EHS Due Diligence Study Project: EHS DD as per the IFC Performance Standards, World Bank EHS Guidelines, applicable legal requirements and International Good Practices
A comprehensive risk based EHS due diligence report was prepared and presented to the investor. Apart from the regular contents like significant business risks and disruptive issues, it had a list of actions expected to be delivered in sequence as per priority to not only safeguarding the goodwill of the business and brand in the global market but to enhance the brand by ensuring almost zero EHS incidents.
EHS Due Diligence Study – The Challenge
Tea estates were located in remote places of Assam and Dooars (The foothills of Darjeeling) usually considered as the quality tea growing region of India. The estates are governed by the ‘Plantation Labour Act’ of India. Most of them have an integrated factory (processing unit) that is governed by ‘The factories Act 1948’ and corresponding state rules. Being remotely located and labour intense industry since inception, it follows its own Dastur (code of conduct).
Most factories are established between the late 19th century and early 20th century. The factory layouts are old with conventional robust and slow-moving machineries. Modernisation with the concept of EHS seems to be a task that has never being attempted or thought before. It was equally difficult to convince the operation manager the concept of EHS and assessment of risk as it was with the supervisors or other maintenance staff down below. PPE were thought to be additional hassle and hindrance to the jobs.
It is a fact that being traditionally old, practices of manufacturing in the factories are not so modernised and inherently the factory possess less hazards or risk in comparison with any other sector with complex manufacturing. Despite it is also not accident foolproof. Many instances were found of accident caused due to STF (Slip Trip and Fall), fall from height, electrical shock and caught in between machineries during maintenance activities because of practising unfair means of approaching work renowned to be ‘Jugar’. Fire in many tea factories is ultimate and engulfed the whole establishment turning to debris, yet the approach is, ‘it will never happen to my one’.
Since the task was to balance in between sentiments of locals vs. the requirement of IFC performance standards, world bank EHS guidelines, industry good practices and Indian statutes to deliver a due diligent gap report with recommendations of the action plan.
Breaking the notion was utter challenging and it would not have been possible without the prudent and timely intervention of top management.
EHS Due Diligence Study – How we did it
In conclusion, the EHS Due Diligence report containing potential EHS risk exposures which need interventions. Most importantly the outcome was for improving the production, profitability and living & working conditions of the tea workers. Certainly they are fact based inputs for management to decide their next course of actions.
Onsite job was a presentation of meticulous preparation by a team of EHS Due Diligence experts having sound knowledge of tea process and management systems. Calibration meetings were arranged to decide on methodology and approach.
An in-house checklist and score sheet based on qualitative risk analysis method and safety management system approach was prepared for data collection. The checklist consists of all the elements mentioned in WBG–EHS and related Indian legal requirements, customised on every process in sequence and all applicable work areas thereby coverage was almost foolproof. The checklist also covered industrial hygiene to an extent that could be rated through qualitatively.
Identifying Hazard and Analysis of Risk and Aspect – Impact Analysis were performed to rate them on the basis of consequence and likelihood. The results of analysis were expressed qualitatively and ratings were made to prioritise the action plan. Risk analysis was done to set action plans that are necessary on immediate or short-term, mid-term and long- term basis to determine and priorities budgets.
Then comes the turn to suggest or recommend. The recommendations are not bookish or theoretical but based on the practical experience and realisation of the entire team jointly discussed and is achievable. Finally, a comparative study between all the estates within the company was carried out to draw attention of management, determine and prioritise tasks.
Role of Consultivo in Transaction Advisory
There are ever growing demands by investors, the markets and other stakeholders which require an understanding of the broader impact of Environmental, Social and Governance – ESG issues on business. For Financial and Impact Investment sectors, ESG issues are pivotal to business risk management.
Recognizing the importance of these non financial issues to transactions like Mergers, Acquisitions, IPOs, Joint Venture, and supply chain governance, Consultivo maintains a competent team of professionals dedicated to ESG due diligence and transaction support.
We review both the tangible and intangible ESG risks and liabilities associated with a transaction, as well as identifying ESG elements which will provide ongoing value post deal.
Consultivo offers different other forms of transaction support due diligence solutions:
A comprehensive report was prepared and presented in front of management which was like a list of actions expected to be delivered in sequence as per priority to not only safeguarding the prestige of business and premium brand in the global market but to enhance the brand by ensuring almost zero EHS incidents.
This EHS Due Diligence helped the company to achieve its mission to obtain the desired financial support. Initially, the task was assigned to ten estates of the company which were relatively old and required financial support to recuperate business. But, later seeing its impact and long term business benefits, the top management has decided to carry out the exercise on all its remaining estates in the next two phases.
Today, the company is leading the Indian agribusiness and tea sector by accomplishing to be the most trusted and ethical producer of quality tea and providing quality work environment and lifestyle to its employees.
Tool used for this EHS Due Diligence Study:
Survey, Interview, Analytics & Statistical Tools