SFG3324 HASHEMITE KINGDOM OF JORDAN JORDAN LOAN GUARANTEE CORPORATION INNOVATIVE STARTUPS AND SMEs FUND PROJECT ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK (ESMF) April 25, 2017 TABLE OF CONTENTS Contents TABLE OF CONTENTS ................................................................................................................. ii ACRONYMS .................................................................................................................................. iii EXECUTIVE SUMMARY ............................................................................................................. 1 CHAPTER ONE: INTRODUCTION .............................................................................................. 3 1.1 Introduction and Objective of the ESMF ............................................................................. 3 1.2 Project Design and Context ................................................................................................. 3 1.3 Project Description .............................................................................................................. 4 CHAPTER TWO: POLICY, REGULATORY AND INSTITUTIONAL FRAMEWORK ............ 7 2.1 Environmental Regulations .................................................................................................. 7 2.2 Jordanian Environmental Impact Assessment Policy .......................................................... 8 2.3 Labor Regulations ................................................................................................................ 9 2.4 World Bank Group Safeguard Policies and Procedures ................................................... 11 2.5 Comparison of World Bank Safeguard Polices and Environmental Policies of Jordan.... 13 2.6 Cultural Heritage and Physical Cultural Resources ......................................................... 13 2.7 Public Consultations and Disclosure ....................................................................................... 14 CHAPTER THREE: ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK . 16 3.1 Procedures for Subproject Assessment and Development of ESMPs ................................ 16 3.2 Implementation Arrangements ........................................................................................... 16 3.3 Monitoring Plan ................................................................................................................. 20 3.4 Monitoring Indicators ........................................................................................................ 20 3.5 Capacity Building and Training Plan ................................................................................ 21 3.6 ESMF Cost Estimate .......................................................................................................... 21 Annex 1: World Bank Group Policies ........................................................................................... 23 Annex 2: Chance Find Procedures ................................................................................................ 24 Annex 3: ISSF Consultation Summary Note ................................................................................. 26 Annex 4: Environmental and Social Aspects Screening Checklist ................................................ 28 Annex 5: ESMP Preparation Guidance for ISSF Partners ............................................................. 30 Annex 6: ESMP Outline ................................................................................................................ 33 Annex 7: Environmental & Social Management Plan (ESMP) Sub-project Monitoring ............. 36 Annex 8: Annual Aggregate E&S Performance ISSF Reporting to JLGC ................................... 37 ii ACRONYMS BDS Business Development Services CBJ Central Bank of Jordan CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora E&S Environmental and Social EC European Commission EHS Environmental Health and Safety EIA Environmental Impact Assessment EMP Environmental Management Plan EPL Environmental Protection Law ESDD Environmental and Social Due Diligence ESMF Environmental and Social Management Framework ES Environmental Specialist FI Financial Intermediary FIL Financial Intermediary Loan GOJ Government of Jordan GP General Partnership GRM Grievance Redress Mechanism IC Investment Committee IFC International Finance Corporation ILO International Labor Organization IR Investment Readiness ISSF Innovative Startup Fund Project JLGC Jordan Loan Guarantee Corporation JNCW Jordan National Committee for Women LAL Labor Acquisition Law LP Limited Partnership M&E Monitoring and Evaluation MENA Middle East and North Africa MoEnv Ministry of Environment MoH Ministry of Health MoL Ministry of Labor MoMA Ministry of Municipal Affairs MOPIC Ministry of Planning and International Cooperation MoTA Ministry of Tourism and Antiquities MoWI Ministry of Water and Irrigation MSME Micro, Small, and Medium Enterprises NGOs Non-Governmental Organizations OPs Operational Policies iii PAD Project Appraisal Document PCB Poly Chlorinated Biphenyl PIF Project Information Form PMU Project Management Unit POM Project Operations Manual PS World Bank Policies RPF Resettlement Policy Framework SIA Social Impact Assessment SMEs Small and Medium Enterprises SPV Special Purpose Vehicle TRC Technical Review Committee UN United Nations VC Venture Capital WB World Bank WBG World Bank Group iv EXECUTIVE SUMMARY This document presents an Environmental and Social Management Framework (ESMF) for the Jordan Innovative Startup and SMEs Fund (ISSF) Project. The ESMF ensures that the project activities are compliant with the relevant requirements of national policies, regulations and legislations as well as the World Bank Group (WBG) relevant Operational Policies and Procedures (OPs). The objective of this ESMF is to provide an environmental and social management framework for the design and management of the ISSF and provides a practical processing tool during project formulation, design, planning, implementation, and monitoring to ensure that environment and social aspects are duly considered. The World Bank Group has screened the proposed project components and has determined that this project is categorized as a FI – Financial Intermediary according to OP4.01 1 . Financial institutions selected to implement investments and ecosystems support are referred to in this context as Venture Capital (VC) investment funds, Angel/Seed fund, and the ecosystem providers that will be making investments in Small and Medium Enterprises (SMEs). The Ministry of Planning and International Cooperation (MOPIC) will be the government counterpart signing the loan agreement for this project and Jordan Loan Guarantee Corporation (JLGC) will be the Implementing Agency. MOPIC will sign a subsidiary grant agreement with JLGC giving the JLGC the mandate to create and hold shares in the ISSF on behalf of the Government of Jordan (GOJ). The JLGC will create a funding facility called the Innovative Startup and SMEs Fund (ISSF) to invest in innovative startups and SMEs in partnership with private investors. The ISSF-JLGC will contract a private manager to implement all of ISSF's activities, including safeguards compliance monitoring and reporting. It is expected that the ISSF will hire consultants to serve as Investment Officers, who will be responsible for SME application screening, due diligence, and management including safeguards screening. A consultant will be hired by JLGC to ensure SME compliance with Ministry of Environment and WBG environmental and social guidelines including the handling of complaints. The JLGC has strong knowledge of private sector business responsibilities to comply with Ministry of Environment and Ministry of Labor laws relevant to SMEs, and will hold accountability for ensuring that the ISSF’s SME screening and funding process incorporates Frameworks commensurate with the World Bank Policies. It is anticipated that the majority of sub-project investments supported in this Project will be in the services or technology sphere, with no-to-limited associated environmental or social risks. However, it is recognized that there may be some investments (e.g. renewable energy, pharmaceuticals, agro-business) in which the environmental and social risks may be identified. Due to the young age and size of SMEs, limited physical or economic production is expected during the World Bank project implementation period. Under Jordanian Environmental Law 2006/No. 52, private companies are to undertake an Environmental and Social Screening process. ISSF participating companies would need to be classified according to their potential impacts and appropriate mitigation/rehabilitation measures required. Given the low environmental and social risk of the project, the screening will be done using country systems through the Ministry of Environment. The initial screening form will provide for exclusion of any investment which merits the application of Operational Policies (OPs) 4.09 Pest Management, 4.11 Physical Cultural Resources, or 4.12 Involuntary Resettlement. The initial screening form will not screen for the possible application of OPs 4.04 Natural Habitats, 4.10 Indigenous Peoples, 4.36 Forests, 4.37 Safety of Dams, 7.50 Projects on International 1 See Annex 1 for Financial Intermediary section on OP 4.01. 1 Waterways, or OP 7.60 Projects in Disputed Areas. Natural habitats, forests, dams, etc. do not exist within the geographical range of possible ISSF locations. The screening of subprojects will result in the prospective subproject being determined as one of the below general modes of safeguards management: a. Important impact (Category A according to the World Bank (WB) and Category I according to the GOJ. This class of projects will be excluded from financing as ineligible project; b. Average impact (Category B and Category II according to GOJ). Relevant E&S documents in compliance with World Bank Policies will be developed, and the tender documents signed in accordance with the Jordanian regulations and World Bank safeguards clauses; or c. Negligible or absent impact (Category C according to the WB and Category III according to the GOJ): no impact assessment is required. Eligible activities at the subproject level are not anticipated to trigger World Bank Operational Policy OP 4.12 Involuntary Resettlement, which is related to the relocation of households or communities; acquisition of private owned lands (temporarily or otherwise); adverse impacts on livelihoods including those that may occur through restriction of access to resources. Subproject screening will exclude any subprojects that would trigger OP 4.12. Hence, no Resettlement Policy Framework (RPF) will be produced. All SMEs and the ISSF are exposed to some level of Environmental and Social (E&S) risk through the activities of their investees, which can represent a financial, legal, and/or reputational risk to the MOPIC the JLGC and the Central Bank of Jordan (CBJ). Accordingly, the Hashemite Kingdom of Jordan (HKoJ) has developed this ESMF to ensure that appropriate risk management and mitigation measures are defined for implementation. As part of the due diligence under Jordanian laws, SMEs will complete environmental and social risk screening forms and submit to the Ministry of Environment along with their applications. They will manage/mitigate these in a manner consistent with the guidance provided in this ESMF but should not be in excess of existing requirements by law. If a SME does not have the capacity to implement such management/mitigation measures, it will be expected to hire-in such expertise to complete the ESMP as necessary to meet the requirements set forth in this manual. The ISSF (will make sure that implementation of this ESMF becomes a standard investment review procedure within project investment partners. It should form part of the Shareholder Agreement signed between the ISSF and each investment partner (Angel/Seed Investment Management Company, early stage/VC fund manager, and ecosystem provider). The cost associated with implementing the ESMF is accommodated by the project and estimated at US$51,000 per year. These costs include part of the salary of a part-time consultant as JLGC for handling/resolving complaints. Part of the time allocated by the Investment Officers to conduct sub- project application review and clearance will be related to environmental screening, however it costs will be absorbed as part of their overall responsibilities. The ISSF will retain access to Environmental Specialist (ES) consultancy services to advise on an “as needed� basis and to conduct an annual post - review audit to ensure screening process is in compliance. ES consultancy services implies that the ISSF may retain services of several different ESs as they are available when their services are needed. The cost of ES consultancy services is estimated continuously over the implementation of the ISSF project. This estimate will fluctuate according to percentage of ISSF subproject applications which require subproject ESMFs. 2 CHAPTER ONE: INTRODUCTION 1.1 Introduction and Objective of the ESMF This document presents an Environmental and Social Management Framework (ESMF) for the proposed Jordan Innovative Startup and SME Fund (ISSF) Project. The objective of this ESMF is to provide an environmental and social management process for the design and implementation of this Project and provides a practical tool during project formulation, design, planning implementation and monitoring to ensure that environmental and social aspects are duly considered in the planning and implementation process. It describes the steps involved in identifying and mitigating the potential environmental and social impacts of proposed investments and ensures that all relevant institutional capacity building and training needs are established for effective implementation of recommendations outlined in the ESMF. The ESMF details agreed policies, guidelines and procedures to be reflected in the Operations Manual and that are in compliance with applicable Jordanian laws and regulations and relevant World Bank policies environment and social development safeguard policies and triggers. At present, the details of the subprojects of the components are not yet in place. Therefore, ESMF is the appropriate safeguard instrument to be prepared. The ESMF entails an Environmental and Social Screening process which allows subprojects to be classified according to their potential impacts and appropriate mitigation/rehabilitation measures required. The ESMF summarizes institutional arrangements for the implementation of mitigation measures, the monitoring arrangements, including monitoring indicators, capacity building needs as well as cost estimates. 1.2 Project Design and Context This project involves the setting up of a private sector managed funding facility called the “Innovative Startups and SMEs Fund� (ISSF) which will make investments in innovative startups and early stage SMEs leveraging private sector funds. The ISSF will also support the entrepreneurship ecosystem to generate a viable deal flow of startups. The Jordan Loan Guarantee Corporation (JLGC) will be responsible for legally setting up the ISSF and hiring a private manager who will manage the ISSF activities and report to the JLGC. The JLGC is a private corporation under the supervision of the Company Controller who oversees all private companies. Contribution to the capital of the ISSF will be provided by the World Bank loan and an additional amount in the form of co-financing will be provided to the ISSF from the Central Bank of Jordan (CBJ). The JLGC will hold the shares in the ISSF on behalf of the Government until all assets are liquidated and the proceeds returned to the government. The government will not be involved in the operations or administration of the ISSF. The JLGC will be responsible for setting up a Board of Directors for the ISSF based on criteria in the POM and non-objection of the World Bank and for ensuring the sound management of the ISSF by the ISSF manager. The CBJ will not be a member of the Board and will not have a role in the ISSF other than providing capital and will take the position of a silent partner (no veto, non-voting shares). The ISSF manager will be responsible for hiring the ISSF staff, putting in place its operational and investment strategy, and providing the required monitoring and reporting on project indicators, as well as on financial management, procurement, and safeguards in accordance to the project criteria indicated in the project operations manual (POM). The ISSF Manager will be evaluated and selected based on criteria established by the World Bank indicated in the POM. All ISSF staff must be experts from the private sector. 3 Figure 1: ISSF ISSF Financing Deal flow creation (equity and quasi equity in Support to incubators, accelerators, angel networks, SMEs with VC and angel funds, associations etc. to do platforms, investment entrepreneurship support companies etc. activities The ISSF manager will also select and appoint an independent Investment Committee (IC) based on criteria and non-objection by the World Bank. The JLGC will not have any role in the implementation of the activities or selection of investments. The IC will sanction investments and exits. 1.3 Project Description The project’s development objective is to increase private early stage equity financ e for innovative small and medium enterprises (SMEs). Component One: Financing ($US44.75 million Bank loan/total ISSF Budget $US53.5 million) Under this activity the ISSF is expected to invest US$50 million in approximately 200 companies and provide approximately US$3.5 million in investment support to partner investors. Investments in startups will be balanced between the three high risk enterprise stages roughly categorized as: Seed (investment ticket size (ITS) US$50,000 – US$280,000); early stage (ITS US$280-000 – US$750,000); and VC (ITS US$750,000 - US$3m). Investments in SMEs may be in the form of equity or quasi equity instruments such as convertible notes2 and other form of concessional debt that partner investors or intermediaries judge as necessary for a company to succeed. Investments will be opportunistic across all sectors. However, it is expected that investments will be primarily in Technology, Media, Telecom, Service sector with some in Agribusiness, Pharmaceutical, water, and green energy. The ISSF investment strategy will use a combination of direct investments in SMEs alongside private investment funds seeking to leverage financing on a specific deal, and indirect investment in SMEs through funds (as a shareholding partner) One of the main reasons that discourages an investor from taking a stake in an early-stage company is the high transaction costs incurred to help make a young innovative company successful once it receives capital. The effort and costs are not the same for those incurred for a more mature SME. To provide an incentive to partner fund managers and co-investors to invest in innovative startups the ISSF will provide 2 A Convertible Note is an amount provided to a company in exchange for equity shares in the company that is later repaid back as a loan when the company starts to generate revenues. 4 partner funds, in addition to capital, an amount (non-reimbursable) to cover costs related to supporting the growth of the innovative startup. Investment support activities may include professional financial, legal, and administrative costs to registering/maintaining/updating patents, field testing a product in a new market, and back office support (Accounting, legal, marketing, administration) which small companies usually do not have. Component Two: Deal-Flow Creation ($US3.125 million Bank loan/total budget $US6.25 million) The quality and number of viable investments made by the ISSF will depend on a strong ecosystem able to generate entrepreneurship opportunity across Jordan and channel it into more viable startups. This includes entrepreneurs from lagging regions, under-served industries (other than ICT), and underserved groups like women entrepreneurs. For young educated graduates, resources to help foster their creativity and innovative concept is an essential starting point when considering starting their own ventures, or joining an entrepreneurial team. Thus entrepreneurship support institutions must be able to provide them with the appropriate type of support that will make companies that are attractive for investors. The ISSF will contract/outsource to one or more support providers (such as accelerators, incubators and business development support entities and the like) in accordance to criteria in the POM, and cover their cost, to implement the following deal flow creation activities: Incubation/Acceleration programs. These programs will target brand new ventures (or teams that are planning a venture). The programs will accelerate cohorts of entrepreneurs which will include ventures/teams. Acceleration programs typically feature time–limited support (three to six months) comprising programmed events, training and intensive mentoring to test the viability of a business model/product often utilizing lean start-up methodologies, an application process that is ‘in principle’ open to all, yet highly competitive, and cohorts or classes of startups rather than individual companies. Investment Readiness and business development services for young ventures seeking capital and established SMEs looking to substantially increase growth. This support targets ventures already operating, which require specific assistance to become ready/eligible for investment through the ISSF. Ventures seeking investment from the ISSF may come from startups that recently graduated from an acceleration program who will need to go through and investment readiness (IR) program and/or existing SMEs who are looking to expand through an innovative product or process and require more individualized business development services (BDS). Develop Angel investor networks. Develop at least two Jordanian business angel groups, by supporting new group formation; network design and establishment; group manager training and mentoring; angel member training and mentoring; and/or support system-level activities benefitting all Jordanian angel networks. Component 3: Project Management (US$2 million Bank loan/total budget $US4 million) Funds under this activity will cover the ISSF project management costs over the project life. The ISSF will be the de facto Project Implementation Unit (PIU). Costs of the ISSF include management and consultancy fees and operations, and administrative costs for the management and supervision of the project investment and deal flow activities. Project funds will also support the ISSF’s costs for the following: training/capacity building activities; marketing; conducting ecosystem assessments/analysis, and outreach specifically to the regions (website, conferences); citizen’s engagement activities; monitoring and evaluation (M&E); safeguards advice, monitoring and review; legal; accounting, auditing, and financial management. Project funds will also cover costs incurred by the JLGC in setting up the ISSF and conducting the necessary fiduciary and safeguards supervision including managing redress grievances as the project implementing agency. 5 6 CHAPTER TWO: POLICY, REGULATORY AND INSTITUTIONAL FRAMEWORK 2.1 Environmental Regulations The Ministry of Environment (MoEnv) was established in 2003 as Jordan’s lead institution for environmental management, with one of its responsibilities to coordinate national efforts to protect the environment. Jordan has an extensive web of laws and regulations pertaining to environmental protection and management. The following regulations have been initially identified to discuss within the framework of the legal requirements for the ISSF project. Law of Environmental Protection, No. 52 of 2006, went into effect Oct. 16, 2006: The provisions under this Law include the requirement to protect the environment and all of its elements; the requirement to set policies for the protection of the environment and the preparation of plans for such policies; the requirement to monitor elements of the environment; the requirement to set principles for the handling of harmful substances; approval for the establishment of natural reserves, national parks, and their management and supervision; the requirement to issue environmental emergency plans; and the monitoring and inspection of projects and facilities to ensure that they are in compliance with Jordanian standard specifications. As per the law, MoEnv is responsible for setting Jordan’s environmental protection policy, monitoring activities, coordinating national efforts for environmental protection, and preparing environmental contingency plans.  Article 7 of the law assigns the MoEnv with the environmental monitoring and inspection responsibilities, and grants its employees the right to enter any facility for inspection needs;  Articles 8, 9, and 10 relate to the marine environment;  Article 13 sets the requirements for conducting Environmental Impact Assessment (EIA) for projects;  An Environmental Protection Fund was established under articles 16 and 17 and sets fees for violation of its provision, terms for delegation of authority, and the operation of environmental non-governmental organizations in Jordan. Finally, it lists the regulations that should be issued in accordance to the law. Furthermore, Article 23 of this Environmental Protection Law (EPL) mandates MoEnv to issue a number of bylaws which include natural reserves and national parks. To date, the following by-laws have been issued:  EIA regulation No. 37 for the year 2005;  Noise Level Control Regulation for the year 2003;  Hazardous Waste Management and Handling Regulation for the year 2003;  Regulation for the Control of the Use of Ozone Depleting Materials for the year 2003;  Regulation for the Management, Transport and Handling of dangerous and Hazardous Materials number 24 for the year 2005;  Public Heath Law (No. 54, 2002);  Water Authority Law (No. 18, 1988) and related standards;  Regulations for protection of birds and wildlife and roles covering their hunting (No. 113, 1973);  The Antiquities Law (No. 21, 1988);  Civil Defense Law (No. 18, 1999);  Traffic Law No. 47, 2001;  Labor Law;  Penalty Law (No. 16, 1960);  Ministry of Agriculture Law (No. 44, 2002); 7  Natural Resources Authority Laws 2002;  Jordanian Standards for Air Pollution (JS 1189/2006);  Handling and discharge of used oil by-law of 2003;  Natural Reserves and national parks by-law (No, 29, 2005); and  Soil protection by-law (No.25, 2005) 2.2 Jordanian Environmental Impact Assessment Policy EIAis a key tool to ensure that decisions taken at the legislative and regulatory level are actually executed and built into the design and implementation of development projects. The legal basis for EIA is established in the Environment Protection Law (EPL) no. 52/2006. It is implemented through its EIA regulations no. 37/2006 and its five annexes. These require that the project proponent hire a national consulting firm to conduct the EIA and prepare an EIA report. It also assigns full authority to the MoEnv through its Department of Licensing and Guidance (which also includes the EIA section) to arrange for screening, control and follow up on the EIA process and its implementation. The approval of an EIA is a pre-requisite for any subsequent license or permit by any or all other relevant authorities that may be required prior to construction. All development projects, regardless of EIA classification, must adhere to the air emission, water, wastewater reuse; industrial and municipal discharge Jordanian standards. As part of the ESMF a "negative list" excludes certain activities such as: those universally excluded by donors (weapons, illegal activities, casinos, etc...), in addition to those affecting natural habitats, forests, endangered species, forced relocation of populations, dams, watercourses, and activities in the disputed areas. The negative list, which includes activities not eligible for financing, according to Jordanian regulations, is as follows:  Production or activities involving forced labor / harmful child labor;3  Production or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements;  Production or trade in weapons and munitions;  Gambling, casinos and equivalent enterprises;  Trade in wildlife or wildlife products regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);  Production or trade in radioactive materials;  Production or trade in or use of un-bonded asbestos fibers;  Production or trade in wood or other forestry products from unmanaged forests;  Production or trade in products containing poly-chlorinated biphenyl, or PCBs;  Production, trade, storage, or transport of significant volumes of hazardous chemicals, or commercial scale usage of hazardous chemicals;  Production or trade in pharmaceuticals subject to international phase outs or bans;  Production or trade in pesticides / herbicides subject to international phase outs or bans; 3 At the national level, the Jordanian Labor Law No. (8) for the year 1996 and its amendments prohibited the employment of children and juveniles. Article (73) of the said law strictly prohibited the employment of juveniles (children) who have not completed sixteen years of age; in addition, article (74) of the same law prohibited the employment of juveniles who have not completed eighteen years of age in hazardous or health harmful jobs. These restrictions are in line with the stipulations of the ILO Convention No. (138) for the year 1973 on the minimum age for admission to employment ratified by Jordan in 1997, and the ILO Convention No. 182 on eliminating the worst forms of child labor ratified by Jordan in 2000, as well as the Arab Labor Convention No. (18) for the year 1996 concerning the employment of minors. 8  Production or trade in ozone depleting substances subject to international phase out;  Production or activities that impinge on the lands owned, or claimed under adjudication, by indigenous peoples, without full documented consent of such people. 2.3 Labor Regulations When employing workers, the private companies must abide by Jordanian labor laws. The Government of Jordan has adopted International Labor Organization (ILO) labor rights. Since joining the ILO in 1956, Jordan has ratified 24 Conventions including seven out of eight fundamental Conventions. The ILO’s three priorities in Jordan are:  To expand decent work opportunities for young Jordanian men and women through the promotion of better working conditions, non-discrimination and equal rights at work  To extend a minimum level of social security to the most vulnerable groups of society through the Social Protection Floor as part of a more comprehensive social security Framework in Jordan.  To enhance employment opportunities with a focus on youth employment. To achieve these objectives, the ILO is working with the Government of Jordan, workers and employers to advance the national employment agenda and enhance access to decent work opportunities. It represents the common commitment of the ILO and its partners to collaborate on specific objectives in the areas of employment promotion, rights at work, social protection, social dialogue, pay equity, youth employment, labor inspection, child labor among others. With regards to child labor specifically, local workers over the age of 16 can legally work in factories, but the tasks they can undertake and the hours they are permitted to work are limited; for migrant workers, the recruitment age is 18. Recruitment of underage migrant workers is categorized as trafficking and is handled by the Anti-Trafficking governmental department.  Workers’ Rights Jordanian law prohibits most workers from working more than the customary 48 hours a week, and 54 hours for hotel, restaurant and cinema employees.  Employees are entitled to one day off each week, and workers may not work more than 16 hours in any continuous period or more than 60 hours’ overtime per month  Workers in the private sector and in some state-owned companies have the right to establish and join unions, although unions must be registered to be considered legal. Over 30 percent of the work force is organized into seventeen unions, which comprise the General Federation of Jordanian Trade Unions. The Constitution prohibits anti-union discrimination, and unions exercise their right to bargain collectively.  Labor disputes are usually resolved through mediation or arbitration, and during this time strikes are prohibited. If a settlement cannot be reached through mediation, the Ministry of Labor may refer the dispute to an industrial tribunal by the agreement of both parties. If only one party agrees, the Ministry of Labor refers the dispute to the cabinet and then to Parliament. Labor law prohibits employers from dismissing a worker during a labor dispute.  Trade Union and Employers Association Regulation: Workers may organize themselves in a trade union in accordance with of Labor Laws and regulations. Trade union can be established by at least fifty founding members working in the same trade or engaged in similar or interdependent occupations within one field of production and any worker in such trade has the right to join the trade union if he fulfills membership conditions. The employers have no right to make the employment subject to status that worker does not join a trade union or withdraws from membership of a trade union (Article 97 and 98 of Labor Law). The employers also have the right to establish unions that represent them and their mutual issues (Article 98). 9 Women’s Rights Jordan’s constitution protects women by explicitly stating that all Jordanians are equal before the law, have the right to assume public office and the right to work. In 1974, women were given the right to vote and the right to run in general elections.  In September 1996, a National Committee for Women (JNCW) was formed in order to formulate general policies related to women in all fields. The committee also defines the priorities, charts plans and programs for women in both the governmental and non-governmental sectors.  In June 1996, working mothers were provided with additional legal protection. The new labor law that went into effect includes an article that prohibits employers from terminating their jobs or giving them notice about termination if they are past their sixth month of pregnancy or on maternity leave. It also gives mothers ten weeks of paid maternity leave, compared with the previous allowance of eight weeks, as well as an hour a day for breast-feeding during the first year after delivery and a year’s unpaid leave to care for their newborns. The ISSF may need to consult with relevant Jordanian governmental institutions, regulatory authorities as well as other stakeholders from public & private sector during the clearance process to ensure environmental and social compliance; others must be approached prior to construction to take permissions and/or approval for construction plans, etc. in the rare case that may be necessary depending on the type of sub-project. The start-ups will be working on “proof-of-concept� of the product, testing and development, raising funds, market testing, etc. No products are expected to come to market during the period of the implementation period. A summary of responsibilities of relevant governmental authorities is outlined in the following Table: Table 1: Summary of Institutional Roles of Some Relevant Regulatory Agencies Authority Institutional Roles / Responsibilities  Permitting prior to operation (EIA report is Ministry of Environment (MoEnv) required)  Inspection during operation  Permitting prior to operation (after the occupational health and safety measures are Ministry of Labor (MoL) considered)  Inspection during operation Ministry of Health (MoH)  Inspection during operation  Permitting prior to construction (identification of intersection with water piping distribution Ministry of Water and Irrigation (MoWI) Framework).  Supplying water needs for the project  Permitting in case of existence of Ministry of Tourism and Antiquities (MOTA) archaeological remains  Responsible for setting accidents' prevention Ministry of Transport measures and developing them under the international requirements  Supplying electricity needs for the project Ministry of Energy and Mineral Resources  Approval for construction plans Civil Defense  Permitting prior to operation Ministry of Housing and Public Works  Permitting prior to construction 10 Ministry of Industry and Trade Department of Land and Survey  Permitting prior to construction. Public Security Directorate  Permitting during operation The ESMF ensures that the project activities are compliant with the relevant requirements of national policies, regulations and legislations. Table 2 summarizes the Jordanian EIA Procedures which are followed for any project proposal/application: Table 2: Jordanian EIA Procedures and Steps Jordanian EIA Procedures and Steps Stage Activity  The Project Proponent completes a Project Information Form (PIF) for the Initial intended project and submits it to the Ministry of Environment for screening; Filing and  An Inter-ministerial Central Licensing Committee reviews the PIF, and after Screening conducting site surveys determines if the project is classified as:  A Category I project; for which a full EIA/EMP report is required  A Category II project, for which an initial EIA/EMP is required  Category III for which no environment analysis is required  The decision is publicly displayed for 2 weeks. Scoping  The Ministry issues legally binding guidance on the Scope of the Assessment  Proponent prepares a Terms of Reference for the EIA/EMP, after a mandatory public consultation.  An Inter-Ministerial Technical Review Committee (TRC) reviews and approves the TOR. 2.4 World Bank Group Safeguard Policies and Procedures The World Bank Group has screened the proposed project components and has determined that this project is categorized as a FI – Financial Intermediary according to OP4.01. Institutions selected to implement investments and ecosystem support are referred to in this context as ISSF partners and include VC investment funds, Angel/Seed funds, and the Ecosystem providers (e.g. accelerators, incubators, business development centers). It is anticipated that the majority of sub-project investments supported in this Project will be in the services or technology sphere, with no-to-limited environmental or social risks associated with them. However, it is recognized that there may be some investments (e.g. renewable energy, pharmaceuticals, agro-business) in which the environmental and social risks may be identified. Due to the young age and size of SMEs, there are expected to be no physical production during the entirety of the World Bank project implementation period. 11 Each ISSF partner will be required to undertake an Environmental and Social Screening process which allows ISSF investments to be classified according to their potential impacts and appropriate mitigation/rehabilitation measures required, according to the Jordanian Environmental Law and the World Bank’s Operational Policy 4.01 on Environmental Assessment. The initial screening form will provide for exclusion of any investment which merits the application of OP 4.09 Pest Management, OP 4.11 Physical Cultural Resources, or OP 4.12 Involuntary Resettlement. The initial screening form will not screen for the possible application of OP 4.04 Natural Habitats, OP 4.10 Indigenous Peoples, OP 4.36 Forests, OP 4.37 Safety of Dams, OP 7.50 Projects on International Waterways, or OP 7.60 Projects in Disputed Areas. Natural habitats, forests, dams, etc. do not exist within the geographical range of possible ISSF locations. Table 3: World Bank Operational Policies for Safeguards and their Applicability to the ISSF Applicable? If applicable, how might it apply Yes Environmental Assessment (OP/BP/GP 4.01) The World Bank Group has screened the proposed project components and has determined that this project is categorized as a FI – Financial Intermediary according to OP 4.01. Financial institutions and ecosystem partners selected to implement investments and ecosystem support are referred to in this context as ISSF partners. ISSF partners include venture capital (VC) investment funds, angel/seed funds, and ecosystem providers (accelerators, incubators, business development services etc.). It is anticipated that the majority of sub-project investments supported in this Project will be in the services or technology sphere, with no-to-limited environmental or social risks associated with them (i.e. Category C, or Category III in Jordan). Furthermore, due to the early (proof-of-concept and pre-production) stages as well as the size of SMEs, there is expected to be no physical production during the entirety of the World Bank project implementation period. However, it is recognized that there may be some investments (e.g. renewable energy, pharmaceuticals, agro-business) in which the environmental and social risks may be identified. The SME screening process will exclude any Category A projects (Category I projects in Jordan), and will identify the Framework needed for mitigation and management of Category B projects (Category II in Jordan). No Natural Habitats (OP/BP 4.04) Sub-project screening will exclude any sub-project which involves natural habitats. No Pest Management (OP 4.09) Potential activities in agribusiness are limited to innovative packaging, processing, marketing and distribution of food products. Any sub-activities which produce or use pesticide will be excluded from the project and listed in the ineligible activities. Also, the screening checklist includes questions on the use/production of pesticides to ensure these activities are screened out. No Physical Cultural Property (OP 4.11) All potential investments or grants will be screened in order to exclude from ISSF financing those which would locate or invest in areas with physical cultural property attributes. 12 No Involuntary Resettlement (OP/BP 4.12) The project is expected to mainly finance small enterprises in the services or technology sphere and expected to be located in leased office space. Sub-project screening will exclude any sub-project which would require land acquisition, loss of land use, or economic displacement. Hence, a resettlement policy framework is not required. No Indigenous Peoples (OP 4.10) There are no indigenous peoples in the service area. No Forests (OP/BP 4.36) Sub-project screening will exclude any sub-project which involves forests. No Safety of Dams (OP/BP 4.37) N/A No Projects in Disputed Areas (OP/BP/GP 7.60) N/A No Project on International Waterways (OP/BP/GP 7.50) N/A 2.5 Comparison of World Bank Safeguard Polices and Environmental Policies of Jordan The project review and approval process outlined above methodology is commonly reproduced in similar forms in the Levant. In Jordan, for example, the national regulations define a list of projects that must do a comprehensive Environment and Social Impact Assessment (ESIA). In addition, through the screening processes, unlisted projects could be asked to conduct an ESIA if they prove to have significant negative environmental impacts. Further, the Jordanian regulations divide the projects into three categories that correspond roughly to the three categories of the World Bank. Many features of the Jordanian EA Framework are compatible with the World Bank EA Policy (OP 4.01) as well as with the European Commission (EC) EIA Regulations no. 97/11. These features are: (i) screening; (ii) scoping; (iii) EIA report content; (iv) content of the Environment Management Plan; (v) provisions for appeal; and (vi) requirements for monitoring and evaluation. In the event of differences, the WB policies will be applied. As per the EIA regulation no. 37/2005, the Technical Review Committee consists of the representatives of the following agencies: MoEnv, MOPIC, MOMA, MoWI, MOTA, MoH, Agriculture, Industry and Trade, Energy and Mineral Resources, and Public Works and Housing, in addition to representatives from non-governmental organizations (NGOs) and academia. 2.6 Cultural Heritage and Physical Cultural Resources Any project that is known to trigger OP/BP 4.11 Physical Cultural Resources will be excluded from ISSF. However, chance find procedures are included in the rare case that previously unknown physical heritage artifacts are found. 13 The definition of physical cultural resources include any movable or immovable objects, sites, structures, groups of structures, and natural features and landscapes that have archaeological, paleontological, historical, architectural, religious, aesthetic, or other cultural significance. Physical cultural resources may be located in urban or rural settings, and may be above or below ground, or under water. Their cultural significance may be at the local, provincial or national level, or within the international community. In case of accidental findings of any antiquities or physical cultural resources that might occur during the implementation of the projects, the JLGC and the project proponent must notify Ministry of Tourism and Antiquities (MoTA) immediately. According to the applicable Jordanian Heritage Law No. 51 for the year 1966, Article 15, MoF must stop the project and notify the related Authority (MoTA) within 3 days to take the necessary actions. The Chance Find Procedures are to be applied in case culturally valuable materials are uncovered during excavation includes:  Stop work immediately following the discovery of any materials with possible archeological, historical, paleontological, or other cultural value; announce findings to project manager; and notify relevant authorities;  Protect artifacts as well as possible using plastic covers; implement measures to stabilize the area, if necessary, to properly protect artifacts;  Control access to site where finding occurred  Prevent and penalize any unauthorized access to the artifacts; and  Restart construction works only upon the authorization of the relevant authorities. The Chance Find Procedures are detailed in Annex 2. 2.7 Public Consultations and Disclosure Consultations on the project design were held in October 10, 2016 and on the evolving project design and ESMF during meetings with several stakeholders in February 2017. For the purposes of project design, beneficiaries consulted included stakeholders from the investment and entrepreneurship community on the project concept design. (Refer to Annex 3 for details). Consultation feedback included the following:  Private sector representatives stressed the importance of ensuring that the investment mechanism is set up in a flexible and open manner to encourage private sector participation.  Private sector representatives also raised the importance of World Bank intervention in helping building a pipeline of investment opportunities in local companies, as well as contributing to produce a new generation of fund managers through the demand generated by this project  Preliminary conversations also stressed the need for a non-sector specific fund which can invest both in pre-existing funds as well as directly in companies. With regards to ESMF consultations were held in February 2017 with the key stakeholders, JLGC, the Central Bank, and the Ministry of Finance in which the operational details governing the management, monitoring and mitigation of both environmental and social issues were discussed. The World Bank procedure requires a public disclosure of the ESMF prior to project appraisal, so as to ensure that all stakeholders, potential beneficiaries, and the general community understand the project and its potential environmental and social impacts, and are able to give their feedback and raise their concerns if any. This enables the Appraisal Team to enhance the ESMF by incorporating the feedback received. The ESMF must be disclosed widely in-country and is also made publicly available on the WB’s InfoShop. 14 During the sub-project preparation process, the private companies will prepare an ESMP on a ‘needs basis’. The ISSF will consult potential beneficiaries about the Project's environmental aspects and takes their views into account. The SME will initiate such consultations as early as possible. For meaningful consultations between the SME and potential beneficiaries, the grantee provides relevant material (e.g. the subproject design as well as the draft ESMP) in a timely manner prior to consultation and in a form and language that are understandable and accessible to the groups being consulted. In addition, the SME must consult with such groups throughout project implementation as necessary to address environmental risk management issues that affect them. Provisions and specifics, including budgets, will be included in the relevant sub-project application budget and the ESMP documents. However, due to the upstream nature of the project the risk is low. 2.8 Grievance Redress Mechanism (GRM) The Project is required to establish a GRM to address any complaints that may arise during project implementation. The JLGC will set up an email account to be displayed in their website to enable potential beneficiaries to submit a complaint if needed. The email address will also be displayed at the ISSF website however all complaints will be channeled to JLGC. JLGC will be accountable for managing and resolving the complaints in coordination with the Board of Directors and ISSF. A part- time consultant housed at JLGC will be responsible for overall follow up and monitoring of the project, including liaising with the Board to resolve complaints. Transparency, confidentiality and independence of the process is important and will be safeguarded by housing uptake at JLGC. Documentation of the complaint and resolution will be key and will build on JLGC’s strong capacity on transparency and accountability including uptake and registration of complaint, follow up and resolution. 2.8 Outreach, Social Inclusion and Transparency It is paramount that measures that promote social inclusion and transparency permeate the procedures, eligibility criteria, and access to information throughout the project. The project will therefore be responsible for widely disseminating the call for proposals through multiple channels, including women’s business associations, social media outlets, and other relevant mediums. Eligibility criteria, application process, and grievance redress mechanism should be included in the call. Additionally, the list of awarded companies should be publicly disclosed on the ISSF and JLGC websites. 15 CHAPTER THREE: ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN 3.1 Procedures for Subproject Assessment and Development of ESMPs In agreeing to participate in the Project, the JLGC, ISSF and each ISSF partner accepts responsibility to the WBG for mandatory screening, assessment, and management of the environmental and social risks and impacts of proposed transactions taken under the Project in a manner that is consistent with WBG Standards as well as the financial institution’s corporate practices and policies for Corporate Responsibility. All investments/loans/grants to SMEs provided under the Project should be subjected to an environmental and social review process incorporating the procedures described in this ESMF (Annex 4). All ISSF partners should use these procedures in reviewing and appraising sub-project investment/grant applications, and to inform sub-investees/grantees of environmental requirements for investment/grant appraisal, so that sub-projects can be implemented in an environmentally and socially sound manner. These procedures and requirements incorporate the World Bank’s safeguard policies. ESMP preparation guidance is included as Annex 5. An outline for preparation of a sub-project ESMP is included as Annex 6, including guidance on identifying adverse impacts, accompanying mitigation measures, and monitoring indicators. As with all World Bank-funded projects if new information becomes available that indicates that any of the proposed actions might be “major� and their effects “significant�, JLGC shall make the World Bank aware of these actions and potential effects. If such a proposed action has been accepted as a sub-project and the JLGC wishes to continue to support a sub-project recategorized from Category B to Category A, the entire ISSF project would need to be recategorized as a Category A project through a project restructuring. 3.2 Implementation Arrangements The ISSF Fund will be created as a Private Shareholding Company (PSC) under the Jordanian Companies Law of 1997 Law No. (22). In accordance to its status under the Law No. (22) the ISSF will be subject to the supervision of the Company Comptroller which supervises all private corporations. The Companies Law does not directly regulate the activities of PE and VC funds. It only provides a general legal framework for the incorporation and corporate governance of the companies registered under the above Law. Under the Companies Law the constitutional documents that govern the relationship of partners or shareholders in a Jordanian company are filed with the Companies Control Department at the Ministry of Industry & Trade. The Companies Law also prescribes specific rules in relation to the corporate governance of companies registered under the law. The Company’s Controller is responsible for monitoring the implementation of the Companies Law and managing the Companies Control Department at the Ministry which is the corporate registry of Jordan. In Jordan, the typical local Fund legal Structure is not available due to certain limitations in the Companies Law. While the limited partnership corporate form is in theory available through a Limited Partnership (LPA) or a Partnership Limited by Shares (LPS), there are certain requirements in the Companies Law that make it impractical, if not impossible, for the implementation of a typical Fund Structure (LPA or LPS). Some of these limitations include (i) the requirement for a General Partner (GP) in a LPA to be a natural person as opposed to a corporate entity, (ii) requirement for two GPs in an LPS 16 (iii) requirement for a GP of an LPS to contribute 30 percent of the total fund value. Thus funds that want to be set up using an exclusively Jordanian corporate structure (“Local Funds�) take the form of a private shareholding company (a “PSC�) which is a closed limited liability company that allows for the establishment of classes of shares. Alternatively, which is the case for all current fund structures in Jordan, funds register as an Offshore LP with a GP presence in Jordan. In order to encourage private sector participation and to promote transparency and commercial implementation, it was agreed that the ISSF would be implemented through the JLGC which would act as the local sponsor of the project. The legal agreements that will be signed to make the project effective are as follows: The Ministry of Planning and International Cooperation (MOPIC) will sign the Loan Agreement (LA) and receive the World Bank loan on behalf of the government of Jordan (GOJ) who will be responsible for repayment of the loan to the World Bank; at the same time The World Bank will sign a Project Agreement (PA) with the JLGC as the entity responsible for implementing the project in accordance with the LA and POM. MOPIC will also sign a Co-Financing Agreement (CFA) with the CBJ with regards to the Co-Financing that the CBJ will provide to the project; and MOPIC will sign a Subsidiary Agreement (SA) with the JLGC as the implementing agency. The JLGC will put in place the necessary controls to ensure that the implementation of the project is subject to strict independent private sector led oversight and a transparent and professional investment strategy. These include the establishment of a predominantly private sector Board of Directors and the establishment of an independent IC by the ISSF, comprised fully from private sector experts who will decide on the selection of investments and sanction exits presented by the ISSF management team. Both the BOD and IC structures will be selected based on criteria indicated in the POM and based on non- objection from the World Bank. A management agreement will be signed by JLGC and the selected Manager for the ISSF outlining respective responsibilities of JLGC as supervisor and the ISSF manager for making and managing investments and deal flow activities and supplying the necessary information and reports to the JLGC. The legal and governance structure of the ISSF including the criteria for selecting independent private experts as part of the Board of Directors and the IC was approved by Cabinet under resolution No (2283) dated March 19, 2017. A Board Decision taken by the Board of Directors of the JLGC at its meeting dated February 2, 2017 gives approval to the JLGC to set up the ISSF under the proposed structure. Figure 2: Legal Arrangement GOJ 1. Loan Agreement (LA) 3. Co-Financing Agreement (PFA) WB CBJ 4. Subsidiary Agreement (SA) 2. Project Agreement (PA) JLGC Implementing Agency 17 Figure 3: Institutional Implementation ISSF Shareholder CBJ Agreement JLGC 51% Share 49% Shares Chairman of the Board (Silent) of Directors Management Agreement Inv. Committee ISSF Manager (CEO) (PIU) Reviews and selects investments Funds Ecosyst SMEs em Exit from the ISSF: The JLGC will hold the shares in the ISSF on behalf of the Government until all assets are liquidated and any remaining proceeds returned to the government and the CBJ. The World Bank loan repayment is not dependent on the returns and closure of the ISSF. The government is liable to repay the World Bank loan in accordance to the terms in the Loan agreement. The CBJ has committed to provide US$49 million to the Capital of the ISSF in addition to the World Bank loan4. A portion of this amount (US$13.88 million) will be disbursed to the ISSF during the project life. At the end of the project life (6 years) the CBJ will provide the remaining amount for a second funding round for the ISSF. This will enable the ISSF to re-balance its investments and gain sustainability until all investments are exited/liquidated (early stage investments in Jordan take an average of 7-9 years before they can be exited). 4 According to the recommendation adopted by the Cabinet the CBJ is to provide a matching amount to the US$50 million World Bank loan. 18 Diagram 2. PROCEDURE FLOW FOR E+S RISK MANAGEMENT SYSTEM Receive loan application form Check Against Exclusionary List Initial Check of Project Category Screening Category 1(CI) Category 2 (CII) or Category 3 (CIII) and Loan Loan pre-screened and eligible for approval Pre- Excluded Appoval Loan obtains loan Officer receives Applicant MoEnvform application relevant clearance letter with EA category assigned (See Table 2.2) Category 3 (CIII) No Environmental analysis is required Category 2 (CII) Loan Approval Loan Approval (Y/N) Initial Environmental Examination (IEE) is required Loan Approval for “proof of concept� and design work only (Y/N)* Loan Disbursement Yearly post-review audit and spot checking by Environment Consultant (on call) 19 *A Category II / “B� Environmental Impact Assessment (EIA) will need to be written, reviewed, cleared by the World Bank, and disclosed if the project moves past design phase into construction or implementation. An Environmental Specialist (ES) consultant will be retained by the ISSF and will report to the ISSF Manager on the below listed activities.  Conduct post-review audits of all sub-projects for quality assurance (see Annex 7 for an example);  Design and conduct necessary training; and  Prepare annual safeguards monitoring reports in a timely manner. 3.3 Monitoring Plan The JLGC will not have any role in the selection of investments or implementation of the activities and will engage through an international competitive process an independent management team and put in place the necessary controls to ensure that the implementation of the project is subject to strict independent private sector led oversight and a transparent and professional investment strategy. The ISSF Manager will be accountable to the Board of Directors of the ISSF of which the JLGC will be the Chairman. As such, the ISSF will directly report to the World Bank, and in turn, the JLGC will report to MOPIC on project implementation. With regards to safeguards reporting, the ISSF will conduct annual post-review audits and present progress on the Project to the JLGC. The JLGC will report to the WBG as indicated in this ESMF guidelines (see Annex 8 for an outline) Aiming at providing information about key environmental and social impacts of the project, and effectiveness of mitigation measures, a sample monitoring framework is attached as Annex 5. The monitoring framework serves also as a tool for monitoring and evaluating safeguards compliance with the ESMP. The ISSF will include a section on safeguards compliance in each progress report which will be submitted to the Board of Directors and JGLC. JGLC will transmit progress reports to the World Bank. Key objectives of the monitoring plan include:  Enabling the ISSF and the World Bank to evaluate the success of mitigation as part of project supervision.  Allowing corrective actions to be taken whenever needed. As most-to-all funded SMEs are not expected to start physical/economic operations prior to the close of this ISSF project, monitoring will consist of design-phase screening, and for Category B sub-projects, ESMP documentation, Ministry of Environment approval, and ESMP document disclosure. 3.4 Monitoring Indicators The performance indicators below are to be monitored and reported on by the ISSF environmental safeguards consultant to monitor compliance on the ESMP:  Subproject screening forms reviewed by ES as a percentage of total subprojects provisionally cleared for ISSF loan application phase, as well as for approval; 20  Subproject screening forms cleared by ES as a percentage of total subprojects as a percentage of total subprojects provisionally cleared for ISSF loan application phase, as well as for approval;  Subprojects with filed Ministry of Environment approvals, as a percentage of total subprojects with loans approved.  Subprojects with filed IEEs, as a percentage of total subprojects with category B/II classification; 3.5 Capacity Building and Training Plan Several training opportunities should be held for the ISSF staff, and interested/potential ISSF partners, covering the following topics: (i) overview of sub-project screening process and subproject categorization, including “negative list�; (ii) overview of the ISSF ESMF structure, including positive list of potential subprojects; and (iii) training on subproject ESMP preparation. Training costs will be primarily related to the use of the ES consultant to prepare and execute these workshops as needed. These costs are included in Section 3.6, ESMF Cost Estimate. Costs related to hosting workshops are expected to be borne by ISSF; all costs related to attending workshops are expected to be borne by workshop participants. 3.6 ESMF Cost Estimate The costs associated with implementing the ESMF will be covered under the standard operating/administrative costs of the private company as the companies are obliged to follow Jordanian Environmental Law. It is expected that the ISSF will retain access to ES consultancy services to advise the ISSF on as “as needed� basis. ES consultancy services implies that the ISSF may retain services of several different ESs as they are available when their services are needed. The cost of Environmental Specialist part-time consultancy services is estimated at $1,500/month continuously over the implementation of the ISSF project. Again, this is an estimate, which will fluctuate according to percentage of ISSFs subproject applications which require subproject ESMPs. Table 4: ESMF Implementation Cost Estimate Details Unit Rate in Yearly Cost in Total US$ Activity Quantity US$ US$ (for 6 years) Part-time Follow Up and 1 1,500/month 18,000 108,000 Monitoring Consultant (at JLGC): - Complaint Handling and Resolution - Environmental 1 1,500/month 18,000 108,000 Specialist Consultancy Services - Environmental 3 3,000 9,000 54,000 post-review audit - Training 3 2,000 6,000 36,000 workshops 21 Total 51,000 306,000 22 ANNEXES Annex 1: World Bank Group Policies Performance Standard 2: Labor and Working Conditions (As Reference from IFC on labor issues) http://www.ifc.org/wps/wcm/connect/2408320049a78e5db7f4f7a8c6a8312a/PS2_English_2012.pdf?MO D=AJPERES Operational Policy 4.01 – Environmental Assessment (Financial Intermediaries) Projects Involving Subprojects For projects involving the preparation and implementation of annual investment plans or subprojects, identified and developed over the course of the project period during the preparation of each proposed subproject, the project coordinating entity or implementing institution carries out appropriate EA according to country requirements and the requirements of this policy. The Bank appraises and, if necessary, includes in the SIL components to strengthen, the capabilities of the coordinating entity or the implementing institution to (a) screen subprojects, (b) obtain the necessary expertise to carry out EA, (c) review all findings and results of EA for individual subprojects, (d) ensure implementation of mitigation measures (including, where applicable, an EMP, and (e) monitor environmental conditions during project implementation. If the Bank is not satisfied that adequate capacity exists for carrying out EA, all Category A subprojects and, as appropriate, Category B subprojects--including any EA reports--are subject to prior review and approval by the Bank. Projects Involving Financial Intermediaries For a project involving a financial intermediary (FI), the Bank requires that each FI screen proposed subprojects and ensure that sub-borrowers carry out appropriate EA for each subproject. Before approving a subproject, the FI verifies (through its own staff, outside experts, or existing environmental institutions) that the subproject meets the environmental requirements of appropriate national and local authorities and is consistent with this OP and other applicable environmental policies of the Bank. In appraising a proposed FI operation, the Bank reviews the adequacy of country environmental requirements relevant to the project and the proposed EA arrangements for subprojects, including the mechanisms and responsibilities for environmental screening and review of EA results. When necessary, the Bank ensures that the project includes components to strengthen such EA arrangements. For FI operations expected to have Category A subprojects, prior to the Bank's appraisal each identified participating FI provides to the Bank a written assessment of the institutional mechanisms (including, as necessary, identification of measures to strengthen capacity) for its subproject EA work. If the Bank is not satisfied that adequate capacity exists for carrying out EA, all Category A subprojects and, as appropriate, Category B subprojects--including EA reports--are subject to prior review and approval by the Bank. 23 Annex 2: Chance Find Procedures Contracts for civil works involving excavations should normally incorporate procedures for dealing with situations in which buried physical cultural resources (PCR) are unexpectedly encountered. The final form of these procedures will depend upon the local regulatory environment, including any chance find procedures already incorporated in legislation dealing with antiquities or archaeology. For F4J, chance finds procedures contain the following elements: 1. PCR Definition In some cases the chance finds procedure is confined to archaeological finds; more commonly it covers all types of PCR. In the absence of any other definition from the local cultural authorities, the following definition could be used: “movable or immovable objects, sites, structures or groups of structures having archaeological, paleontological, historical, architectural, religious, aesthetic, or other cultural significance�. 2. Ownership The identity of the owner of the artifacts found should be ascertained if at all possible. Depending on the circumstances, the owner could typically be, for example, the state, the government, a religious institution, the land owner, or could be left for later determination by the concerned authorities. 3. Recognition As noted above, in PCR-sensitive areas, recognition and confirmation of the specific PCR may require the contractor to be accompanied by a specialist. A clause on chance finds should be included in every contractor’s specifications. 4. Procedure upon Discovery Suspension of Work If a PCR comes to light during the execution of the works, the contractor shall stop the works. Depending on the magnitude of the PCR, the contractor should check with the Ministry of Tourism and Antiquities (MoTA) for advice on whether all works should be stopped, or only the works immediately involved in the discovery, or, in some cases where large buried structures may be expected, all works may be stopped within a specified distance (for example, 50meters) of the discovery. MoTA’s decision should be informed by a qualified archaeologist. After stopping work, the contractor must immediately report the discovery to the Resident Engineer. The contractor may not be entitled to claim compensation for work suspension during this period. The Resident Engineer may be entitled to suspend work and to request from the contractor some excavations at the contractor’s expense if he thinks that a discovery was made and not reported. Demarcation of the Discovery Site With the approval of the Resident Engineer, the contractor is then required to temporarily demarcate, and limit access to, the site. Non-Suspension of Work The procedure may empower the Resident Engineer to decide whether the PCR can be removed and for the work to continue, for example in cases where the find is one coin. 24 Chance Find Report The contractor should then, at the request of the Resident Engineer, and within a specified time period, make a Chance Find Report, recording: · Date and time of discovery; · Location of the discovery; · Description of the PCR; · Estimated weight and dimensions of the PCR; · Temporary protection implemented. The Chance Find Report should be submitted to the Resident Engineer, and other concerned parties as agreed with the cultural authority, and in accordance with Palestinian national legislation. The Resident Engineer, or other party as agreed, is required to inform the cultural authority accordingly. Arrival and Actions of Cultural Authority The cultural authority undertakes to ensure that a representative will arrive at the discovery site within an agreed time such as 24 hours, and determine the action to be taken. Such actions may include, but not be limited to: · Removal of PCR deemed to be of significance; · Execution of further excavation within a specified distance of the discovery point; · Extension or reduction of the area demarcated by the contractor. These actions should be taken within a specified period, for example, 7 days. The contractor may or may not be entitled to claim compensation for work suspension during this period. If the cultural authority fails to arrive within the stipulated period (for example, 24 hours), the Resident Engineer may have the authority to extend the period by a further stipulated time. If the cultural authority fails to arrive after the extension period, the Resident Engineer may have the authority to instruct the contractor to remove the PCR or undertake other mitigating measures and resume work. Such additional works can be charged to the contract. However, the contractor may not be entitled to claim compensation for work suspension during this period. Further Suspension of Work During this 7-day period, the Cultural authority may be entitled to request the temporary suspension of the work at or in the vicinity of the discovery site for an additional period of up to, for example, 30 days. The contractor may, or may not be, entitled to claim compensation for work suspension during this period. However, the contractor will be entitled to establish an agreement with the cultural authority for additional services or resources during this further period under a separate contract with the cultural authority. 25 Annex 3: ISSF Consultation Summary Note A consultation in the form of a Roundtable took place on October 10, 2016 at Eversheds LLD in Amman. The stakeholders comprised of representatives from the investment and entrepreneurship community on the preliminary project concept design. The purpose of the workshop was to validate key parameters and targets of the project, and to solicit feedback on institutional arrangements for the project. Consultation feedback included the following:  Private sector representatives stressed the importance of ensuring that the investment mechanism is set up in a flexible and open manner to encourage private sector participation. They confirmed the critical need for improving the current legal framework to enable the establishment of local equity management funds. Limitations in local regulations, hinder flexibility in funds management, thus most funds operating in Jordan are registered offshore or operate as a financial corporation Limited Partnership (LP) or General Partnership (GP). It was stressed that the project needs to be flexible in allowing funds to have an offshore LP/GP structure.  Private sector representatives also raised the importance of World Bank intervention in helping to build a pipeline of investment opportunities in local companies, as well as contributing to produce a new generation of fund managers through the demand generated by this project. They also stressed the importance of focusing on innovation financing, since they consider that this segment is the one that presents the biggest gap in the market. To achieve this purpose, the project may include programs on investment readiness, mentoring, and acceleration. The project may also provide support to the higher than normal transaction costs funds may face when managing innovative young companies – these include registering/maintaining/updating patents, conducting field pilots, lab testing etc. Support in this area will be an important incentive for the private sector and will constitute a mitigation against failure of the investee companies.  An issue stressed by all stakeholders was the importance of keeping the project design as open and flexible as possible to incentivize private sector participation. According to investors and fund managers in Jordan their incentive is to have broad parameters in place yet flexibility to design their own investment strategy. The lack of equity financing for innovative seed and early stage (below US$1m) and VC stage companies (investments between US$1m – US$3m) presents a specific challenge, notably the need to design effective tools for non-financial support and mechanisms to address the higher than normal transaction costs necessary for supporting such companies, which tend to discourage investors. In this sense it is necessary to address the capacity in the ecosystem- to create more and better deal flow, and provide coverage for the higher than normal transaction costs as a means of incentivizing private investors. Preliminary conversations also supported the need for a non-sector specific fund that can invest both in pre-exiting funds and directly in companies – the latter being dependent on the capacity within the project implementing agency. It was also discussed with the Government, the importance of setting a steering committee with members including CBJ, MOF, MOPIC and JLGC. The Steering Committee will have general oversight of the project while investment decisions will be led and decided upon by the private sector. Consultations were conducted with the following: Central Bank of Jordan (CBJ) H.E. Dr. Ziad Fariz, Governor 26 H.E. Dr. Maher Sheikh Hasan, Deputy Governor Mr. Mohamed Amaireh, Project Implementation Unit (PIU) Director Ms. Maha I. Al-Abdallat, Assistant Executive Manager, Banking Supervision Department Jordan Loan Guarantee Corporation (JLGC) H.E. Dr. Mohamad Aljafari, Deputy Chairman and Director General Mrs. Rana Tahboub, Advisor, Risk Management Mr. Mohamed Al-Rashdan, Assistant Director General, Technical and Operational Group Ms. Haneen Obeidat, Investment Officer Ministry of Industry, Trade and Supply: H.E. Ms. Maha Al-Ali, Minister Jordan Enterprise Development Corporation (JEDCO): Ms. Hana Uraidi, Chief Executive Officer Jordan Investment Commission: Mr. Mukhallad Al Omairi, Secretary General Injaz: Mr. Muhannad Al-Jarrah, Executive Director, and Mr. Omar Nimri, Director of Entrepreneurship Badia Impact Fund: Mr. Emile Cubeisy, Managing Partner Intaj: Mr. Nidal Al-Bitar, Chief Executive Officer Amman Chamber of Industry: Mr. Maher Al-Mhrooq, General Manager Queen Rania Center for Entrepreneurship: Dr. Abdelraheem Abual Basal, Executive Director Oasis 500: Mr. Yousef Hamidaddin, Chief Executive Officer King Abdullah II Fund for Development: Mr. Rami Ksous, CEO of Investment Business Development Center: Mr. Nyef Istetyeh, Chief Executive Officer Capital Bank: Mr. Haitham Kamhiyah, General Manager Ahli Bank: Dr. Omar Razzaz, Chairman 27 Annex 4: Environmental and Social Aspects Screening Checklist Environmental & Social Aspects Screening Checklist Project name: Location: Financing amount (US$) and financial purpose Industry sector: Brief project description: Site visit date: Additional technical review required:  Yes Reviewed by:  No Compliance with applicable requirements – check all that apply  Jordan Ministry of Environment Exclusion list applied  National regulatory requirements  Environmental, health and safety permits granted Management systems – check all that apply  No written environmental and social policy:  No written human resources policy (e.g. employment rights/non-discrimination)  No written fire/safety plan or emergency prevention/preparedness/response plan)  No environmental, health and safety training for employees  No procedures for managing environmental and social risks  No designated person in charge of environmental and social issues  No internal process for sharing information Project site —check all that apply:  Non-urban/undeveloped land  Proximity to river/stream/pond/lake/sea  Proximity to protected area (e.g. forest/endangered species)/ecologically sensitive area (e.g. wetland/breeding grounds)  Proximity to culturally sensitive/indigenous area Environmental issues—check all that apply: Air emissions Waste water  Boilers  Waste water discharged to:  Generators _____________  Vehicles and equipment  Drains and grates  Furnaces and incinerators  Oil separators  Welding and soldering  Separation tanks or filters  On-site burning  Reed beds  Use of solvents  Cut-off valves  Use of fumigation  Foul sewers and septic tanks  Evaporation of chemicals  Water treatment units  Refrigeration plant  Cleaning operations  Use of exhaust ventilation  Spraying operations  De-watering/water pump out Solid and hazardous wastes Hazardous chemicals, fuels, pesticides  Waste generated:  On-site chemicals or fuels storage  Types of waste:  Protective measures against leaks/spills 28 ___________________________  Signs of leaks/spills ___________________________  On-site spill cleanup equipment ___________________________  Protective measures against rain  Hazardous waste (e.g. waste oils, pesticide  Signs of corrosion on tanks/containers washings, solvents, clinical waste, asbestos)  Secured storage areas against theft  Waste disposed to: __________________  Training on proper handling of chemicals and fuels  Pesticide use and management Resource consumption Nuisance  Material used:  Dust _________________________________  Noise _________________________________  Odors  Use of renewable natural resources  Fumes  Use of tools and equipment  Vibrations  Water source:__________________  Traffic congestion and obstructions  Energy source:_________________ 29 Annex 5: ESMP Preparation Guidance for ISSF Partners Background This Environmental & Social Management Plan (ESMP) details the policy, procedures and workflow that will be followed for investments made by ________________ (“the Company�) under the management and administration of _____________________(“the Follow Up and Monitoring Consultant (or other designated officer)�). Environmental & Social Management Plan General Principles The Company continually endeavors to ensure effective Environmental & Social management practices in all its activities, products and services with a special focus on the following:  Ensuring that all activities undertaken by the Company are consistent with the Applicable Requirements outlined later in this document  Ensuring that all projects are reviewed against the Applicable Requirements  Financing projects only when they are expected to be designed, built operated and maintained in a manner consistent with the Applicable Requirements  Making best efforts to ensure that all projects are operated in compliance with the Applicable requirements on an ongoing basis, during the currency of the Company’s financing  Ensuring transparency in its activities  Ensuring that the management and the shareholders of the client companies understand the policy commitments made by the Company in this area. This Policy will be communicated to all staff and operational employees of the Company. Signed Effective Date _________________________ ________________________ 30 Applicable Requirements The Company will ensure that all projects are reviewed and evaluated against the applicable national laws on environment, health, safety and social issues and any standards established in Jordanian Law. The Company will also ensure that:  Category A (I) projects are excluded from financing (including any project that involves acquisition of land and involuntary resettlement).  The Jordanian MoEnv Exclusion List for all projects At an initial stage of inquiry, one of the ISSF Investment Officers will apply the ESMP checklist, including the exclusion list (see Annex 4), to the project. If the project involves an excluded activity, the prospective client will be so informed, and further consideration of financing for the project will be terminated. Otherwise, the Investment Officer, with the advisement of the Environmental Specialist consultant as needed, will indicate the Applicable Requirements for the project. When the ISSF Investment Officer indicates, through the sub-project application screening process, that the project does not involve an excluded activity, but is identified as having a potentially substantive E&S risk, the prospective SME will be informed that it must take undertake ESMP mitigation action in accordance with Jordanian law. Prospective SMEs must provide all applicable ESMP-related information to the ISSF and the Investment Officer must have concluded that the Project is expected to meet the ISSF’s Applicable Safeguards Requirements (with Corrective Action if required) prior to the Fund’s decision to make an investment. Depending on the complexity of the ESMP, Environmental and Social Due Diligence may be carried out by the Environmental Specialist consultant to be retained by the ISSF, and can be a desk review or require a full scale review, to include an interview with the Applicant and/or a site visit. Environmental and Social performance will be evaluated on an annual basis, including status of implementation of any Corrective Actions. The benchmark for performance will be the ongoing compliance against the ISSF’s Applicable Safeguards Requirements. The responsibilities for implementation of the Performance evaluation are on: a) The beneficiary SMEs, who will provide annual reports to the ISSF, who may follow up as required with further queries or site visits; and b) The ISSF, who will provide biannual progress report to ISSFManagement and WBG, to be prepared on the basis of the annual reports provided by the SMEs, as well as the ESDD conducted. All investment agreements will contain appropriate environmental representations, warranties, and covenants requiring that projects are in compliance in all material respects with host country environmental, health, safety and social requirements embodied by state general laws and implementing agencies and conducted in accordance with any Applicable Requirements. Organization and Responsibilities For category B sub-projects, one team member in the SME will have oversight for environmental and social issues, and will sign the Company’s annual environmental performance report to the JLGC/WB. The responsibilities of this SME team member include:  During due diligence, the evaluation of environmental compliance of the SME company with Applicable Requirements; 31  Supervising investment progress against on-going compliance with the Applicable Requirements.  The preparation of an annual environmental performance report as part of SME reporting to the ISSF. This will ensure that these procedures are implemented, and that records of environmental reviews are maintained. The Environmental Coordinator (or other designated officer) will ensure that all investment decisions are supported by appropriate due diligence documentation (including, but not limited to, an environmental section in each final Investment Memorandum). The Company will also ensure that the WBG is notified if and when the current Environmental Coordinator leaves that position, and will provide the WBG the name of the new Environmental Coordinator. Legal Counsel will ensure that appropriate environmental representations, warranties, and covenants are incorporated in each SME shareholder agreement. Resources and Capabilities The Environmental Coordinator will work with Senior Management to ensure that adequate Company resources have been committed to allow for the effective implementation of the environmental policy and procedures of the Fund. The Environmental Coordinator (or other designated officer) will need to be technically qualified to be able to carry out the due diligence or review work carried out by a consultant. The Environmental Coordinator will maintain a file of qualified environmental consultants who can be called upon to assist in conducting environmental reviews. Records to be maintained Environmental & Social Due diligence (ESDD) - This is the record of the Company’s E&S review of a project at the time of considering of the project for investment and forms E&S Supervision records for projects being supervised. Reports to be provided to ISSF management, the JLGC , and to the WBG. 32 Annex 6: ESMP Outline Guidelines for a sub-project ESMP: An ESIA is needed for EA category B projects in order to identify the potential impacts and appropriate mitigation measures to be included in the ESMP. Any sub-project ESMP would have the following format: 1. Project Description. 2. Description of Adverse Impacts: The anticipated impacts are identified and summarized. 3. Description of Mitigation Measures: Each measure is described with reference to the effects it is intended to deal with. As needed, detailed plans, designs, equipment description, and operating procedures are described. 4. Mitigation Indicators and Description of Monitoring Program: Monitoring provides information on the occurrence of impacts. It helps identify how well mitigation measures are working, and where better mitigation may be needed. The monitoring program should identify what information will be collected, how, where and how often. It should also indicate at what level of effect there will be a need for further mitigation. How environmental impacts are monitored is discussed below. 5. Monitoring methods: Methods for monitoring the implementation of mitigation measures or environmental impacts should be as simple as possible, consistent with collecting useful information, so that the sub project implementer can apply them. For instance, they could just be regular observations of the sub project activities or sites during construction and then when in use. Are plant/equipment being maintained and damages repaired, does a water source look muddier/cloudier different than it should, if so, why and where is the potential source of contamination. Most observations of inappropriate behavior or adverse impacts should lead to common sense solutions. In some case, e.g. transgenic crops, there may be need to require investigation by a technically qualified person. 6. Responsibilities: The people, groups, or organizations that will carry out the mitigation and monitoring activities are defined, as well as to whom they report and are responsible. There may be a need to train people to carry out these responsibilities, and to provide them with equipment and supplies. 7. Implementation Schedule: The timing, frequency and duration of mitigation measure and monitoring are specified in an implementation schedule, and linked to the overall sub project schedule. 8. Capacity Development and Training: If necessary, the ESMP can recommend specific, targeted training for project staff, contractor, and community groups to ensure the implementation of environmental safeguards recommendations. 9. Cost Estimates and Source of Funds: These are specified for the mitigation and monitoring activities as a sub project is implemented. 10. Integration: The ESMP must be integrated into the sub-project’s and F4J’s plan and design, budget, specifications, estimated costs, bid documents, and contract/agreements clauses. Contract documents should only be finalized when site-specific ESMP recommendations are adequately and appropriately incorporated into the plan and design, cost estimates, specifications, and contract clauses. Annex 6 (cont). Sample of Adverse Impacts, Mitigation Measures, and Monitoring Indicators Sample ISSF Potential Activity Sub-Project Environmental and Mitigation Measures Indicators Categories Social Impacts Rehabilitatio Agro-processing Construction-related, - Application of environmental requirements for contractors Testing and results within n of existing Renewable Energy localized dust, noise, - Implementation of simple mitigation measures as per acceptable Jordanian buildings / Pharmaceuticals and traffic impacts, screening results Ambient dust and noise facilities IT based debris management, - Preparation of a stand-alone ESMP as one of the indicators worker health and environmental requirements safety Preparation Agro-processing Worker packing and - Application of Environmental Guidelines for contractors Occupational health and of packaged logistics (e.g. processing line injuries - Performance Standard 2 on Labor and Working Conditions safety inspections; or processed distribution, storage, - Implementation of simple mitigation measures as per Jordanian labor law fruits and/or cold storage, labeling, Spoiled fruit or screening results compliance; vegetables packaging, tracking) vegetable packaged, - Preparation of a stand-alone ESMP for export which, when market consumed, could harm consumer health Solar energy Alternative energy Lifecycle impacts on - Avoid sites that have roof slopes that would require the - Pre-construction and panel GHGs panels to be placed in a manner which would reflect light construction phase site installations into an immediate neighbor’s window, balcony, or door for visit to review and (as an Heat or light reflection more than 30 days a year detail site-specific example for - All safety measures for high-rise installation must be environmental safety renewable Worker health and followed. If working on a roof directly sloping to the road, a features energy) safety safety net must be placed on the side facing the road to - Field inspection prevent debris from accidentally falling on the road and guidelines and Waste Disposal appropriate warning signs must be placed on the road checklist on worker - All necessary protective gear must be worn at all times health and safety - Dispose packaging and construction waste properly at - Waste management approved waste management sites, using registered transport checklist facilities. This waste should not be treated as domestic 34 Sample ISSF Potential Activity Sub-Project Environmental and Mitigation Measures Indicators Categories Social Impacts waste. - Have a temporary storage facility that can contain the waste until disposed. Either into contract with a waste disposal facility capable of handling solar panel wastes. - Application of Environmental Guidelines for contractors - Performance Standard 2 on Labor and Working Conditions IT-based - IT based software - Worker - Sprinkling water to suppress dust emissions - Testing and results (including programming, occupational, health - Use of protective gear such as nose masks, earmuffs, safety within acceptable software and research, calling and safety issues boots and gloves, proper disposal of construction debris and Jordanian Ambient applications) centers, and - Air pollution due to general solid waste dust and noise firms customer service dust emission arising - Fencing off the construction sites and limiting access by indicators centers from site clearance non-construction personnel - Pre-construction and - Possible linear and transportation of - Linear excavations of active utility line right-of-ways for construction phase site excavations for construction burying visit to review and - burying fiber-optic materials - Fiber-optic cable or, alternatively, overhead stringing of the detail site cable or, - Noise nuisance cable, and rollout of additional wireless networks existing environmental safety alternatively during construction, utility lines. features overhead stringing - Waste generation - Application of Environmental Guidelines for contractors - Field inspection of the cable, - Safety issues for the - Performance Standard 2 on Labor and Working Conditions guidelines and - Civil works families close to - Preparation of a stand-alone ESMP checklist on worker associated with project active sites, health and safety building of national etc. - Waste management terrestrial checklist backbones and rollout of wireless networks. 35 Annex 7: Environmental & Social Management Plan (ESMP) Sub-project Monitoring (To be done only post-proof-of concept or post-design) Process Yes/No Have there been any updates to the ESMP If yes, please provide a copy of the updated procedure or procedure? and reasons for the same. Has Senior management signed off on the If yes, please provide a copy of the same. changes? Please provide details of the implementation budget and reasons for changes from the previous year if any. Were any transactions rejected on account If yes please provide details of the IFC exclusion list? Were there any difficulties and/or If yes please provide details constraints related to the implementation of the environmental procedures? Were there any material environmental and If yes please provide details social issues associated with borrowers during the reporting period in particular? Supervision and monitoring Yes/No Do you supervise the performance of your If yes, please describe how you do this and the extent of projects? coverage of your portfolio. Do you conduct client site visits? If yes, please describe the process including any environmental and social issues considered. Sustainable investments Yes/No Have you made any investments in If yes please provide details projects that have environmental and social benefits such as investing in management systems, energy efficiency, renewable energy, cleaner production, pollution management, supply chain greening, corporate social responsibility, community development etc? 36 Annex 8: Annual Aggregate E&S Performance ISSF Reporting to JLGC 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 Organization: Completed by [name]: Position in the Organization: Reporting period: From: To: PORTFOLIO INFORMATION Report Covering Period From: To: For the reporting period, please provide the following information about your portfolio where applicable: Fund Portfolio Company name Description Total exposure Average outstanding for most investment/transaction size recent FY year end (in (in US$) US$) 37