The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 12/21/2023 | Report No: ESRSC04027 Feb 07, 2025 Page 1 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) I. BASIC INFORMATION A. Basic Operation Data Operation ID Product Operation Acronym Approval Fiscal Year P502837 Investment Project Financing (IPF) Green SIEs 2025 Operation Name Türkiye Small Industrial Estates Reconstruction and Regional Economic Recovery Project Country/Region Code Beneficiary country/countries Region Practice Area (Lead) (borrower, recipient) Turkiye Turkiye EUROPE AND CENTRAL Finance, Competitiveness ASIA and Innovation Borrower(s) Implementing Agency(ies) Estimated Appraisal Date Estimated Board Date The Republic of Ministry of Industry and Technology 02-May-2024 29-Jul-2024 Türkiye (MoIT), Directorate General of Industrial Zones Estimated Concept Total Project Cost Public Disclosure Review Date 13-Dec-2023 600,000,000.00 Proposed Development Objective The PDO is to support the restoration and sustainability of MSME operations in the earthquake-affected provinces through building resilient and low-emission Small Industrial Estates (SIEs). B. Is the operation being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project Activities The Project aims to support the restoration and sustainability of MSME operations in earthquake-affected provinces through building resilient and low-emission Small Industrial Estates (SIEs). The proposed Project will include two components: the first will finance investments in new SIEs and workshops to be built and offered for sale to eligible MSMEs, and the second will finance expenses for Project-related technical assistance and management by MoIT. Under the first component, the Project will support the construction of approximately 1,600 workshops for MSMEs that owned or rented workshops in the 11 earthquake-affected provinces prior to the February 2023 earthquakes. The new SIEs will Feb 07, 2025 Page 2 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) be designed to be resilient to future earthquakes, other natural disasters, and adverse impacts of climate change, and will include energy and water efficiency measures in their construction design. In addition to the workshops, the component will also finance the construction of common infrastructure in the SIEs, outer spaces, electricity and water lines, small access roads and other necessary facilities. Under the second component, the Project will finance management and technical assistance activities. The technical assistance will accompany the investments to enable beneficiary MSMEs to be better prepared for climate and disaster challenges and equip them with the skills needed to become more women inclusive. MoIT issued a special regulation to govern the implementation of the Project, including eligibility criteria, financing terms, and application process. D. Environmental and Social Overview D.1 Overview of Environmental and Social Project Settings The project will cover the 11 earthquake affected provinces in Türkiye. The earthquakes have caused major damages to the industrial sector. Micro, Small and Medium Enterprises (MSMEs) account for 99 percent of total registered businesses in Turkiye and make an important contribution to the economy. About 15% of MSMEs in Turkiye are located in the 11 earthquake affected provinces (473,354 MSMEs), including 35,674 manufacturing MSMEs that employ 133,024 workers. Many manufacturing MSMEs are based in Small Industrial Estates (SIEs), which are registered as cooperatives at the Ministry of Environment, Urbanization and Climate Change (MoEUCC). MoEUCC records show that 248 SIEs (14.6% of total registered SIEs) have been registered in earthquake-affected provinces and have been impacted by the earthquakes to a varying degree, resulting in interruption in economic activity and labor migration. SIEs have played an important role in the Turkish economy since their introduction in 1963 and designed to provide a suitable environment for MSMEs to operate. These estates are usually located in the outskirts of cities and offer a range Public Disclosure of facilities and central services to support MSMEs, such as affordable workspaces, shared resources, access to infrastructure, utilities, and transportation as well access to credit facilities (since 1970s). Most SIEs are established and operate as building/management cooperatives, bringing together small entrepreneurs, such as craftspeople, tradespeople, small manufacturers and service providers. According to MoEUCC, 1,698 SIEs have been registered across Türkiye to date, housing 179,000 workshops for MSMEs. The establishment of new SIEs, and rebuilding the damaged or destroyed industrial estates using disaster-resilient materials and greener technologies can ensure that MSMEs and wider communities in the earthquake-affected areas are more resilient and sustainable, also to the adverse impacts of climate change. D.2 Overview of Borrower’s Institutional Capacity for Managing Environmental and Social Risks and Impacts The Ministry of Industry and Technology (MoIT) will implement the Project. The MoIT/ DG Industrial Zones offers a credit scheme to SIEs (and Organized Industrial Zones (OIZs)) for their establishment and development of infrastructure and workspace buildings (superstructures). To implement credit schemes to SIEs and OIZs, the MoIT Directorate General of Industrial Zones employs approximately 160 staff across 21 units. Personnel are responsible for supervision and monitoring of infrastructure projects, construction works, environmental management and waste &wastewater treatment projects, topography and geographical information systems, tendering, zoning, financial affairs, industrial zones establishment and monitoring, utilities, site selection, national plan and strategies, and investment programs. MoIT / DG Industrial Zones (IZ) has a good track record in implementing an active World Bank project: Türkiye Green Organized Industrial Zone Project (P171645). The project has established and maintained a robust Project Implementation Unit (PIU) that has already acquired strong knowledge in World Bank’s environmental and social safeguards. To ensure efficiency, the same team will dedicate several of their staff and hire additional staff to prepare all the feasibility studies, environmental and social risk assessments and management plans and tender documents for Feb 07, 2025 Page 3 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) the new project. The proposed project will incorporate suitable environmental and social specialists, along with a comprehensive framework and capacity for monitoring and evaluation. The Project will also include activities to develop a dedicated environmental and social unit at MoIT with its own E&S policies and standard operating procedure aligned with the relevant country laws and the World Bank’s ESF. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Moderate A.1 Environmental Risk Rating Moderate The environmental risk is assessed as “Moderate”. The proposed project aims to support recovery and rebuilding efforts in the small-scale industry sector following the earthquakes in SE Türkiye in February 2023. The environmental impacts from the project are expected to be positive given that the seismic resilience of the buildings will be increased and new, more environmentally friendly processes introduced during project implementation. However, renovation and construction activities may bring adverse environmental impacts due to dust and noise generation, vehicle and machines emissions, generation of construction waste, hazardous material and waste management etc. as well as OHS issues. The sub-projects are expected to be implemented in urban and peri-urban areas. If culturally important buildings will be renovated or reconstructed, those will have permits from the relevant authorities, and the renovation activities will be implemented accordingly. The environmental impacts related to the project are expected to be spatially limited to the project footprint, temporary, reversible and easily manageable through application of good engineering practice, national laws as well as use of the World Bank Environmental, Health and Safety Public Disclosure Guidelines. During operation phase, the related risks will be managed through use of Good International Industrial Practices (GIIP). An Environmental and Social Management Framework (ESMF) will be prepared, which will include procedures for identifying and mitigating associated risks/impacts, monitoring and reporting, and implementation arrangements. The scale and extent of the renovation/construction activities and the location settings may require, in addition to ESMPs, the preparation of site-specific Environmental and Social Impact Assessment (ESIAs). The provisions of the above mentioned ESIAs/ESMPs will be incorporated into the bidding documents and resulting contracts. Moderate A.2 Social Risk Rating The social risk is assessed as “Moderate” as the potential adverse social risks and impacts are not likely to be significant (due to the types of planned activities and infrastructure) and can be mitigated in a predictable manner through assessments, plans and/or management of impacts. The key social risks and impacts are as follows. First, new Industrial Sites will be constructed that may require acquisition of land causing physical and economic displacement of people. Second, the project will support in-situ reconstruction of damaged MSMEs. Without clear eligibility criteria and selection process of beneficiaries, the project benefits may be captured by elites instead of people most in need including vulnerable groups (e.g. women and SuTPs owned MSMEs). The same risk may apply to MSMEs accessing newly built infrastructure in SIEs. Thus, risk of social exclusion may be significant. Thirdly, given the post-earthquake contexts, inadequate stakeholder engagement may lead to lack of access to project services and benefits by many eligible beneficiaries. Fourthly, construction activities may cause occupational health and safety (OHS) and road safety-related risks (due to increased traffic volume and movement). Fifthly, risks related to management of labor (non-compliance with laws, exploitation of labor, health and safety risks, labor influx etc.) as well as construction- Feb 07, 2025 Page 4 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) induced adverse impacts on the neighboring community at the sites of the proposed SIEs may occur. Finally, the risks of adverse impacts on land and social exclusion in the post-earthquake context may cause social tension and conflicts in the area. This may be a significant risk given growing sentiments among host communities regarding Syrians under temporary protection (SuTP). During the project preparation phase, environmental and social assessments and adequate stakeholder engagement activities will need to be conducted to avoid, minimize and mitigate these risks. B. Relevance of Standards and Policies at Concept Stage B.1 Relevance of Environmental and Social Standards ESS1 - Assessment and Management of Environmental and Social Risks and Impacts Relevant An ESMF will be prepared to guide the assessment and management of E&S risks and impacts. The ESMF will include a comprehensive environmental and social screening template and a template project specific ESMP, as well as exclusion list. All activities proposed under this project will be screened for E&S risks. For low or moderate risk activities, the project level ESMP will be customized and implemented and if required, site-specific ESIAs and other E&S instruments prepared. Substantial and high risk activities will not be eligible for financing under the Project, unless the project risks rating is revised. A Stakeholder Engagement Plan (SEP) will be prepared to ensure that all relevant stakeholders are engaged in a structured and planned fashion. The relevant requirements will be reflected in the Environmental and Social Commitment Plan (ESCP). ESS10 - Stakeholder Engagement and Information Disclosure Relevant Public Disclosure The key stakeholders for this project include the affected MSME owners and the communities in the vicinity of the proposed SIEs. Consultations and engagement with these stakeholders during project preparation and implementation will be crucial for the project. Thus, it will be important to ensure that the project design and proposed interventions are prepared and implemented, taking into consideration stakeholders’ feedback. To this end, a Stakeholder Engagement Plan (SEP) will be prepared. The SEP will lay out a strategy to identify and map key stakeholders, including vulnerable and disadvantaged groups. The SEP will be disclosed prior to the appraisal, consistent with the requirements of ESS10, and will be updated, as necessary. An grievance redress mechanism (GRM) will be updated and operationalized for the project to allow for feedback and complaints from the time of project preparation throughout implementation ESS2 - Labor and Working Conditions Relevant Labor will be employed by contractors for the construction activities. Compliance with applicable laws, Occupational Health and Safety (OHS) guidelines as well as guidelines for the prevention of sexual harassment at the workplace will apply to these workers. Labor Management Procedures (LMP) will also be prepared to include a Code of Conduct, establishing mechanisms to manage risks related to sexual abuse and exploitation / sexual harassment (SEA/SH); provisions to address infectious diseases concerns, and a separate GRM to redress grievances for these workers including for SEA/SH incidents. All relevant requirements will be integrated into the Environment and Social Commitment Plan (ESCP) for the project. ESS3 - Resource Efficiency and Pollution Prevention and Management Relevant Feb 07, 2025 Page 5 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) Potential impacts associated with activities of Component 1 could be attributed to dust and noise, generation of construction waste, wastewater, hazardous materials/ waste (oil, grease, hydrocarbons, old fluorescent bulbs, old appliances, asbestos, lead-based paint). The ESMF and sub-project ESIAs/ESMPs will address (i) establishing and adhering to general good housekeeping rules and procedures, (ii) monitoring and reducing emissions (incl. dust, noise, etc.), and (iii) waste management incl. hazardous, solid and construction waste. Project will mandate use of construction materials (sand, gravel, stone, cement etc.) from local certified sources. Measures to ensure resource efficiency (water, energy, construction material) will be also included in the ESMF. Site operation and risk management plans will detail the measures and procedures to ensure that resource efficiency measures and processes are applied during the operational phase of the industrial sites/zones. ESS4 - Community Health and Safety Relevant There may be construction induced adverse impacts on the communities in the vicinity of the proposed SIE sites. Further, there may be SEA/SH risks arising out of labor influx. These will be managed through comprehensive LMP containing provisions for management of migrant labor, a Code of Conduct, as well as GRMs which include channels for handling SEA/SH incidents. Community health and safety risks are based on construction phase impacts of sub- projects, such as noise and air quality, traffic management and temporary road closures and construction waste management. Site-specific as well as Project based ESMPs will include measures to address these impacts and disturbances. During the small industrial site/zone operation, the standard health and safety measures relevant to respective production sector, in line with the national legislation and standards, will apply. ESS5 - Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Public Disclosure Establishment of new SIEs may affect private land (involving both physical and economic displacement). At this stage, the information regarding land acquisition requirements for SIEs are limited. A Resettlement Framework (RF) will be prepared by project appraisal and site specific Resettlement Plans (RPs) will be prepared as and when needed. ESS6 - Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources This ESS is relevant as the proposed new construction activities under Component 1 may be located adjacent or in the vicinity of protected natural habitats. To avoid the potential negative impacts during the civil works, any activities and sites situated in or near critical or natural habitats, or those that will be assessed to have potential substantial or high biodiversity impacts, will be excluded from Project funding. In this regard, the ESMF document will establish criteria for such exclusion and will contain an exclusion list. Additionally, all site-specific ESIA/ESMPs for small industrial zones/sites near the protected natural areas will incorporate site-specific biodiversity assessment and, when necessary, will include relevant mitigation and monitoring measures. In these cases, Biodiversity Managements Plans may be prepared and implemented under the Project, in line with ESF and national procedures. ESS7 - Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities NA ESS8 - Cultural Heritage Relevant Feb 07, 2025 Page 6 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) Some of the buildings selected for renovation under the project may be registered as cultural heritage/cultural assets in the provincial or national property inventory. In such cases, MoIT will obtain the relevant permits from related institutions and/or the Ministry of Culture and Tourism before any civil works start. The relevant permits and the processes to obtain these will be outlined in the ESMF and site-specific Cultural Heritage Plans may be required as part of ESIA/ ESMPs. Additionally, all construction contracts will include a “Chance Find” clause which will mandate contractors to stop construction and inform the relevant authority in the event that cultural property sites or finds are encountered during construction. In the unlikely case of of work within the culture heritage protected areas, a Cultural Heritage Management Plan will be prepared before start of design activities, to guide the overall Project activities within the culture protected area. ESS9 - Financial Intermediaries Not Currently Relevant NA B.2 Legal Operational Policies that Apply OP 7.50 Operations on International Waterways No OP 7.60 Operations in Disputed Areas No B.3 Other Salient Features Public Disclosure Use of Borrower Framework No Use of Borrower Framework is not being considered. Project will use the World Bank’s Environmental and Social Framework. Use of Common Approach No NA C. Overview of Required Environmental and Social Risk Management Activities C.1 What Borrower environmental and social analyses, instruments, plans and/or frameworks are planned or required by Appraisal? The Stakeholder Engagement Plan (SEP), Labor Management Procedures (LMP), Resettlement Framework (RF) and Environmental and Social Management Framework (ESMF) will be required by Appraisal. · ESMF will be prepared, acceptable to the Bank that includes relevant Environment and Social Standards requirements, along with the potential project impacts, as well as rules and procedures for site specific project activities, ESIA and ESMPs. The document will be disclosed, consulted and cleared by the WB prior to Appraisal. · ESCP: The WB and MoIT will agree on an Environmental and Social Commitment Plan (ESCP), which will set out the material measures and actions required for the project to meet the ESSs over a specified timeframe. The ESCP will be prepared, disclosed and cleared by WB prior to appraisal and will form part of the legal agreement. · SEP will be prepared, disclosed and consulted. Feb 07, 2025 Page 7 of 8 The World Bank Türkiye Small Industrial Estates Reconstruction And Regional Economic Recovery Project (P502837) · RF will be prepared, disclosed and consulted. · LMP will be prepared and disclosed. · Development, disclosure and consultation on other sub-project specific Bank approved ESA instruments (ESIAs, ESMPs, Resettlement Plans and, where relevant, cultural heritage plans) before any bidding documents are published · Inclusion of relevant environmental and social provisions in bidding documents and ensuring contractors’ adherence to the environmental and social instruments · Monitoring and reporting, including incidents and accidents and contractors’ monthly reports · Implementation of SEP, with attendant financial and human resources · Capacity building to enhance the environmental and social performance of the implementing agency on ESF application and ESS compliance III. CONTACT POINT World Bank Task Team Leader: Stefka Slavova Title: Lead Economist Email: sslavova@worldbank.org TTL Contact: Ali H. Abukumail Job Title: Senior Private Sector Specialist Public Disclosure Email: aabukumail@worldbank.org IV. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects V. APPROVAL Task Team Leader(s): Stefka Slavova, Ali H. Abukumail ADM Environmental Specialist: Nikola Ille ADM Social Specialist: Ferdous Jahan Feb 07, 2025 Page 8 of 8