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This Environmental Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Environmental Review Summary
Garment and Apparel (Without Fabric , Excluding Footwear)
Gbl Ind, Manufact, Agribus & Services
Grupo M, S.A.
Date ERS disclosed
May 2, 2003
Date revised ERS disclosed
April 1, 2005
Local Disclosure Date
May 3, 2003
Invested: March 22, 2004
Signed: January 16, 2004
Approved: October 9, 2003
This project will provide corporate financing to Grupo M, a vertically integrated apparel manufacturer in the Dominican Republic (DR) producing knits and woven products for the US market, to finance ongoing capital expenditures, long term working capital needs and to refinance existing obligations, as well as a loan to finance an export zone (Zona Franca) promoted by Grupo M focusing on garment production in the Republic of Haiti.
Founded in 1986, Grupo M is the largest private sector employer in the DR with 12,000 employees working in 22 production facilities (including JVs) and is the largest apparel producer in the Caribbean/Central American area. Grupo M is a supplier to major US brand name companies including Liz Claiborne, Polo, Levis, Hanes and Tommy Hilfiger. In March 2002, Grupo M acquired Tee Jays, a brand name t-shirt and casual clothes company based in Alabama, USA and supplier to Wal-Mart.
The Haiti Zona Franca Project is a phased development of a 500,000m2 site on the border of Haiti and DR. Phase 1 of the investment program will develop an area of 150,000m2 including
- site clearing and access roads and utilities,
- training center, staff facilities (medical services and cafeteria) and customs clearing offices, and
- 3 factory buildings owned by Grupo M which will produce garments for Levis, Dockers and Tee Jays, with completion expected in December 2003. (One factory, the administration building, cafeteria, clinic and training center will be completed by July 2003). When complete, Phase 1 will generate 1,500 direct jobs and up to 3,000 indirect jobs for Haitian workers in the adjacent area.
If successful, Phase 1 of the Haiti Project should generate demand from outside customers producing apparel, footwear and other products who would lease or purchase facilities built to order by the zone development company, which will be 100% owned by Grupo M. The second phase of development, which would build up to 11 more buildings depending on demand, together with Phase 1 would generate 21,000 direct and indirect jobs. The total site area would allow up to 40 factory units providing as many as 20,000 direct jobs and 40,000 indirect jobs in further phases.
Environmental Category B disclosure requirements
IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors.
The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.
To view the Summary of Project Information(SPI) for this project,
Environmental and social issues
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor as well as a site visit by an environmental and social specialist in April 2003. The following potential environment, health and safety and social impacts of the projects were analyzed.
- Corporate Environmental and Social Management Systems and capacity;
- Land acquisition and economic displacement;
- Air emissions and noise;
- Water supply and discharge;
- Solid and liquid waste disposal;
- Use of CFCs;
- Occupational health and safety including employee exposure to noise and dust;
- Fire protection and emergency response;
- Trans-boundary and influx migration issues;
- Community development initiatives including HIV/AIDs policy and programs;.
Proposed mitigation for environmental and social issues
The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. The project team completed due diligence for the specific Haiti Zona Franca project by a visit to the site and meetings with some Haitian officials. As well the team appraised Grupo M’s capacity for Environment and Social Management at a corporate level by visiting a number of operations located in the Caribbean Industrial Park in Santiago. An Environmental and Social Action Plan is attached to this document outlining some additional items the sponsor has committed to complete for this project.
Grupo M Ouanaminthe Industrial Park, Zona Franca, Haití
Grupo M is the operating unit of La Compagnie De Developpment Industriel, S.A. (CODEVI) in the Republic of Haiti, for the operation of the free trade zone, “Zona Franca” in Ouanaminthe, a town on the border of Haiti, with a population of approximately 70,000. The industrial park is located 55km east of Haitian Cape and 1km from Dajabón (population 64, 000) in the Dominican Republic. The project will 13 industrial buildings and will be constructed in phases as outlined above.
Grupo M as the operator of the Zona Franca is constructing the infrastructure and services for the industrial park and will provide potable water, wastewater treatment plant, electric power, training center, telecommunications, medical center, social initiatives such as a day care center, and immigration and customs services. As well as renting facilities/lots, operating and maintaining the industrial park throughout it’s 25 year lease from the Republic of Haiti.
Grupo M has prepared an Environmental Impact Assessment (EIA) and Environmental Management Plan (PMAA) for the construction and operation of the industrial park. The Republic of Haiti does not have any legislation that requires the preparation and public consultation of the EIA, however, as part of the corporate policy of Grupo M, the company will provide a copy of the EIA to local authorities and the community church parish offices for review by any interested members of the public. The project did not need an environmental license from the authorities of the Republic of Haiti to commence construction activities.
Grupo M and their consultants held two meetings with the local population in December 2002 where they explained the Zona Franca project, discussed issues raised in the EIA and answered questions from the community. This project is generating a great deal of interest in the two countries and raising expectations among the general population regarding employment opportunities and infrastructure development in a particularly poor and underdeveloped area of Haiti. The consultants who have completed the EIA are now embarking on a regional planning exercise in the DR border provinces of Monte Cristi and Dajabón, but will also include the town of Ouanaminthe in their study. Issues to be covered include natural resource protection, social, economic and cultural issues, an infrastructure needs assessment, capacity building for the local level of Government of Haiti (GoH), and development of land use plans. The high expectations of the local population and impacts of potential in-migration were raised and discussed with Grupo M and their consultants and this Regional Plan will be a first step in managing these issues. The sponsor will pursue local hiring policies through their training centers as another method to control in-migration to the area.
The relationship between Haiti and Dominican Republic has been historically very difficult and complex. However recently there seems to have been a commitment from both Governments to work together to develop the border areas, in order to provide employment opportunities and to control the flow of Haitians to the DR, which has created many social problems and a strain on infrastructure in the DR. The Dominican Republic’s Army has guards at the border approximately every 300m to control immigration. Grupo M have hired private security people from Haiti, and are also working closely with the Haitian Police Force who are also supplying security at the site. A boundary fence is currently being constructed as are the border/customs gates and crossings. The community is being consulted on the Zona Franca concept though community meetings and an opinion questionnaire carried out by Grupo M’s Corporate Relations Department and a group of stakeholders from the community toured the Caribbean Industrial Park in the DR. Both Grupo M and Levi Strauss (the primary partner in the initial Zona Franca development) are very sensitive to the project and any potential issues on labour and human rights which may arise as the Haitian project is developed.
One of the components of the EIA was a Social Compensation Plan (SCP), which laid out a framework for addressing the compensation issue regarding the economic dislocation of a group of 53 small and large land holders/farmers who were utilizing the land which has now been leased to Grupo M by the Government of Haiti. The GoH committed to pay compensation for the land as well as find new land for those farmers who wish to have access to land to farm. Some farmers of larger holdings were not interested in new land and took strictly cash compensation. However, smaller farmers and some sharecroppers, who used the land for subsistence farming, and sold extra produce in local markets, wanted access to new land. Grupo M, in order to help expedite this process, have asked their consultants and a local NGO (Don Bosco/Technical School) working in the area to search for new land with the affected people and to increase their agricultural production through improved farming methods with training. Grupo M is very conscious of empowering local people and recognizes the need to re-establish affected people’s income streams. There will be an associated micro credit scheme, a local farmers cooperative as well as a foundation set up to implement community development initiatives in Ouanaminthe. Additionally, local people are being trained to work in the new factory (to open in July 2003) in both Ouanaminthe and Fort Liberte, as well as in the factories located in the DR in the Caribbean Industrial Park.
Further refinement of the Social Compensation Plan has been agreed to by Grupo M, with guidance to their consultants from IFC on additional work to be completed in the next two months, to prepare the SCP in accordance with OD 4.30 (Involuntary Resettlement). This work would include obtaining documents from the GoH on the exact details of the farmers and other affected people, the amount of land and compensation and status of payments, completion a socio-economic baseline survey of the affected people, further definition of roles and responsibilities of the GoH, Grupo M, the NGO, Grupo M’s foundation currently being created, budget and schedule of implementation of the Plan as well the set up of the micro credit scheme and the cooperative, and monitoring and evaluation. Included would be extensive consultation program with the affected people who live in Ouanaminthe on the SCP and their involvement in the ongoing process of implementation.
Corporate Grupo M
The current activities of Grupo M in the Dominican Republic includes: knits, cutting, wash and finish, sewing, coloring, pressing and packaging. In total, Grupo M has 18 facilities (not including JVs) in the Dominican Republic. Currently, the environmental legislation of the country requires that the company prepare for each of the facilities, a PMAA as well as one PMAA for the entire Caribbean Industrial Park. Grupo M has committed to prepare an Environmental Management System for the operations in the Dominican Republic.
Grupo M has its own wastewater treatment plant (WWTP) and follows the standards established by the Government of the Dominican Republic (recently established) as well as those used by Levi’s, which are more stringent. The standards used are similar to the World Bank standards. Liquid effluent generated by sanitary use is pre-treated in septic tanks and then is injected in property wells. Domestic waste is collected on a regular basis and transported to the sanitary landfill. Waste from industrial material (cloth) and cartons are sold to recycling companies.
Employees are well trained in fire protection and emergency response, and are issued with appropriate PPE (Personal Protective Equipment) in high noise areas or areas with excessive dust. The health clinic does annual monitoring of employees who work in these areas for hearing or respiratory damage.
Grupo M long ago recognized the need for a social license to operate and have worked hard to improve the social and economic well being of their employees, families and the communities in which they operate. All employees and their immediate families have access to many medical services offered at clinics in the Industrial Park where they have facilities. Grupo M provides subsidized medical treatment, dental and eye care, health programs regarding prenatal care, cancer detection, and family planning. Free inoculations are given to all children through age five. In order to support quality child care, Grupo M subsidizes several day care centers. There are Pregnancy Clubs and lactation centers in collaboration with the La Leche League International.
Aware that employee empowerment is a key ingredient to their success, Grupo M supports company wide continuous education programs including monthly classes in basic personal guidance on money matters to technical and engineering courses. Grupo M subsidizes advanced education for employees who maintain a certain GPA, offer scholarship funding programs for employee family members and specialized programs at universities abroad. At all of their facilities Grupo M have established top training facilities and career enhancement programs. The company constructed a community center for educational, cultural and religious seminars, and this facility is also used by local schools. As well, Grupo M sponsors cultural events such as free concerts and art exhibitions. In 1998 the company in partnership with the Ecological Society (SOECI) established a 6500 acre mountain forest range rejuvenation project. Grupo M plans to offer a basic health care package, as well as some of their educational and other training initiatives to their Haitian employees, eventually replicating most of the programs they offer in the Dominican Republic operations over time.
Although they do not have a specific company policy on HIV/AIDS, the company has been working for almost 5 years with a local institution to teach “health messengers” about HIV/AID and other Sexually Transmitted Diseases, who discuss issues with employees and distribute condoms and contraception at no cost. The medical staff running the health programs are very interested in further developing the companies capacity on HIV/AIDS, and they have recently applied for funding through a CIDA (Canadian International Development Agency) project. They also recognize that the problem may be much more acute in the new Zona Franca, recognizing that Haiti has a fairly significant HIV/AIDS prevalence. They would like to discuss this issue further with the IFC Against Aids to explore potential partnerships and have some external input.
One of Grupo M’s largest customers is Levi Strauss and Company (LS&CO) and Docker/Levi products are produced in the DR and will be produced in the Haitian Zona Franca. In 1991 LS&CO established their code known as Global Sourcing and Operating Guidelines (
). This code directs business practices such as fair employment, worker health and safety and environmental standards. All facilities that manufacture or finish a Levi’s product must sign on and comply with the Terms of Engagement (TOE). If a contractor is unable to meet a TOE after an Audit and Corrective Action Plan is implemented, LS&CO will terminate their business. Grupo M is in compliance in all it’s facilities with many of their customers requirements, but the LS&CO Code is the most stringent and all of Grupo M’s facilities, regardless of whether they make Levi’s products, are compliant with the TOE. LS&CO also works with several NGOs for input and recommendations for improving their world wide internal monitoring programs, such as the Ethical Trading Initiative (
). Additionally, the Levi Strauss Foundation has been giving grants to communities in many countries where their products are sourced. They currently fund Mujeres en Desarrollo, a non profit organization in the DR that motivates young people to change risky behavior by informing them about HIV/AIDs. It is likely that LS&CO will want to partner with Grupo M and local NGOs in Haiti on potential community health, education or environmental projects. IFC’s Corporate Citizen Facility may also be an interested partner with Grupo M on an as yet unidentified project, but possible a community development initiative.
September 11, 2003
Social Compensation Plan Update
Since disclosure of the Environmental Review Summary (ERS) in May, 2003 a Social Compensation Plan (SCP) pertaining to the farmers and landowners directly affected by the site location of the Zona Franca Industrial Park has been under preparation. The SCP has been devised by a team working on behalf of Grupo M in close consultation with those directly affected and with the active participation of IFC.
Completion of the SCP was complicated by the fact that verification of the ownership status and who previously held title to portions of the 57 hectares constituting the Zona Franca proved to be more difficult than expected due primarily to inadequate record keeping. More specifically, it has proven to be the case that that there were in fact more land owners and users than the original number identified in April.
As a result of additional field work by the consultants including further direct engagement with those affected as well as verification by the Government of Haiti , the numbers of people who are eligible for compensation for land as well as rental income derived from crops growing on that land, increased substantially. The up to date totals are now 95 small scale farmers of whom 56 are landowners with legal title to portions of the 57 hectares and 39 agricultural occupants who either rented the land or were sharecroppers and paid for their use of the land with crops instead of cash to the owners.
From April through to the present, the consultants retained by Grupo M have worked to establish an accurate inventory of the various categories of affected people, and developed a compensation and technical assistance package and program acceptable to the affected farmers.
Some new key components which have been developed and added since the original SCP was outlined include a grievance mechanism to deal with any disputes over compensation which may arise during the implementation of the SCP; and more operational definition on how the Coordination Office of the SCP will implement the SCP in consultation with affected farmers, the local community and civil society.
In mid-August summaries of the Plan were posted for public review in English, Spanish and Creole locally and on the IFC/World Bank Info Shop web site. As of September 9, 2003, the completed SCP has been disclosed at various locations for local review, in Spanish (Dajabon) and Creole (Ouanaminthe), as well as in Santiago, and all documents have been posted on the Infoshop web site. A further update was posted September 11, 2003 to correct some typographical errors and incorporate explanatory annexes. The ERS, originally posted in May, has also been revised to reflect these updates.
Labor Update -- March 2005
In February 2005, agreement was reached between Grupo M and Sokowa, a Haitian labor union, to resolve a dispute between the two parties. In the interest of supporting the future viability of Grupo M's operations in Ouanaminthe, Haiti--known as Codevi-- and given the compelling job creation and development benefits of the enterprise, IFC proposed and paid for the bi-national mediation team (Haitian-Dominican) which facilitated the realization of this agreement. Reaching this accord involved significant compromise by both parties, and represents a significant achievement. More importantly, and assuming the agreement is well implemented, it affords an opportunity for Codevi to reach its full potential.
A joint statement issued by Grupo M's Codevi management and Sokowa announcing the agreement follows below:
JOINT PRESS RELEASE OF CODEVI AND SOKOWA
CODEVI Industrial Park Administration and the SOKOWA Labor Union, is proud to announce to the National and International public opinion that last Saturday February 5th, the Mediation Process was completed and agreement was reached on the differences that led to the events of June/2004.
The Mediation Process was executed efficiently and professionally under the leadership of Attorneys Dr’s Porfirio Hernandez Quezada and Serge Henry Vieux, whom additionally helped stage the guidelines towards a sincere and transparent labor policy in CODEVI, based on absolute respect of Freedom of Association and the Internationally recognized workers rights. Special attention was given to the Internal Labor Code and the Haitian Labor Code in this process.
Within the Protocol of the Agreement between the parties, consideration was given to create an ideal environment for social dialogue that would permit the development of labor peace and increase of factory productivity.
We would like to point out that at the moment of this announcement, many of the points included in the mentioned Agreement have already been executed successfully.
Both parties agree and consider that there is sufficient confidence now in the CODEVI Industrial Park of Juana Mendez for the installation of new Factories and opening of new jobs, that will greatly benefit the town oh Juana Mendez as well as the Haitian country in general./
Written in Juana Mendez , February 14th, 2005.
For CODEVI For SOKOWA
Luis Gil Borgella Telor
Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.
Monitoring and compliance
IFC will evaluate the project’s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: (i) the status of implementation of any measures contained in the Environmental and Social Action Plan as attached and (ii) ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.
Environmental and Social Documentation
The following supporting documents provide further details of environmental and/or social issues:
Environmental and Social Action Plan is attached below:
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SCP FINAL+Annexes ENGLISH-09 10 03.pdf
Final SCP Spanish Executive Summary Sept 09 03 for disclosure.pdf
PCS Spanish Version without exec summary Sept 9 03.pdf
PLAN KONPANSASYONSOSIALVlora_Full Creole version revised.pdf
SCP Final Executive Summary Creole 09 10 03.pdf