Cotton Way

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Translated version of this PSD: Russian The EBRD is considering providing financing to Cotton Way, the leading player in the Russian industrial laundry and textile management market. The financing will support Cotton Way in expanding further in the Russian market and implementing efficiency improvement. The Project fosters diversification, supports a locally managed enterprise that innovates, introduces modern new technologies and upgrades to international standards, particularly with regard to corporate governance, transparency and resource efficiency. It supports a Russian regional company becoming more productive / competitive and it increases access of an SME to structured and long-term finance. The Project is also consistent with Sustainable Resource Initiative (BDS13-52, recently developed by the Bank) prioritising efficient use of energy, water and materials. Cotton Way is the leading player in the Russian industrial laundry and textile rental market, servicing railways, hospitals, hotels, fitness clubs, and other clients. EBRD is considering a loan facility in the amount of up to RUB 1,800 million. Up to RUB 5,355 million. Categorised B. The potential environmental and social impacts associated with the development and operation of industrial laundry plants are expected to be site specific, readily identified and addressed through appropriate mitigation and management measures. Environmental and social due diligence (ESDD) has been carried out by an independent consultant and complemented with further due diligence by ESD. ESDD has shown that Cotton Way has an integrated Environmental, Health and Safety (EHS) Management System, and the necessary capabilities and capacities, which although not certified in terms of ISO 14001 and OHSAS 18001 is consistent with these standards and good practice. Cotton Way’s quality management system is ISO 9001 certified. These systems will be implemented at all company operations. Cotton Way is in compliance with all relevant Russian labour legislation although it will need to develop and implement an internal employee grievance mechanism. Occupational Health and Safety performance is consistent with Russian legislation and international good practice and appropriate to Cotton Way’s activities. Construction works will cause localised and short-term adverse impacts, which can be mitigated or prevented by adhering to good construction practice. Key operational impacts include water usage, emissions to air and wastewater generation which will be addressed through installing modern efficient equipment, process automation and implementation of company procedures. An energy efficiency audit, including a GHG assessment, has been completed of the existing operations and an energy efficiency investment programme is to be agreed with Cotton Way. Waste water will be treated on site before discharge to the municipal sewage system. Cotton Way undertakes microbiological and chemical testing of its linen and complies with Russian sanitary requirements. With the completion of the Kaluga and the Kazan sites, there is the possibility that Cotton Way may relocate its services from Moscow to Kaluga and from Nizhny Novgorod to Kazan. Cotton Way will be required to engage with their employees in this respect and develop a relocation/retrenchment plan. New acquisitions will be subjected to appropriate due diligence by Cotton Way in line with the EBRD PRs. An Environmental and Social Action Plan (ESAP) has been developed for the Project. Key actions in the ESAP, in addition to those described, include appointing EHS and social officers, development and implementation of E&S management plans and other procedures, implementing EHS provisions to manage dry cleaning risks if required and implementation of a Stakeholder Engagement Plan (SEP) and internal and external grievance mechanisms. Cotton Way will provide the EBRD with annual environmental and social reports, including updates on the implementation of the ESAP. The EBRD will monitor the Project’s E&S performance in line with the Bank’s E&S Policy. EBRD supported Cotton Way with EUR 25,000 technical cooperation to finance preparation of a business plan and a financial model for the company by Ernst & Young. In addition, an energy and resource efficiency assessment and comparison with the Best Available Techniques was conducted as part of the EBRD GEF-funded programme on industrial energy efficiency in Russia. The audit covered a review of Cotton Way’s existing laundry facility in Moscow and a review of design documentation of the new plants in Vsevolozhsk and Vorsino. The estimated energy and resource efficiency CAPEX is approximately RUB 700 million and will be financed by the EBRD loan. Evgeny Glinin, Deputy CEO Tel: +7 (495) 280-12-80