Environmental and Social Performance Report

45900 Annual Report 2014

2014 Environmental and Social Performance Report for the PRC: Municipal Water Distribution Infrastructure Development Project

Prepared by Water Affairs Group Limited for the Asian Development Bank (ADB)

This environmental and social performance report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. OUTLINE OF AN ANNUAL ENVIRONMENTAL AND SOCIAL PERFORMANCE REPORT

Please provide responses to the questions below. Please include additional sheets or attachments as required to provide details on questions that have been answered Yes. (Name of The Company) is required to submit the annual performance report to ADB.

Name of Organization China Water Affairs Group

Completed by (name): Wen Wei/ 文威 Position in organization: Supervisor of ESMS Date: 2013.04.30 E&S Protection Department

Reporting period From: 2013.04.1 To: 2014.03.31

Report Covering Period:

From: 2013.04.1 To: 2014.03.31

A. Environmental and Social Management System (ESMS)

Policies & Processes Yes/No

Confirm if ESMS is being fully yes ESMS has been adopted and applied to all water implemented in your current project subsidiaries of CWA since 2011. operations? What are the main challenges to yes Requesting supporting documents from meet host country's safeguard government authorities takes a long time; requirements? Limited information disclosure from Government

What are the main challenges to no So far, CWA has actively adopted the ESMS policy meet ADB's requirement for ESMS smoothly and applied to all water subsidiaries establishment and implementation? effectively in PRC Please describe how you ensure that yes Audit Department of CWA is responsible for your subsidiaries and their water checking the on-going water operations and treatment subprojects are operated constructions, including but not limited to project establishment, budgeting, design, and construction in compliance with the national inspection, making sure full compliance to national laws and regulations and applicable laws and regulations; as well, ESMS Department is ADB’s environmental and social focused more on environment and social matters. requirements. Please give details of any material no No environmental and social issues during the social and environmental issues review period associated with subsidiary companies and their water treatment subprojects during the reporting period in particular.

In case the existing ESMS is not yes Besides ESMS Department, CWA also has Audit fully functional, what is the action Department and Enterprise Management plan being implemented by CWA Department, working directly under executive management and monitoring internal and external risk/non-compliance. Is there a need to update or revise No The latest version of ESMS Policy was updated by the current ESMS to address present ADB in early 2013, no need to have further operations? If yes, what elements revision. (policies, procedure, capacity and reporting) of the ESMS are required to be updated/revised?

Capacity Yes/No

How many staff members are yes Please refer to Appendix 15 of ESMS for designated in the implementation of “Description of Responsibility of ESMS the ESMS? Please provide Division/Department” names/position titles. Do the staff members assigned to yes Please refer to Appendix 15 of ESMS for implement the ESMS perform other “Description of Responsibility of ESMS job functions/responsibilities? If Division/Department yes, please enumerate other job functions/responsibilities. Are these staff members long- no Most standing employees of ESMS are from senior standing employees of the management team of CWA and the ones of project company? Or are they new companies. employees?

Are there external environment and no ESMS is controlled by CWA internally under social consultant/s assisting you to assistance from Environmental and Social experts deal with technical issues of the of ADB subproject?

What was the budget allocated to the no Budget will always be allocated as needed ESMS and its implementation during the year? Monitoring Yes/No

Do you receive environmental and no According to ESMS, only Category A&B project social monitoring reports from require to prepare additional environmental and subsidiaries for their water treatment subprojects? social monitoring reports. Water plants that under normal operation are considered Category C. Do you check for ongoing yes Audit Department of CWA is responsible for compliance of your water treatment checking all aspects of on-going projects, subproject with national regulation including project establishment, budgeting, and any other requirements? design, construction inspection, making sure a full compliance to national laws and regulations. As well, ESMS Department is focused more on the environment and social matters.

Please describe how you monitor CWA sends out 4-6 ESMS officers from Beijing your subsidiaries and their headquarter to project companies to conduct subproject’s social and environmental performance. ESMS audit together with local ESMS managers. Audit process includes document review and interviews with involved personnel if needed

Please provide details of any no No accidents/ litigation/complaints/regulatory accidents/ litigation/ complaints/ notices and fine has been received during the review regulatory notices and fines: period - Any incidents of non- compliance with the applicable Environmental and Social Requirements - Covenants/ conditionalities imposed by ADB to (Name of Project/Borrower) water treatment subprojects as a result of any non-compliance

Reporting Yes/No

Do you regularly receive No By ESMS policy, only Category A&B project with environmental and social involvement of ADB Facility needs to submit E&S monitoring reports from your monitoring report. Water plants that under normal subsidiary companies? operation are considered Category C.

Do you have external monitoring Yes Independent government authorities also reports covering environmental and monitor environmental and social aspects time social issues? to time without prior notice

B. Information on Water Treatment Subprojects Utilizing ADB Funds

For the reporting period, please provide the following information about ADB-financed water treatment subprojects by (Subsidiary Company) currently under implementation:

Name of Subsidiary Company: 1. Water Affairs Limited 2. Ji’an Water Affairs Corporation Limited 3. Changsha (China Water Affairs) Company Limited 4. Water Affairs Group Limited 5. Chongqing City Yongchan District Qiaoli Water Affairs Co. Limited 6. Gao’an Water Affairs Limited 7. Luxi Water Affairs limited 6. 8. Yifeng Silver Dragon Water Affairs Limited 9. Wannian Silver Dragon Water Affairs Limited Name of Water Treatment Subproject 1. Acquisition Project of Pingxiang Water Affairs Limited 2. Acquisition Project of Ji’an Water Affairs Corporation Limited 3. Construction Project of Changsha (China Water Affairs) Company Limited 4. Construction Project of Xinyu Water Affairs Group Limited 5. Construction Project of Chongqing City Yongchan District Qiaoli Water Affairs Co. Limited 6. Construction Project of Gao’an Water Affairs Limited 7. Acquisition Project of Luxi Water Affairs Limited 8. Yifeng Liang Gang water plant with pipeline construction 9. Wannian 42km pipeline construction and renovation project

Please also refer to “semi-annual updates on Project Companies” Subproject location: 1. Pingxiang City, Jiangxi Province, China 2. Ji’an City, Jiangxi Province, China 3. Changsha City, Hunan Province, China 4. Xinyu City, Jiangxi Province, 5. Yongchuan District, Chongqing City 6. Gao’an City, Jiangxi Province, China 7. Luxi County, Jiangxi Province, China 8. , Jiangxi Province, China 9. , Jiangxi Province, China

Total Subproject : Nine (9)

Total Financing from ADB (US$ mil): USD $200 million

Safeguard category: Water plants under normal operation have no impacts either environmentally or socially, thus: (Please use the REA Checklist and Social Safeguards Environment: Category C Screening Checklist to determine the category) Involuntary Resettlement: Category C Indigenous Peoples: Category C

Were any environmental and social due Yes, kindly refer to the reports of “Environmental diligence undertaken and by your organization? and Social Safeguards Compliance Audit” prepared by CWA and approved by ADB

Any environmental assessment report Not in this review period; all assessment report (including environmental management plan), have to be reviewed before any construction been involuntary resettlement plan, or Indigenous kicked off Peoples plan, or audit reports reviewed by your organization?

What were the main environmental, involuntary No major environmental and social issue resettlement and Indigenous Peoples issues associated with the nine subproject companies associated with this subproject that were other than those disclosed in the “Environmental identified through due diligence conducted by and Social Safeguards Compliance Audit” reports your organization, and how were the issues dealt with (i.e., outcome of due diligence)? For each water treatment subproject, did (Project/ ESMS Policy in Chinese version was prepared Borrower’s staff responsible for implementing the and distributed to all operating subsidiaries. ESMS) assist the subsidiary company to ESMS team from Beijing visited all operating comply with the applicable environmental and subsidiaries and set up meetings with local social safeguard requirements and their ESMS officers in charge, introducing them the implementation? new adopted ESMS system and discussing the areas of focus as well as the procedure of monitoring and reporting mechanism for E/S safeguard requirements.

For category A/B subprojects, were safeguards related EIA information is available to public upon documents such as EIA/IEE report, RP and IPP, or request audit reports made publicly available, in addition to posting on ADB’s website?

Were any conditions or covenants related to No environmental and social issues made along with the investment? Does the subproject comply with applicable PRC Yes, requirements includes but not limited government requirements? to environmental and social national laws, regional regulations, standards and policies, as well as requirements of ADB listed in SPS (Safeguard Policy Statement 2009)

Does the subproject comply with applicable ADB Yes, comply with ESMS policy and safeguard requirements? ADB’s SPS (Safeguard Policy Statement 2009) Does CWA comply with the following ADB’s social Yes, CWA endeavors to provide its protection requirements? employees working friendly environment and social benefit packages in-line with (a) Do not employ child labour or forced labour; related national and regional requirements. It confirmed that (b) Carry out activities consistent with the intent of (a) no case of child labor ensuring legally permissible equal opportunity, fair (b) CWA HR Department has closely monitored the HR sub-division in treatment and non-discrimination in relation to Subproject Companies regarding equal recruitment and hiring, compensation, working opportunity, fair treatment and non- conditions and terms of employment for its workers discrimination in relation to recruitment (including prohibiting any form of discrimination and hiring, compensation, working against women during hiring and providing equal work conditions and terms of employment for its workers (including prohibiting any form of for equal pay for men and women engaged by CWA); discrimination against women during hiring and providing equal work for equal (c) not restrict its workers from developing a legally pay for men and women engaged by permissible means of expressing their grievances and CWA) (c) and ensure its employee to protecting their rights regarding working conditions freely express their grievances and and terms of employment; protecting their rights regarding working conditions and terms of employment

Does the subproject engage contractors and other Yes, CWA tries to screen out sub- providers of goods and services: contractors with ethical issues, and also promote standards of CWA to existing and (i) who do not employ child labour 33 or forced potential partners. labour;34 (ii) who have appropriate management systems that

33 Child labour means the employment of children whose age is below the statutory minimum age of employment in the relevant country, or employment of children in contravention of International Labour Organization Convention No. 138 ‘Minimum Age Convention” (www.ilo.org). 34 Forced labour means all work or services not voluntarily performed, that is, extracted from individuals under threat of force or penalty. will allow them to operate in a manner which is consistent with the intent of (A) ensuring legally permissible equal opportunity and fair treatment and non-discrimination for their workers, and (B) not restricting their workers from developing a legally permissible means of expressing their grievances and protecting their rights regarding working conditions and terms of employment; and (iii) whose subcontracts contain provisions which are consistent with paragraphs (i) and (ii) above.