In July 2022, AgDevCo engaged a Malawi-based development consulting firm, C12 Consultants, to assist with the development and implementation of environmental and social management systems (ESMS) at four investees in Malawi. This was funded through AgDevCo’s Technical Assistance Facility (TAF). The purpose of the ESMS project was to build internal ESG capacity at investees to enable them to meet the requirement in AgDevCo’s Responsible Business Principles to work towards alignment with the IFC Performance Standards. Having an ESMS is a requirement of the IFC Performance Standards, and as such the wider Development Finance Institution (DFI) community, and it helps to de-risk companies and to make them more ‘bankable’.
The challenge, however, lies in the internal capacity of investees to develop a practical set of management procedures, as well as obtaining management commitment and ensuring appropriate implementation. ‘On the ground’ specialist support is needed to assist investees to do this. This is where C12 stepped in and helped some of our Malawian investees to operationalise and implement the ESMS to ensure it is fit for purpose.
“AgDevCo and C12 helped us develop a practical management system rather than just a set of policies and procedures.”
- Moses Sumani, ESG Officer, Kasinthula Cane Growers Ltd
Across the four investees, more than 810 employees (28% women) were trained on a total of 75 new policies and procedures that were developed as part of the ESMS project. These include policies such as zero tolerance on sexual harassment; emergency response; Health, Safety, Security & Environment (HSSE) policies; internal and external grievance mechanisms; and stakeholder management plans.
Through the project, we found that having a dedicated internal ESG staff member at the farm/estate level, with some prior training on systems and controls, eased development and implementation. This also resulted in a greater degree of ownership of the resulting policies/procedures compared to a more ‘top down’ approach, e.g. where a consultant develops and hands over a generic system for implementation, without follow-on support.
Investee company ESG resources found that providing training, consultation and communication to all management and employees was beneficial to bolstering support for implementation of the ESMS.
“Historically we struggled with resistance to change and poor reporting on health and safety issues from employees. We are grateful for the support from C12 to break down all the training packages into smaller topics according to the nature of the job of an employee, which has helped sensitise employees and make the management system context specific.”
- Patrick Matchika, HSE Officer, Cattle Feedlot Company (CFC)
Through the same TAF programme, Moses, a particularly determined and driven ESG champion at Kasinthula, was able to attend training on social risks in Ethiopia which was provided by one of AgDevCo’s investors British International Investment (BII). This was an opportunity to speak to people from other sectors and share experiences on how they are benefiting from the management systems and how they are dealing with challenges, and as such help him drive further implementation across Kasinthula in Malawi.
Moses provided positive feedback about his experience of the BII training: “the training helped to clarify the importance of identifying and managing social risks, gender issues, the grievance redressal procedure, and stakeholder engagement, which may be neglected but have significant impact on company operations and business”.
As a follow-on to the ESMS work in Malawi, AgDevCo launched a portfolio-wide ESMS project in September 2022 covering 11 additional investees across sub-Saharan Africa and covering various value chains (from aquaculture and poultry to avocados, macadamia, floriculture and cereals). The new project has taken into account the lessons learnt from the Malawi pilot, including structuring the investee engagement period over a shorter timeframe and contracting a dedicated AgDevCo resource in order to ensure that momentum can be sustained and that follow-up support can be provided throughout the life of the investment as and when needed.