CASE STUDY

Sihleza

The anticipated impact of the project, once in rotation will generate an annual income of R5mil for the community-owned forestry development based in Umzimkhulu.

Natural environment

Policies and approach

As a responsible funder, we strive to ensure that business partners appreciate their impact on the environment and communities. We have a risk management system in which we assess the Environmental, Health and Safety risks of a business partner prior to funding, as well as after the funds have been disbursed. This supports our environmental and social framework.

Key principles of our framework are:
  • All activities must be environmentally and socially responsible;
  • All projects must comply with national legislation and international environmental conventions;
  • All projects must have respect for local communities;
  • Projects must develop standards that promote favourable working conditions and are not harmful to employee health and well-being; and
  • All projects shall develop and implement own environmental management systems and plans.

IDC endeavours to fully comply with applicable environmental, health and safety (EHS) laws and regulations. To ensure compliance, the IDC undertakes rigorous environmental and social due diligence for new applications according to a detailed environmental and social checklist.

An environmental and social due diligence procedure has been implemented to identify and quantify potential EHS risk of our clients and reduce IDC exposure to environmental and social liabilities, and to encourage our clients to conduct their business in a responsible way. The IDC endorsed the requirement that each submission for credit approval has an environmental and social assessment detailing IDC exposure to potential EHS liabilities and that a detailed report thereof be attached as an annexure.

In the case where a new application is found to be non-compliant with environmental and social legislation, and showing no possible mitigation measures, a decline response is given based on the environmental and social requirements. If mitigation measures provided are practical, an EHS team member will stipulate some non-negotiable conditions precedent(s) (CPs) on such a credit submission.

In order to strengthen and enforce compliance, the environmental and social clauses are included in the legal agreements which enable the IDC to consider possible recourses in case of persistent non-compliance by clients.

The clients are categorised according to an environmental and social risk rating and are given a risk rating aligned to the IFC project finances criteria.

If we identify shortcomings against these principles during our due diligence process, we put in place conditions to the funding and assist where necessary. In the year under review, 153 clients were subjected to environment and social risk assessments as part of the due diligence process and on request from SBUs.

We also assess clients post investment. In this case, the review concentrates on the client’s ability to understand, manage and minimise their environmental and social impacts and the level of compliance with legislation and industry standards and norms.

The risk profile is reported to management on an annual basis. Priority is always given to clients who were assessed previously and displayed an unsatisfactory performance. In the year under review, a total of 37 audits were undertaken from eight SBUs. Nine of the 37 had poor performance and will be reviewed further in the coming reporting year.

The IDC continues to induct new employees on environmental, health, social and safety matters.

We collaborate with other financial institutions through the Banking Association’s Sustainable Finance Forum on issues of mutual interest such as legislation development and training. IDC is a signatory of the UNEP Finance Initiatives and continue to be engaged on developments in the sustainability and environmental arenas.

We have in the past been left with the responsibility of managing the rehabilitation of two legacy pollutions from clients’ previous actions (African Chrome) or legal requirements (Columbus Joint Venture).

We have used these cases as lessons learnt for ourselves to ensure that we are not burdened with rehabilitation costs in future.

Water strategy

IDC is acutely aware of the importance of water, not only as being central to life but also on its importance to the long-term viability of IDC-funded projects, as well as for the sustainability of the whole economy.

In the past year IDC partnered with WWF (SA) and piloted the WWF Water Risk Assessment tool to identify water-related risks in mining and agriculture. As a result, industry-specific goals for IDC have been set for new investments in the top three stressed catchments in South Africa, namely, the Vaal, Olifant and Crocodile (West) Marico catchments. New investments in these locations will undergo water risk assessments in addition to the normal environmental and social due diligence performed on new investments.

Coega Dairy Holdings

The IDC has identified increased competition in the dairy value chain and import substitution in the cheese industry as key sector development goals. We also singled out the need for increased farmer (and specifically B-BBEE) participation in dairy value-adding initiatives.

Windtown Lagoon Resort 

The newly built Windtown Lagoon Resort and Spa reflects the IDC’s focus to funding community-based projects that have potential to create employment opportunities in far-flung regions.


APPROVALS
R13.1 billion
DISBURSEMENTS
R16.0 billion
JOBS FACILITATED
18 922
JOBS SAVED
3 950
© The IDC 2013. All rights not expressly allowed are reserved. P.O. Box 784055, Sandton, 2146, South Africa