Category B project supported: Classic Fashion, Jordan

1. Project description

UK Export Finance has agreed to provide support to ASGC UK Ltd (ASGC) in providing engineering, procurement and construction (EPC) services to Classic Fashion Apparel Industry LLC (CFAI) for the construction of a garment factory complex in Aqaba, Jordan.

Aqaba is located in the far south of Jordan and is the country’s only port city on the Gulf of Aqaba of the Red Sea. The main function of the proposed garment factory will be to produce finished garments using fabrics imported from various countries.

It is expected that during the construction period approximately 470 workers will be directly involved. Once in operation, the facility will enable CFAI to provide direct employment opportunities to approximately 3,600 Jordanians and approximately 8,4000 expatriate workers, including Indians, Bangladeshis, Nepalese, Syrians, Palestinians and Sri Lankan. It is expected that this project will also create large-scale indirect employment opportunities for the local population of Aqaba.

The project includes:

  • Construction of a state-of-the-art head office; warehouses; factories; centralized cutting unit; printing unit; commercial buildings; as well as facilities for workers and staff including living quarters, centralized kitchen, recreational facilities, training center, clinics, etc.

  • Operation of the plant complex including accompanying accommodation facilities etc.

The project does not include any associated facilities.

2. Project sector

The project belongs to the civil construction sector.

The project is developed by Classic Fashion Apparel Industry LLC.

4. UK exporters

The UK exporter is ASGC UK Ltd.

5. Export Credit Officers Bank

HSBC

6. Amount of UK export finance support

The main value of the aid is around 86 million USD.

seven. OECD Common Approaches and Equator Principles

UK Export Finance has classified the project as Category B, i.e. having environmental, social and human rights (ESHR) impacts which are few, site specific, of which few (if applicable) are irreversible and for which mitigation measures are more readily available. as defined in the 2012 OECD Common Approaches (revised 2016) for officially supported export credits and environmental and social due diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

8. Environmental, social and human rights standards

Project-related ESHR documentation was reviewed for alignment with the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the Group’s Environmental, Health and Safety (EHS) Guidelines. the World Bank.

The applicable IFC PSs were:

  • PS1: Assessment and Management of Environmental and Social Risks and Impacts;
  • PS2: Labor and working conditions;
  • PS3: Resource Efficiency and Pollution Prevention;
  • PS4: Community Health, Safety and Security;
  • PS6: Conservation of Biodiversity and Sustainable Management of Living Natural Resources;
  • PS8: Cultural Heritage;

PS5 (Land Acquisition and Involuntary Resettlement) and PS7 (Indigenous Peoples) were not considered relevant.

The applicable World Bank Group EHS guidelines were:

  • General EHS Guidelines (2007).

Other guidelines that were also relevant were:

  • IFC/European Bank for Reconstruction and Development (EBRD) Guidance Note on Workers’ Housing: Processes and Standards (2009).

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts considered the following key impacts, receptors and issues during the construction and operation phases of the Project, including but not limited to:

  • construction health and safety;
  • workers’ accommodation conditions;
  • the human rights of workers, including in the supply chain;
  • resource efficiency and wastewater management; and
  • worker engagement and grievance mechanisms.

ten. ESHR impact assessment

A review was undertaken in accordance with the requirements of the OECD Common Approaches and the Equator Principles to identify the potential ESHR risks and impacts of the Project and how these would be effectively managed.

An Independent Environmental and Social Consultant (IESC), WSP Middle East Limited – Dubai Branch (a WSP Group company), has also been appointed by the ASGC to undertake a review of the project.

The review included:

  • Desk review of project documentation, including: environmental and social assessment (ESA); human rights assessment; Environmental and Social Management Plan (CESMP) for the construction phase; ASGC human resources policies; the CFAI environmental management system manual; CFAI’s human resources policy; and Better Work Jordan (BWJ) compliance assessment reports;

  • Visits to the Aqaba site and an existing CFAI plant in Irbid; and

  • Stakeholder meetings with respective management teams, as well as with BWJ representatives in Amman.

The results of this review formed the basis for the assessment of the project’s alignment with relevant international standards and recommendations for future compliance and monitoring.

Based on the review, the project was found to be likely to cause a number of adverse environmental and social impacts both during construction and operation. However, a series of controls proposed as part of the Project’s environmental and social management systems should facilitate the management of these impacts.

11. Climate Change Considerations

UKEF has considered the potential direct and indirect greenhouse gas (GHG) emissions from the project and the effects of climate change factors on the project as part of its ESHR review.

A climate change risk assessment has been undertaken as part of the SEA, including consideration of physical risks and quantification of Scope 1 and 2 emissions. high carbon intensity (such as fossil fuels or petrochemicals) and energy efficiency has been integrated into the design of the building to optimize the use of solar panels; however, the project is expected to exceed the 25,000 tCO2e per year threshold for reporting under the OECD and IFC PS Common Approaches during operations. Therefore, the project will need to monitor and report its emissions.

The review revealed that the design of the project took into account the potential physical impacts of climate change such as flooding. A flood risk assessment was carried out as part of the SEA and relevant adaptation measures were incorporated into the construction design.

Decision

Various actions have been agreed between the project promoter, the operator and the parties involved in the financing, which are necessary to ensure the continued alignment of the project with international standards. Following agreement on these commitments, it was concluded that the project should adhere to relevant international standards throughout the project cycle. UKEF has therefore decided to support the supply of goods and services by UK exporters to the project.

A condition of the support is that the project will be subject to monitoring and reporting to ensure that the project is aligned with relevant international standards throughout the duration of the support.

UK export finance