Kaufland

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The proposed project is the second in a regional co-operation to finance the Schwarz Group’s strategic expansion of its Kaufland discounting hypermarket format in Central and Eastern Europe. The expansion will mainly focus on small and medium sized towns. The proposed project will contribute to increased competition mostly in the secondary cities and relatively disadvantaged areas, which are the focus of the Schwarz Group’s expansion strategy. It will bring a new format of modern retail and the convenience of discounting hypermarkets shopping to large portions of the population. Procurement of products locally will generate strong backward linkages and encourage local producers to process according to best business practice. Kaufland Romania s.r.l., a company organised and existing under the laws of Romania, and part of the Schwarz Group (the Sponsor), a privately held company based in Germany. EUR 100 million Loan to partially finance the roll-out of stores. EUR 300 million. Screening categories and rationale for classification A retail development such as this project has some environmental impacts which can be readily identified and prevented through adequate mitigation measures. For the above reasons, the EBRD has classified the project B/1 and required an environmental due diligence of the Project. Information reviewed during the environmental appraisal The environmental due diligence has been based on a tailored Environmental Questionnaire and follow-up information gathering and analysis through communication with the Client and the Sponsor. This has included meetings with Client and Sponsor staff at the headquarters and at one of the discount hypermarket stores in Bucharest. Environmental Impacts and mitigation measures The development and operation of discount hypermarkets and can be associated with a number of environmental issues, which can be readily addressed apart of site specific due diligence and permitting requirements. These can range from noise impacts during construction and operation of the stores, to risk of historic contamination resulting from former use of any sites. The Client has developed environmental due diligence procedures, and for instance undertakes environmental assessment of all sites before developing new stores. This addresses the risk of soil and groundwater contamination from previous site activates. In line with Romanian legislation, the Client undertakes environmental impact assessments (EIA) of all new stores, as required by Romanian legislation for such developments, which among other address any noise and traffic impacts associated with such developments. This is then subject to the statutory consultation process. To date all stores have obtained the necessary permits and have implemented any mitigation factors required by the regulators as part of the permitting process. The environmental due diligence has not identified any major environmental or social issues associated with stores in operation and/or under construction at this stage. In line with EBRD procedures, the Client is required to ensure that each store will meet the relevant Romanian and EU environmental, health and safety standards and requirements as well as to submit an annual environmental, health and safety report to the Bank. Labour Issues The Client will be required to observe applicable Romanian laws and standards on employment, as well as standards consistent with the Conventions of the International Labour Organisation relating to the employment of children and young people, discrimination at work, and forced labour. During the course of due diligence visit by EBRD staff the Client explained the management systems and procedures which they have put in place to seek to ensure compliance with national labour legislation. These include procedures for the recording and verification of working hours, overtime and remuneration throughout the company and clear recruitment procedures based a template devised by the central HR function. Managers are also given specific training on people management issues. Monitoring The Bank will evaluate the project’s compliance with the applicable environmental, health, safety and labour requirements during the lifetime of the project by reviewing annual environmental reports (AER) and any relevant information prepared for the project covering the status of implementation of environmental and labour management measures as well as visits to the Client and eventually selected stores. None. Schwarz Finanz und Beteiligungs GmbH & Co. KG Sekretariat Finanzen Stiftsbergstr. 1 D-74172 Neckarsulm, Germany