Shared Value

“We are generating attractive returns and creating substantial co-investment opportunities for our investors, while developing positive economic, environmental and social impact for the local economy.”

Eric Idiahi, Verod Capital’s Co-founder and Partner

Our Policy

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.

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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:

  1. 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;
  2. 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;
  3. 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;
  4. 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;
  5. 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:

  1. 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.
  2. 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.
  3. 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 Alex Ekpiken, Vice President and General Counsel at alex.ekpiken@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.

We are commited to

Health and Safety

Verod is committed to safeguarding the health and safety of its employees, employees of underlying investee companies, and other stakeholders (including members of the host communities), by adhering to stringent policies on working conditions and labor rights. Verod insists on proper PPE for construction or manufacturing, adopts high standards in its food processing and handling, and typically implements processes to deal with waste management (including any hazardous waste), and protection of local resources such as groundwater and where appropriate, will also devise robust biodiversity conservation plans to protect local wildlife and ecosystem.

Job Creation

Verod typically aims to upgrade working conditions for jobs directly created or saved by Verod’s investments by standardizing terms of employment and offering better than minimum wages, including health care, pensions and related benefits. Verod actively supports the creation and expansion of indirect employment opportunities through partnership with local suppliers and service providers.

Developing Local Industries

Verod promotes the use of cutting edge technology in operation of its investees companies. Verod has also developed or supported companies that provide a viable import-substitution which results in technology transfer and development of human capital. This in turn has led to further advancement of local industries through partnership with local providers, knowledge transfer and know-how sharing, which can act as a catalyst for technological advancement within these local industries.

Energy Efficiency

Verod consistently promotes the adoption of energy-efficient technologies and processes in all of its investee companies and where possible, adopts eco-friendly energy sources that reduce environmental degradation, produce lower levels of CO2 emissions and are generally more cost effective.

Community Development

As far as practicable, Verod strives to employ from within the local community in which it operates and is a believer in early engagement with the community by adopting a proactive stakeholder engagement plan. Verod has donated free medical services, participated in youth apprentices, provided support to local schools and built roads that connect rural areas. Verod has found that improving local trading links positively impacts the local economy (and livelihood) of its surrounding communities.

Women Empowerment

Verod is a major advocate of gender equality and women empowerment and strives to ensure that all of its investee companies operate as equal opportunity employers of labor with well-entrenched rules against discrimination. Verod has invested in portfolio companies that are run by women, or that have predominant female senior management teams.

Case Studies

GZ Industries Limited

GZ Industries Limited (“GZI”) is West Africa’s first and leading aluminium beverage can manufacturing business. The company manufactures and promotes the use of aluminium cans, which are 100% recyclable by local and multinational brewing and beverage companies. Amongst the shared values initiatives promoted, GZI shows its commitment to the local community by providing boreholes for clean water, good roads, recreational facilities and free medical services.

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GZI currently runs a recycling scheme involving school students collecting used cans and exchanging them for school equipment and or facility repairs. GZI instituted a proactive policy to employ staff from its host communities and provides substantial engineering and technical training, as well as accommodation for staff members. GZI further demonstrates its commitment to the environment via the use of gas turbines to reduce emissions, and by using plastic returnable pallets (first in Nigeria) to reduce waste and combining heating and cooling systems to reduce energy requirements. On World Malaria Day, GZI presented mosquito nets to some of the inhabitants of Gberefu Village and in conjunction with members of the Rotary Club in Badagry Lagos State and the Brace Youth Network,donates to local orphanages.

Niyya Food and Drinks Limited

Niyya Food and Drinks (Niyya), is an integrated farm and juice production business that owns a processing facility, dairy farm, orchards, agricultural lands and manufactures the Farm Pride brand of natural fruit juices and fresh yogurt. Its entire operation is designed and structured around themes of creating shared value which ensures maximum efficiency with due consideration for conversion and sustainability of the environment.

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Water is sourced from an earth dam and is delivered through a modern drip irrigation system that ensures precise water application and minimum water use. Fruit production is done through a system designed to optimize productivity within the agro-ecosystem, including soil organisms, plants, livestock and people.

In addition, as part of its investment program in Niyya, Verod restructured employment contracts and improved overall benefits for casual workers (including providing healthcare); successfully engaged with both local chiefs and Fulani herdsmen; sources some of its requirements from local out-growers; increased the number of female workers; instituted new health & safety procedures; provided transportation for farm workers; and upgraded numerous production and housing facilities around the farm. Niyya is poised to accelerate its growth and become Nigeria’s leading producer of all-natural fruit juice using 100% made-in-Nigeria ingredients, and is in the process of potentially becoming the first truly ‘organic’ farm in Nigeria.

Shaldag Nigeria Limited

Shaldag is a large-scale greenfield recirculating aquaculture company for the production of Catfish and Tilapia. Nigeria currently spends around US$1bn per annum importing fish, Shaldag is set to substitute that for fresh, quality local supply. Verod has been proactive in engaging with the local community (the “Odo-Temu Community”) to ensure the project is equally beneficial to the community's long-term prosperity.

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One of the benefits brought on by the development of the facility include the construction of a road to link the community to the outer established roads in the area. The road is expected to improve transportation of goods in and out of the Community, and provide unfettered access to old community sites of local importance. Shaldag has also introduced policies to hire and train locals, and to share knowledge of best practices in aquaculture with local farmers. Shaldag plans to donate fish waste, free-of-charge, to local farmers for use as fertilizer. Furthermore, Shaldag has instituted a responsible waste management plan and implemented a biodiversity conservation plan to control and monitor any impact on the surrounding ecosystem. Further, the company is looking into conducting a ground water resource study to minimize any effects on the local water supply.