The Pretoria Head and Neck Hospital site under construction, and the identified options for new hospitals, have previously been owned by legally registered companies, with legal land ownership documents. As such, no PS 5: Land Acquisition and Involuntary Resettlement risks are foreseen. The project sites are located in already modified urban environments, and no priority ecosystems are proximal to the locations of new buildings. Also, no conversion of natural/critical habitats is expected to take place. Therefore, no PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources risks are expected. There are no indigenous people around the actual and proposed asset sites. Therefore, no PS7: Indigenous Peoples risks are foreseen. Presence of cultural artifacts are unlikely at the selected site options. Therefore, no PS8: Cultural Heritage, risks are expected in the Project.

This is a Category B project, according to IFC’s Environmental and Social Sustainability Policy. Based on information reviewed during the appraisal, it is expected to have limited adverse environmental and social risks and impacts that are few in number, short-term and site-specific, and can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the sections further below.

The key environmental and social (E&S) issues identified include; (i) the adequacy and implementation of the Growthpoint’s Environmental and Social Management System (ESMS); (ii) availability and adequacy of the existing E&S risk assessment procedures to appraise the entire scope of business risks; (iii) availability and adequacy of relevant E&S management plans and procedures to effectively manage the entire scope of business risks; (iv) adequacy of the E&S management staff capacity to oversee key risks in the business; (v) adequacy of the human resources policy, and it’s implementation, to address risks related to labor and working conditions for direct and contracted workers; (vi) adequacy of the life and fire safety measures at the Pretoria Head and Neck Hospital, and other operational public buildings managed by Growthpoint on behalf of GHPH; (vii) waste and wastewater management practices at the buildings managed by Growthpoint; (viii) armed security management; (ix) stakeholder (internal and external) engagement process.

Environmental and Social Assessment and Management Systems:

As a company managed by Growthpoint, GHPH’s healthcare facilities will be managed under Growthpoint’s set of policies and procedures. Growthpoint has key documents that comprise an environmental and social management systems (ESMS), including; an Environmental Policy, Health and Safety Policy, Corporate Social Responsibility Policy, Solid Waste and Materials Management Procedures, Employment Equity Plan, Disclosure Policy, Human Resources Policies, Procurement Policy and Risk Framework. These policies and procedures address the key risks in the Company and are communicated to staff and are applied across the projects undertaken by the Company. Growthpoint has recently embarked on the process of standardizing management procedures across the business, and these documents are under review and will be subsequently improved to cover the growing scope of the business.

While developing new properties, Growthpoint is guided by national legal compliance requirements, including the requirements for environmental impact assessment or development of environmental management plans, as would be advised by the authorities. An Environmental Impact Assessment, in terms of the EIA Regulations, 2014 and the National Water Act, 1998, is a mandatory requirement before the relevant Authorities grant the permission for new developments. For the Pretoria Head and Neck Hospital, Growthpoint developed the Development Environmental Management Plan (DEMP) and Construction Health and Safety Plan (CHSP). These were approved by the regulatory authorities and are now under implementation by contractors and sub-contractors, supervised by the development manager.

For greenfield projects, Growthpoint hires qualified consultants to undertake ESIAs, health and safety assessments and audits. For property acquisitions, Growthpoint conducts due diligence on key risk areas, including (legal, insurance, technical and OHS). However, Growthpoint does not have formal procedures to guide the technical quality and reporting requirements expected of consultants of both greenfield projects and property acquisitions. Given their experience and good understanding of the real estate sector, the Company will develop environmental and social assessment procedures to provide guidance on the minimum requirements from contracted consulting firms for impact assessments for new developments; and risk-based due diligence procedures for property acquisitions. The procedures will incorporate local legal requirements as well as IFC’s Performance Standards requirements, especially on life and fire safety, land acquisition, EHS, and emergency response for property acquisitions ESAP 1.

Identification of Risks and Impacts

Growthpoint has developed a Risk Information Management System (RIMS), a software program focused on the company’s property operations which is used to record any environmental and occupational safety and health risks at each property, and collate these into a business-wide dashboard, with reports on each facility. RIMS is used by Growthpoint for risk identification and management, and to evaluate compliance with South Africa’s Building Regulations, Occupational Health and Safety Act, Compensation for Occupational Injuries and Diseases Act and Fire Compliance Regulations. Each building has a facility manager, a building manager and a handy Man, all with risk assessment and monitoring responsibilities. They compile the building risk assessment reports, coordinate with tenants and local authorities, supervise emergency drills and oversee implementation of corrective actions at their sites. Facilities managers complete electronic checklists for each building, every quarter. The results thereof can be analyzed on a building, sector business unit, sector and/or geographic basis. This readily helps to identify common issues and risks that need management’s attention. In addition, Growthpoint conducts annual carbon emission assessments at each property to determine the emission impact of their operations. The findings from these assessments are used to improve their emission reduction efforts.

For new projects, including the Pretoria Head and Neck Hospital under construction, environmental screening, followed by impact assessments (where needed) are the primary risk identification tools used by Growthpoint. For acquisition of existing properties, the Company undertakes due diligences prior to decision. The Company will develop and integrate E&S Due Diligence procedures into the existing Due Diligence process (ESAP 1) to guide the scope of E&S risk appraisal during such acquisitions.

Management Programs

Growthpoint’s main risk management program is the Risk Management Strategy Document, a framework document that covers strategic, operational, reporting and compliance risks. EHS risks are addressed, in broad terms, under the compliance risks section. This framework is developed to guide the Risk Management Committee (the main risk management team comprising key management officers and board members) in their work of overseeing management of all risks, including E&S (occupational safety and health, environment and social) risks and impacts of the business. As part of the ongoing process to standardize management procedures, Growthpoint will revise this Risk Strategy to increase its level of practical detail and make it a more effective business-wide risk management framework. Specifically, this revision will include the following: (i) an outline of the key risks faced by the business under each risk category (strategic, operational, reporting and compliance); (ii) clear roles and responsibilities (from building level to top management/board) of each assigned office in addressing risks under each risk category; (iii) clear reporting responsibilities and accountabilities under each risk category, including roles of contactors; and (iv) expansion of the scope of the strategy beyond addressing risks in operating facilities, to include risk management during new project development and new property acquisitions ESAP 2.

Organizational Capacity and Competency

Due to the nature of REIT operations (that involves significant reliance on contractors at different levels, management of hundreds of properties at different locations and high insurance compliance risks) the E&S roles are shared among different departments/units to enhance efficiency. For new developments, development managers oversee E&S compliance, from feasibility to completion of such development activities. They rely primarily on E&S and EHS consultants for technical/specialist support in their oversight role. For occupational health and safety risks at all operational properties and newly acquired existing facilities, the Head of Internal Audit and Risk Management, through a delegated authority to the risk officer, supervises the implementation of RIMS. The sustainability manager oversees the environment (water and energy efficiency, waste management and carbon emissions) aspects of the business. The Human resources director is tasked with addressing employee-related E&S issues at the offices. All these roles report to the chief operating officer and interact at the Risk Management Committee Meetings. From the interviews and review of documents, IFC deems this model of E&S risk and performance management as effective, given that every assigned lead has closer focus on their core functional areas. These various office holders interviewed demonstrated good understanding of their E&S roles, and related legal and regulatory requirements. However, one risk officer does the extensive work of overseeing and analyzing RIMS outputs from over 400 properties, highlighting risks and liaising with external parties visit sites and to conduct audits. This seems overwhelming, and the Company will consider increasing human capacity at this level to ensure efficiency in discharging these tasks, even as the portfolio grows.

For Pretoria Head and Neck Hospital, the development manager oversees implementation of the DEMP by E&S Consultants, and the CHSP by Health and Safety Consultants. All these three parties have permanent representatives on site to conduct visits, trainings and reporting as required. The development manager conducts regular meetings with all parties to ensure that risks are adequately managed, and reporting is accurate. This same approach will be applied for all future greenfield development project. Local healthcare groups who operate the hospitals are tenants and have their own resources and systems to manage EHS aspects of the operations that are not related to the physical facilities.

Emergency Preparedness and Response

Pretoria Head and Neck Hospital has been designed with emergency response systems, encompassing; fire suppression systems (no sprinklers), smoke detection systems, emergency voice evacuation communication system, emergency lighting and power system and smoke management and stairwell pressurization systems. The Construction Health and Safety Plan, currently under implementation, has provided for key emergency measures, including; location of emergency lighting, training of first aiders, designation of muster points, emergency communication and reporting lines. These are communicated to construction workers.

In routine operations, all buildings operated by Growthpoint have asset-specific emergency response systems, ranging from Growthpoint facility manager (trained and charged with regular inspections), regulated drills, information sharing with tenants, emergency routes and public information and signage. Growthpoint conducts regular audits of the emergency response systems as part of annual statutory H&S and insurance audits.

Monitoring and Review

Through the RIMS, Growthpoint continuously monitors health and safety risks from the assets and address risks as they occur. Quarterly health and safety reports from each asset are submitted to the Head of Internal Audit and Risk Management and then to the Chief Operating Officer, and requisite improvement actions discussed and acted on. Also, Growthpoint conducts annual health and safety audits of all properties, together with insurance professionals, and addresses the corrective actions as advised.

Growthpoint works closely with operating entities in the audits and in the implementation of corrective actions.

External communications and Grievance Mechanisms

Growthpoint has a Disclosure Policy, appropriate to the needs of the business, that guides the dissemination of Company information to investment analysts, institutional investors and fund managers, financial media, the public; and also provides an internal communication framework. The Policy also provided guidance on crisis and external complaints management.

Human Resources Policies and Procedures

Growthpoint has a total of 627 workers, comprised of 610 direct workers and 26 contractors; 48% (301) male and 52% (326) female workers. Growthpoint has developed the Human Resources Policies and Conditions of Employment Handbook, issued to every employee upon recruitment. The Handbook covers key labour requirements including; recruitment, leave, employee benefits, medical aid, disability substance abuse, sexual harassment, whistle blowing and protected disclosures, and retirement policy. These policies apply to Growthpoint and GHPH but each healthcare group who operate the hospitals have their own policies. However, the Handbook does not have provisions covering contracted workers and suppliers, who undertake some key tasks on behalf of the Company. The Policy Handbook will be revised by introducing a policy statement on contracted workers to enable it be consistent with the requirements of Performance Standard 2. An implementation framework to ensure it is operational will also be developed ESAP 3.

Working Conditions and Terms of Employment

Every Growthpoint employee has a documented contract indicating terms and duration of the employment, wages and benefits, hours of work, grievance procedures, deductions, working conditions, termination procedures, health insurance, and pension.

The Company provides medical insurance for employees and registered dependents, payment of allowances (travel, relocation), education bursaries and retirement benefits for staff. All employees are entitled to annual leave. Female employees are entitled to annual leave plus 16 weeks paid maternity leave and all staff are entitled to sick leave according to national law.

Workers’ Organizations

The Growthpoint management allows the workers liberty to join workers’ organizations, and there is no restriction of workers to develop alternative mechanisms to express their grievances. However, none of the workers is currently aligned with any national or regional unions, and this liberty has not been expressed in the Human Resources Policies to ensure formal management commitment on the matter. As part of the review and revision of sections of the Handbook in ESAP 3, Growthpoint will include a statement on it’s commitment to respect workers’ rights to join trade unions.

Non-discrimination and equal opportunity

Growthpoint has an Employment Equity Plan that outlined the Company’s commitment to creating a diverse working environment which provides equal opportunity to all employees, whilst giving special care to employees from specific designated groups (eg. the disabled).

Retrenchment

Growthpoint is a growing organization, and the GHPH is expected to grow in staff numbers. In case retrenchment is needed in the future, Growthpoint will perform it in accordance with the requirements of PS 2

Grievance Mechanism

Growthpoint is implementing a whistle blowing and protected disclosures policy that provides the platform for workers to report any criminal and other irregular conduct in the workplace, in a responsible manner, anonymously. On personal employee grievances, the policy guides that all these are directed to the managers and the human resources department. The Company will revise employee grievance procedures to provide clarity on the grievance reporting hierarchy, processing timeframes, feedback to complainants and alternative dispute resolution where complainants are not satisfied ESAP 4.

Protecting the workforce

No child or forced workers are engaged by Growthpoint. The employee recruitment process aligns to country legal provisions, which are designed to protect unsafe child labor or forced labor.

Occupational Health and Safety

In new projects, Growthpoint hires health and safety consultants to draft construction health and safety management plans and supervise their implementation by contractors, in accordance with the legal requirements, at minimum. For routine office/asset operations, the RIMS tool is applied to ensure early identification and management of any health and safety risks to workers and tenants. The human resources department addresses any employee concerns relating to their health or safety at the workplace, together with the risk team. Growthpoint has an occupational safety and health committee that meets quarterly and conducts regular office safety talks and assessments.

Growthpoint has an existing employee training regime and conducts regular training needs assessments before preparing training programs, that include EHS training. Through the RIMS dashboard, the Company obtains reports of incidents, accidents, lost time and occupational injuries, and reports these in the annual ESG reports.

The management of OHS risks at operational hospitals is primarily undertaken by the operating healthcare groups (comprised of doctors and other healthcare industry experts) within their operational procedures. These include healthcare waste management, infection control, exposure to radiation/cytotoxic drugs, and load management (handling patients) focus on prevention, and mention engineering controls, training and PPE provision and use. The key groups, Mediclinic and Netcare have procedures aligned to international healthcare standards to manage healthcare quality and OHS risks. However, Growthpoint has retained Facility managers to ensure that the hospital operators maintain the properties as they are obligated to, including their safety for tenants and the public.

Workers engaged by third parties

Most new projects, expansion and refurbishment works and repairs at Growthpoint properties are undertaken by contractors. The procurement department has developed checklists used to prequalify contractors and vendors, and the questionnaire includes key EHS requirements (EHS Policy, Environment Policy, Labor practices). Only prequalified and shortlisted contractors can be assigned to the Company projects. Any lapse or failure to sustain the requirements leads to disqualification of affected contractors from Growthpoint activities. The Risk Strategy will formally align contracted workers with the company E&S risk management regime.

Resource efficiency

At least 63% of Growthpoint properties Office portfolio are “Green” certified by the Green Building Council of South Africa (GBCSA), to at least level 4 (Best practice). The design, construction and operational practices of new properties are done to significantly reduce or eliminate the negative impact of development on the environment and people and enhance resource efficiency. Growthpoint is also implementing a campaign called “GreenX5.0”. This is a campaign using the GBCSA Energy and Water Benchmark (EWP rating). tool to calculate energy and water efficiencies in real estate in South Africa. The Company’s objective is to, in all commercial buildings, be on par with the GBCSA Energy and Water Benchmark (EWP rating). The EWP rating was developed on international standards, where 5.0 represents the benchmark on a rating scale between 0 and 10. Currently, more than 91% of Growthpoint’s office buildings are 5.0 or above on the energy and water benchmark scale. Specific metrics are integrated into this tool to identify poor performing buildings related to energy and water consumption, a basis for efficiency improvement. The Company intends to have all long-term hold office properties achieve at least a level 4 “Green” rating by 2020.

By in large, Growthpoint collects water usage data for most of the buildings in its portfolio. In FY19, a total of 3 379 981kl of water was used. Against an initial sustainability target for office buildings to use no more than 0.88kl/sqm/pa by 2020, the office buildings used lower average of 0.83kl/m2/pa. Growthpoint is currently developing an extensive audit plan to further assess water consumption and to implement further water efficiencies across the business.

Greenhouse gas emission

Growthpoint has prioritized carbon emission reduction as a pivotal sustainability consideration. The Company undertakes carbon footprint assessments annually for all buildings that they own and manage. These assessments are externally verified by a third party, under the international standard ISO 14064-3 (2006) specification with guidance for validation and verification of greenhouse gas assertions. The Company has set an emission reduction target of achieving a 5% reduction in it’s intensity per square Metre (0.16tCO2e/m2) over the next five years. Growthpoint has made a commitment https://growthpoint.co.za/environmental-sustainability/cop-21) in line with Conference of Parties COP 21 to have all its long-hold commercial buildings attain a minimum 4-Star Green Star SA rating by 2020. No gases that are considered illegal or are in contravention of the Montreal Protocol are used in Growthpoint properties.

Wastes and Effluents

Growthpoint has set a waste target of zero organic waste to landfill by 2022 for the entire portfolio. As part of these efforts, the Company is implementing a solid waste and materials management guideline at a building level, coordinated by the facilities managers. The Company has a waste reporting portal that allows waste vendors to upload data and enable Growthpoint to track the amount of waste generated at its different properties. In due course, this functionality will be rolled to GHPH’s tenants. Each operational hospital, GHPH, together with the healthcare facility operating entities, implement defined Healthcare Risk Waste (HCRW) management procedures, and such wastes from the hospital operations are segregated, consolidated and collected by legally registered hazardous waste management contractors to designated incineration points. Healthcare waste permits are granted to the operating entities, while Growthpoint is responsible for wastes from the physical assets (repairs, maintenance etc). The same process will be applied in the Pretorial Head and Neck Hospital.

All hospitals under GHPH are connected to municipal sewer systems. Effluents are treated to required standards by the South Africa’s Waste Act and discharged to the sewer systems. However, Growthpoint has installed an anaerobic digester at N1 City Mall – a shopping mall property, also owned by the Company, to convert organic waste into energy, and solid and liquid compost. This is a pilot project and will be rolled out to other facilities (including GHPH owned properties) with time, to ensure that effluent discharge into the sewers is reduced, and useful resources are obtained out of it.

Hazardous Materials Management

Growthpoint does not store significant quantities of hazardous materials. Some chemical cleaning agents and equipment repair materials would fall into this category but are few in the operations. However, during project development activities, the nature of works, equipment and processes may involve use of various forms of hazardous materials (including stand-by generators and fuel storages). These are usually handled in line with Construction Health and Safety Management Plans for each site.

In operating healthcare facilities, the hospital operating entities take ownership of their wastes, including hazardous wastes.

Infrastructure and equipment design and safety

The Fire Safety Engineering (FSE) design at the Pretoria Head and Neck Hospital has been done to the requirements of the National Building Regulations and Building Standards Act (SANS) 10400, and the British Standard (BS) 7974. The design ensures that there is provision of adequate life and fire safety (LFS) measures and means of escape for all occupants and to provide means of access for emergency services as well as equipment for detecting, controlling and extinguishing fire. The hospital design includes a fire masterplan developed by LFS consultants and Growthpoint will submit a certification by a LFS professional that the building has been designed to the mentioned standards. Before commissioning of the Pretoria Head and Neck Hospital, a qualified L&FS expert will conduct a post-construction Life and Fire Safety risk-based review of the hospital before commissioning to review aspects such as occupancy levels, means of egress and systems for fire prevention, detection and suppression and confirm compliance with the LFS section 3.3 of the General EHS guidelines  As needed an action plan will be agreed and implemented

ESAP 5.

Growthpoint has a well-defined set of criteria incorporating LFS provisions, which are aligned with South African and the British Standards. Growthpoint will design, develop and operate any future hospital following the requirements of the LFS section of the WBG General EHS Guidelines. For greenfield healthcare facility developments, Growthpoint will submit to IFC the LFS masterplans for approval, and will provide a professional post-construction LFS certifications that the design of life and fire safety systems for new facilities comply with the requirements of the L&FS Section of the WBG General EHS Guidelines. For acquisition of existing properties, the E&S due diligence procedures to be developed under ESAP 1 will include risk-based life and fire safety screening protocol, which will be completed for every new acquisition and shared with IFC for review ESAP 6.

All other operational facilities also have adequate emergency and fire safety equipment, personnel and signages clearly placed to guide in cases of emergency incidents. The facility managers, risk officer and insurance agencies conduct comprehensive annual health and safety audits (including fire safety audits). Further, Growthpoint coordinates with tenants to conduct regular building/facility inspections and emergency drills and collaborate to address identified corrective actions. All fire and emergency measures at Growthpoint properties are on continual improvements as risks change.

Security personnel

Growthpoint has contracted security companies to provide security for some key public buildings, especially the malls and hospitals.  Professional Security firms have to comply with strict regulations that prescribe the level of training required for the different levels of security provided (e.g. armed vs unarmed and level of proficiency of guard etc). Please note that it is Growthpoint’s policy to not employ armed security guards at its premises.

Primarily, Growthpoint undertake continuous sector-wide engagements with peers, engagements with shareholders, the media and suppliers. The Company also publishes its annual Environment, Social and Governance reports on its website for public consumption and has open contacts to address any related comments of queries. The Company has developed a Disclosure Policy that provides guidance on various types and scales of the disclosure and engagement process. The Policy is designed to encourage the flow of information between the Company and its investors, and analysts in a way that builds public confidence and observes the regulatory requirements. The Policy seeks to ensure that all investors and analysts must be provided with the same information at the same time. However, the Disclosure Policy does not expressly provide for public disclosure of environmental and social impact assessment reports or environmental management plans, as required in international practice, and the IFC Performance Standards. The Company will consider revision of the Disclosure Policy to include a section on disclosure of environmental study reports, or include public disclosure of reports as a section in the environmental and social assessment procedures to be developed under ESAP 1

In addition, through the Corporate Social Policy, Growthpoint undertakes series of planned engagements with various cohorts of communities in South Africa. These are through programs in education, volunteerism, SME incubation and mentorship, and training activities. Reports are generated from these engagements and collated in the Growthpoint’s Annual ESG Reports.

Company – Growthpoint Healthcare Property Holding Ltd.

Point of contact – Linda Sigaba

Title – CEO

Telephone - +27 11 944 6531

Email – Lsigaba@growthpoint.co.za

Mailing Address – The Place, 1 Sandton Drive, Sandton Gauteng, 2196

Website – www.growthpoint.co.za