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Chapter 4. Case Studies

Provided by IFC Sustainable Business Advisory


Here we present several short cases that illustrate some of the actions that companies can take to avoid, minimize or offset/com­pensate common environmental and social key risks in the food and beverage industry. Action Plans can be scaled to the size of your company and the nature of the risks you face.

India - Beverage Company 

Risk: Excessive, inefficient water use

CASE

Based on the high demand during the summer season, a beverage company in Andhra Pradesh, India wishes to expand its capacity by about 30 percent. As per the regulatory requirements, the company is required to have the necessary environmental permits to expand and operate from the State (provincial) Pollution Control Board (PCB). However, as the region is already experiencing severe water shortage, the PCB is not willing to provide the “consent to establish” (permit for expansion). After repeated attempts, the company is granted a conditional permit allowing it to expand its capacity by 30 percent, provided there is no additional fresh water withdrawal.

IMPACT

Depletion of local water resources (ground and surface water)

AVOID

  • Develop water balance for specific processes and estimate consumptive and non-consumptive water usage
  • Benchmark water use against industry standards
  • Identify and prevent all water losses, including pilferage, transmission losses due to seepage (exfiltration), leakage, evaporation, etc. and inefficient/unnecessary water usage in various processes
  • Modify/replace water-intensive or wet processes with zero-water or water-efficient technologies (e.g. sweeping with brooms vs. sweeping with water)
  • Identify and implement decentralized water recycling/reuse techniques in specific operations (e.g. using final rinsing water from CIP or bottle washing for pre-washing operations)

MINIMIZE

  • Install decentralized water meters and monitor and reduce water consumption in specific operations/processes
  • Reduce water consumption by minimizing water usage in non-consumptive processes (e.g. floor cleaning, vessel cleaning, CIP, bottle washing, etc.)
  • Equip water hoses with water-saving nozzles, high-pressure nozzles, spring closures and other water-saving devices
  • Plan and implement water conservation awareness and training program for workers, supervisors and managers

OFFSET

  • Engage in active consultation with local communities, regulators and NGOs to address water concerns in the region
  • Participate in and promote Integrated Water Resources Management processes in the region
  • Develop and implement rainwater harvesting programs
  • Reduce demand by others through adequately treating the industrial wastewater and finding alternative applications for the treated wastewater (e.g. irrigation, horticulture or as raw water resource for other local industry or potable water treatment plants)
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Brazil - Dairy Company 

Risk: Discharge of untreated or ineffectively treated wastewater

CASE

A medium-sized multinational company operating from northern Brazil produces multiple food products, including skimmed milk powder, bottled fruit drinks and different chocolate brands. The company generates about 600 cubic meters (m3) of wastewater from its various processes, which include bottle-washing and other industrial processes. The water is treated and discharged into a nearby river. In recent months, there have been increased complaints from the downstream communities that the river water has turned black or very dark, there are fish kills, there is a foul smell coming from the river water, and the quality and quantity of fish is affected. The river water is not suitable for irrigation because it is plasticizing the soils and impacting irrigation activities. The company officials deny that these impacts are due to its operations, but have admitted some malfunctions have occurred in its wastewater treatment plant.

IMPACT

Contamination of surface water/downstream river

AVOID

  • Investigate all sources of wastewater and minimize wastewater generation by reducing non-consumptive water usage
  • Develop water balance and identify opportunities for reduction in wastewater generation by modifying/replacing water-intensive or wet processes with zero-water or water-efficient technologies (e.g. sweeping with brooms vs. sweeping with water)
  • Replace or minimize the use of potentially toxic or hazardous substances that may contaminate wastewater
  • Collect nontoxic and uncontaminated concentrated liquid wastes for sale to pig farmers or cattle farmers (if possible), thereby reducing the overall load on the effluent treatment plant (ETP)

MINIMIZE

  • Optimize effective wastewater treatment by:
    • Evaluating the efficiency of the ETP by analyzing the ETP “inlet” and “outlet” characteristics and other operating parameters.
    • Evaluating treatment works for hydraulic and or organic slug flows such as bottle and equipment washing; adjust to an integrated flow rate that matches the design flow
    • Minimizing fluctuating loads on the ETP by having a collection and “equalization” sump before treatment or temporarary holding facility
    • Scheduling and staggering bottle washing and other water-intensive operations (if possible) to distribute the load on the ETP over a 24-hour period
    • Installing interlocking system to ensure ETP shutdown during any malfunction; convey untreated wastewater to a temporary holding facility to prevent discharge of untreated effluent
    • Providing adequate training to the effluent treatment plant (ETP) operator and ensure the ETP is operated and maintained as per the recommended operating criteria (such as design flow) and standards
  • Stop sludge bulking and overflow through adequate desludging and other management techniques
  • Analyse treated wastewater for its compliance before its final discharge
  • Consider having separate treatment facilities for toxic/chemically contaminated wastewater streams (e.g. wastewater from bottle washers contaminated with detergents or other chemicals

OFFSET

  • Engage in active consultation/engagement with local communities, regulators and NGOs to address water concerns in the region
  • Adequately treat the industrial wastewater and find alternative applications for the treated wastewater, e.g. irrigation, horticulture or as a raw water resource for other local industry

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Thailand - Meat Processing Company 

Risk: Emissions of foul odors and dangerous vapors

CASE

A meat processing company operates from a small facility located in the heart of Bangkok. About 85 percent of the production is supplied to food service businesses, hotels, restaurants and fresh markets. Therefore, it is crucial for the company’s profitability that it operates in the city to minimize the transportation and warehousing costs. As the company has increased production over the past few months, there have been several cases of ammonia leakage from the refrigeration, causing a foul odor, as well as dangerous vapors. Neighbors are also complaining of foul odors, which are coming from the rendering of waste.

IMPACT

  • Concerns and complaints from community/neighbors
  • Worker illnesses due to exposure to ammonia

AVOID

  • Contract a specialized company for ammonia refrigeration plant preventive maintenance and repairs
  • Provide training to personnel responsible for operation of the refrigeration plant
  • Inspect ammonia refrigeration equipment and eliminate ammonia leaks; overcome the effects of deferred maintenance
  • Ensure all regulatory requirements related to building codes, ammonia storage and use and safety/labor codes are met, monitored and reported on a regular basis
  • Segregate wastes that may be used for animal feed and dispatch these wastes to farms where the wastes may be consumed (e.g. blood meal for fish)
  • Store, transport and dispose of waste as per the regulatory requirements to prevent foul odors and discharge to air, water or land environment

MINIMIZE

  • Minimize leakages of ammonia during handling/replacement of the ammonia cylinders, regulators, manifolds, etc. and during purging operations
  • Minimize ammonia exposure to employees through proper training, appropriate PPEs and adequate ventilation in the operation area
  • Consider production and product distribution planning to minimize cold storage requirements
  • Reduce volume of wastes generated by improving meat processing operations
  • Reschedule raw materials receipt and production timing to reduce requirement for refrigeration and cold storage

OFFSET

  • Engage in active consultation with neighboring facilities and settlements and regulators to address their concerns
  • Provide necessary information and training to the neighboring units on emergency procedures related to ammonia leakage
  • Pay for medial checkups of workers (e.g. pulmonary capacity tests) and compensate as needed

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India - Beverage Company 

Risk: Disposal of hazardous solid waste

CASE

A beverage company in South India generates more than 1000 tons of sludge from its wastewater treatment plant every year, which requires proper disposal. For years, the beverage company officials claimed that this sludge is a good fertilizer and made it available to the local farmers free of cost. After many years of use of this sludge as fertilizer, the local farmers have claimed that the land and water in the region is contaminated with toxic chemicals and the crop quality and yield have been severely affected. Soil and water samples from the surrounding region sent for testing by some NGOs and media representatives were found to be contaminated with high levels of cadmium, lead, chlorides and other toxic chemicals.

IMPACT

  • Land contamination
  • Groundwater contamination and surface water contamination through run-offs
  • Stakeholder concerns and disputes with local communities

AVOID

  • Sample and analyse wastewater streams to identify the sources of pollution
  • Provide bins for separate collection of all non-process waste (chemicals, detergents, used/waste oil, batteries, etc.) and dispose off site; do not let hazardous waste enter the wastewater stream
  • Investigate, prevent and substitute all chemicals, detergents and paints from the beverage bottles that may be responsible for leaching heavy metals into the wastewater streams
  • Segregate, collect and treat wastewater streams from bottle-washing plant separately and send the ETP sludge to hazardous waste disposal facility
  • Stop distribution of sludge to local communities and send all sludge/solid waste to a hazardous waste disposal site if needed

MINIMIZE

  • Minimize sludge generation in wastewater treatment by pretreatment of wastewater (e.g. filtration) and treatment chemical substitution
  • Provide training to employees on regulatory requirements and waste handling including identification and disposal of hazardous waste

OFFSET

  • Engage with affected stakeholders/community members and asses the level of impact on them due to the use/exposure to toxic and hazardous waste (sludge)
  • Identify the extent of the problem; analyze the concentration of cadmium and lead in soil samples and compare to the background concentration levels of these elements in the area
  • Consider initiating or supporting the remediation of contaminated sites remediation with the help of regulators and/or competent agencies

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Brazil - Meat-processing plant 

 Risk: Worker exposure to chemicals and vapors due to lack of adequate ventilation

CASE

A 50-worker meat processing plant in Brazil occupies the basement and three floors of a building in an urban area of São Paolo. The main customers are retailers within the city, so the location of the plant is strategic - it helps to minimize transport and refrigeration costs. Commercial rents in São Paolo have been increasing, so the plant managers want to maximize the use of space by including the basement. Workers are concentrated in the basement, where they handle chemicals used in meat preservation. The basement also houses the large refrigerators that are used to store the meat – these refrigerators are not properly vented and expose workers to toxic ammonia vapor from the cooling system.

IMPACT

  • Worker illnesses due to exposure to chemicals and vapors
  • Emergency situations due to major leakage, fire or other immediate evacuation requirements

AVOID

  • Contract a specialized company for ammonia refrigeration plant preventive maintenance and repairs
  • Provide training to personnel responsible for operation of the refrigeration plant
  • Inspect ammonia refrigeration equipment and eliminate ammonia leaks; overcome the effects of deferred maintenance
  • Move refrigeration plant to an upper floor to increase air ventilation
  • Move production process and processes requiring chemical handling from basement to upper floors. Basement could be used for non-hazardous/non-flammable material or simple operations that do not require chemical handling
  • Ensure all regulatory requirements related to building codes, ammonia storage and use and safety/labor codes are met, monitored and reported on a regular basis

MINIMIZE

  • Minimize leakages of ammonia during handling/replacement of the ammonia cylinders, regulators, manifolds, etc. and during purging operations
  • Minimize ammonia and meat preservation chemicals exposure to employees through proper training, appropriate PPEs and adequate ventilation in the operation area
  • Provide necessary information on hazards of ammonia exposure to workers using MSDS and ICSC
  • Install ammonia detection systems with visual and audible alarms; train workers on emergency response, evacuation and rescue procedures

OFFSET

  • Pay for medical checkups of workers (e.g. pulmonary capacity tests)
  • Provide medical assistance for cases of workplace related injury/illnesses
  • Compensate injured workers for wages lostCompensate for loss of life and loss of ability to work

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United States - Ready-made salads processing plant 

Risk: Use of third party migrant workers

CASE

A vegetable processing plant in the United States has 100 permanent workers and 300 contract workers. The contract workers are placed at the factory by a recruiting agency. The factory management prefers this arrangement since the plant is in an area where it is hard to find workers willing to take seasonal work. The agency brings migrant workers to fill the demand. It is responsible for recruiting and transporting the workers, and for training and paying them. The factory supervisors and permanent workers are from the local area and speak English. They are well aware of their rights under US labor law and feel that the factory is a good place to work. They feel that there is a challenge in working with many of the contract workers, who only speak Spanish and do not seem to have the same level of skills and awareness of their rights.

IMPACT

  • Discrimination against contract or migrant workers
  • Forced labor/human trafficking

AVOID

  • Decrease company’s reliance on temporary workers
  • Use only legally accredited recruitment agencies
  • Develop adequately defined hiring and remuneration policies and terms of employment for contract/migrant workers; communicate policies to workers, supervisors, managers and recruitment agencies
  • Ensure organizational labor policies are understood by the recruitment agencies; make policies contractually binding under the service agreement with recruitment agencies
  • Periodically monitor and audit recruitment agencies’ labor performance as per the organization’s own policies and procedures and local law

MINIMIZE

  • Make sure that contract/migrant workers are informed (in all applicable languages) on their rights including wages, benefits and deductions
  • Agree with recruitment agencies on reasonable deductions for housing, transport and other services provided to contract/migrant workers
  • Make sure all contract/migrant workers receive contracts and periodic clear records of pay calculations in their native language
  • Implement a complaint management resolution mechanism accessible to both permanent and temporary workers
  • Periodically talk to contract/temporary workers on complaints and opportunities

OFFSET

  • Reimburse workers for any illegal deductions made by recruitment agencies
  • Retroactively pay workers whose compensation didn’t meet legal minimum wage (or agreed contract value if higher than legal minimum)

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China - Bakery and confectionery 

Risk: Excessive overtime hours and hour averaging

CASE

A baking facility in China employs 50 workers in a one-shift operation. The facility supplies local markets and there is typically a 20-30 percent fluctuation in demand for certain holidays and seasons. Supplies of flour, milk and eggs are usually delivered once a week and stored at the facility. Sometimes there are delays from the suppliers, so the facility cannot run at full capacity and the workers do not work their full shifts. The facility compensates for the lost production by having the workers work extra hours in the late evening once supplies become available. In addition, due to the short shelf-life of supplies, the facility often runs its operations past normal working hours to prevent waste. The extra working hours are then averaged over the month so the workers do not receive overtime premium pay.

IMPACT

Non-payment of overtime work at premium rate

AVOID

  • Develop organization’s policy on remuneration and working hours; communicate policy to workers, supervisors and managers
  • Remunerate workers for their regular and overtime working hours based on regulatory requirements and industry norms; all overtime should be limited, voluntary and be paid at premium rate
  • Provide training to managers and supervisors on production planning
  • Consider operating two shifts to meet demands of fluctuating schedules and production requirements

MINIMIZE

  • Engage with customers and suppliers and agree on systematic planning to minimize uncertainties in demand of products and supply of raw materials
  • Provide workers with periodic and clear records of pay calculations including worked overtime and received compensation

OFFSET

Retroactively compensate for overtime work at the established overtime rate

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South Africa - Fruit processing factory 

Risk: Supply chain

CASE

A factory in South Africa produces juice and packaged fruit, with a variety of products across different seasons. The factory has recently expanded operations, installing new equipment and adding 100 new workers, for a total of 300. With the expansion, the factory expects to quadruple its production, mostly exports to the European market. To meet production targets, it needs to add new suppliers of fruit, mostly from the Western Cape area. There has been increasing demand from both domestic and European consumers for ethically made products, and the factory participates in the ethical trade program recently launched by the South African fruit industry. The program involves labor standards audits at the factory, and training for workers and managers. However, the factory management is concerned about recent reports of wide-scale labor abuses in South African farms and vineyards.

IMPACT

Social and labor violations in supply chain including forced labor, child labor, inadequate remuneration, excessive working hours, discrimination, poor disciplinary practices, restrictions on freedom of association and health and safety risks at supplier farms

AVOID

  • Develop well-defined labor policies based on international norms in the supply chain; communicate policy to purchasing managers and supplier farms
  • Make policies contractually binding under purchasing agreements with supplier farms
  • Provide training to purchasing managers and supplier farms on the organization’s labor policies and procedures
  • Periodically monitor and audit the supplier farms for their labor performance as per the organization’s own policies and procedures

MINIMIZE

Select and reward supplier farms on price and quality but also on labor criteria

OFFSET

  • Assist the supplier farms in remediation of labor violation cases
  • Assist the supplier farms in identifying the root causes for identified labor violations and assist them in implementing suitable corrective action and preventive actions
  • Ensure that the affected workers at the supplier farms are suitably remediated and compensated as per established policies and procedures

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Vietnam - Fish processing plant 

Risk: Discharge of organic solid waste into surface waters

CASE

A fish and shrimp processing facility employing 100 people discharges solid waste directly into the surrounding estuary water. Although it is an organic substance, waste from fish processing can deplete oxygen levels in the receiving water through bacterial decomposition. Other waste elements can increase salinity and temperature or depress pH levels, affecting local communities that are dependent on the estuary’s fisheries. There is also further concern over the effect of methods used by supplier farms to the factory on safe water supplies due to lack of oversight. For example, a nearby 150 hectare shrimp farm is one of several that uses pig and geese manure as shrimp feed (which is cheaper than commercial feed), with the possibility of contaminating the estuary’s water with antibiotics and pathogens present in the manure.

IMPACT

  • Adverse impact on the estuary water quality through depletion of dissolved O2 levels
  • Adverse impact on the aquatic life
  • Adverse impact on the livelihood of the local communities
  • Adverse impact on the health of local community due to contamination of estuary and affected aquatic life

AVOID

  • Prevent all solid waste disposal near estuary
  • Substitute pig and geese manure with commercial shrimp feed; eliminate raw manure use

MINIMIZE

  • Establish, implement and monitor waste disposal plan in line with the regulatory requirements and industry best practices
  • Provide training to the employees on waste management, regulatory requirements and the organization’s procedures on waste handling and disposal

OFFSET

  • Engage with key stakeholders, including regulators, NGOs and local communities, to address their concerns and communicate on the steps taken by the organization to prevent any further contamination to the estuary
  • Identify the affected community members and provide suitable compensation for the loss of livelihood. Compensation could be provided in terms of alternate employment opportunities, financial compensation, and/or providing vocational training to assist them in enhancing their employability

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Canada - Meat processing plant 

Risk: Poor infrastructure, process and equipment design

CASE

A meat processing plant employing 400 people has had 200,000 pounds of processed beef recalled after being linked to 18 consumers getting sick from E. coli bacteria. The plant’s operating license has been suspended pending detailed inspection of the sanitary conditions, equipment, procedures and facilities. Initial reports suggest employee and animal sacrificing hygiene practices are poorly informed and executed, and slaughtering practices are being observed by the state veterinarian to determine where there are breakdowns in internationally recognized good manufacturing practices (GMPs). In addition, swab tests are being collected from selected carcasses. E. coli can result if feces from an animal’s intestines or hide spread onto the tools for butchering and also onto employees’ hands, clothing and boots if cross-contamination steps in all aspects including employee hygiene, toilet use, hand washing and other practices are not addressed thoroughly. Each day, 4,500 cattle are slaughtered at the plant, a total that a previous audit of the facility suggested was a “strain on the system” with “high potential for problems.” According to interviews conducted by the auditor, workers complained of having just a few seconds to pick up a sterilized knife and complete the gutting. The auditor noted this has inevitably led to worker fatigue, which can lead to mistakes during butchering and consequent contamination by the animal feces.

IMPACT

  • Risk to consumers’ health due to consumption of contaminated and E. coli infected product
  • Product contamination and exposure of workers to pathogenic bacteria due to poor infrastructure, process design and personal hygiene
  • Occupational health and safety risk because of worker fatigue in butchering section (due to inefficient and poor process design)

AVOID

  • Design and implement HACCP plan to prevent product adulteration and eliminate prod­ucts exceeding the “critical limits”:
    • Establish and implement “operational prerequisite programs”, including GMP and SSOPs
    • Establish and implement systems for verifications at regular intervals
    • Establish and define “food chain,” conduct a “food safety hazard analysis” and de­termine the “acceptable levels”
    • Identify the “critical control points” and determine “critical limits” for all critical control points
  • Optimize the operation process at slaughtering by employing effective sanitary dressing procedures during slaughter
  • Inspect and improve employee sanitary facilities for proper operations and train em­ployees on personal hygiene
  • Ensure boot wash, hand wash, clothing appropriateness and associated cross-contami­nation stations and activities are functioning as designed and as required by GMP

MINIMIZE

Train and re-train employees on GMP, personal hygiene and prevention of food adulteration

OFFSET

  • Engage with key stakeholders, such as regulators, food authorities, customers, consumer groups, NGOs and media, to address their concerns and communicate on the steps taken by the organization to ensure consumer health
  • Effectively communicate the organization’s food safety policy and the organization’s response to the E. coli outbreak to consumers and other stakeholders through print and electronic media campaign, social networking sites and other formal and informal events
  • Recall the affected lot; recall all the product if no traceability system in place
  • Appoint a a key staff person from senior management and make him/her available to receive and respond to consumers grievances
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>Proceed to Chapter 5. Organizational Capacity and Competency

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