Verod is a responsible investor with a commitment to creating shared value deeply embedded through its operations both on firm and portfolio level. Verod aims to generate economic value in a way that also produces value and sustainability for the communities in which it operates.
Underpinning its corporate philosophy and growth path is an appreciation that its growth objectives cannot be achieved effectively without a committed focus on sustainable development; Verod firmly believes that successful investing and responsible investing are not mutually incompatible.
Environmental, Social and Governance Policy Summary
This is a summary of Verod Capital Management’s ESG Policy. The information contained here is intended for information purposes only and should not be relied on for completeness.
1. Overview
At Verod, we recognise that it is critical for our investments to contribute to building sustainable societies and environments to achieve a return on investment. To this end, we are committed to developing, implementing and continuously improving management of ESG issues and to structuring investments with the policies, governance structures, targets and reporting systems to effectively manage the risks and opportunities that sustainable development presents.
In line with our ESG commitments, we will strive to ensure that adequate human, technical and financial resources are constantly available to ensure implementation of our ESG Policy.
2. Management Commitment
Verod’s board and executive management are committed to ensuring that adequate human, technical and financial resources are available to ensure implementation of the firm’s ESG Policy and to procuring that all firm, and portfolio company activities are carried out in a socially responsible and environmentally sustainable manner.
3. Principles
In order to meet our ESG objectives, we have set the following ESG operational requirements:
- We will conduct induction sessions to educate and inform new Verod personnel of the operational requirements and other aspects of the ESG policy and will continually enlighten and update our team on ESG issues and risks;
- We will screen our prospective investee companies for ESG risks, impacts and benefits prior to approving any investment through a well-defined due diligence analyses and decision-making process;
- We will strive to ensure that our portfolio companies comply with any agreed Environmental and Social Action Plans (resulting from our screening and due diligence) based on the IFC Performance Standards, AfDB Integrated Safeguard System and Operational Safeguard Standards and other applicable requirements, within an agreed time period;
- We will require the adoption of ESG and business integrity Standards by all of our portfolio companies, as well as their business partners and participants in their supply chains;
- We will monitor and report on our contribution to ESG development of our portfolio companies in a transparent, credible and timeous manner, based on a “three tier” framework involving a Director of Verod, a designated Fund ESG Manager, Senior Investment Officers, and Portfolio Company ESG Officers.
4. Applicable Codes and Standards
In implementing this ESG Policy, Verod has recourse to internationally recognised standards, national laws, ESG policies and standards of investors, and ESG requirements of side letters executed with investors.
In particular, Verod will have recourse to the International Finance Corporation Performance Standards, the African Development Bank’s Integrated Safeguard System and Operational Safeguard Standards, FMO’s ESG Policy and the World Bank’s General Environment, Health and Safety Guidelines.
Verod strives to ensure compliance and compliance by portfolio companies, with all applicable national laws, rules and regulations of any government, regulatory body, organisation and licensing agency but in the event of an absence of national standards and/or regulations in a relevant country, or a conflict between international standards or investors’ codes & standards, Verod and its portfolio companies comply with the more strict law, rule or regulation.
5. Resources and Capabilities
Financial resources required for implementation of Verod’s ESG Policy are incorporated in our annual budget and deal fees and expenses for potential investments always include estimates of ESG deal fees proposed to be incurred in relation to the relevant investment.
As a rule, external consultants are always engaged to perform, implement and oversee Social and Environmental Due Diligences for all Category A and Category B projects, whilst Social and Environmental Due Diligence studies for all Category C Projects will be conducted internally by the ESG Manager and Senior Investment Officer.
6. Reporting
Verod provides the following categories of reports to its investors:
- Major Incidents - The portfolio company ESG Manager is required to provide reports to Verod for further reporting to the Investment Committee and investors on significant incidents including Fires or explosions; Significant fuel/chemical spills; Significant pollution discharges above limits of normal operation; Major work-related injuries (including injured employees, contractors and members of public); Work-related fatalities (including deaths of employees, contractors and members of public); Incidents significantly affecting the health of employees, contractors or members of public); Regulator enforcement actions/notices; Major security breaches etc. Portfolio companies are to notify Verod of these issues as soon as they occur and Verod, in turn is to notify investors within 3 business days after becoming aware.
- Quarterly Reporting - The Fund ESG Manager will be responsible for compiling the quarterly reports in partnership with the Portfolio Company ESG Officer, which must detail all ESG policy processes and changes enacted during the period. Reports will include information on the categorisation of investments as well as details of progress with implementation of pre-agreed action plans and any corrective actions for identified noncompliance issues.
- Annual Report - Verod will deliver to investors, an Annual ESG Performance Report and Development Impact Report within 60 days of the end of the financial year. The report will afford Verod an opportunity to review or adjust the ESG Policy and identify areas for improving their implementation as necessary. It will include updates on Implementation and operation of ESG policies; ESG performance of the all applicable Portfolio Companies over the last twelve months, illustrating progress and challenges encountered since the last annual ESG report, and Status of Portfolio Companies respective Environmental and Social Action Plans (if applicable).
7. External Engagement
Verod’s ESG Policy reflects the firm’s fundamental beliefs as regards Environmental and Social issues. Verod however also values the opinion of portfolio companies, regulators, business partners and other stakeholders and aims to engage stakeholders continuously. This exchange of ideas provides relevant input for internal discussions and positioning on ESG issues.
To provide feedback as regards any aspects of the ESG policy or in relation to any environmental or social impacts of any Verod financed companies or projects, please contact Chigozie Ejimogu, Sustainability Manager at chigozie.ejimogu@verodcapital.com.
8. Review
Verod’s ESG Policy is reviewed annually unless an earlier review is triggered by recommendations of the Investment Committee and/or the LP Advisory Committee of its Funds.