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8 Miles

PRI reporting framework 2020

You are in Direct – Private Equity » Outputs and outcomes

Outputs and outcomes

PE 14. ESG issues affected financial/ESG performance

14.1. Indicate whether your organisation measures how your approach to responsible investment in Private Equity investments has affected financial and/or ESG performance.

Describe the impact on:
Impact
Financial performance of investments
Describe the impact on:
Impact
ESG performance of investments

14.2. Describe how you are able to determine these outcomes.


PE 15. Examples of ESG issues that affected your PE investments

15.1. Provide examples of ESG issues that you identified in your potential and/or existing private equity investments during the reporting year.

Investment Stage
ESG issues

ESG issues

          Waste Water Management
        
Sector(s)
          FMCG / Agribusiness
        
Impact (or potential impact) on the investment

Environmental 

Water quality issues where our portfolio companies are providing clean drinking water to workers or as part of processing activities is a critcal business continuity issue  (licensing, food hygiene, occupational and health). In the same vein, waste water is a subsequent issue when waste water treatment technologies are not commonly deployed in emerging markets. 

Activities undertaken to influence the investment and its response

The approach taken was to work hand in hand with the business to identify a technology supplier, budget and process to improve internal capacity to manage waste water (and broader environmental management). A modern Waste Water Treatment Plant (WWTP) was purchased in 2019 and installed at a cost of $400,000, through further capital injection into the portfolio company from the fund manager.  

 

Investment Stage
ESG issues

ESG issues

          Wages meeting national minima and living wage options
Provision of formal employment contracts and payslips
        
Sector(s)
          Agribusiness
        
Impact (or potential impact) on investment

Social

In the Country the cost of living is rising and recent minimum wages were raised by the Government as a re-calibration to meet economic pressures. Fixed costs rose as a component of the business liabilities. 

Activities undertaken to influence the investment and its response

The Company invested in an automated digital system for managing data and committed to include all staff (HR) details in this for the 3,000 workers. As a result, a clear understanding of personnel and the liabilities enabled transparency for meeting the national and (ILO) standards. 

 

Investment Stage
ESG issues

ESG issues

          Board and Committee Performance - inc. management of audits, decision making, etc
        
Sector(s)
          FMCG
        
Impact (or potential impact) on investment

Staff from the Company were supported in attending DFI training on Governance in Lagos and London to empower and improve their awareness of shareholder expecations. 

 

Activities undertaken to influence the investment and its response

Training was prepared and executed by the Fund and its partners. 

Time was given for the Company to progress. 

15.2. Describe how you define and evaluate the materiality of ESG factors.

ESG factors are initially defined by the due diligence undertaken on the target company and then executed through the ESG Action Plan. The Responsible Investment Code and SEMS provide the framework for what is material and how this is then incorporated into decision making. 

The ESG Director has ultimate responsibility for subsequent definitions of material ESG factors and works with the portfolio team, partners and ESG Committee to improve performance and enhance risk management activities from within each company. 

Evaluation of materiality then becomes a function of the monitoring process and the themes that are identified. When new operational activities are identified, i.e. land acquisition or new labour contracts, these are considered at a portfolio team level and the ESG Director is involved with determining if there are meaningful changes in exposure or risk to the business and whether further assessment is required. 

 


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