The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 12/14/2023 | Report No: ESRSC04017 Feb 07, 2025 Page 1 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) I. BASIC INFORMATION A. Basic Operation Data Operation ID Product Operation Acronym Approval Fiscal Year P181448 Investment Project Financing (IPF) DR GRIT 2026 Operation Name Dominican Republic Green Resilient Industrial Transformation Country/Region Code Beneficiary country/countries Region Practice Area (Lead) (borrower, recipient) Dominican Republic Dominican Republic LATIN AMERICA AND Finance, Competitiveness CARIBBEAN and Innovation Borrower(s) Implementing Agency(ies) Estimated Appraisal Date Estimated Board Date Dominican Republic Ministry of Industry and Commerce 03-Mar-2025 17-Jul-2025 Estimated Concept Total Project Cost Review Date Public Disclosure 12-Dec-2023 150,375,000.00 Proposed Development Objective The project's development objective is to facilitate private investment in green, resilient, and high-value added industrial development. 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 in structured in three components: (1) facilitating and promoting private investment in the industrial sector, (2) improving access to talent by exporting firms in high-value-added industrial sectors, and related services, (3) fostering the development of decarbonized and resilient industrial parks by improving access to long-term finance for Eco-Industrial Park (EIP) developers. D. Environmental and Social Overview Feb 07, 2025 Page 2 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) D.1 Overview of Environmental and Social Project Settings The specific project areas have not been identified at this point. The TA activities will be nationwide, and it is expected that the FI component may support eco-industrial parks across the country. While still to be determined, it is assumed that the FI component will mainly support parks in urban or semi-urban areas and in areas with good transportation facilities. The DR is well known for its abundant natural resources and biodiversity. Its geographical location, beaches, and productive landscapes have enabled robust development within the agricultural and tourism sectors. However, the country is highly vulnerable to extreme natural events. This vulnerability is being exacerbated by climate change, rapid and unplanned urbanization, and natural resource degradation. Over the past years the country has expressed a strong commitment to improving their environmental commitment towards a sustainable development pathway. The poverty rate increased during 2021, reaching 23.9 percent, representing over 300,000 people falling into poverty since the pandemic crisis began. Approximately 5.6 percent of the country’s population is made up of foreign immigrants. Although people of Haitian origin continue to be the most represented migrant population in the DR, there has been a significant increase in the number of Venezuelans in the country in recent years. The DR receives people in increasingly vulnerable conditions who, due to their degree of social and economic vulnerability, cannot apply for regularization. D.2 Overview of Borrower’s Institutional Capacity for Managing Environmental and Social Risks and Impacts Public Disclosure Components 1, 2, and 4 will be implemented by the Ministry of Industry, Commerce, and SMEs through a Project Implementation Unit (PIU), which is expected to be responsible for preparing the project, including E&S assessment and preparation of management measures. Key technical staff in the PIU (including E&S specialists, M&E specialist and legal specialist) will have responsibilities and qualifications acceptable to the Bank, as will be stated in the ESCP. E&S capacity is limited; a detailed E&S capacity assessment of the Ministry will be carried out during project preparation and will inform the final E&S arrangements to implement this project. Funds to implement Component 3 (Fostering the development of green and resilient industrial parks) will be channeled through a Financial Institution (FI) yet to be determined. During Project preparation and once the FI has been selected, an assessment of the FI’s capacity and experience implementing FI operations with MDBs will be conducted by the WB Team; it is expected that E&S capacity is limited irrespective of choice of FI. This assessment will also cover the FI’s capacity to manage E&S risks and impacts and its Environmental and Social Management System (ESMS) (if it exists). The assessment results will inform the design of measures needed to strengthen their capacity to ensure compliance with ESS9’s requirements. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) High A.1 Environmental Risk Rating High Feb 07, 2025 Page 3 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) At this stage, the environmental risk rating is considered high due to the lack of specifics of the investment portfolio of eco-industrial parks (type, scale, and location), as well as to the FI to be selected and its capacity to manage environmental, health and safety (ESHS) risks and impacts while ensuring adequate monitoring and supervision of the necessary mitigation measures. As more information becomes available, the risk rating will be reassessed and adjusted accordingly if needed. Based on available information, Components 1 and 2 support technical assistance activities that are not expected to result directly in negative environmental risks and impacts. Key environmental risks and impacts are expected to result from the construction and operation of eco-industrial parks under Component 3 to be financed through an FI. These include: (i) environmental liabilities pre-construction; (ii) nuisance related to dust generation, vibration, noise, and odors from construction and eco-industrial park businesses during operation; (iii) soil and water contamination from civil works and eco-industrial park businesses; (iv) management and disposal of waste; (v) generation and discharge of wastewater from civil works and eco-industrial park businesses; (vi) temporary disruptions to local traffic during construction; (vii) diverse impacts on lands and land use depending on the selection of the locations for the eco- industrial parks, including potentially on natural habitats or other sensitive landscapes; (viii) health and safety risks to the project workforce and local communities, including from exposure to hazardous materials and construction wastes from rehabilition works; (ix) direct and indirect impacts from natural hazards (earthquakes, tsunamis, landslides, volcanos, extreme heat, cyclones and floods) that may occur in the affected areas; and (x) potential cumulative impacts. High A.2 Social Risk Rating At concept stage the social risks are rated as high mainly because of the uncertainty concerning the type and scope of project activities and the expected limited capacity of implementing agencies to manage social risks, particularly the Public Disclosure FI. Components 1 and 2 support technical assistance activities to strengthen capacity and systems and are not expected to have social risks based on current information. Key specific social risks that may contribute to a high risk rating (within a limited E&S capacity context) include for Component 3: i) the potential acquisition of land for new eco-industrial parks, and expansion and retrofitting of existing parks; in some cases with potential legacy issues for previously acquired land; ii) labor and working conditions, including for migrant workers; iii) community health and safety issues for communities living near the eco-industrial parks; iv) potential sexual exploitation, harassment, and abuse; v) uncertain arrangements for managing social risks by a Financial Intermediary and recipients; vi) forced and child labor concerns regarding the procurement of photovoltaic systems; and vii) discrimination by nationality and exclusion from project benefits such as employment opportunities, especially during project implementation (construction activities) in relation to relevant migrants from Haiti and Venezuela. The risk rating is based on a draft PCN with a number of uncertainties concerning the type and scope of project activities and institutional arrangements. A more detailed risk assessment will be carried out during project preparation and the risk rating may be adjusted accordingly. 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 Component 1 and 2 focus on TA activities, and no major E&S risks have been identified. The ToRs and other documents defining TA scope and outputs will be prepared consistent with relevant ESSs. Component 3, financed Feb 07, 2025 Page 4 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) through an FI may include the construction of new, and retrofitting of existing industrial parks, associated road infrastructure, installation of photovoltaic systems, and other equipment. The selected FI will develop, disclose adn implement an ESMS, in line with all ESSs (excluding ESS7) and WB’s EHS Guidelines. The FI will include a gap analysis, screening procedure for eligibility purposes, exclusion list, risk management, and monitoring and reporting. Infrastructure works with low E&S risk classification will follow national law. Other E&S risk activities will be required to follow national law and apply the ESF in case of gaps with the national law. An E&S assessment will be prepared and disclosed by appraisal covering all components together with the ESCP and SEP. ESS10 - Stakeholder Engagement and Information Disclosure Relevant The Client will prepare, consult, and disclose a draft SEP prior to Appraisal that will cover all three components; finalization of the SEP, and its re-disclosure within 90 days of project effectiveness will be included as a commitment in the ESCP. The draft SEP will identify interested parties, including vulnerable groups and workers, participation, consultation, and information disclosure arrangements (including during preparation to inform the preparation of the project), as well as the project´s grievance mechanism, including channels, procedures, governing structure and plans for the socialization of the GM. For activities under Component 3, the FI will develop and implement an ESMS, in line with the Bank´s ESSs, including ESS10 requirements. Additionally, as per ESS9, the FI will require the FI subproject recipients to conduct stakeholder engagement in a manner proportionate to the risks and impacts of the subproject and have an appropriate GM in place in line with ESS10. ESS2 - Labor and Working Conditions Relevant Public Disclosure This project will likely include direct and contracted workers, but not community workers. Labor Management Procedures (likely part of the POM), including a work-related GM and code of conduct to mitigate SEA/SH risks and potential misconduct in the workplace or engagement with project stakeholders, will be prepared. Requirements with regard to training for project workers, including on the code of conduct, the functioning of the workers´ GM, OHS, and SEA/SH prevention measures, will be detailed in the POM and the ESCP. For Component 3, the FI’s ESMS will include OHS considerations in line with national legislation, ESS2 requirements, WBG’s EHS Guidelines, and Good International Industry Practice. Risks of forced and child labor relating to the procurement of photovoltaic system will be assessed by appraisal, and if this will be a core aspect of project financing, measures to address related risks will be identified and included in the ESCP and procurement requirements. ESS3 - Resource Efficiency and Pollution Prevention and Management Relevant ESS3 is relevant as there are potential sources of pollution from the construction and operation of the infrastructure works under Component 3. Appropriate guidance on mitigation measures for resource efficiency and pollution management will be included in the FI’s ESMS following the mitigation hierarchy and in line with ESS3 requirements, WBG’s EHS Guidelines, and national law. The FI’s ESMS will include provisions to comply with ESS3 requirements. GHG implications and potential emission reduction of GHG during project implementation will be assessed during project preparation. ESS4 - Community Health and Safety Relevant ESS4 is relevant as infrastructure work under Component 3 may expose communities to health and safety risks, especially those communities that are close to industrial parks, particularly during construction. The FI’s ESMS will Feb 07, 2025 Page 5 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) include national guidance to decrease community exposure to E&S risks and impacts and will screen out high risks activities that could have significant impacts on community health and safety, e.g., new structural elements situated in high-risk locations, including those with risk of extreme weather or slow onset events; activities subject to high risk or criminal/violent attacks in non-secure areas; exposure of communities to communicable and noncommunicable diseases; and potential community exposure to hazardous materials and long-term impacts of increased traffic and noise around the parks. Labor influx risks related to community health and safety will be assessed during preparation as more detailed project description becomes available. ESS5 - Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant ESS5 is considered relevant at concept stage. However, the extent to which the project may result in economic or physical displacement is not known at this point and will need to be carefully assessed during preparation. The project will finance the establishment of new and expansion of existing eco-industrial parks, which may require some land acquisition and/or resettlement and may have temporary impacts on residents and businesses during construction. An eligibility criteria for eco-industrial parks may include the availability of land that does not result in any involuntary land acquisition. In any case, due diligence assessments will be required to identify and address any legacy issues of land acquired consistent with ESS5. The measures for managing ESS5 risks and impacts will be identified during project preparation, including on scope of potential land acquisition and who will be responsible for acquiring land. The FI’s ESMS will include measures to manage ESS5 risks. ESS6 - Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Public Disclosure ESS6 is relevant. Although no significant conversion or degradation of natural habitats is expected, some of the construction works may potentially be located in areas of importance for biodiversity conservation. The FI’s ESMS will provide guidance on biodiversity screening and an exclusion list to ensure that civil works do not alter or cause destruction or degradation of any critical or sensitive natural habitats, especially forests and wetlands, outside legally designated protected areas. Infrastructure activities that could result in significant adverse impacts on critical habitat and/or protected areas will be screened out through the ESMS. For infrastructure works with low minor impacts on biodiversity, these will be addressed through compliance with national legislation and ESS9 (para. 14-16). ESS7 - Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities There are no Indigenous peoples in the Dominican Republic that fulfill the ESS7 criteria. ESS8 - Cultural Heritage Relevant Adverse impacts on cultural heritage, whether tangible or intangible, could arise as a result of construction activities under Component3 that may involve soil excavations that could expose artifacts, human or ecological elements that may be beneath land surface, as well as from the siting and operation of ancillary facilities (quarries or borrow pits, laydown areas, workers camps, etc.). The FI’s ESMS will include provisions for site-specific screening and assessment of any known sites of cultural or historic importance which may be impacted locally, identification of any sites of cultural/social importance for local communities, and soil excavations. Feb 07, 2025 Page 6 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) ESS9 - Financial Intermediaries Relevant The FI has not been identified. Project preparation will assess whether ESS9 will apply to the entire FI’s portfolio or if it can be ring-fenced to only apply to Bank-financed activities. The FI will put in place and maintain an ESMS commensurate with the nature and magnitude of E&S risks and impacts, which will include (i) E&S policy (including gap analysis); (ii) clearly defined procedures for the identification, assessment and management of E&S risks and impacts (including an exclusion list); (iii) organizational capacity and competency; (iv) monitoring and review of E&S risks of subprojects and the portfolio; and (v) external communications mechanism. During preparation, the team will assess whether the FI already has an ESMS in place, indicating which elements, if any, will be enhanced or modified to meet the requirements of ESS9. WB approval of the ESMS may be an effectiveness condition to be confirmed prior to Appraisal. 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 Use of Borrower Framework No At the concept stage, the project is not expected to rely on the Borrower Framework. However, the national Public Disclosure framework will be assessed in view of the final project design and activities to determine if some project activities may use the Borrower’s framework, or parts thereof. The FI will need to prepare a, or strengthen its current, ESMS consistent with the ESF. Use of Common Approach No At this moment, it is not anticipated that a common approach will be considered. However, the InterAmerican Development Bank is also considering a loan with the Ministry of Industry, Commerce, and SMEs, which may be prepared in parallel or potentially as co-financing of a joint project. In the case of co-financing, a common approach will be considered. 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? By Appraisal, the following E&S instruments are envisioned to be required to be prepared and disclosed by the Client, depending on more details of the project design and activities: 1. Environmental and Social Assessment. 2. Draft ESCP. 3. Draft SEP developed and consulted by the Ministry of Industry and Commerce (Component 1 and 2). Feb 07, 2025 Page 7 of 8 The World Bank Dominican Republic Green Resilient Industrial Transformation (P181448) Prior to implementation, the following instruments are currently envisioned to be prepared and disclosed: 1. Project Operations Manual, including amongst others Labour Management Procedures (Component 1 and 2). 2. Final SEP (Component 1 and 2). 3. FI ESMS (Component 3); likely as effectiveness condition (TBC prior to Appraisal). III. CONTACT POINT World Bank Task Team Leader: Hind Kadiri Title: Senior Private Sector Specialist Email: hkadiri@worldbank.org TTL Contact: Jean Michel Lobet Job Title: Senior Financial Sector Specialist Email: jlobet@worldbank.org Public Disclosure 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): Hind Kadiri, Jean Michel Lobet ADM Environmental Specialist: Fabiola Maria Lucia Mercado Jaldin ADM Social Specialist: Svend Jensby Feb 07, 2025 Page 8 of 8