HERITAGE CAPITAL ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) POLICY

1.1  ESG Policy Statement:

As a Fund Manager wholly-owned by black females, Heritage Capital has a real understanding of the need for job creation, skills development and transformation in the South African economy. As such, Heritage Capital is committed to fostering the sustainable development of jobs and skills, with a focus on previously disadvantaged South Africans. In our quest to make this a reality, Heritage Capital commits to ensuring that no operation or entity into which we deploy investment will cause undue risk or impact to the environment. These commitments are underpinned by our belief that strong and efficient stewardship of environmental and social matters in our portfolio companies is linked to strong and efficient management of our portfolio companies financial returns.

Thus, Heritage Capital is committed to implementing its Environmental and Social Management System (ESMS) supported by this policy and outlining the means by which we will ensure the prevention, mitigation or compensation for any environmental or social risks and impacts occurring as a result of deploying investment in our portfolio companies. The ESMS possesses a component dedicated to monitoring the environmental and social (E&S) as well as the governance performance of all portfolio companies. This is in keeping with our desire to see continuous improvement in the ESG performance of our portfolio companies.

1.2 Commitment to sound ESG Management:

Heritage Capital therefore commits to the following 1:

  • Our group and portfolio companies will meet the requirements of national legislation in South Africa, and any other country in which we operate and/or plan to invest in;
  • Heritage Capital will ensure that any authorisations, licenses and permits and subsequent renewals required by our portfolio companies for legal operation will be in place;
  • We will promote Black Economic Empowerment (BEE) (Broad-Based Black Economic Empowerment Act, 2003, as amended) in all South African operations;
  • The implementation of all reasonable precautions to protect the health and safety of employees of our portfolio companies, and to comply with the occupational health and safety legislation of the countries in which we operate (e.g. the South African Basic Conditions of Employment Act, 1997 and Occupational Health and Safety Act, 1993);
  • The activities of our portfolio companies will comply with the IFC Performance Standards on Environmental and Social Sustainability, 2012 and the World Bank Group General Environmental Health and Safety (EHS) Guidelines and applicable Industry Sector EHS Guidelines;
  • Heritage Capital is committed to aligning the United Nations Sustainable Development Goals (SDGs) into our business/ESG strategy. Our mission is to contribute to a sustainable future by addressing critical global challenges through responsible business practices. We will adhere to uphold the SDG 3 (Good health & well-being), 5 (Gender equality), 8 (Decent work & economic growth) and 12 (Responsible consumption & production) through responsible investing. Furthermore, Heritage Capital will constantly be looking for opportunities to adhere with additional SDGs for a greater impact;
  • Heritage Capital will not invest in a company in which child or forced labour may be in use, as well as any company conducting activities that impinge on lands owned or claimed by indigenous peoples without their engagement and consent;
  • Heritage Capital will foster value-driven ethical behaviour and good governance practices (including business integrity, anti-money laundering, anti-bribery & corruption, conflict of interest, grievances and/or any criminal activities), informed by respect for human rights;
  • We will strive to ensure compliance in our group companies and portfolio companies to King IV Reporting Guidelines as far as possible; and
  • Whistleblowing of criminal activities to the relevant authorities, that comes to our attention during the course of business.

Furthermore, Heritage Capital undertakes to 2:

Review our potential investments for ESG impacts, risks and value add opportunities prior to approving any investment through a process of due diligence appropriate to the level of risk inherent in the target; Ensure that our group companies and portfolio companies avoid, or where avoidance is not possible, minimize, mitigate or compensate for adverse impacts on workers, affected communities and the environment; Ensure that affected communities are appropriately engaged by our portfolio companies on issues that could potentially affect them; Require the adoption of ESG standards by our portfolio companies, business partners and supply chain where possible (i.e. where Heritage Capital or the portfolio company has a reasonable level of control and influence over a supplier); Ensure compliance with the IFC Performance Standards by all portfolio companies; Monitor and report on our ESG performance in a credible and timeous manner to all stakeholders, with a focus on meeting our goals and our Limited Partners’ reporting requirements; and Regularly review and update this policy and other elements of our ESMS in order to ensure its continued applicability to the activities of Heritage Capital and our portfolio companies.

1 Or any subsequent updates to any of the listed legislation, guidelines, and standards.
2 Discretionary based.

1.3 Applicable ESG Standards, Requirements and Guidelines

Besides our commitment to comply with legislative requirements and the IFC Performance Standards on Environmental and Social Sustainability, Heritage Capital currently draws on a number of other guiding documents, and may, in the future also draw from other documents that will assist in managing group companies and portfolio companies in a more focused and relevant manner. In addition to this, a situation may arise in which our guiding documents are in conflict with one another. In such cases, Heritage Capital commits to conforming to the stricter of the guiding documents.

Heritage Capital and its portfolio companies will comply with the requirements of the following:

  • The IFC Exclusion List;
  • IFC Guidelines with a focus on those relating to General Manufacturing; and
  • All applicable laws and regulations to which Heritage Capital and its portfolio companies may be subject (including any applicable legislation in respect of the prevention of slavery and human trafficking if the portfolio and its supply chain are at risk of these).

1.4 The Role of Management in ESG Stewardship:

Heritage Capital understands that the effective management of ESG risks, impacts and opportunities at Manager, Fund and portfolio company level requires commitment and positive action from investors through to investees. 

Management of Heritage Capital, by means of this policy, commits to driving this change by ensuring that our staff and representatives from portfolio companies will receive adequate training in ESG matters. Heritage Capital will ensure that adequate resources are available for communication and implementation of a strong ESG-centric message and culture, in keeping with the ethos of our Fund and Heritage Capital itself. 

Heritage Capital will review this Policy annually to ensure its continued relevance and applicability in the management of ESG matters as they pertain to our investments.