans and require that the Loans conform to legal regulations and requirements in each respective country. The legal documentation for the Loans will, among other things, require Borrowers to warrant and represent that they have investigated applicable international and in-country regulations, ___ 1 The EARF shall utilize this ESMS regardless of whether GCF and/or Climate C.V. eventually are engaged. 4 laws and requirements and that they are in compliance with such applicable regulations, laws and requirements. The institutions supporting the EARF include bi-lateral and multilateral development finance institutions, private sector investors, charitable foundations, and public charities. Some of these institutions require the EARF to comply with Environmental, Social and Governance (ESG) policies, exclusions, and practices. Climate C.V. is expected to participate in a portion of EARF loans which are both ESG Category ‘I3 or C’ and are located in countries with a No Objection Letter (NOL). SIMA has an overarching Environmental and Social Management System (ESMS) that is applied to its activities in the energy access space. SIMA’s ESMS forms the basis of this ESMS which applies to the EARF, setting the principles and objectives to be used as benchmarks when assessing investments. This ESMS is supported and approved by the company’s CEO, and SIMA in its role as Fund Manager of the EARF in charge of each investment is ultimately responsible for integrating E&S considerations throughout the investment process. Category ‘I1 or A‘ projects are not eligible for support under the EARF and the funding will be provided to E&S low risk projects/activities. With respect to E&S, the EARF commits to: • Ensure that all its operations are reviewed, evaluated and monitored against E&S requirements provided in section 3.1; • All eligible companies/ borrowers will be screened for environmental and social risks and impacts; • Minimize the negative impacts and E&S risks of its activities and, in addition, generate positive financial, social and environmental impacts; • Act in accordance with applicable laws and regulations; • Support eligible companies/ borrowers only when they are expected to design, built, operate and maintain their projects and operations in a manner consistent with the applicable E&S requirements; • Allocate resources for effective ESMS implementation; • Ensure that all staff are trained in, and are aware of their roles and responsibilities with respect to, ESMS implementation; • Establish a monitoring protocol to confirm ESMS implementation; and • Promote transparency and accountability through internal and external disclosure and reporting. 3.1 Eligible Projects and Applicable E&S Requirements 5 The eligible companies/borrowers shall be engaged in the business of mini-grids, clean- cooking, solar home systems, solar lanterns, or solar-powered productive appliances (“Eligible Businesses�); provided that in respect of clean-cooking the EARF shall: (i) not approve loans to companies that either produce, manufacture, sell, market and/or service exclusively Liquified Petroleum Gas-based and/or full charcoal-based cook stoves, and (ii) only provide loans to companies that are engaged in the following cook stove businesses: (1) all fuel wood improved cook stove (including charcoal/fuel hybrid) with an absolute thermal efficiency greater than 25%, and (2) electric induction cook stoves and electric pressure cookers. To manage supply chain risks, companies/borrower who have primary suppliers2 located in Xinjiang, China, will not be eligible for funding. This is due to the prevalence of forced labour and human rights abuses in the region and evidence of solar manufacturers, such as GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar, using forced labour. Applicants will be required to provide a list of their primary suppliers in the Self-Assessment Questionnaire. Any applicants with primary suppliers located in Xinjiang, will be asked if they are willing to change suppliers. If so, the company may be considered for funding if they are able to provide evidence that they will no longer be purchasing material/equipment from Xinjiang. If not, the applicant will not be eligible for funding. With respect to hybrid mini-grid companies, eligible borrowers must be able to demonstrate compliance with CDC’s Fossil Fuel Policy. Specifically, for hybrid diesel-renewable mini-grid projects in their pipeline and existing portfolio, companies must be able to demonstrate that: a) A renewable-only grid has been proven as not offering sufficient reliability or cost feasibility in the context of the proposed application; b) The cleanest feasible fossil fuel options have been used; and c) The risk of ramping up the use of the non-renewable part to respond to increased demand is being managed. This will be verified through the Self-Assessment Questionnaire. Borrowers with new projects and/or existing assets that cannot provide evidence that they meet the above requirements will not be eligible for funding. The eligible borrowers/companies shall be deriving at least fifty per cent (50%) of their business revenues from Eligible Businesses and shall not be engaged in any business or be deriving revenues exceeding 10% from any business related to fossil fuels, except as specified under the ‘Eligibility Criteria’ for clean cooking businesses. All Loans made by the EARF with Climate C.V. participation are expected to be Category ‘I3 or C’ indicating low-risk. Category ‘I1 or A’ projects are not eligible for support under the EARF. All the eligible companies/ borrowers will be assessed against the following E&S requirements: ___ 2 Primary equipment suppliers are those suppliers who, on an ongoing basis, provide goods or materials essential for the core business pro- cesses of the project /company / operation. For instance, suppliers of solar PV equipment would qualify as primary equipment suppliers here. 6 a) The Exclusion List provided in “Appendix A�; b) National regulatory requirements/applicable laws; c) IFC Performance Standards; d) *Good International Industry Practice (GIIP) such as WHO technical guidance developed for addressing COVID-19; e) *Good Practice Note on “None-Discrimination and Disabilities�, and “Addressing Sexual Exploitation and Abuse/Sexual Harassment�; f) *WBG generic and sector specific EHS guidelines; and g) *All International Labour Organization (ILO) conventions signed and ratified by the country(es), all ILO conventions covering core labor standards and all ILO conventions covering the basic terms and conditions of employment. *Note: These are already covered under IFC performance standards and self-assessment questionnaire however, the above documents may also be followed as reference/ guide. In addition to the above compliance requirements, all eligible companies/ borrowers are required to have the following scaled to their nature and scale of business: 1. Formal E&S Policy and ESMS (in the absence of a formal E&S policy at the time of Investment Proposal approval, SIMA will develop an ESAP to develop formal E&S policy and improve ESMS with some timebound legal covenants). 2. Policy, procedures on occupational health and safety. 3. Human Resource policy (including code of conduct for workers and grievance mechanism for workers). 4. Waste management policy and procedures. 5. Stakeholder engagement plan and grievance mechanism. SIMA will require all off-grid solar borrowers to commit to the GOGLA Consumer Protection Principles (as an example of GIIP and as per the guidelines given in their website https://www.gogla.org/consumer-protection/tools-and-resources) for SHS. EARF will require non-SHS companies and mini-grids to agree on similar consumer protection tools principles in alignment with the GOGLA Consumer Protection Tool to make it correlated to the Borrower’s business activities. The guidelines principles should be as (a) Transparency (b) Responsible Sales & Pricing (c) Good Consumer Service (d) Good Product Quality (e) Personal Data Privacy (f) Fair & Respectful Treatment. 4. E&S DUE DILIGENCE PROCESS AND SCOPE OF APPLICATION As noted above, the EARF will provide debt financing in the form of Loans to private sector companies engaged in the following sectors: off-grid solar, clean cooking and solar-powered mini-grids. The off-grid solar company Borrowers will principally be engaged in distributing pico solar lanterns up to 100 watts and distributing and installing solar home systems up to 2500 watts. 7 The clean cooking companies will principally be selling cooking appliances that reduce the use of fossil fuels for cooking. The financing provided to EARF borrowing companies will be to meet their working capital requirements and it will not be solely utilized for the purpose establishing new mini-grid projects. This E&S procedure serves as a guiding manual on processes for the inclusion of E&S standards which must be adhered to and followed by the investment team during the whole investment process. The key steps involved in E&S process are: 1. Confirm compliance with the Exclusion List. 2. E&S screening and categorization based on self-assessment questionnaire (Appendix B) - to be filled in by borrowers and reviewed by SIMA team. 3. Duly filled job protection plan questionnaire (see Appendix E). 4. Reputational checks. 5. Additional assessment based on additional documents. 6. E&S summary to be reflected in Investment Proposals and will be presented for Investment Committee’s decision. 7. Legal covenants based on the Environmental and Social Action Plan (ESAP) and standard EARF requirements. 8. Ongoing monitoring for confirming compliance with the legal covenants, ESAP and performance of borrowers. SIMA proposes to source prospective deals through an arrangement with Odyssey Energy Solutions (Deal Sourcing Partner) whereby prospects will apply for EARF funding through an online application. After shortlisting of borrowers, SIMA team will then start the detailed due diligence process of borrowers which will also include obtaining the E&S self-assessment questionnaire and all related documents from borrowers. SIMA team will review the E&S processes of borrowers as part of SIMA’s credit underwriting process. SIMA is responsible for executing the different stages of this ESMS process and ensuring that the E&S process is consistently followed. The ESMS will be executed in conjunction with the credit underwriting process. All parties involved in the investment process will follow this procedure during the assessment of E&S issues across each investment. This E&S procedure will be integrated into the investment process at every stage, from the initial assessment of sourced deals through to maturity / divesting. The below flowchart illustrates the steps and roles associated with the E&S risk assessment throughout the transaction cycle. 8 Item 1 | General E&S Due Diligence Process Step-1 Confirm Exclusion List compliance Step-1 E&S screening and categorization based on self-assessment questionnaire and supporting documentation to be submitted by all borrowers. Step-2 If there is a no potential to be higher risk category to be certified and move to Step-7 Step-3 If there is potential to be higher risk in terms of E&S aspects further due diligence & additional documents to be obtained. Step-4 If required external consultant to be hired on need basis to assist SIMA. Step-5 Category to be certified as “A�, “B� or “C� Step-6 If category is “A� it is not eligible for financing, If Category is “B� it is not eligible for financing for Climate CV participation for other than Climate CV Step-7 to be followed. If category is “C� Step-7 to be followed. Step-7 Following to be done:- a) Covenants based on assessment, ESAP (if required) and IC recommendation, b) Compliance with Exclusion List c) Compliance with E&S Law & IFC Standards d) Reputational Checks to be conducted. 9 In case any weakness/deficiencies are identified in borrower’s ESMS, the investment proposal may be considered ineligible or an appropriate ESAP* (as per Appendix C) to be agreed with borrower. *Note:- Instead of implementing an ESAP the borrower may also be asked to complete the ESMS requirements as condition precedents (before disbursement) in some cases, such as if the borrower does not have a formal HR policy, does not have a written waste disposal mechanism, a potential reputational issue identified and clarification is sought or minor updates are required in the E&S/HR policy. All the borrowers will be provided necessary guidelines on E-Waste Management and will be required to comply with these guidelines based on the loan size, size and complexity of the project. At each step of the E&S risk management cycle for all investees, a decision will be taken according to the findings of the E&S analysis. In other words, the outcomes of each stage will determine the course of the next actions. These steps are explained in detailed in the following sections. 4.1 Scope of the E&S Assessment All the potential borrowers will be reviewed for their E&S risk assessment and management processes and E&S capacity. The scope of E&S Assessment and further due diligence requirement will be based on the nature of operations and potential to be higher risk (such as type of company, complex / larger size projects and/or evidence of usage of fossil fuel and/or inconclusive documentation, impact on key biodiversity areas; human rights; labour; health & safety; potentially irreversible impacts; land use; extent of environmental/social issues, and presence of environmental and social management systems (ESMS). 4.2 Compliance with Exclusion List | Check Each proposed investment will be screened to determine whether it is in line with the Fund’s exclusion list. The Fund will not finance any activity, production, use of, trade in, distribution of or involving specific listed activities that are against its investment values. SIMA has adopted an Exclusion List for this Fund (a copy is available in Appendix A of this document). Borrowers that comply with the exclusion list will be assessed for reputation risks, compliance with national regulatory requirements and IFC Performance Standards. 4.3 E&S Risk Screening and Categorization The E&S screening will be undertaken based on the self-assessment questionnaire completed by all borrowers. Potential investments will be screened using the information provided in self-assessment questionnaire and categorized according to inherent risk factors affecting various environmental and social aspects with the following objectives:- 10 a) Minimize the negative impacts and E&S risks of its activities and, in addition, generate positive financial, social and environmental impacts; b) Act in accordance with applicable laws and regulations; c) Align with relevant international standards and principles (i.e. IFC Performance Standards) which include: • PS 1: Assessment and Management of Environmental and Social Risks and Impacts: including consideration of potentially irreversible risks and impacts including direct and indirect impacts and induced, long-term and cumulative impacts, and the potential environmental and social risks to the activities taking into account the activities’ areas of influence including associated facilities and third-party impacts, including consideration of the extent of environmental/social issues including the nature, magnitude, and complexity of the environmental and social risks including Human Rights as well as requirements for stakeholder engagement • PS 2: Labor and Working Conditions: including health & safety risks • PS 3: Resource Efficiency and Pollution Prevention • PS 4: Community Health, Safety, and Security • PS 5: Land Acquisition and Involuntary Resettlement: including specific characteristics of the influence area including risks of displacement, involuntary resettlement and to indigenous peoples. • PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources: including potential impacts on key biodiversity areas • PS 7: Indigenous Peoples Including specific characteristics of the influence area including risks to indigenous peoples, their lands and cultural heritage • PS 8: Cultural Heritage All risks are considered in the context of inherent sector risks, the scale of the company’s operations and whether the investment involves new or continued operations and locations. The potential borrowers after E&S assessment and based on the risks identified in their operations will be categorized into the following three categories more specifically defined in the risk categorization table in clause 4.4. • Category I1 or A. Activities with potential significant adverse environmental or social risks and/or impacts that, individually or cumulatively, are diverse, irreversible, or unprecedented; • Category I2 or B. Activities with potential limited adverse environmental or social risks and/or impacts that, individually or cumulatively, are few, generally site-specific, largely reversible, and readily addressed through mitigation measures; and • Category I3 or C. Activities with minimal or no adverse environmental or social risks and/or impacts. Each investment is checked for environmental and social risks and then categorized according to the following table: 11 Risk Definition Indicative Investments Risks Wherein, the risks are diversified and diversity of risks and impacts may affect the capacity of the entities to plan and implement measures to manage risks and impacts. Investments in Companies or projects Wherein, the risks are companies that have with potential negative unprecedented, the activities projects with impacts such as projects and the identified risks and potentially significant, • Having large geographic impacts may have not been adverse environmental scale; involving large- experienced in the locality and or impacts that are scale infrastructure; would require mitigation diverse, irreversible or • Located in valuable measures with unique unprecedented; ecosystems and critical requirements; impacts and or risks ESS habitats (IFC PS 6); Irreversible, where the that cannot be readily Category • Entailing adverse activities may lead to mitigated or remedied A or I1: impacts to the rights, permanent impairment of (or if they can be, only High resources and lands of environmental quality, decline at significant costs, indigenous peoples (IFC of ecosystem services, and management PS7); adverse effects to the commitment and • Entailing significant communities, including business complexities) resettlement of vulnerable groups. affected peoples (IFC Other considerations Such as The Fund will not PS5). activities include the large-scale finance a company or • Adverse impacts to nature of the activities, impacts project categorized as Cultural heritage (PS 8) that may extend beyond the high risk. project’s footprint, complex implementation arrangements, duration of impacts, manageability of risks and impacts, and community involvement and support. Investments in Risks and impacts are companies that have considered limited, and the Moderate risk activities, projects with magnitude is expected to be include those with risks potentially limited low to moderate. The risks and and impacts that are less adverse environmental impacts are few in number, ESS adverse than category A or social impacts and or contained within the footprint Category activities in terms of risks that are typically of the activities, largely B or I2: magnitude and likelihood site-specific and can be reversible, and readily Medium of occurrence. For addressed through mitigated through generally example Ground- mitigation measures accepted mitigation measures mounted C&I projects of including widely and good international industry approx. 10MW available technologies practices or changes in 12 management (It is not eligible for financing for Climate CV). Wherein, physical Low-risk activities, include elements or a footprint those that have minimal to no may also be considered as adverse environmental or low risk, particularly social risks and/ or impacts. Investments in where the activities are ESS companies that have small-scale, undertaken Category projects with minimal within an already built C or I3: or no adverse environment, do not Low environmental or social involve physical and impacts and or risks. economic displacement of people or have minimal or no adverse impacts on indigenous peoples. The Fund will utilize an enhanced E&S assessment process for companies which have potential to be higher risk (anticipated to be a very limited number, if any). If project categorized as high risk (category I1 or A) and medium risk i.e. category I2 or B (only for Climate CV), the Fund will not finance such a company. The risk categorization level will define the level of E&S due diligence required. In addition, for complex situations SIMA will use experienced external E&S consultants to undertake ESDD and E&S monitoring of potentially medium/high category projects, including mini-grid activities. However, the services of external consultant will be utilized only if there are complex project such as large size/multiple projects in various locations, evidence of fossil fuel use or incomplete or inconclusive documentation to ascertain the true level of risk. The E&S champion will review the self-assessment questionnaire and the job protection plan to identify the E&S issues that require further assessment. The EARF will require all eligible companies and borrowers to submit supporting documents along with the self-assessment questionnaire. The supporting documents include copies of all required authorizations as required under national regulations, various policies and procedures such as HR Policy, ESMS, etc., E&S assessment reports for projects undertaken by the company, records of occupational health & safety data (scaled as per size of business), photo documentation of all facilities, review of latest E&S due diligence carried out by other funds/ lenders (if any E&S review has been conducted). The minimum requirement for E&S assessment to be followed is as per Appendix “D�. The further due diligence may require additional documents to be submitted for review, and involvement of external consultant. The borrowers are required, to use the Self-Assessment Tool available on GOGLA website (https://www.gogla.org/consumer-protection/tools-and-resources), to measure and monitor 13 consumer protection practices in daily operations. This tool is to be completed as part of the application process and to be re-assessed bi-annually thereafter for the loan duration. 4.4 Reputational Issues | Check At this stage, SIMA will review and investigate information available in the public and private domain regarding any adverse environmental or social issues associated with the potential borrower. The goal of this early step is to highlight past and/or existing issues that have already been identified by other stakeholders. For this purpose, SIMA will use the tools and platforms defined by SIMA and also any other tool that it might be using already for this same task. Already at this initial stage of sourcing investment opportunities, the potential investment’s compliance with applicable E&S laws will be explored. In case of any performance issues in the results, SIMA’s E&S team including SIMA’s Managing Partner and SIMA’s Risk Officer will be consulted on an as-needed basis. If SIMA decides to proceed, it will include a note in the Investment Proposal. Some standard key words that will be checked through google searches will include: ‘Scandal’, ‘labour’, ‘fraud’, ‘corruption’, ‘bribery’, ‘money laundering’, ‘illegal’, ‘offshore’, ‘’, ‘child’, ‘children’, ‘environment’, ’pollution’, ‘waste’, ‘water’, ‘community’, ‘employees’, ‘workers’, ‘discrimination’, ‘accident’, ‘retrenchment’, ‘injury’, ‘death’, ‘abuse’, ‘harassment’, ‘security’, ’protest’, ’blockade’, ’landgrab’, ‘human rights’, ’violation’, ’violence’, ’conflict’, ’suppression’, ’civil rights’, ’land acquisition’, ‘indigenous people’, ’stakeholder engagement’ In addition to this country specific searches such as local media/ newspaper searches will also be made to explore more specific results related to borrower. 4.5 Compliance with Applicable Laws and Regulations | Check During this stage of the assessment, all borrowers will be required to demonstrate that they are currently complying with host country E&S/OHS laws through a valid company registration certificate, applicable E&S /OHS certifications and representations in the loan agreement. The borrowers are also required to provide any notices received from relevant authorities which highlight issues of non-compliance with E&S laws or IFC Performance Standards. 4.6 Additional E&S Due Diligence Items Other available E&S Assessments from SIMA, other investors and/or any third parties will be utilized or requested. Some of the borrowers that will be seeking financing from this Fund might have already been assessed on E&S issues by SIMA or by other investors. When 14 additional E&S information from these E&S assessments is available, SIMA will also consider it in its E&S DD process in order to simplify the E&S due diligence process. However, SIMA will ensure that E&S requirement as per clause 4.1 and Scope of E&S Assessment as per clause 4.2 is followed for all potential borrowers. 4.7 E&S Appraisal Findings in Investment Proposal The outcome of the E&S DD process will ultimately be recorded in the Investment Proposal (IP), evidencing and documenting such assessment. Once the whole IP is ready, SIMA’s Risk Manager will also review the E&S assessment and challenge it in order to ensure that it has covered all relevant elements in a proper manner. The questionnaire will be attached to the IP and will be reviewed by SIMA’s E&S specialists such as Risk Manager, E&S Champion and Managing Partner before the deal is submitted to the IC for approval. If needed, an ESAP will be defined. The E&S analysis will form part of the overall IP reviewed by the IC and considered when making a final decision on the investment. The decision to continue or stop the investment process will be taken at the IC review level and will be triggered by E&S risks identified in the diligence process and compliance. In cases where the E&S risk assessment is likely Category ‘I3 or C’ but there is potential to be considered riskier, SIMA will ask the borrower further due diligence in order to evidence that a set of minimum E&S safeguards are in place. 4.8 Legal Documentation Finally, E&S clauses will be included in the loan agreement to ensure the investee company complies with the Fund’s exclusion list, and with the applicable E&S laws and regulation. If an ESAP has been defined, it will be used to determine covenants in the legal loan agreement to ensure the investee company works to address the identified issues within a set time frame over the investment period. In addition to this in the event of significant accidents and incidents, with potentially adverse environmental or social effects such as spills or workplace accidents resulting in death, serious or multiple injuries, safeguarding violations3 or major pollution, the borrower is required to notify SIMA within 3 days of the incident. ___ 3 A “safeguarding violation� means any action or series of actions that: (a) involves any work or service which is exacted from any person under the menace of any penalty and for which that person has not offered themselves voluntarily, or that otherwise contravenes the requirements of the ILO Conventions; (b) contravenes the requirements of ILO Core Labour Convention 190 (Violence and Harassment), or that otherwise involves the exploitation, abuse or harassment (being any form of unwanted verbal, non-verbal or physical conduct, whether by force or under unequal or coercive conditions) of any person that is directed at such person because of their perceived or real sex or gender, or that disproportionately affects people of a particular sex or gender; or (c) involves the exploitation or abuse of a child. 15 4.9 Compliance Monitoring EARF will monitor the E&S performance of all its borrowers through E&S monitoring reports as per the format provided in “Appendix I� on half yearly basis. The borrowers will be required to comply with E&S covenants, applicable E&S requirements and ESAP. The required compliance and other monitoring indicators are required to be reported by borrowers on bi- annual/annual basis and based on the information provided by borrowers SIMA will report to investors as per the format given in the “Appendix-H� on an annual basis. As part of its monitoring of E&S aspects, SIMA will periodically review the effectiveness of its ESMS implementation. Additionally, SIMA will also regular reports/ updates to its senior management on ESMS implementation and E&S performance of its borrowers. 4.10 Institutional Arrangements To ensure effective ESMS implementation, SIMA has assigned a Managing Partner to be responsible for E&S risk management. The managing partner, Mr. Michael Rauenhorst, has undertaken training in social performance and indicators. He will be supported an E&S champion, Mohit Kumar Soni, and a Risk Manager, Suhail Darwesh. The E&S champion and Risk Manager will be involved in applying the E&S requirements to all eligible borrowers and companies. They will review the E&S self-assessment questionnaire and additional documents to confirm compliance, and will develop ESAP to close gaps identified in the E&S due diligence. They will work closely with the investment analyst to ensure effective ESMS implementation. They will report to the Managing Partner for E&S matters. In addition, for complex situations SIMA will use experienced external E&S consultants to undertake ESDD and E&S monitoring of potentially medium/high category projects, including mini-grid activities. However, the services of external consultant will be utilized only if there are complex project such as multiple projects in various locations, evidence of fossil fuel use or incomplete or inconclusive documentation. Qualified external consultant will be used for training of SIMA’s Staff especially investment analyst. The roles are defined in the following table. Institutional role Responsibilities SIMA’s Relationship • interface directly with prospects on conference calls to Managers and determine and verify the prospects’ understanding of Investment Analysts statements made in the E&S self-assessment. • Obtain all related documentation from potential borrowers. • Draft and prepare an Investment Proposal (IP) which will include a summary of the findings from the E&S Self- Assessment and related documentation. 16 Risk Manager • Support implementation of the ESMS and perform checks on compliance with this ESMS, which will include a review of the underwriting process and verifications obtained by the Relationship Managers, reviewing documentation and satisfying all ESMS related conditions precedent, as well as documentation related to monitoring and reporting during the tenure of the EARF. • Along-with Managing Partner Provide SIMA’s Relationship Managers, Investment Analysts with internal trainings and refresher trainings tailored to the implementation of this ESMS. E&S Champion • Review self-assessment questionnaire and all related documents and will provide his feedback to inform the assessment. • Support Drafting of the E&S summary for inclusion in the investment proposal. • Ensure that E&S covenants and ESAP are included in the legal agreements with the borrowers. • Inform the Managing Partner when an external E&S consultant is required during ES& due diligence and monitoring. • Undertake regular E&S monitoring of all borrowers and report to the senior management in case of non-compliance. • Prepare and submit E&S monitoring reports to all funders. Managing Partner • Responsible for overseeing overall implementation of the ESMS and providing the category certificate. • Ensure that the position of E&S champion and analyst is always staffed for day-to-day implementation of the ESMS, including the environmental and social procedures. • Ensure that adequate resources are available for management of E&S risks and training programs are implemented for investment analyst and legal team in environmental and social issues; and • ensure that adequate technical expertise, either in-house or external expert support, is available to carry out due diligence and manage the environmental and social risks, including providing implementation support as required to SIMA and its borrowers. External E&S • In complex situations a qualified external consultant with consultant relevant expertise in E&S assessments will be hired on an as needed basis to assist SIMA in the ESMS assessment. Investment • The Investment Committee will review the IP including the Committee E&S summary and any ESAP. 17 Considering the above, the following table tries to summarize the allocation of responsibilities on E&S-related matters: E&S Data E&S Reputational Applicable Additional Investment Gathering Categorization Issues and XL E&S Laws E&S DD Proposal Borrowers Provide questionnaire and other related documents. SIMA Review & Review Review Review Review & Draft Implement Implement E&S Review when Review when Review Consultant necessary necessary when necessary Investment Decision Committee 5. STAKEHOLDER ENGAGEMENT & GRIEVANCE MECHANISM a) Stakeholder Engagement Effective environmental and social management involves engagement between the borrower those directly affected/ benefiting from the borrowers activities (including consumers) and where appropriate, other stakeholders. Other Stakeholders include people not directly 18 affected by the project but that have an interest in it such as national and local authorities, neighbouring projects, and/or nongovernmental organizations. Borrowers will need to demonstrate that they are undertaking engagement proportionate to the nature and scale of their business activities. Engagement activities should aim to: • Provide stakeholders with information at appropriate times and in accessible forms; • Communicate project activities in a timely manner (including for new activities); • Ensure stakeholders are involved in decision making processes where relevant and are able to effectively communicate any impacts they experience; and • Ensure that stakeholders are aware of how to submit grievances and/ or complaints. This may require proactive engagement where borrowers actively seek inputs from stakeholders, this is likely to be particularly important for mini-grid companies and reactive engagement where projects respond to stakeholder concerns usually via grievance redress mechanisms. The self-assessment questionnaire for off-grid solar companies inquires about the applicant’s engagement with customers and other stakeholders. Consumer protection is also captured through the requirements for the GOGLA Code of Conduct. In relation to mini-grid companies the self-assessment questionnaire will aim to establish if companies have established practices for identifying and engaging with stakeholders in an appropriate manner close to their proposed activities. Stakeholders include directly affected people (such as land owners, neighbouring communities) and other interested parties (local government, regulators and civil society). Mechanisms for engagement will need to be culturally appropriate and undertaken in a timely manner. Considerations should also be given to vulnerable groups and indigenous people where they are present in engagement activities. b) Grievance Mechanism SIMA will require each Borrower to provide a grievance mechanism which is able to receive and respond to grievances of stakeholders. Borrower grievance mechanisms will be assessed through the self-assessment questionnaire to demonstrate they are appropriate for the scale and nature of the project risks, accessible to all stakeholders, culturally appropriate, free to use and will provide a response in a timely manner. Where available, grievance logs will be assessed to determine this is the case. 19 6. EXTERNAL COMMUNICATION MECHANISM, GRIEVANCE MECHANISM AND WHISTLEBLOWING POLICY 6.1 External Communication Mechanism SIMA will undertake external communication to raise awareness about the EARF. This will involve engaging relevant stakeholders as per the activities included in Appendix-F for the financial proposal of Green Climate Fund as a reference of activities undertaken. 6.2 SIMA’s Grievance Mechanism In order to ensure transparency if any of the existing or prospective borrowers, investors or stakeholders including customers of the borrower companies have any grievance with SIMA or its team they may send the grievances to attention of SIMA’s managing partner on the SIMA Response Form available on the SIMA’s website www.simafunds.com or can fax on SIMA’s fax number +1 646 930-5547. Upon receiving a Report, the Contact Person/Compliance Officer will review the information and consider all appropriate actions to address the Report, which may include involving the Compliance Officer, internal or outside counsel, accounting firms or other personnel or third parties. The Contact Person may determine, in his or her discretion, whether or not it is appropriate to investigate the issues raised in the Report and, if so, the course of any investigation. 6.3 Whistleblowing Policy Compliance officer will maintain proper records of reported incidents and concerns and details of how they were investigated/discounted/remediated. All the reported incidents and concerns to be responded within 15 working days and reporting person will be informed about the final action taken on the same. The detailed guidelines are given in SIMA’s whistle blower policy and procedures which is part of ‘Compliance Manual’. Approved by _________________________ Michael Rauenhorst Managing Partner 20 APPENDIXES Additional E&S Documents 21 Appendix A: Environmental and Social Exclusion List | EDFI / IFC-PS7 In addition to companies or subprojects not being able to access financing for investments deemed as high risk (Category A or I-1), the borrower/ investees will not partake in any activity, production, use, distribution, business or trade involving: 1. Forced labor4 or child labor5 2. Activities or materials deemed illegal under host country laws or regulations or international conventions and agreements, or subject to international phase-outs or bans, such as: a) Ozone depleting substances, PCB's (Polychlorinated Biphenyls) and other specific, hazardous pharmaceuticals, pesticides/herbicides or chemicals; b) wildlife or products regulated under the Convention on International Trade in Endangered Species or Wild Fauna and Flora (CITES); or c) Unsustainable fishing methods (e.g. blast fishing and drift net fishing in the marine environment using nets in excess of 2.5 km in length). 3. Cross-border trade in waste and waste products, unless compliant with the Basel Convention and the underlying regulations. 4. Destruction6 of High Conservation Value areas7 5. Radioactive materials8 and unbounded asbestos fibers 6. Pornography and/or prostitution 7. Racist and/or anti-democratic media 8. In the event that any of the following products form a substantial part of a project’s primary financed business activities9: a) Alcoholic Beverages (except beer and wine); b) Tobacco; c) Weapons and munitions; or d) Gambling, casinos and equivalent enterprises. 9. Involuntary resettlement of indigenous people or activity which faces serious complaints from indigenous people. ___ 4 The client will not employ forced labor, which consists of any work or service not voluntarily performed that is exacted from an individual under threat of force or penalty. This covers any kind of involuntary or compulsory labor, such as inden- tured labor, bonded labor or similar labor-contracting arrangements. 5 The client will not employ children in a manner that is economically exploitative, or is likely to be hazardous or to inter- fere with the child’s education, or to be harmful to the child’s health or physical, mental, spiritual, moral, or social deve lop- ment. Where national laws have provisions for the employment of minors, the client will follow those laws applicable to the client. Children below the age of 18 years will not be employed in dangerous work. 6 Destruction means the (1) elimination or severe diminution of the integrity of an area caused by a major, long-term change in land or water use or (2) modification of a habitat in such a way that the area’s ability to maintain its role is lost 7 High Conservation Value (HCV) areas are defined as natural habitats where these values are considered to be of outstanding significance or critical importance (See http://www.hcvnetwork.org). 8 This does not apply to the purchase of medical equipment, quality control (measurement) equipment or any other equipment where the radioactive source is understood to be trivial and/or adequately shielded. 9 For companies, “substantial� means more than 10 % of their consolidated balance sheets or earnings. For financial institution s and invest- ment funds, “substantial� means more than 10% of their und erlying portfolio volumes. 22 Appendix B E&S Self-Assessment Questionnaire 1) Nature of the Business a) Name of the borrower and description of its operations b) Industry sector, product manufactured, capacity c) Location and description of all facilities such as warehouse, retail outlet, repair centre, etc. (region, city/town, type of neighborhood - commercial or residential, size, managed by self or third party) d) Total number of employees and sales agents (disaggregated by gender and term of employment- contract or permanent) e) Main markets (domestic/export (specify countries) f) No of active & inactive customers (disaggregated by gender) i) If the borrower is involved in B2B Business Model only, they should provide breakdown of No of Women owned Customers and Non-women owned Customers. g) Urban customers & rural customers. h) Breakdown of your customers by poverty levels/Income levels (if available). i) Please provide a list of your primary suppliers* and their location: Name of supplier: Product (e.g. solar panels): Location: *Primary suppliers are defined as suppliers who, on an ongoing basis, provide goods or materials that are essential for core business processes (e.g. solar panels). 2) Portfolio information (fill only the ones relevant to your operations) Please provide the following portfolio information (for off grid solar companies) Types of off grid Total number of Total number of Total number of solar products products customers customers distributed to date Female Male Urban Rural 23 Mini grid companies Proje Type Investm E&S Was an Did the project involve Describe Describe Status of ct and ent type Categ E&S stakeholder project’s project’s name descript and ory assessm engagemen e-waste compliance , ion of amount ent t activities manage with locati the (US$ underta ment regulatory on project mn) ken practices E&S (inclu prior to requiremen de the ts. proje project? Land acquisition Impact on Biodiversity ct Provide indigenous impacts coord summar peoples inate y (Full s) ESIA/Ini tial assessm ent etc). Notes: If any of the project involved land acquisition, impacts on indigenous peoples and/ or biodiversity, please provided details on the extent of the impacts and how these impacts were managed. Please attach copies of all ESDD reports and Corrective Action Plans for new investments made during the reporting period. Please also attach copies of E&S monitoring reports. 24 3) E&S Policy and ESMS a) Do you have a formal E&S policy and E&S management system (ESMS) for your company? If yes, please provide a copy of the E&S policy and ESMS. b) Please describe how the E&S policy and ESMS is communicated across the organization. For instance, through regularly scheduled internal trainings, internal memos, making a copy of the E&S policy available to all staff? c) Do you have any officers, or a department involved in addressing E&S issues in your organization? d) If you do not have a formal ESMS, then please describe the procedures for the following: i) How do you assess compliance with national laws for your projects? ii) How do you undertake E&S risk assessment of your projects for key risks such as e-waste management, land acquisition, stakeholder engagement, gender equality, complaints or grievances, indigenous peoples and biodiversity? Please attach if you have procedures on any of the key risks listed here. iii) Who in your company is responsible for E&S matters? e) Do you monitor the E&S performance of your projects? How or what methods do you use? How frequently do you do that? What are the key E&S indicators that you monitor? (this question is not relevant to off grid solar companies) f) Do you have an Emergency Preparedness and Response plan to respond to emergency situations at your locations and at the location of your borrowers? (e.g., fire plans and safety equipment at your warehouses) 4) Stakeholder Engagement and Information Disclosure a) How does the company engage with local community and its leaders? b) How do the company’s activities impact the community health, safety and security? c) Has appropriate (technical level, language, location, etc.) disclosure of assessment information to, and consultation with the communities been/or is being conducted in a timely and culturally appropriate manner? d) Is there a mechanism to receive and register concerns/grievances from affected communities and other stakeholders such as the borrowers, general public, NGOs, etc.? If yes, please briefly describe the mechanism or attach evidence. e) Is there a defined process to screen, assess and resolve the issues raised and to determine how to respond? If yes, please briefly describe the process. f) Is the grievance mechanism easily accessible, understandable and predictable? Does it allow for anonymous complaints? Please describe. g) Is there a log or register to track incoming queries and responses? h) How have you ensured the affected community and other stakeholders are aware of the grievance mechanism? 5) Environmental Pollution and E-waste management a) Do you have a waste management plan? If so, please share a copy. b) Please describe sources of waste from your business, quantity generated, and method of disposal (fill in table) c) Do you use a waste disposal company or contractor to dispose of e-waste? If so, please provide the name of the disposal company (this question is relevant mostly to off-grid companies. Mini-grids which are undergoing major maintenance should also provide this information). Sources of waste Quantity generated Describe the disposal mechanism Batteries Used equipment collected from users Hazardous waste (mention the type of waste) d) Do you any of your operations lead to environmental pollution? If yes, please fill in the following table. (Fill this table only if its relevant to your operations) Source of pollution How is it managed? Air pollution Noise pollution Water contamination e) Is the environmental pollution monitored? If yes, please provided copies of all monitoring reports for the last one year (such as air quality monitoring data, noise monitoring, and effluent monitoring data) 6) Human Resources Policies and Working Relations a) Do you have a human resources (HR) policy? Please provide copies. b) Does your HR policy include the following: HR policy contents Yes/ No Copy attached (please put a tick) Terms and conditions of employment Employees/ worker’s rights related to hours of work, wages, overtime, compensation, benefits, etc. Employee code of conduct Recruitment policy Progression policy Employee grievance mechanism Anti-harassment policies, including a Sexual Harassment Policy and Gender Based Violence Policy? Policy on Non-discrimination and Equal Discrimination Policy prohibiting child labor and forced labor Right to organize Retrenchment Whistle Blower Policy c) How are the working conditions and terms of employment communicated to all staff/ workers? d) Do workers have legal contracts and benefits according to the law: social security, minimum age, working hours, collective bargaining? e) Do sales agents have contracts? f) In case of contracted personnel, is there a reasonable control over these aspects? Are environmental and social aspects introduced into the contract with service providers? g) Are equal opportunities granted to women and minorities? h) What is the share of women in the overall workforce? i) Does your company have a gender action plan in place (including policies on increasing the share of women in their workforce and/or offering employees flexible work hours)? If yes, please attach. If not, a baseline assessment template will be provided if your application is approved, and you will need to agree to provide a gender action plan within 90 days of loan agreement. j) How does the company ensure child labor and forced labor is not used through contractors or in your supply chain? Do you use covenants in your legal agreements with suppliers and contractors? 7) Occupation Health and Safety a) Does the company provide its workers with a safe and healthy work environment? Has the client taken steps to identify potential hazards to workers and prevent accidents, injury, and disease by minimizing the causes of hazards? What steps are these? b) Has the client trained workers in occupational health and safety? c) Does the company document and report on occupational accidents, diseases, and incidents? d) Do you monitor workplace noise and air quality? Please provide reports. 8) Environmental Regulations Compliance a) Is the company in possession of all required Health Safety and Environment (HSE) permits and approvals? Provide copies. b) Has the company paid any excess charges or fines/penalties for non-compliance with HSE regulations and standards (mini grid companies should confirm this for all their projects) in the last two years? If yes, for what and why? c) Is the company exposed to potentially significant HSE liabilities, such as those arising from land / groundwater contamination, related to the company’s past or ongoing operations (mini grid companies should confirm this for all their projects)? d) If yes, specify magnitude?; Has the company had any significant accidents or incidents in the last two years (e.g., oil spills, fires) involving, lost time incidents, deaths or multiple serious injuries and/or significant environmental damage (mini grid companies should confirm this for all their projects)? e) Was the company inspected by relevant government/municipal authorities in last 2 years (mini grid companies should confirm this for all their projects)? If yes, provide results including any corrective actions/notices. 9) Social issues and consumer protection a) Does the company have a process for identifying Indigenous Peoples (IPs)? b) In the locations the company operates are any of the following groups present (if yes please provide details name, location etc): i) Legally recognised IPs ii) Marginalised groups Iii) Ethnic groups Iv) Tribal groups c) Are there any other of the Company’s activities affecting indigenous peoples, their lands and resources, livelihoods and cultural heritage? Identify and assess any specific risks. (Guidance related to Indigenous people can be obtained on the following IFC link: https://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/sustainabilit y-at-ifc/policies-standards/performance-standards/ps7� d) Is the company a signatory of the GOGLA Consumer Protection Code? e) Have you completed GOGLA Consumer protection self-assessment tool? Please share the results. f) Does the company have a focus on low-income customers (Low-income customers are defined as the lower 50% income group of the country and whether the company’s products are accessible by these low-income customers)? Please provide supporting evidence g) Are any of the company’s activities affecting conservation and sustainable management of natural resources? 10) Any ESG Audits of company or its suppliers (if yes provide copies of the audit reports): Yes / No 11) Describe frequency and types of engaging with your stakeholders including customers and others. 12) For Solar Home System Companies & Mini-grid companies: Please provide information whether any essential service centers such as schools, health, clinics, government offices, etc. are powered by the company 13) For Clean cooking: a) Provide reliable documentary evidence / study showing that the products are reducing biomass usage overall b) Confirm that company is not deriving revenues exceeding 10% from any business related to fossil fuels, except as specified under the ‘Eligibility Criteria’ for clean cooking businesses. 14) Please indicate that what amount and percentage of your revenue is derived from carbon credit revenue sources 15) For Mini-grid companies: a) Do any of your portfolio or pipeline projects include diesel/renewable hybrid mini-grids? b) If yes, was it feasible to develop a renewable-only mini-grid instead of a hybrid? If not, why not (e.g. cost feasibility, reliability)? c) If yes, do the hybrid mini-grids use the cleanest possible fuel source? How will increases in demand be managed from a fuel source perspective? Document provided by: ___________________________ ______________ List of documents required with the self-assessment questionnaire a) ESMS policy and system b) HR Policies c) Environmental approvals d) Google Earth link and coordinates for all projects (such as mini grids) and facilities e) Other regulatory approvals etc. (if applicable). f) E-waste disposal mechanism. g) Provide photos documentation of: all products; typical installations; typical branches/points of sale; all warehouses/storage facilities; all call centers; all service/repair centers; any other facilities. h) Records of consultations with stakeholders. i) Record of grievances received over the last one year. j) Job Protection Plan template completed k) Gender action plan or any policies related to protecting female workers and increasing their share of employment l) GOGLA self-assessment tool completed. m) Records of occupational health & safety data (scaled as per size of business) Appendix C. Environmental and Social Action Plan Template Summary Mitigation Risk Responsible Schedule Expected Cost/Budget of risks measures significance party/person results This Options to This Individual Timing of Expected Estimated contains avoid, contains a person, unit, implementation outputs of cost of the reduce, description or entity of measures the carrying out description mitigate risks of the tasked to including any measures the measures of risks and and impacts. overall level carry out the additional due can be This may also of risk* mitigation diligence and derived indicate measures management from the additional plans and may responses due diligence depend on the to the and specific stage of screening management implementation questions plans in Part B2. *Risk significance. The probability of occurrence is the likelihood for a risk to occur and can be characterized in terms of the degree to which it will happen (for example, the UNDP screening procedure uses “expected, highly likely, moderately likely, not likely, and slight�). The impact or magnitude of risks is the description of how severe the impacts would be if it were to occur (for example, “critical, severe, moderate, minor, and negligible�). A significance value of the risk (for example low, medium, high) can be obtained by combining the probability and impact values. The risk significance indicates the relationship between probability and severity or magnitude of impacts. The entities or organizations that will be implementing the proposed activities are best positioned to define the probability of occurrence and severity or magnitude of impacts. There is no single technique to determine the significance of risks nor will it apply in all situations. The entities and organizations that will be implementing the activities will need to determine which technique will work best for each situation. Determining risk significance would require an understanding of activities and locations, the urgency of situations, and objective judgment. Appendix D. Guidance for Minimum E&S requirements. Type of solar Key E&S risks Key E&S requirements companies Mini grid Site selection related E&S issues: ESMS must include: companies • Involuntary land acquisition • E&S policy articulating companies’ leading to economic and intent to identify, assess and physical displacement, management E&S impacts created • Voluntary land donations by its operations • Impacts on indigenous persons • Organizational capacity: E&S roles (IPs) and responsibilities • Impacts on biodiversity and • Land acquisition process/ process natural resources for identification of key social issues associated with land such as impacts Construction phase impacts: on IPs, biodiversity impacts. • Procedures for assessment and • Occupation health & safety monitoring of E&S impacts (OHS) o Categorization of projects, • Dust and air pollution related o Undertaking an initial to digging, etc. Environmental and Social • Labor compliance issues Impact Assessment (ESIA), related to child labor in o Developing and construction, payment of implementing E&S wages, overtimes, etc. Management Plans (ESMPs), • Contractor management and • Improper grievance redress for o Monitoring ongoing workers compliance and • Supply chain risks (Xinjiang, implementation of ESMPs China) • Information disclosure and stakeholder engagement plan Operational phase impacts: • E-waste management plan • OHS plan for construction and • OHS working at height, with operations phase electrical devices, systems • Grievance mechanism • Human resources and labor • Monitoring and reporting compliance procedures • Improper grievance redress for • HR policies must reflect workers commitments to the Human • Unfair terms of employment Resources / Human Rights Principles • Contractor management outlined in Box 1 below. • E-waste management • Water management (panel • Commitment to Consumer cleaning) Protection Principles set out by • Improper implementation of GOGLA, SMART Campaign, or other social management plans industry association related to social impacts created during site selection Retailers/ Labor & working conditions: Small Enterprises10: Distributors of off grid solar • OHS working with electrical ESMS must include: systems devices, systems • Human resources and labor • E&S policy articulating companies’ compliance issues related to intent to identify, assess, and payment of wages, overtime, manage E&S impacts created by its etc. operations • Improper grievance redress for • Organizational capacity: E&S roles workers and responsibilities • Unfair terms of employment • Procedures for assessment and • Contractor management - sales monitoring of E&S impacts agents may not have written (proportional to E&S risks) contracts or safe working • Grievance mechanism conditions • Monitoring and reporting procedures Operations: • Commitment to Consumer Protection Principles set out by • E-waste management GOGLA, SMART Campaign, or other • Housekeeping issues industry association • Consumer protection issues related to opaque contract Medium Enterprises11: terms, insufficient consumer education, and poor controls ESMS must include: over third party sellers • Emergency Preparedness and • E&S policy articulating companies’ Response, particularly in intent to identify, assess and warehouses management E&S impacts created • Supply chain risks (Xinjiang, by its operations China) • Organizational capacity: E&S roles and responsibilities ___ 10 The IFC defines Small Enterprises as having <50 employees and/or Total Assets/Annual Sales of <$3M USD. • Procedures for assessment and monitoring of E&S impacts o Categorization of projects, o Undertaking an initial Environmental and Social Impact Assessment (ESIA), o Developing and implementing E&S Management Plans (ESMPs), and o Monitoring ongoing compliance and implementation of ESMPs • Information disclosure and stakeholder engagement plan • E-waste management plan • OHS • Grievance mechanism • Monitoring and reporting procedure • HR policies must reflect commitments to the Human Resources / Human Rights Principles outlined in Box 1 below. • Commitment to Consumer Protection Principles set out by GOGLA, SMART Campaign, or other industry association Assemblers of Labor & working conditions: Small Enterprises: solar systems • OHS issues involved in ESMS must include: production process such as exposure to hazardous material • E&S policy articulating companies’ like silicon, etc. intent to identify, assess and • Human resources and labor management E&S impacts created compliance by its operations • Improper grievance redress for • Organizational capacity: E&S roles workers and responsibilities • Unfair terms of employment • Procedures for assessment and monitoring of E&S impacts (proportional to E&S risks) • Grievance mechanism • Labor compliance issues • Monitoring and reporting related to child labor, payment procedures of wages, overtime, etc. • Commitment to Consumer Protection Principles set out by Operations: GOGLA, SMART Campaign, or other industry association • Environmental Pollution such as air pollution, wastewater Medium Enterprises: and noise • Resource use in production ESMS must include: such as water and electricity • Use of hazardous chemicals in • E&S policy articulating companies’ production process intent to identify, assess and • Housekeeping at the management E&S impacts created manufacturing facility by its operations • Management of waste • Organizational capacity: E&S roles including hazardous waste, e- and responsibilities waste, and other types of solid • Procedures for assessment and waste monitoring of E&S impacts • Emergency Preparedness and o Categorization of projects, Response, particularly in the o Undertaking an initial manufacturing facility and Environmental and Social warehouses Impact Assessment (ESIA), • Supply chain risks (Xinjiang, o Developing and China) implementing E&S Management Plans (ESMPs), and o Monitoring ongoing compliance and implementation of ESMPs • Information disclosure and stakeholder engagement plan • Standard operating principles or plans for prevention of air pollution, hazardous waste handling, management & disposal and wastewater treatment • Resource efficiency/ conservation plan • E&S monitoring plan • OHS plan • Grievance mechanism • HR policies must reflect commitments to the Human Resources / Human Rights Principles outlined in Box 1 below. • Commitment to Consumer Protection Principles set out by GOGLA, SMART Campaign, or other industry association Box 1. Human Resources / Human Rights Principles: • Not employ or make use of child labour • Not employ or make use of forced labour • Wages meet or exceed industry or national legal minima • Not to discriminate in terms of recruitment, progression, terms and conditions of work and representation, based on personal characteristics unrelated to the job (e.g. gender) • Adopt an open attitude towards workers’ organisations and respect the right of all workers to join or form workers’ organisations of their own choosing, to bargain collectively and to carry out their respective functions in the workplace; • Provide reasonable working conditions including a safe and healthy work environment, working hours that are not excessive and clearly documented terms of employment; where workers are employed in remote locations for extended periods of time to ensure that such workers have access to adequate housing and basic services; • Provide a workplace free from violence and harassment, including gender-based violence and harassment (GBVH) and sexual harassment. i) The IFC defines Small Enterprises as having <50 employees and/or Total Assets/Annual Sales of <$3M USD. ii) The IFC defines Medium Enterprises as having 50<300 employees and/or Total Assets/Annual Sales of $3M<$15M USD. Appendix E. Job Protection Plan Template (for companies) Question Response Total no. of workers Include information disaggregated by gender Include information disaggregated by direct and third-party workforce where possible Total no. of jobs at risk Include information disaggregated by due to COVID-19 gender Include information disaggregated by direct and third-party workforce where possible Business reason for risk to jobs Options available to avoid Measures to make continued work Provide further details (e.g. other retrenchment (tick all that possible with full wage payment options) may apply)  workplace distancing / hygiene measures;  remote working;  redeployment (eg cleaning, maintenance) or training) Modifications to work arrangements to make continued work possible with some reduction to worker income:  job sharing;  short-time working;  paid leave (incl paid sick/care leave) Measures to retain workers on books with continued payment of (some) wage / some reduction to worker income:  rotating furloughs;  furlough with limited wage / benefits,  combination of paid and unpaid leave Measures to retain workers on books with no payment / income / benefit coverage:  furlough (ie temporary lay-off),  unpaid leave Question Response For all those options marked ‘not available’, provide reason why not Are there workers in the Consider potential vulnerable groups workforce who are (e.g. women, workers of different age particularly vulnerable to groups, migrant workers) and reasons economic impacts? why these workers may be impacted differently. This might include mobility constraints, literacy, reliance on employer accommodation etc. Are there targeted provisions for these vulnerable workers? Workforce consultation Ensure that representatives of taken, with any notable vulnerable groups (e.g. women, older responses or suggestions workers, migrant workers) are included in consultation processes Proposed job protection measures adopted and timeframe Additional cost of job NB: Additional costs refers to costs protection measures which are additional to what the business can afford in view of the current state of operations Proposed reporting E.g. No. of jobs protected – regularity of indicators reporting Appendix F EARF Stakeholder Engagement Plan Summary of consultations conducted in preparation for this proposal: In late February 2020, when the vast majority of coronavirus cases were in China, it was already clear that the outbreak would have a huge impact on the energy access sector. On March 6, Acumen reached out to a handful of other investors in the energy access industry to discuss the impact of COVID-related supply chain disruptions. In less than a week, the situation had already evolved: what had begun as a national outbreak in China was declared a global pandemic. On March 26, Acumen brought nearly 90 investors, donors, and sector leaders together to create the COVID Energy Access Action Network: a coalition dedicated to mobilizing the resources needed to help off-grid energy companies in Sub-Saharan Africa and Asia weather the global recession. The COVID Energy Access Action Network’s capital providers, technical assistance partners, and data collectors had rallied to assess company and customer needs, while working in parallel to design the financial instruments and technical support to meet those needs. • The first industry survey went out to GOGLA members on March 20 th in an effort to get an early read on companies’ financial and non-financial needs. Results presented on March 31st.12 • In parallel, on March 25th, the Global Impact Investing Network received the results from its survey of investors and donors to determine their capacity to provide bridge loans or grants to companies in crisis.13 • Results from an SEforALL survey of energy access companies’ needs came in on April 9 th and the results were shared with the COVID Energy Access Action Network.14 • On June 10th, Acumen partner 60 Decibels, along with GOGLA and CGAP hosted the first of three webinars to present the results of their three surveys of 5000 customers across six countries to understand the impacts of the pandemic on their livelihoods. The webinar for the 3 rd round of surveys is scheduled for September 3rd.15 • On June 26th, a multi-stakeholder survey led by Energising Development (EnDev) went out as the most comprehensive survey to date. With 613 companies responding from 44 countries, the Energy Access Industry Barometer provided the most detailed picture of the financial situation on the ground. The results were shared widely with investors, donors, energy access companies and other stakeholders on August 7th.16 Throughout these months, the COVID Energy Access Action Network and its sub-committees have continued to meet regularly, with 5 full-network meetings and more than 30 working group convenings. Customers’ and companies’ needs have been central this sector -wide effort from the beginning and continue to guide and direct each step. Findings and insights were shared widely and transparently and ___ 12 https://www.youtube.com/watch?reload=9&v=XKcw2gIiCNU&feature=youtu.be 13 https://www.barrons.com/articles/how-bridge-loans-can-aid-nonprofits-and-social-enterprises-through-the-covid-19-crisis-01584791494 14 https://www.seforall.org/system/files/2020-04/SEforALL-survey-findings-20200417.pdf 15 https://www.gogla.org/events/consumer-insights-during-covid-19-webinar-2 16 https://endev.info/content/COVID-19_Energy_Access_Industry_Barometer_-_Presentation_of_results_in_a_webinar_hosted_by_EnDev were carefully considered to ensure that the Energy Access Relief Fund was structured to effectively meet the needs of the market. In addition to these sector and customer-level consultations, the Acumen team has been in close and ongoing dialogue with the relevant National Designated Authorities (NDAs) in the countries that we seek to provide letters of no objection (NOLs). We have been assured by those NDAs that have provided NOLs that private sector energy access companies are a crucial component of their strategy to achieve both their INDCs and the SDGs. STAKEHOLDER INTERESTS AND PROPOSED ROLE IN THE ENGAGEMENT GROUP INFLUENCE RELATIVE PROJECT STRATEGY TO THE PROJECT NOL Country National governments Enablers and indirect Engagement will National have several key beneficiaries. National occur primarily Governments interests that align with governments can play a through local project outcomes: key role in enabling the Renewable Energy meeting INDC mitigation successful recovery of Associations, which targets, achieving energy access companies have been formed to universal access to through import/tax engage national modern energy, policy, designations of governments and maintaining robust energy firms as essential advocate for targeted private sector service providers, and sector support. Also employment, and even targeted subsidies representatives from catalyzing COVID-19 towards lower-income national relief. households. Success of governments will be the project will mean invited to participate Government NDAs have significant progress in knowledge-sharing been consulted through towards governments’ events the NOL process, and INDCs and SDGs. also have existing points of influence at a company level in most markets. Current and future Off-grid and low-income Indirect beneficiaries. As EARF recipients are consumers of households experience companies receive EARF meant to be energy access the daily effects of funding they will be able companies that products and energy poverty: to maintain service for conduct regular and services household air pollution, existing customers and frequent poor light quality, and a expand sales into new consultations with lack of productivity. This regions, helping more their customers, both group has great interest and more people gain to listen and to in accessing affordable, access to life-changing provide information. modern energy sources of energy. SIMA and Acumen solutions, particularly if will ensure that they are bundled with customer responses ongoing service and are recorded, sustainable consumer reviewed, and shared financing. among EARF borrowers, and that the lessons emerging from those consultations are absorbed by all recipient companies. This company-level outreach will be bolstered through an ongoing consultation with customer- focused research, such as GOGLA’s COVID-19 Consumer Insights project with 60 Decibels. Both of these channels will also be used (and have already been used by many companies) to communicate relevant information to customers, such as public health information regarding COVID-19. Public investors in As part of their Catalysts, conveners, and The EARF has already energy access (e.g. respective mandates to indirect beneficiaries. secured funding DFIs, Multi-lateral support universal DFIs who are able to commitments from banks) energy access goals, support the EARF will several DFIs, and will development finance contribute directly to the continue to seek institutions have equity fund, while those who commitments from and/or debt exposure to cannot may still advise others. Regular calls numerous companies in their borrower and among interested the energy access investee clients to seek investors and sector. They are also, in EARF funding. At the stakeholders have many cases, direct same time, concessional been underway since investors in the EARF. finance will help to March (the COVID maintain the integrity of Energy Access Action DFIs’ holdings in this Network). In parallel, sector, which in turn will all funders of the help them to achieve energy access sector energy access targets. will be invited to participate in future EARF knowledge sharing events. Private debt and Similar to investors in Several private investors The COVID Energy equity investors in the public sector, private (as well as non-profit Access Action energy access investors are concerned investors such as Network is already that the crisis will Acumen) have already holding regular decrease the value of played critical roles in convenings of energy their shareholdings or, establishing the need for investors, including in the case of banks and concessional finance and sub-groups on key debt investors, require structuring the EARF. financial and them to reschedule loan These investors and operational payments and/or to others will be relied upon considerations. This is suffer credit-related to mobilize a pipeline of meant to continue for losses. At the same time, interested, viable the duration of the maintaining access to companies for the EARF. crisis and into the commercial capital Additionally, their recovery. For markets is vital to the continued participation company-specific long-term health of the and cooperation will be discussions (e.g. energy access sector. needed throughout the regarding EARF programme cycle, restructurings), SIMA to ensure that EARF (supported by financing is used to Acumen) will maintain operations and maintain dialogue not to finance creditors. with fellow investors. Energy access As managers and Direct beneficiaries. SIMA will be liaising company shareholders in energy Companies that receive directly with recipient executives access companies, these EARF funding are companies regarding individuals’ interests are expected to use that potential loans, in line with the EARF’s liquidity to maintain disbursements, and intended outcomes: service, supply lines, and ongoing monitoring. notably, the employment, with the Meanwhile Acumen preservation and future goal of regaining will be responsible for sustainability of the sustainable, pre-crisis ongoing convening of sector. Given the growth trajectory as soon companies who have relative nascence of the as is feasible. The impact received funding, as sector, no individual of EARF funding will well as those who firm’s executives are depend heavily on have not, in order to expected to have undue company executives, circulate best influence on the project. who will also be practices related to responsible for reporting gender on their financial and empowerment, operational progress. combatting workplace harassment, achieving equal pay, implementing flexible work, and conducting customer consultation, as well as arranging for periodic knowledge- sharing within the sector. Energy access Company staff have a Direct beneficiaries. As SIMA and company staff vested interest in their staff are both the largest independent firms’ ongoing liquidity. expense category as well evaluators will be It is often they who will as the primary engine of responsible for bear the brunt of energy access growth, checking staffing financial shortcomings their retention is a levels and monitoring in the form of layoffs. cornerstone of EARF’s adherence to EARF impact strategy, with criteria at regular 80% of funding tied to intervals. Both SIMA maintaining and Acumen will be employment. responsible or communicating the importance of achieving equality in hiring, implementing equal pay and flexible work, and providing appropriate external grievance mechanisms Broader energy A number of The organizations (some Acumen, as part of its access sector foundations, research of which have convening and stakeholders institutions, and contributed grant capital) knowledge (including industry associations will be able to study the disseminating role, foundations, exist to enable the effects of EARF funding, will continue to host researchers, and expansion of energy and disseminate useful regular COVID Energy access and the Access Action industry improvement of energy practices for recovery Network calls to allow associations) solutions. from COVID-19. SIMA, investors, donors, energy access companies, and other stakeholders to share insights with the broader sector. Appendix G – Guidance to Solar Companies on Management of E-Waste Introduction This note provides an overview of the approach the EARF will adopt to promote safe and responsible e- waste management practices by its borrowers to manage the health and safety and environmental risks, including good practice on storage, handling, transport, recycling and disposal of batteries. The EARF will provide COVID-19 related relief funding to energy access companies, of which a majority are companies offering off-grid solar systems. Off-grid solar products are delivering important social impact to off-grid households and small businesses, as well as positive climate impacts by mitigating greenhouse gas emissions from traditional polluting lighting sources, such as kerosene, while supporting economic development in low-income countries. However, there are environmental and health and safety concerns, related to waste management when products, in particular batteries, reach the end-of-life. SIMA will therefore support EARF borrowers to develop and maintain responsible e-waste policies and procedures, by (i) setting up mandatory requirements for essential e-waste measures, and (ii) providing guidance and capacity building to the Borrowers on adopting emerging good practices, drawing on the WBG General EHS Guidelines and WBG EHS Guidelines for Waste Management Facilities and GOGLA’s e- waste, as an example of GIIP, toolkit: https://www.gogla.org/e-waste. Potential impacts to be mitigated Unsound end-of-life management and recycling can cause severe health impacts, including for those working in unregulated recycling sector. Environmentally, when disposed alongside household trash, batteries end up in landfills/waste dumps. As the battery casing corrodes, chemicals leach into the ground water from where they contaminate the water bodies. Acid and lead particulates also contaminate the soil and become airborne when dry. All these can cause significant health risks. Batteries used in solar systems can be of two main types – lead acid and lithium ion. Both contain risks in the recycling and storage process. If not treated with care, they can cause damage to the environment and people’s health. They present different challenges with disposal and recycling. Lead Acid batteries are hazardous because of their two primary components: Lead and Battery Acid. Most solar batteries are gel or maintenance free type PbLead batteries. If undamaged, these should be transported whole to the recycler. Lead becomes dangerous if it is disturbed, such as when the case is opened (creating Lead dust) as part of the dismantling process by battery recyclers or when the internal lead plates are melted (creating fumes). Lead is a heavy metal that is easily absorbed by organic organisms (humans and plants), builds up in organic systems and takes many years to remove. Among other effects, in pregnant women it can cause miscarriages and foetal defects, in children it blocks normal neurological development and in adults can lead cognitive function deterioration, brain damage and cancer. Battery acid, lead acid battery’s main component, sulfuric acid, is poisonous to ecosystems, can pollute ground water when dumped and can cause injury and illness to humans. In addition, it contains lead particles which also contaminate any environment where they are dumped and extremely difficult to clean up. Lithium-based batteries Lithium batteries come in many different chemistries, the most commonly used for off-grid solar products are LFP (Lithium-iron-phosphate) or LMO (Lithiummanganese-oxide). When in storage, they present a risk of fire – they are a significant factor in warehouse fires due to uncontrolled thermal runaways (sometimes referred to as short-circuiting). Although LFP and LMO batteries have a lower fire risk than other compositions, companies should still make sure to discharge them fully and store them properly. In more developed markets there are e-waste management companies and recyclers that accept the other components and their fractions – plastics, glass, aluminium, copper, PCBs, etc. However, the absence of service providers in many countries represents a major obstacle for improved recycling. The WBG General EHS Guidelines, WBG EHS Guidelines for Waste Management Facilities and GOGLA’s e-waste toolkit, as an example of GIIP, provides an overview of management companies and gives guidance on how to select a service provider on their e-waste hub. The mandatory requirements related to e-waste in off-grid solar sector The borrowers will be required to (i) adhere to robust quality standards (Lighting Global or equivalent), including honoring the mandatory warranties); (ii) comply with the national laws on regulations, including those related to e-waste; (iii) have appropriate systems in place for hazardous waste management, in accordance with IFC EHS guidelines on hazardous waste management; and (iv) develop and commit to e- waste management plans, and (v) educating consumers on e-waste (as already required by the Code of Conduct). The summary of the e-waste management plans will be submitted as a part of the EARF borrower’s applications (as per guiding questions in the self -assessment questionnaire) and should be adapted and proportional to borrower’s scale and type of bu siness, drawing where feasible on WBG General EHS Guidelines, WBG EHS Guidelines for Waste Management Facilities and GOGLA’s e-waste toolkit. SIMA will provide additional guidance to help EARF borrowers to improve the e-waste management plans throughout the life of EARF, following emerging best practices on safe collection from customers, safe storage, safe transport, safe recycling/repurposing or disposal. Adoption of emerging good practices related to e-waste in off-grid solar sector GIIP as represented by GOGLA’s e-waste toolkit contains the up-to-date best practices on e-waste management in the off-grid solar, and the corresponding guidance to the off-grid solar companies on how to apply these best practices. The borrowers will draw on these resources along with WBG General EHS Guidelines and WBG EHS Guidelines for Waste Management Facilities in developing their e-waste management plans, and SIMA will draw on them in providing further guidance and capacity building (e.g. via webinars) to the borrowers. Since this is an evolving field, SIMA will draw on the WBG General EHS Guidelines and WBG EHS Guidelines for Waste Management Facilities as well as the latest versions of the GOGLA’s toolkit, which is anticipated to include further updates of the good p ractices. Guidance on Appropriate Storage of Batteries EARF borrowers will be bound per the borrower agreement to follow guidance on the appropriate storage of batteries, as outlined below. The right storage of batteries is important for regulatory as well as safety considerations. Risks can be mitigated by following good practices, as outlined below. It is important that all staff handling batteries should be properly trained on the handling of batteries, and adequate personal protection equipment (PPE) provided. The main risk of lithium-based batteries at end-of-life is fire. Lithium-Iron-Phosphate batteries (most common in off-grid solar) are the lowest risk in terms of fire but should still be treated with care. Fires from lithium batteries are due to uncontrolled “thermal runaways�, which are caused by either deep discharging, short circuiting or overcharging. Therefore, lithium batteries should be fully discharged prior to storage. Other key storage protocols include: • Avoid any damage to the cells, do not try to dismantle battery packs. • Cover the poles of the batteries with insulated tape. • Storage area should be sheltered from heat and rain. • Lithium batteries should always be stored in a separate area of the warehouse, to mitigate the risk of fire spreading in the event of an incident. • Batteries should be discharged, then stored in plastic containers covered with sand. The sand will absorb any thermal runaway, and create a glass around the battery, stopping the spread of any fire. Lead-acid batteries should be kept out of direct sunlight. Wet batteries (those that require an addition of distilled water in their lifetime) should be drained, and the acid stored in secure bins. Sealed batteries should not be opened and kept on a non-permeable surface. Lead-acid Batteries should be stored and transported on pallets. Similar sized batteries are placed next to each other. Every layer of batteries includes a layer of thick cardboard in between to absorb any leakage of battery acid. The batteries are stacked no further than 3 layers high. Once stacked, the pallets are wrapped and sealed with plastic wrap according to shipping requirements (criss-crossing the plastic for stability of the load) to be ready for transport. After arrangement in this manner, pallets can be stacked maximum 2 meters high. Guidance on Transportation of Spent Batteries In general, e-waste management companies will undertake all transport of the e-waste, collecting from off- grid solar logistics hubs. However, it is important to understand the hazards and best practice of transport as part of assessing waste management partners. Domestic Transportation Good practice for transferring of e-waste is the same as it would be for other hazardous waste; it should be transported in a sealed truck (to contain any leaks), dedicated solely to the transport of hazardous waste. The truck should also be labelled with appropriate signage and have a permit for the transport of hazardous waste. Drivers and other staff accompanying the waste should have appropriate safety gear. Local regulations often contain specific requirements or outlined responsibilities that companies should be aware of. For this reason, it is important to understand the transportation means and methods of your waste management partner. Transboundary Movement When waste crosses international boundaries, it is referred to as Transboundary Movement. It differs from domestic or national transportation and is therefore governed by international conventions (Stockholm, Rotterdam, Basel), along with local regulations. Compliance requirements can include, among others, requirements for specific vehicles and permits like the ones needed for domestic transportation. If e-waste is shipped without adhering to regulations and policies such as the Basel convention, it is possible that the shipment could either be stranded in the destination port or returned to the departure port for re- processing. In these situations, the waste can sometimes be dumped or incinerated causing unknown environmental damage and financial penalties. The EARF borrowers therefore are required to adhere to the requirements of the appropriate international convention if transporting e-waste across borders. Guidance on Recycling EARF borrowers are expected to pro-actively seek and identify recycling opportunities, where feasible, to mitigate the risk of inadequate treatment of spent products. In general, there is no “best practice� or “one-size-fits all� approach to handling company’s e-waste. The choice of which and how many partners to use depends on availability of service providers, which components/ fractions to recycle, operational and financial requirements, and environmental and safety standards. For off-grid-solar companies, it is common to only deal with one e-waste management company that plays the role of collector, dismantler and transporter, and selects the recycler/s and manages this relationship. An exception to this is from companies with lead-acid batteries where it is advisable to deal with the recycler directly for this component - this is advantageous from a financial and logistical perspective as well as ensuring the environmental, health and safety standards of the recycler. Selecting a waste management partner is a unique process for each company -the service provider must meet local regulations and are considered safe. For more guidance, please refer to WBG General EHS Guidelines, WBG EHS Guidelines for Waste Management Facilities and GOGLA e-waste briefing note 1 chapter on how to select suitable recyclers. Guidance on Consumer Awareness on E-waste and Take Back and Collection Beyond treating faulty products returned by customers, EARF borrowers are strongly encouraged to pursue pro-active take back plans, allowing customers to return spent products. Moreover, as per the GOGLA code of conduct, which the EARF borrowers are required to adopt, ‘The consumer needs to be made aware of the disposal requirements of the product at end-of-life, with particular attention to the battery. As appropriate, the company implements a collection scheme or informs consumers about other collection options (e.g. from other agencies)’. Take-back and collection is an integral part of a company’s e-waste management strategy and an opportunity to engage new and existing customers and strengthen the brand. It is also a risk mitigation activity; reducing health and environmental issues for consumers and communities, and avoiding brand damage through products entering the informal repair sector and returning to market with dubious quality. By leveraging the consumer relationship beyond the warranty period and encouraging repeat purchases, companies can ensure that the positive impact of access to clean, affordable electricity is maximised. Please consult WBG General EHS Guidelines, WBG EHS Guidelines for Waste Management Facilities and GOGLA e-waste briefing note 6 for more information on best practices. i. Disposal: Lead acid batteries are hazardous waste. Lithium ion batteries may also qualify as household hazardous waste.17 Solar company will ensure that the batteries are disposed in a particular designated area ensuring environmental and occupational health and safety in line with World Bank E&S standards and Environmental, Health, and Safety Guidelines of the World Bank Group. Solar company will also comply with the government regulations, if any, regarding disposal of any of the components used in the battery units. In general, batteries should be disposed of at facilities which are authorized and are operated in compliance with the national requirements on e-waste ___ 17 In some countries, they are classified as non-hazardous waste. Consumer awareness program is at the heart of all e-waste management activities. The companies must ensure that they implement an awareness program aimed at its consumers, informal sector waste collectors and transporters (if the company plans to use them in their waste management activities). The awareness should focus on the following aspects: i. Awareness about the E&S risk involved in unsafe disposal of e-waste; ii. Company supported e-waste collection and recycling activities iii. Awareness about incentives for safe disposal of e-waste. The company should prepare a do’s and don’ts for consumers with focus on e -waste. Sample do’s and don’ts Do’s: • Ensure that only Authorized Recyclers/dismantler handle your products and e-waste • call us at our toll-free number regarding any questions on product, and e-waste • Always drop your e-waste such as batteries, CFL bulbs, etc. when they reach the end of their life at your nearest e-waste collection points. Don’ts: • Do not dismantle or open your solar products on your own • Do not give e-waste to informal and unorganized sectors like scrap dealers/ rag pickers. • Do not dispose your product in garbage bins along with municipal waste that ultimately reaches landfills. The elements of the awareness program should be defined in the e-waste management plan. Appendix H – Annual Environmental and Social Monitoring Report (ESMR) (to Investors) (this format will be included in the loan agreement for EARF to submit it its investors) Reporting period: ESMR completed by (name, designation and contact details): ESMR reviewed by (name and designation): Date of the ESMR A. Portfolio Information For the reporting period, please provide the following (as applicable): A1. Type of energy access companies supported during the reporting period Type of company Number Africa South Asia East Asia Solar Home Systems Mini-grids Cookstoves Total A2. Information on energy access companies Please list all exposures (please add rows as needed): Compan Type and Investmen E&S E&S Does the GOGLA Describe Date of Key E&S Current y name, descriptio t type and Categor issues company have membe company’s last issues E&S location n of the amount y identifie (Y/N) r (Y/N) e-waste supervisio identified complianc company (US$ mn) d at ESM E&S managemen n by EARF during e status appraisal S capacit t practices supervisio (list y n them) Please attach copies of all E&S due diligence reports and ESAP for new investments made during the reporting period Please also attach copies of E&S monitoring reports and final legal agreements of Cat B investments. A3. Information on Rejected Applicants How many applicants were rejected during this reporting period? What were the main reasons applicants were rejected? e.g. high risk, insufficient E&S capacity, factors unrelated to E&S, etc. How many applicants had primary suppliers in Xinjiang, China? Of these, how many applicants were willing to change suppliers? B. Monitoring Data Employment Data - please disaggregate by product type (i.e. solar home systems, mini- grids, clean cookstoves) How many companies retrenched employees Please provide details on the following: since the last reporting period? - Number of companies - Total number of employees retrenched - Number of companies where retrenchment was significant (>25% of workforce) - Number of companies that completed a Job Protection Plan How many companies have had to furlough Please provide details on: employees or not renew contracts as a result - Number of companies of Covid-19? - Total number of employees furloughed - Total number of contracts not renewed - Number of companies that completed a Job Protection Plan How many companies have had to implement Please provide details on the number of measures with financial implications for companies, number of employees employees as a result of Covid-19? (e.g. pay affected, and measures implemented cuts, reduced shifts, etc.) How many companies have hired new Please provide details on: employees since the last reporting period? - Number of companies - Number of new employees - Male/Female - Direct/indirect employees/commission-based agents Number of full-time employees (excluding management and senior management) - Of which male - Of which female Number of senior managers (includes C-suite or equivalent (e.g. managing directors, partners) - Of which male - Of which female Number of managers (excluding senior management) - Of which male - Of which female Number of commission-based agents - Of which male - Of which female Occupational health and safety Indicators (to be provided for all portfolio projects) Company/ borrower names Total Total person Total Total number Number number hours worked number of of lost of of (annual) lost time workdays due fatalities workers occupational to injuries injuries In case of fatalities and high lost time incidents, please provide action taken reports for those specific borrowers. External communication mechanism and stakeholder engagement Is there a point of contact for dealing with Name: public enquiries and concerns related to E&S matters? Title: Phone/mobile: E-mail: How many complaints or grievances did you receive from members of the public or civil society organisations during the reporting period specifically with regards to portfolio companies and EARF’s E&S risk management? Summarise any issues raised in the complaints or grievances and explain how they were resolved. C. Impact Monitoring Please provide estimates of the following impact indicators based on cumulative results from the company-level monitoring reports. Energy Access - please disaggregate by product type (i.e. solar home systems, mini-grids, clean cookstoves) Indicator Definition Unit Value Notes Total number Total number of Number of of customers customers during the customers reporting period Customer Average payment rate Percentage payment rate of existing customers of customers Number of Cumulative number of Number of people with people who have ever people improved lived in a house with energy access, an improved off-grid cumulatively energy source (i.e. solar product/mini-grid connection/clean cookstove) Number of Number of people who Number of people with currently live in a people improved house with an energy access, improved off-grid currently energy source (i.e. solar product/mini-grid connection/ clean cookstove) Economic Activity - please disaggregate by product type (i.e. solar home systems, mini-grids, clean cookstoves) Indicator Definition Unit Value Notes Number of Number of customers Number of people who are undertaking people undertaking more economic activity as a result of more economic using the off-grid activity energy source Number of Number of off-grid Number of people using solar customers using people products to their system to support support an enterprise, enterprise or income generating activities e.g. charging phones for a fee or opening a shop at night Number of Number of households Number of households that are generating households generating additional income as a additional result of the off-grid income energy source e.g. by opening a business for longer, or using their energy source to generate income Additional Cumulative amount of USD$ income additional income generated, generated as a result cumulatively of off-grid energy source ownership/connection; over the expected lifetime of the product/connection CO2e Reduction - please disaggregate by product type (i.e. solar home systems, mini-grids, clean cookstoves) Indicator Definition Unit Value Notes CO2e emissions Estimated metric Metric avoided tonnes of carbon tonnes of dioxide equivalent CO2e averted as a result of the off-grid energy source in the reporting period, e.g. by reducing kerosene lantern use, cooking fuels Energy Spending - please disaggregate by product type (i.e. solar home systems, mini-grids, clean cookstoves) Indicator Definition Unit Value Notes Savings on Estimated amount of USD$ energy average US$ savings expenditure, by on energy-related household expenditure resulting from the off-grid energy source during the reporting period, per household Savings on Estimated amount of USD$ energy US$ savings on energy- expenditure for related expenditure pico-solar, resulting from the off- cumulatively grid energy source, in aggregate of all sales Financial Inclusion - please disaggregate by product type (i.e. solar home systems, mini-grids, clean cookstoves) Indicator Definition Unit Value Notes Number of Number of people with Number of people current access to clean people currently energy financing benefitting from clean energy financing (PAYGo only) D. E&S issues in portfolio companies Has any portfolio company been associated with the following issues? E&S issues Name of the company Negative attention in the media or non-governmental organizations  Non-compliance with national environmental, health & safety or labour laws and  regulations Fatalities or serious injury  Major accidents (e.g. e-waste management, contamination, fires, traffic others  please specify) Non-compliance with the applicable E&S requirements  Non-compliance with covenants included in the legal agreements, including but  not limited to: - Providing public health information related to COVID-19 to customers and staff - Maintaining or improving the share of women in workforce - Adopting and promulgating a Gender Action Plan Legal actions, fines, penalties or increased permit charges  Retrenchment of workers  Job creation  Non-Compliance with an agreed Environmental and / or Social Action Plan  Complaints or grievances from regulatory agencies, workers, interest groups, or  local communities Positive reports in media  If the answer to any of the above is yes, please provide details on the issue and what corrective actions plans have been agreed with the company in response. E. Information on Implementation of EARF’s Environmental and Social Management System (ESMS) and E&S Capacity Policies & Processes (Yes/No) Description If applicabl e Have there been any changes to EARF’s Yes/No If yes, please provide a copy of the updated policy E&S Policy and ESMS? If yes, please including date when it was issued and reasons for the same. provide a copy of the updated ESMS. Please confirm that EARF’s ESMS remains in place and has not been reduced in scope or objectives. Please summarise any E&S training / Provide details on the number of people trained capacity building provided to EARF staff and topics covered. with E&S responsibilities. Give details of companies rejected on environmental, health, safety or social grounds Please describe any difficulties and/or constraints regarding ESMS implementation Please describe what measures EARF has taken to ensure borrowers comply with E&S requirements, including Exclusion List, national law, and EARF’s ESMS. Please describe what assurances EARF has in place to ensure modern slavery, Gender-Based Violence and Harassment (GBVH), and child exploitation and/or abuse are prohibited in borrowers’ operations and supply chain. Please confirm EARF’s human resources policies and practices remain in place and have not been reduceds in scope or application. Please confirm EARF complies with ILO Conventions and local labour laws. How many companies did you Yes/No If Yes, please provide details of supervision activities and supervise during the year? Did you findings. undertake E&S supervision as part of your supervision? How many companies did you visit Name and location during the reporting period? Do you know whether your clients and Yes/No their projects are in compliance with the relevant environmental, health and safety regulations of the host country? How do you determine this? Have you invested in companies that Yes/No Please include details of such companies and include projects that involved land projects acquisition? How do you know? Have you invested in companies that Yes/No Please include details of such companies and include projects that have created projects impacts on indigineous peoples? How do you know? Have all companies adopted a Gender Yes/No If Yes, please include details of such companies Action Plan? and their plans Have all companies maintained or Yes/No If Yes, please provide updated data on increased the share of women in their workforce composition workforce? Do all companies have e-waste Yes/No Please include details of such companies and management plans? Have you reviewed projects the plans of all companies? How do companies that don’t have e- waste management plan manage their waste? Capacity Please specify any staff reductions or Number of lay offs: additions at EARF during the reporting Number of staff additions period. Please specific number of employees at Male Female EARF according to: Permanent: Temporary: Middle Management: Top Management: Youth (permanent employees age 25 and younger): Did you use the external consultant Please provide details during the reporting provide? If yes, for what activities and on how many projects? Have you allocated budget for ESMS Please provide budget details. implementation? Monitoring How many companies provided E&S Number of companies monitoring report during the reporting period? Do you check for ongoing compliance of Yes/No If yes, please describe the process including any your investments with national Environmental and Social considerations if applicable regulation and any other requirements? Appendix I – Environmental and Social Monitoring Report (ESMR) (Portfolio companies to EARF) (to be submitted by portfolio companies to EARF) Reporting period: ESMR completed by (name, designation and contact details): ESMR reviewed by (name and designation): Date of the ESMR A. Portfolio Information What products or projects does the company specialize in? Please check all that apply.  Solar Home Systems  Mini-grid projects  Cookstoves Please provide the following portfolio information (for off grid solar companies) Types of off grid Total number of Total number of Total number of solar products products sold till customers customers date Female Male Urban Rural For the reporting period, please provide the following (as applicable for mini grid companies): Poject Type and Investme E&S Was an Did the project involve Describe Describe Current name, descripti nt type Catego E&S Land Impact Biodiversi stakehold project’s e- E&S locatio on of the and ry assessmen acquisiti on ty er waste complian n project amount t on indigeno impacts engageme manageme ce of the (US$ mn) undertake us nt nt project n? Provide peoples activities practices summary. Please attach copies of all E&S assessment and management for new mini-grid projects undertaken during the reporting period If any of the project involved land acquisition, impacts on indigenous peoples and/ or biodiversity, please provided details on the extent of the impacts and how these impacts were managed. Provide supporting documentation. B. E&S issues in Portfolio Projects Has any project been associated with the following issues? E&S issues Name of the project Negative attention in the media or non-governmental organizations  Non-compliance with national environmental, health & safety or  labour laws and regulations Fatalities or serious injury  Major accidents (e.g. e-waste management, contamination, fires,  others please specify) Non-compliance with the applicable E&S requirements  Non-compliance with covenants included in the legal agreements  including but not limited to: - Providing public health information related to COVID-19 to customers and staff - Maintaining or improving the share of women in workforce Adopting and promulgating a Gender Action Plan Legal actions, fines, penalties or increased permit charges  Non-Compliance with an agreed Environmental and / or Social  Action Plan Complaints from regulatory agencies, interest groups, or local  communities Positive reports in media  If the answer to any of the above is yes, please provide details on what corrective actions plans have been agreed with the company in response to the above E&S issues Information on E&S Performance of Portfolio Projects Occupational health and safety Indicators (to be provided for all portfolio projects) Project name Total Total person Total Total number Number (specify mini grid name or number hours worked number of of lost of provide this information at of (annual) lost time workdays due fatalities the company level workers occupational to injuries injuries In case of fatalities and many lost time incidents, please provide action taken report. C. Information on Environmental and Social Management System (ESMS) Policies & Processes Description Have there been any updates to the Yes/No If yes, please provide a copy of the updated E&S Policy and ESMS? policy including date when it was issued and reasons for the same. Has senior management signed off on Yes/No If yes, please provide the date and internal the updated policy/procedure? communication indicating the same. Please list down the E&S training conducted during the reporting period Give details of projects rejected on environmental, health, safety or social grounds State any difficulties and/or constraints regarding ESMS implementation Have there been any updates to the Yes/No If yes, please provide a copy of the updated policy Gender Action Plan? including date when it was issued and reasons for the same. Capacity Please provide details on current E&S staffing in the company . Have there been any changes in the E&S staff? If yes, provide reasons for the change. Did you use the external consultant Please provide details during the reporting provide? If yes, for what activities and on how many projects? Have you allocated budget for ESMS Please provide budget details. implementation? Please summarise any E&S training / capacity building provided to EARF staff with E&S responsibilities. Mini-grid companies only: How do monitor the E&S performance of all your projects? Do you check for ongoing compliance of Yes/No If yes, please describe the process including any your projects with national regulation Environmental and Social considerations if and any other requirements? applicable Is there an internal process to report Yes/ No If yes, please describe the process E&S issues to your senior If no, how are senior management alerted to such management? issues. D. External communication mechanism and stakeholder engagement Grievance mechanism and stakeholder engagement Is there a point of contact for dealing with public Name: enquiries and concerns related to E&S matters? Title: Phone/mobile: E-mail: How many complaints or grievances did you Total no. of grievances received: receive from members of the public or civil society organisations during the reporting period Grievances closed: specifically with the E&S aspects of your projects? Summarise any issues raised in the complaints or Average time taken to close a grievances and explain how they were resolved. grievance: Key issues raised in grievances: 1. 2. 3. 4. 5. Is there a channel for internal complaints and Yes/No whistleblowers to report fraud, impropriety, If Yes, provide detailed on harassment, or other violations? communication channel. How many complaints or grievances did you Total no. of grievances received: receive from staff or agents during the reporting Grievances closed: period specifically with the E&S aspects of your Average time taken to close a projects? Summarize any issues raised in the grievance: complaints or grievances and explain how they Key issues raised in grievances: were resolved. Please provide details of all stakeholder engagement activities undertaken during the reporting period. Provide details on when the activities were undertaken, how many people participated, key issues discussed. Please provide minutes of some stakeholder engagement activities. Employment Data Has there been any retrenchment of employees as If yes, please provide details on: a result of Covid-19? Was a Job Protection Plan - Number of employees completed and submitted to SIMA? - Male/Female - Direct/indirect employees/commission-based agents - Job Protection Plan completed (yes/no) Have any employees been temporarily furloughed If yes, please provide details on: or contracts not renewed as a result of Covid-19? - Number of employees - Male/Female - Direct/indirect employees/commission-based agents - Job Protection Plan completed (yes/no) Have other measures, such as pay cuts or reduced If yes, please provide details on what measures have shifts, been implemented as a result of Covid-19? been implemented and number of employees affected. Was a Job Protection Plan completed? Have there been any new hires? If yes, please provide details on: - Number of employees - Male/Female - Direct/indirect employees/commission-based agents Number of full-time employees (excluding management and senior management) - Of which male - Of which female Number of senior managers (includes C-suite or equivalent (e.g. managing directors, partners) - Of which male - Of which female Number of managers (excluding senior management) - Of which male - Of which female Number of commission-based agents - Of which male - Of which female E. Impact Monitoring Please provide estimates of all impact indicators where possible. Refer to the GOGLA Standardised Impact Metrics Guidance Paper and the GOGLA Impact Calculator Tool for more information on methodology and how to calculate these metrics. Please indicate in the Notes field for each indicator whether the GOGLA methodology was used, and if not please specify how the indicator was calculated. Energy Access – please disaggregate by product type (i.e. solar home systems, clean cookstoves, etc.) where applicable Indicator Definition Unit Value Notes Total number of Total number of Number of customers customers during the customers reporting period Customer Average payment rate Percentage payment rate of existing customers of customers Number of Cumulative number of Number of people with people who have ever people improved lived in a house with energy access, an improved off-grid cumulatively energy source (i.e. solar product/mini-grid connection/clean cookstove) Number of Number of people who Number of people with currently live in a people improved house with an energy access, improved off-grid currently energy source (i.e. solar product/mini-grid connection/ clean cookstove) Economic Activity – please disaggregate by product type (i.e. solar home systems, clean cookstoves, etc.) where applicable Indicator Definition Unit Value Notes Number of Number of customers Number of people who are undertaking people undertaking more economic more economic activity as a result of activity using the off-grid energy source Number of Number of off-grid Number of people using solar customers using people products to their system to support support an enterprise, enterprise or income generating activities e.g. charging phones for a fee or opening a shop at night Number of Number of households Number of households that are generating households generating additional income as a additional result of the off-grid income energy source e.g. by opening a business for longer, or using their energy source to generate income Additional Cumulative amount of USD$ income additional income generated, generated as a result cumulatively of off-grid energy source ownership/connection; over the expected lifetime of the product/connection CO2e Reduction – please disaggregate by product type (i.e. solar home systems, clean cookstoves, etc.) where applicable Indicator Definition Unit Value Notes CO2e emissions Estimated metric Metric avoided tonnes of carbon tonnes of dioxide equivalent CO2e averted as a result of the off-grid energy source in the reporting period, e.g. by reducing kerosene lantern use, cooking fuels Energy Spending – please disaggregate by product type (i.e. solar home systems, clean cookstoves, etc.) where applicable Indicator Definition Unit Value Notes Savings on Estimated amount of USD$ energy average US$ savings expenditure, by on energy-related household expenditure resulting from the off-grid energy source during 1 the reporting period, per household Savings on Estimated amount of USD$ energy US$ savings on energy- expenditure for related expenditure pico-solar, resulting from the off- cumulatively grid energy source, in aggregate of all sales Financial Inclusion – please disaggregate by product type (i.e. solar home systems, clean cookstoves, etc.) where applicable Indicator Definition Unit Value Notes Number of Number of people with Number of people currently current access to clean people benefitting from energy financing clean energy financing (PAYGo only) 2