The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Appraisal Environmental and Social Review Summary Appraisal Stage (ESRS Appraisal Stage) Public Disclosure Date Prepared/Updated: 06/06/2022 | Report No: ESRSA02065 Jun 06, 2022 Page 1 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Argentina LATIN AMERICA AND P175143 CARIBBEAN Project Name Innovation Program for Smart Growth (PINCRI) Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Finance, Competitiveness Investment Project 6/1/2022 7/7/2022 and Innovation Financing Borrower(s) Implementing Agency(ies) Argentine Republic Agencia Nacional de Promoción Científica y Tecnológica Public Disclosure Proposed Development Objective The project development objective is to increase innovation-led sustainable growth by strengthening the national innovation system and facilitating access to capital. Financing (in USD Million) Amount Total Project Cost 300.00 B. Is the project 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 [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] The “Innovation Program for Smart Growth” Project contributes to the Education and Future of Jobs pillar of the Economic and Social Council (CES) via its support to young firms and frontier sectors, institutions and policies that promote entrepreneurship, as well as technology adoption and skills building. It aims to respond to Argentina’s accelerated growth imperative in the post-pandemic environment by focusing on private sector-lead growth that yields high economic rates of return, promotes diversification and exports, and creates opportunities for green and inclusive development and better jobs. Accordingly, the proposed Project will be structured around three Jun 06, 2022 Page 2 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) components that: 1) foster innovation-led private sector growth; 2) promote entrepreneurship and innovation financing ecosystems; and 3) support the strengthening of institutions and policies that promote entrepreneurship, innovation and digital transformation. Component 1 – “foster innovation-led private sector growth” aims to push the private sector to a more productive frontier and increase innovation’s contribution to growth with specific emphasis on knowledge transfer and improvements in firm capabilities for SMEs. It also promotes ecosystem support and managerial capabilities to create knowledge-based firms, and develop, upskill and scale up new cohorts of entrepreneurs. Component 2 meanwhile aims to “promote entrepreneurship and innovation financing ecosystems” by leveraging and supporting market- based innovation financing, primarily to crowd-in additional financing and develop skills in early-stage equity financing. As such, components 1 and 2 together, by both upgrading as well as promoting creation of new productive firms, contribute to “diversification within and across sectors”. It is envisaged that those firms and beneficiaries supported under component 1 would over time help build the pipeline of firms that would be served by the market- led financing instruments that are promoted under component 2. Consequently, the project design seeks to bolster the business and growth cycle across a continuum to maximize impact on long-term, sustainable growth. Finally, component 3 works on the cross-cutting regulatory and institutional infrastructure to strengthen the foundational underpinnings of the national innovation system. Across all three components, the Project addresses market failures which are binding constraints to unlocking wider private financing and to firm creation and growth via innovation. Limited financing/capabilities and poor linkages between public research institutions and opportunities for commercialization will be addressed under component 1 Public Disclosure through support to public private partnerships, SME upgrading and entrepreneurial support networks. Component 2 provides targeted support to bridge market gaps in equity/innovation financing. As a result, activities under both components address capital markets failure, insufficient risk finance, information asymmetries and coordination failures that hamper innovation investments and business growth. Component 3 provides financing to strengthen the institutional and policy environment for entrepreneurship and innovation, thus aiming to alleviate the transactional barriers to accumulating knowledge capital. Financing mechanisms under Components 1 and 2 are designed to: (i) support the de-risking of private investments in innovation and entrepreneurship where justified; and/or (ii) allow the internalization of externalities, e.g., through support to the development and use of technologies and innovative practices and support to improved research infrastructure. The Project is consistent with Focus Area 1 “Supporting Argentina’s Access to Long Term Private Financing” of the Bank’s FY19-FY22 Country Partnership Framework (CPF) for Argentina (Report No. 81361-AR). In particular, the Project would contribute to CPF objectives 2 (fostering stronger market institutions, productivity-led growth, and increased exports), 6 (building skills for the future), 8 (transitioning to a cleaner energy matrix), and 10 (building resilient and low carbon cities) by (i) strengthening institutional capacity and policy fundamentals for private sector- led growth and improved enabling business environment; (ii) supporting M&E infrastructure in innovation policies and investments in human capital and research facilities; and (iii) promoting private sector innovations in alternative energy, low-carbon technologies, and circular economy, as well as in growth-oriented sectors at large to achieve productivity gains and increased exports. D. Environmental and Social Overview Jun 06, 2022 Page 3 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] The proposed Project has a national coverage. Project’s activities / interventions will be implemented nationwide in/by Research, Development and Innovation (I+D+i in Spanish) facilities, such as public and private universities; research institutes; and private innovation centers/networks. Environmental context: Main expected environmental risks and potential impacts include localized occupational and community health and safety impacts, and potential site-specific pollution and environmental degradation events, related mainly to applied research and technology development/transfer activities, both in the field and laboratories, nationwide. Some activities under Component 1 may involve low-scale civil works in connection with the upgrade of buildings of the I+D+i facilities (e.g. expansion, remodeling, refurbishment, etc.); however no new infrastructure (i.e construction of new buildings) would be supported by the Project. Social context: The main social impacts associated with the Project are positive, as the Project is expected to contribute to the diversification and strengthening of Argentina’s sources of growth in the post pandemic environment with a special focus on science-based entrepreneurship, green growth, female entrepreneurship, and digital transformation. As stated above, the Project will be implemented at the national level. In this sense, it is important to highlight that Argentina is a multicultural country with a notable presence of indigenous (IP)and afro- descendants (AD) populations, and the majority of these populations live in urban areas. The Project design includes specific measures to ensure the access of IPs, AD and any other vulnerable groups to project benefits. Public Disclosure The implementing agency (Agencia I+D+i) has an active Gender Equality Policy, which is reflected in a comprehensive Plan that aims to expand opportunities for inclusive and sustainable growth for women and sexual diversities; in order to internalize the gender perspective in the initiatives of promotion of scientific research, technological development and innovation. A Gender Commission was created in 2020 to implement this agenda with focus on three main lines of work: (i) Equity, (ii) Violence and (iii) Care. Challenges remain, however, to ensuring inclusion of other vulnerable groups such as AD and IPs. D. 2. Borrower’s Institutional Capacity The Agencia I+D+i (Agencia) from the Ministry of Science and Technology (MINCyT) would be responsible for overall project coordination and implementation. Over the last 25 years, the Agencia has developed its capacity to successfully implement large-scale projects financed by multilateral donors. In particular, these projects include the implementation of five major IDB-financed programs and the recently closed (FY20) World Bank-financed project Unleashing Productive Innovation (P106752). The Agencia has also recently worked with other multilateral lending organizations such as the Central American Bank for Economic Integration (BCIE in Spanish) and CAF Development Bank of Latin America. In February 2020, the Agencia was elevated to a higher administrative status and gained independence beyond that of its original mandate under the MINCyT. The environmental and social management of the project will rely on the Socio-Environmental Management Unit (UGSA) of the Agencia. The UGSA has developed a good track record of implementing projects financed by the World Bank and the IDB; in particular, safeguards compliance by the UGSA under the previous WB-financed project (P106752) was consistently rated satisfactory throughout implementation (2008-2019). It is worth noting that the UGSA is currently experiencing a change in staffing due to (i) the retirement of some professionals and (ii) the hiring of additional specialized personnel, which involves the need to train these new staff. Jun 06, 2022 Page 4 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Additionally, the focus on social risk management is relatively new for the UGSA as the previous WB-financed project’s scope was limited to promoting innovation in certain areas (mainly supporting proposals of public-private consortia for innovation in bioengineering, nanotechnology and ICTs as well as upgrading of infrastructure and/or equipment in selected research institutes and laboratories). Currently, the UGSA is assisted, as needed, by other areas of the Agencia in charge of social and communication such as the Quality Assessment and Reports Coordination Unit and the Institutional Promotion Unit, both of which have personnel specialized in social sciences. For the purposes of the proposed Project, these areas would provide additional, specialized support to the UGSA for the design and implementation of all the aspects related to information disclosure and stakeholder engagement required under ESS10. The MINCyT also has plans for reinforcing the UGSA. As part of the Bank’s due diligence, the capacity of the UGSA for E&S management (including stakeholder engagement) has been assessed during preparation. It was concluded that the current capacities of the UGSA, considering the recently hired personnel and the abovementioned additional institutional support, will allow the Agencia to effectively manage the execution of the project in line with ESF requirements. The commitment that the UGSA will remain operational and be maintained within the Agencia throughout Project implementation is reflected in the Environmental and Social Commitment Plan (ESCP). The Strategic Innovation and Growth (SIG) Fund to be created under Component 2 will be managed by Financial Intermediaries (FI). The selected FI will be required to develop (or adapt, if applicable) and maintain an Environmental and Social Management System (ESMS) in accordance with the ESF risk management approach. The ESMS will be finalized prior to Project´s funds being released to the SIG Fund. As part of the FI selection process, Public Disclosure environmental and social management capacities will be assessed for identifying strengthening opportunities. II. SUMMARY OF ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Moderate Environmental Risk Rating Moderate The project’s environmental risk classification is considered to be Moderate under the WB’s ESF. Low to moderate environmental, health and safety risks and potential impacts, predominantly associated with applied research (both in research institutions and the field), technological development, and equipment activities, are expected under Components 1 through 3 (although mostly under Component 1). Potential impacts are expected to be: (i) temporary and/or reversible; (ii) not significant nor complex/large, and not expected to cause serious adverse effects to human health and the environment; although some project activities could be located in the field they are not expected to have significant adverse effects on ecosystems or natural habitats; (iii) site-specific; and (iv) easily mitigated in a predictable manner, with routine safety precautions expected to be sufficient to prevent accidents. Expected environmental, health and safety risks and potential impacts under Component 1 are related to:(i) applied research and innovation sub-projects in strategic areas (FSAT); and (ii) scientific, technological, and research needs for the new Technology Based Enterprises (EMPRETECNO); both potentially comprising minor infrastructure and equipment upgrades. Under Component 2, only subprojects with Low or Moderate E&S risk would be eligible for financing by the Strategic Innovation and Growth Fund, as per the Responsible FI´s Environmental and Social Management System and associated procedures (such as screening process, exclusion list, among others - see details under ESS9). There are also small and limited risks associated with the possible acquisition of basic equipment and supplies for IT Jun 06, 2022 Page 5 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) infrastructure and connectivity (this sub-component would be largely TA and support with business development services for digital transformation). Finally, risks under Component 3 are related to potential equipment upgrade, although it would be limited, if at all, to make existing infrastructure more efficient or up to date, in connection with accreditation and certification of existing I+D+i facilities; among others. Even though activities are expected to be of limited scope and punctual, low to moderate environmental, health and safety risks and impacts could occur if the necessary (and readily available) management measures are not incorporated into the corresponding activities. These include, among others: punctual environmental degradation/pollution events in case of an inadequate waste management in laboratories and research institutions and/or inadequate management of water and air emissions; punctual pollution events due to an inadequate management of e-waste generated during equipment activities; increased risk of occupational incidents and accidents during research activities (mainly in laboratories); minor community health and safety issues related to research and technological development activities; punctual environmental degradation events and health and safety issues during field work. Potential adverse environmental risks and impacts will be further analyzed during project preparation, as more detailed information becomes available on activities and interventions to be financed. In addition, all the TORs of studies/guidelines/policies etc. to be developed through the different TA under the Project would include the relevant provisions of the ESSs as applicable; this will be further analyzed during preparation when more information on the scope and implications of these TA becomes available. Social Risk Rating Moderate The project’s social risk classification is considered to be Moderate under the WB’s ESF Given the project’s focus on diversifying and unleashing sources of growth, the Project is expected to have only positive social impacts. The main social risks are associated with the potential exclusion of women and/or vulnerable peoples (Afro-descendants, Public Disclosure Indigenous Peoples, People with Disabilities, persons within the LGBTI community, and migrants, among others)from participating in the benefits of the Project, and challenges associated with the stakeholder engagement processes, including social communication and beneficiaries feedback mechanisms, that may require strengthening during Project preparation and implementation to effectively reach targeted groups across the country. The Borrower has prepared a draft Environmental and Social Management Framework (ESMF) that identifies any potential barriers that vulnerable peoples may face in accessing activities financed by the Project and identifies actions to ensure that: (i) they are afforded adequate opportunities to participate in planning and/or implementation of Project-financed activities; (ii) culturally appropriate benefits for these peoples are considered; and (iii) any potential impact that may adversely affect these individuals are avoided, or otherwise minimized and mitigated. The ESMF also describes UGSA’s current social communication and stakeholder engagement procedures and existing grievance mechanism, and was used to inform the preparation of the draft Stakeholder Engagement Plan (SEP). The Borrower also prepared a draft Indigenous Peoples Planning Framework (IPPF) that carried out a similar assessment with specific focus on Indigenous Peoples, in accordance with ESS7. Virtual consultations with government agencies and civil society organizations focused on these vulnerable groups and other interested parties helped inform the preparation of the draft E&S instruments (ESMF, IPPF and SEP). B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of the relevance of the Standard for the Project: Jun 06, 2022 Page 6 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) This standard is relevant. Project E&S Management Instrument. Given that: (i) specific sites of interventions, as well as particular research and technological development activities to be financed are not known and will be defined only during implementation; (ii) the set of potential research and technology transfer sites/institutions to be selected are located in rural and urban areas at the national level; and (iii) the scope of interventions varies; the Borrower, through the Agencia-UGSA, has developed a draft ESMF to adequately identify and manage project E&S risks and potential impacts and to guide the management of E&S issues during implementation, in line with the Bank’s Environmental and Social Standards. The ESMF includes the following components: A) Legal Framework: highlighting national regulations, international agreements and Good International Industry Practices (GIIP) including WBG Environment, Health and Safety (EHS) Guidelines, that are applicable to the project and relevant to each ESS. Emphasis is placed on : (a) waste management in I+D+i facilities (including e-waste), (b) health and safety in laboratories, and (c) labor regulations including occupational health and safety. B) Institutional Framework: describing the institutional arrangements for the implementation of the project, as well as the institutional capacity of the Agencia-UGSA to manage project E&S aspects according to the ESF. C) Environmental, Social and Health and Safety (ESHS) risk assessment. The ESMF assesses the main ESHS issues, risks, and impacts related to the project’s proposed activities and areas of intervention. (a) From the environmental side, these include: (i) occupational health & safety and pollution events during research and technology transfer Public Disclosure activities (indoor and outdoor); (ii) environmental risks arising from technology maturation activities; (iii) risks related to the operation of equipped and accredited labs; and (iv) COVID-19 transmission prevention measures based on WHO Guidance and relevant Guidelines developed by the Bank. (b) From the social side, these include: (i) identification of those individuals and groups who, because of their particular circumstances, may be disadvantaged or vulnerable and may have barriers to accessing Project benefits ; (ii) project risks, including SEA/SH risks; (iii) identification of any prejudice or discrimination toward individuals or groups in providing access to development resources and project; and (iv) health, safety and well-being of project- affected communities. The ESMF also assesses if vulnerable groups (Afro descendants, people with disabilities, LGBTI community, and migrants, among others) face barriers in accessing the benefits of the project and provides recommendations to address potential exclusion. An IPPF, developed as a separate instrument (see ESS7), similarly focuses on potential barriers faced by Indigenous Peoples to access Project benefits, as well as a gap analysis between the ESF and national regulations. The ESMF and the IPPF have informed the preparation of the SEP accordingly (see ESS10). D) Environmental and Social Management process, including: (a) Exclusion List with the set of interventions that will not be financed by the project due to their potential significant E&S risks. (b) For research and technology development activities (interventions mainly to be financed under C1): - A methodology for the screening, review and approval of interventions to be financed. As a result of applying this methodology, the PIU will be able to: identify interventions that need to be excluded based on the Exclusion List; determine the need of E&S instruments / authorizations / permits required by applicable national or local regulation; Jun 06, 2022 Page 7 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) identify the E&S management measures to be included as part of the interventions’ Environmental and Social Management Plans (details below), as applicable; etc. - Process for developing, approving and implementing, as applicable, the Environmental and Social Management Plans (ESMPs) of interventions, which will include all the necessary E&S management measures in compliance with relevant ESSs. ESMPs are expected to be succinct reports, listing main expected ESHS risks and impacts of each proposal, and the corresponding management measures to address those impacts. The ESMF includes the template for these ESMPs. - ESHS requirements applicable to each stage of all the calls for competitive funding processes to be included in the project, including: requirements to be incorporated in the call for proposals; considerations during the proposal evaluation and grant award; supervision and oversight during implementation; and closure. Awarded proposals will require the presentation and approval of an ESMP, prior to the start of the corresponding activities, following the process to be laid out in the ESMF, and aligned with the requirements of relevant ESSs and applicable regulations. Operational elements of the ESMF (such as the exclusion list, relevant requirements for ESMPs, etc.) will be included in pertinent documents related to the sub-project´s cycle. - Key elements of the ESMF will be operationalized in the Project´s Operations Manual vis-à-vis the scheme proposed under Component 1. (c) For IT upgrade, equipment and accreditation activities in I+D+i facilities (expected under the three components although limited, if at all, under C2 and C3): E-waste management guidelines; a checklist to assess the capacity of the corresponding facilities to be equipped and/or accredited in terms of waste management and management of emissions; and energy efficiency measures to be considered. Public Disclosure (d) Monitoring measures during implementation, including project reporting system and how the ESF provisions will be sampled and reported on. E. Capacity building measures to strengthen the UGSA on E&S aspects of project management, at the central and territory level. Staffing and implementation arrangements for the Agencia-UGSA will be addressed in the project’s ESCP. The UGSA has prepared and will disclose a draft ESMF before Appraisal. Early consultations occurred during February 2022, when the Environmental and Social Unit in the Agency met with the Science and Technology Research Fund (Fondo para la Investigación Científica y Tecnológica, FONCYT) to discuss with IP research specialists and get a sense of the relevant issues identified by academia. Consultations also took place with Agency's Oversight Coordination (Coordinación de Evaluación de Calidad y Reportes de la Agencia, CECYR). The consultation process will continue during preparation and implementation, including meetings with key stakeholders, including relevant government agencies and recognized representatives of identified disadvantaged and/or vulnerable groups. Stakeholder views will be sought regarding key project risks and potential impacts, as well as proposed mitigation measures, which will also inform stakeholder engagement. The consultation process and related feedback obtained will be summarized and incorporated into an updated final ESMF, along with any potential change made to the document based on such inputs. This final ESMF is expected to be prepared and redisclosed no later than 60 days after the Effective Date, as agreed in the ESCP. Jun 06, 2022 Page 8 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Given that the project would involve a Financial Intermediary (FI), an FI´s ESMS would be also prepared [or adapted if applicable] and disclosed in line with ESS9 requirements (see details under ESS9), prior to Project´s funds being released to the FI (Fund). Finally, the requirements of relevant ESSs will be considered for all technical assistance to be provided under the Project. Pertinent provisions, including stakeholder engagement aspects in line with ESS 1-10, will be incorporated in the TORs, in a manner acceptable to the Bank. ESS10 Stakeholder Engagement and Information Disclosure This standard is relevant. The different sub-components of the project will involve various stakeholders including national male and female researchers, private sector, educational institutions, etc. All relevant stakeholders will be adequately involved during all project stages, taking into account any requisite COVID-19 rules or social distancing requirements. The UGSA has prepared a draft Stakeholder Engagement Plan (SEP) that itentifies key stakeholders and describe measures to effectively engage them during Project preparation and implementation in accordance with this ESS. Key stakeholders include public and private sector organizations linked to research and technological development, including researchers, small and medium enterprises (SMEs) and technology-based companies (EBTs), research institutes, regulatory bodies, etc., to whom the Program is directed. In addition, stakeholders also include Public Disclosure government institutions and civil society organizations that represent groups that may potentially face barriers to accessing information and opportunities provided by the Program (vulnerable groups). These groups include Afro- descendants, Indigenous Peoples, People with Disabilities, persons within the LGBTI community, and migrants, among others. Some examples of government agencies and non-governmental organizations are the National Institute of Indigenous Peoples Affairs, the Secretariat of Human Rights, and the National Disability Agency. The SEP also includes measures to promote the participation of women though consultations with the Ministry of Women, Genders and Diversity and civil society organizations that promote the participation of women and LGBTI persons in STEAM fields. The SEP includes a strategy that includes different approaches to engage the different stakeholders mentioned above. This includes a mix of virtual and face to face consultation instances, surveys, and an active grievance mechanism. Virtual consultations will be carried out using an open source platform (http://consultapublica.argentina.gob.ar), social networs, and e-mail exchange. Face to face consultations will include meetings and focus groups with representatvies of the different stakeholders mentioned above. In the case of vulnerable groups, these meetings will be organized in a way that are accessible and culturally appropriate. The SEP also describes the grievance mechanism (GM) that will be used for the Project, that includes several channels (mail, e-mail, telephone) and an online platform called Agencia Escucha (https://www.argentina.gob.ar/ciencia/agencia/agencia-escucha). The GM has a protocol in place to properly receive and manage requests for information, queries, concerns, and claims from interested parties, and facilitate their treatment and resolution; ensuring that claims and queries are received, managed, and dealt with promptly by the corresponding area. The GM includes some dedicated channels to address issues related to gender, including GBV. AS stated in the ESCP, the GM will be updated. The updated GM will be publicized no later than 90 days after the Project Jun 06, 2022 Page 9 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Effective Date, and thereafter maintained and operated throughout Project implementation, in a manner consistent with ESS10. Some consultation processes already took place as part of the preparation of the Project, to develop the environmental and social instruments. During February 2022, a consultation was carried out with the Fund for Scientific and Technological Research (FONCYT) on projects linked to the indigenous population, understanding that it will be very positive to integrate actors who study problems, generate knowledge and lead carry out projects in the territory linked to the indigenous population. Likewise, the Coordination of Quality Evaluation and Reports of the Agency (CECYR) was consulted in order to carry out a more in-depth search to identify projects linked to indigenous issues in the databases of awarded projects, through the use of keywords. The results yielded 46 projects related to indigenous issues, of which those that work directly with the indigenous population will be selected to include them in the consultation process. In addition, in Aprill 2022 the UGSA carried out a consultation with members of the Gender Commission that operates within the Agency, to identify organizations and spaces within the Science system. and Technology that promote the participation of women and LGBTI persons. The draft SEP will be be disclosed prior to Bank Appraisal and then updated and re-disclosed within 60 days of Project effectiveness to include the results and feedback from the consultation process, as outlined in the ESCP. The SEP is a fluid document and may be further updated, as needed, during implementation based on the project’s evolution. As required by ESS9, for activities related to the functioning of the Fund under Component 2, the FI will require stakeholder engagement to be conducted for FI subprojects in a manner proportionate to the risks and impacts of Public Disclosure the FI-subproject. As such, the relevant provisions of ESS10 will be included in the FI´s environmental and social procedures. B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions This standard is relevant. Project workers will include both direct workers (workers hired specifically for the implementation of the project or legally transferred to the project) and contracted workers (basically workers of the I+D+i entities involved in the project, as well as firms and/or individuals in charge of TA activities). The Project will be implemented by staff from the Agencia (government civil servants); although civil servants will remain subject to the terms and conditions of their existing public sector employment agreement, they will be also subject to the ESS2 provisions on Protecting the Work Force and Occupational Health and Safety. The Agencia, through the UGSA, will develop and implement Labor Management Procedures (LMP). The LMP will be ready no later than 60 days after the Effective Date or prior to the recruitment of any project worker, whichever comes first. Jun 06, 2022 Page 10 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) The LMP will describe the type of workers involved, identify the main labor requirements and risks associated with the project, and determine the necessary resources to address project related labor issues, including sexual exploitation and abuse and sexual harassment (SEA/SH), and health and safety issues. The LMP would also identify the labor risks more likely to be faced in the project activities, including hazardous work activities. Special consideration will be given to mitigating risks of sexual harassment, the prevention of child labor, and avoiding discrimination against specific groups such as women, people with disabilities, migrant workers, indigenous persons, and afro-descendants. The LMP shall also include measures to ensure that civil servants working on the project, direct workers and contract workers have a general understanding of occupational health and safety requirements and the protection of employees. The LMP will describe the working conditions and management of worker relationships, the terms and conditions of employment, provisions for non-discrimination and equal opportunity, worker’s organizations and freedom of association, occupational health and safety for workers, provisions to protect the workforce (including via minimum wage protections), and the prevention of child and forced labor. The LMP will further ensure that the health and safety of workers are adequately addressed using WBG Environmental, Health, and Safety (EHS) Guidelines, WHO guidelines on COVID-19 and national regulations. A Workers Code of Conduct, which contains obligations of all workers involved in the project, will be developed as part of the LMP; adherence to the Code of Conduct will be a condition of employment for all workers, including the Agencia workers, researchers, and contractors, among others. The Code of Conduct will explicitly address issues of SEA/SH. Similarly, the LMP will incorporate a separate grievance mechanism specifically for project workers, including Public Disclosure the Agencia staff involved in the project. During project implementation, the LMP may be revisited and updated as required, as additional labor-related risks or issues unfold. Relevant aspects of ESS2 will apply to the FI that will be managing the Fund under Component 2 (see ESS9 for details). ESS3 Resource Efficiency and Pollution Prevention and Management This standard is relevant. Energy efficiency measures: The ESMF lays out energy efficiency measures to be considered , and is rooted in the WB’s EHS guidelines for energy conservation. In general, and to the extent possible, all investments will utilize measures to increase energy efficiency, and wherever possible, technical specifications for the appliances and equipment will promote environmentally preferred products. Pollution management of research and technological development to be funded through the competitive funding schemes: research and technological development to be funded through the competitive funding schemes could generate site-specific low to moderate impacts/risks on the environment and/or human health due to inadequate management of waste, including chemical waste and e-waste, and/or other types of hazardous solid or liquid byproducts to be generated. The ESMF includes the EHS requirements applicable to the different stages of the competitive processes (call for proposals, application, grant agreement, implementation & supervision, and closure) with which the corresponding beneficiaries will have to comply with to ensure adequate waste management and avoid pollution, which will be reflected in corresponding ESMPs (required prior to the start of activities). This, in line Jun 06, 2022 Page 11 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) with both national and local regulations and ESS3 requirements. Likewise, the ESMF’s Exclusion List rules out specific types of research that are ineligible for funding due to their corresponding level and type of expected environmental pollution impacts and risks, including those that are unable to demonstrate that the research premises have the necessary infrastructure and procedures in place to ensure an adequate waste and air and water emission management. Pollution management from IT upgrade, equipment and accreditation activities in I+D+I facilities: the Borrower will make sure that these facilities have the minimum requisite infrastructure and processes in place to adequately treat and dispose waste (including e-waste) and to manageair and water emissions, prior to the execution of related activities. The ESMF includes Guidelines for E-waste Management and a checklist to assess the capacity of the facilities to be equipped and/accredited in terms of waste management and management of emissions. ESS4 Community Health and Safety This standard is relevant. Community health and safety (CHS) risks of research and technological development to be funded through the competitive funding schemes: research and technological development could generate site-specific low to moderate impacts/risks on community health and safety related mainly to (i) inadequate waste management, and (ii) the testing of new technologies (prototype, proof of concept) involving individuals and/or the larger community. The draft ESMF includes the necessary EHS requirements applicable to the different stages of the competitive processes Public Disclosure (call for proposals, application, grant evaluation, grant agreement, implementation & supervision, and closure) with which the corresponding beneficiaries will have to comply to mitigate and adequately manage CHS risks. These requirements will be reflected in corresponding ESMPs (required prior to the start of activities) and would also include any measures to ensure that any I+D+I facilities upgrades (low scale infrastructure such as expansion, remodeling, refurbishment, etc.) are done in a way that ensures accessibility by persons with disability. The LMP will include a Code of Conduct, as well as measures to handle SEA/SH incidents. Training sessions on the code of conduct, local regulations in relation to SEA/SH, and sanctions if the code is not respected will be carried out periodically for all researchers and staff from the participating institutions to mitigate the risks of SEA/SH in the workplace and during fieldwork. These actions will implemented, in line with both national regulations and any additional measures stated in the ESMF to ensure compliance with ESS4 Requirements. Likewise, the ESMF’s Exclusion List rules out specific types of research that is considered ineligible for funding due to the corresponding level and type of expected CHS impacts and risks. The Agencia will take every measure to avoid COVID-19 transmission that may be associated with workers on the project by abiding by the Government of Argentina’s currentCOVID-19 Guidelines . Stakeholder engagement consultations will be held according with Government restrictions on COVID 19, with preference for virtual consultations. Relevance of this ESS will be further assessed as part of the Bank’s due diligence, as many activities of the project pertinent to E&S management aspects are demand driven and the locations are further determined. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement This standard is not currently relevant. Jun 06, 2022 Page 12 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) The outcome of E&S screening did not identify any potential risks and/or impacts relevant to ESS5. The proposed project will not finance new physical infrastructure (i.e no civil work will take place outside the premises of involved I+D+i facilities). Works and activities to be financed under the Project will neither require land acquisition, nor restrictions on land, economic displacement or involuntary resettlement as defined under this Standard. ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources This standard is not currently relevant. It is not expected that the research and and technological development activities to be funded under the project could adversely affect biodiversity and project activities do not involve the management of living natural resources. The ESMF exclusion list explicitly rules out interventions that have potential to generate adverse impacts on ecosystems and/or natural habitats. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities This standard is relevant. Argentina is a multicultural country with a notable presence of indigenous and afro-descendant populations. Public Disclosure Indigenous people (2.54 percent of the national population) traditionally lived in rural communities in the provinces of Salta, Jujuy, Chubut, Neuquén, Tierra del Fuego, Chaco, Formosa, Santa Fe, Tucuman, and Mendoza. However, due to numerous factors, including new and improved access to basic services as well as improved market opportunities, more than 80 percent of Argentina’s current indigenous population now reside in urban areas, with the largest concentration living in the Buenos Aires Metropolitan Area. The main challenge related to these groups is linked to the lack of reliable data and certain drivers of exclusion. To name the main barriers, most innovation and technology projects face challenges to culturally adapt to Indigenous Peoples. Furthermore, access to technology and domain in particular skills are generally biased against certain vulnerable groups, including indigenous population. This particularly affects indigenous communities that live in remote areas. The percentage of indigenous peoples that have jobs linked to technological development are negligible. They represent 0.01% of the total number of jobs for the indigenous population, and almost 80% of them are held by men. The scientific research category represents 0.4% of the total jobs of the indigenous population, and almost 60% of them are held by women. For that reason, these groups will be part of the stakeholder engagement process, and relevant recommendations that may result from their participation will be taken into consideration for the final design of the activities and Project implementation. The Borrower has prepared a draft IPPF to assess and address potential barriers faced by Indigenous Peoples to access the benefits of the project. The IPPF contains a plan to implement actionable measures to promote the full participation of IP in the Project. It includes cross-references to the SEP and specifically outlines how (i) project consultations will be tailored to ensure they are conducted in a manner consistent with ESS7 (e.g. via culturally appropriate engagement processes) to promote IP participation; and (ii) how the GM will be tailored to consider customary dispute resolution mechanisms for IPs. Additionally, the draft IPPF also incorporates measures that will be Jun 06, 2022 Page 13 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) implemented to promote the participation of indigenous peoples in the different activities financed by the Project. In the case of financing instruments to support strategic knowledge consortiums (public-private associations) and for those that support the creation of Technology-Based Companies (EBTs), it is proposed to incorporate the inclusion of vulnerable groups as a criterion for evaluating the proposals, including indigenous population. The Project will also promote the participation of indigenous population in the activities to be carried out in the Techlabs, that are spaces intended for youth from vulnerable populations, where innovative educational activities and projects are developed in order to develop their digital skills. This is expected to help reducing the digital gap in the indigenous population and generate more opportunities for them to participate in the Project benefits. This draft IPPF will be disclosed prior to Appraisal and will be subsequently updated and redisclosed no later than Project Effectiveness or prior to carrying out any Project-financed activities (whichever comes first) to reflect feedback from consultations with key IP stakeholders. Consultations on the draft IPPF shall be completed no later than 45 days after the Project Effective Date. The updated IPPF shall be sent for the Bank’s no objection no later than 60 days after the Project Effective Date. Site specific IPPs acceptable to the Bank, will be developed prior to the beginning of any activity to be implemented in an area with presence of indigenous communities. As stated above, the Agency shall establish, publicize, maintain, and operate an accessible grievance mechanism, to receive and facilitate resolution of concerns and grievances in relation to the Project, promptly and effectively, in a transparent manner that is culturally appropriate and readily accessible to all Project-affected parties, at no cost and without retribution, including concerns and grievances filed anonymously, in a manner consistent with ESS10. ESS8 Cultural Heritage Public Disclosure This standard is not currently relevant. The operation will not include earthworks with the potential of generating chance finds. Likewise, activities involving adverse impacts on cultural heritage are not expected as part of the project. The ESMF exclusion list explicitly rules out interventions that have potential of generating adverse impacts on cultural heritage. ESS9 Financial Intermediaries This standard is relevant. Component 2 of the Project would finance the creation of a Strategic Innovation and Growth (SIG) Equity Window, involving the creation of several funds/sub-windows with specific objectives: provincial/start-up and specialized funds (green growth and diversification). Through the SIG funds the Agencia will indirectly co-invest in innovative start-ups along with the private sector (such as financial institutions and private investors that will invest in such funds). The scheme would involve professional and experienced Fund Managers, who will act as FIs as per the terms of ESS9 (Responsible FIs), that would catalyze the abovementioned additional private financing from other invesment partners. The Agencia will issue requests for proposals to invite bids from established Fund Managers in line with the development objectives laid out for each investment sub-category; i.e., Fund Managers will create and manage the SIG funds to meet specific development objectives of the sub-windows. The requests of proposals will include the Jun 06, 2022 Page 14 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Environmental and Social Terms of Reference to be complied with by Fund Managers. All selected Fund Managers will commit to using the project funds in a manner that complies with the Bank’s E&S standards and the funds will be subject to annual external audits. The Responsible FIs (Fund Managers) will be required to develop and maintain an Environmental and Social Management System (ESMS) retaining direct responsibility for selecting and funding the FI subprojects. If the FIs already have an ESMS in place, they will provide adequate documented evidence of such an ESMS, indicating which elements, if any, will be enhanced or modified to meet the requirements of this ESS9. The environmental and social risks and impacts of the FI subprojects financed by the SIG Fund will be identified, assessed, managed, monitored, and reported on appropriately as per the ESMS. The environmental and social assessment process will support (a) making an informed decision on whether the risk associated with a portfolio and with financing or providing a guarantee to a project is acceptable to the FI; (b) minimizing environmental and social risks associated with a portfolio and the impacts of subprojects; and (c) realizing any potential environmental and social benefits associated with subprojects. As such, the FI would monitor and manage the E&S risks and impacts of the eligible investments to be financed by the SIG Fund through the ESMS. The ESMS would clarify the roles, responsibilities and requirements that the FI along with the beneficiaries will need to commit to in order to tap into project funding. The ESMS would be developed [or adapted, if applicable] by the FI, with the support of the UGSA as needed, prior to any project´s funds released to the SIG Fund. Public Disclosure The ESMS would be proportioned for the scale of the eligible credits under the project and maintain consistent with the requirements set forth under ESS9 as proportionate to the maximum moderate risk/impact level of eligible portfolio of investments. Eligible type of credits / investments are not defined yet but, as mentioned above, some criteria was established but only in general terms: provincial/start-ups (seed and early stage), green growth and diversification (growth stage) initiatives. Specific activities to be supported will be demand-driven and thus only known during implementation. The ESMS would secure (i) initial screening and assessment of the investments; (ii) commitment to compliance with relevant national laws and regulations and integration of international good practices as applicable; and (iii) monitoring and reporting procedures. The ESMS will screen out any credits that could lead to high or substantial risks or impacts outlined in paragraphs 11, 14 and 16 of ESS9 on Financial Intermediaries (specifically: involving resettlement -unless the risks or impacts of such resettlement are minor-, adverse risks or impacts on Indigenous Peoples or significant risks or impacts on the environment, community health and safety, labor and working conditions, biodiversity or cultural heritage); the ESMS will include an exclusion list (detailing conditions of exclusion, including those related to ESSs not considered relevant for this project) of subprojects that the SIG Fund will not finance. The ESMS requirements would consequently mainly focus on compliance with applicable laws and regulations, including reference to guidance on international good practices and provision of related training. If any of the impacts set out in paragraphs 11, 14 and 16 is present, the credit will either need to be excluded or adjusted to ensure that the risk level is moderate or lower; no subproject of the exclusion list will be eligible for funding under the Project. Jun 06, 2022 Page 15 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) As mentioned above, the Responsible FI will include relevant provisions of ESS10 in its E&S procedures/ESMS. These include, among others: (i) external communications on environmental and social matters proportionate to the risks and impacts of the FI subprojects and the risk profile of the FI´s portfolio; (ii) requirements for FI subprojects to conduct stakeholder engagement; and (iii) as applicable, requirements for its sub-borrowers to disclose subproject- related document(s) required by the application of ESSs (such as environmental and social assessments reports). The Responsible FI will also provide a safe and healthy working environment applying relevant aspects of ESS2; it will have in place, maintain and support with documented evidence appropriate labor management procedures relating to working conditions and terms of employment, nondiscrimination and equal opportunity, grievance mechanism and occupational health and safety. The ESMS would be disclosed as a separate document and operationalized through the Operation Manual of the project. It would include: (i) an E&S policy; (ii) clearly defined E&S procedures to conduct due diligence to evaluate the E&S risk level of the credits, assign eligible risk categories of low and moderate and screen out high and substantial risk credits; (iii) systems/processes for due diligence to manage, monitor, and report on the E&S risks and impacts of credits; evaluate the E&S performance of on-going credits and the portfolio on a periodic basis; (iv) organizational capacity and competence including a budget and a senior level position designated for reporting on the ESMS as well as providing training and capacity building on ESMS procedures and performance; and (v) external communications and reporting mechanisms on E&S performance. C. Legal Operational Policies that Apply Public Disclosure OP 7.50 Projects on International Waterways No OP 7.60 Projects in Disputed Areas No B.3. Reliance on Borrower’s policy, legal and institutional framework, relevant to the Project risks and impacts Is this project being prepared for use of Borrower Framework? No Areas where “Use of Borrower Framework” is being considered: None IV. CONTACT POINTS World Bank Contact: Tugba Gurcanlar Title: Senior Private Sector Specialist Telephone No: +1-202-473-7147 Email: tgurcanlar@worldbank.org Jun 06, 2022 Page 16 of 17 The World Bank Innovation Program for Smart Growth (PINCRI) (P175143) Contact: Alejandro Espinosa-Wang Title: Senior Private Sector Specialist Telephone No: 5732+2024 / 507-831-2024 Email: aespinosa@worldbank.org Borrower/Client/Recipient Borrower: Argentine Republic Implementing Agency(ies) Implementing Agency: Agencia Nacional de Promoción Científica y Tecnológica V. 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 VI. APPROVAL Task Team Leader(s): Tugba Gurcanlar, Alejandro Espinosa-Wang Public Disclosure Practice Manager (ENR/Social) Maria Gonzalez de Asis Cleared on 11-May-2022 at 17:40:23 GMT-04:00 Jun 06, 2022 Page 17 of 17