Lisa Pearce

An all-rounded approach

The IDC's participation in projects is a catalyst in realising people's dreams and enabling societal growth. To do this we need to engender a culture of responsibility toward people and the environment, amongst our clients.

As an organisation, we promote development that is economically sustainable while being respectful of the environment and the rights and aspirations of local communities. We’re a signatory to the United Nations Environment Programme - Financial Institutions (UNEP FI) – a body of like-minded people in financial institutions that provides access to international best practice in project finance and provides a platform for peer review and interaction. We’re committed to investing in projects that are both socially and environmentally responsible. This filters through to the way we conduct our business on a daily basis.

When a prospective client submits their business plan to the IDC for consideration, their application is processed and evaluated for financial feasibility and other requirements. The due diligence process often includes an Environmental, Health and Safety, or EHS, component. An EHS risk assessment aims at evaluating the prospective client’s understanding of their own environmental, health and safety risks and liabilities and how well they are able to manage these. The process can be daunting, especially for entrepreneurs running small businesses who don’t know what to expect. 

The first step in the EHS risk assessment is to determine the degree of compliance with legal requirements. We request copies of documents: typical examples are environmental permits such as air emission permits and water-use licences, environmental impact assessments (EIAs) and authorisations (also called RODs), social development plans and environmental management plans (EMPs) in the mining industry, waste and hazardous waste handling and/or treatment permits and other permits relevant to the specific industry.

We may also need to undertake a physical site inspection. Compliance with Occupational Health and Safety Act and labour regulations are a critical consideration, and in particular the safety of buildings, working spaces and safety training requirements. Further to legal compliance, we also pay attention to the client’s HIV policy and the provisions that are made to promote equal opportunities for women and voluntary affiliations like GlobalGap certificates in the food and agricultural industry.

Giving life to our key value of ‘Partnership’ is an important second component of the EHS risk assessment. While assessing a client we can give advice about best practice procedures, clean or alternative technologies and climate change mitigation measures where appropriate. Partnership is particularly important in the Small and Medium Enterprise (SME) space where capacity building and awareness may be critical to the success and sustainability of a project. 

A client is rated according to the outcome of the EHS risk assessment. Category C clients are considered to have no or negligible environmental and/or social impacts and require minimal further monitoring. Category B clients are termed medium-risk – either with localised impacts or serious impacts that can be easily prevented or managed. Category A clients fall in the high risk classification. These clients have significant impacts that could have serious consequences for their immediate neighbours and surrounding areas.

Once a Category B or Category A company becomes an IDC business partner, these clients’ EHS performance may be monitored on an ongoing basis. Depending on the conditions precedent or undertakings agreed with each business partner, EHS risk assessments may be performed regularly to provide assistance and give assurance that critical aspects are being addressed. Sometimes clients may be advised to implement improved technology to reduce resource use or minimise pollution.

We consider the EHS risk assessment a valuable tool that contributes to the intrinsic value and sustainability of financial agreements between IDC and our business partners. It’s an important step in meeting our obligations to protect not only our investments, but the broader community and planet in the future.