Considering the nature of business operations and project activities and based on IFC’s review during project appraisal, there are no risks and anticipated impacts associated with the requirements of PS 6 (Biodiversity conservation and sustainable management of living natural resources); PS 7 (Indigenous Peoples) and IFC PS 8 (Cultural Heritage) for this proposed project.

 This proposed investment is expected to have limited environmental and social impacts, which are expected to be short-term and site-specific and none is expected to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus, this is a Category B project in accordance with IFC’s Policy on Environmental and Social Sustainability.

The key E&S issues associated with this corporate investment include i) adequacy of Liquid’s environmental and social management system and risk assessment procedures and its suitability for identifying and managing E&S issues in the various countries of operation; ii) assurance of fair, safe and healthy working conditions for employees and contractors, including, grievance management, security, health and safety, harassment and gender-based violence; iii) enhanced and coordinated engagement with key stakeholders including local communities; and (iv) community health and safety.

 Environmental and Social Assessment and Management System.

The company has designed, and in the process of implementing, a Group environment and social management system (ESMS). The ESMS comprises a health, safety and environment (HSE) Policy, an ESMS Manual and a set of ESMS implementation procedures covering both environment and social risks and impacts, as well as occupational health and safety (OHS), both for routine operations and to be applied during projects. In the HSE Policy, the Group commits to comply with all relevant HSE legislation in the countries they operate and strive to align with the IFC Performance Standards and other international best practice guidelines, where relevant. The ESMS Manual was developed in 2019 and its implementation is still at a nascent stage. Some E&S procedures are still being drafted, while others are at different stages of implementation. The company expects to achieve full ESMS implementation by the end of 2021. To achieve this, an ESMS action plan has been developed, and monthly progress on implementation in terms of the action plan is reported at the Monthly Performance Review (MPR) meetings. All operating regions (South Africa Region, Southern Africa Region and East Africa Region) as well as operating companies (OPCOs) within each region are expected to adopt and customize the Group ESMS to the local operating contexts, and implement relevant procedures based on their own risk and impact assessments. Notably, the ESMS scope does not cover Middle East and West Africa Region in this initial phase of implementation. However, it will be updated annually to increase its scope until all regions are fully covered.

Liquid has obtained ISO 14001: Environment Management Systems and ISO 45001: Occupational Health and Safety certifications for the data centers in South Africa, and is committed to achieving the same in Zimbabwe, Kenya and Rwanda.

Identification of Risks and Impacts.

For routine operations, the Risk Management Manual provides guideline principles and procedures on risk identification, analysis, management and reporting. Each OPCO is required to apply these procedures as guidance in risk management, and regularly updates HSE risk registers as well as environment impacts and aspects registers for their operations. To complete and update the registers, operational risk assessments are conducted daily, based on task and local-level projects and reported monthly at each OPCO. At the time of this appraisal, each OPCO was conducting the first country-level risks assessment and completing the HSE risk registers as well as environment impacts and aspects registers. These would be consolidated into Regional HSE registers, from which the Group-level HSE risk register will be developed. Monthly HSE performance review meetings are held at OPCO, Regional and Group level, and quarterly at the Board level. In these meetings, key HSE risks and impacts are discussed and corrective action programs drawn to address them. Performance against HSE Key Performance Indicators (KPI), as designed in the ESMS, are also reviewed and appraised.

During projects, the E&S assessments are conducted by the principal contractors and submitted to regulatory authorities for EIA licensing. The company has designed Contractor HSE Specifications to assist contractors to effectively manage safety, security, health and environment standards for each project. The Risk Management Manual does not provide for pre-project E&S screening or assessment, especially with respect to screening and assessment of location, route or design alternatives. To ensure that E&S risks are formally screened during project concept and feasibility stages by the technical and HSE teams, and that the findings guide decisions by the technical teams, the company will design a project concept E&S risk screening protocol/procedure which will comply with IFC Performance Standards and will include it as part of the Risk Management Manual. Specifically, the procedure will: (i) include Screening Criteria for the selection of sites, routes and projects to avoid high risk areas, including the criteria of no-go areas, and those with high risk issues related to community health and safety, land acquisition, biodiversity conservation, Indigenous Peoples and cultural heritage, in accordance with IFC’s Performance Standards, 4, 5, 6, 7 and 8; and (ii) develop a site E&S assessment procedure for new sites to standardize assessment requirements across the business, aligned with IFC’s Performance Standards (ESAP #1). This will inform the detail of the Terms of Reference for E&S assessments, where required.

Management Programs.

In these early stages of the ESMS implementation, the Group Risk Management Manual is the primary document that guides the design and application of risk management tools, roles and responsibilities, KPIs and reporting structures. At OPCO-level, Health and Safety Manuals and Environment Manuals will be the primary risk management guides. While some OPCOs have already developed and are implementing these Manuals, others are still in the process of doing the same. The third key risk monitoring documents are the HSE risk registers. OPCO-level risk registers, once fully developed by each country, will be the key risk monitoring tools for routine business operations. Monthly and annual SHE performance reports, outlining achievement of the set KPIs - health and safety, waste, environment and energy efficiency, contractor HSE performance; and guides on competency and training, and HSE reporting in the operations – also form part of the HSE risk management programs in the business. Additional E&S risk management procedures being implemented include Group Incident Management Procedures, External Grievance Procedure, Archeological Chance Find Procedure, Emergency Response Procedures, Employee Manuals and the COVID-19 Prevention Action Plan.

For projects, the Contractor HSE Specifications document primarily guides on the required task-related E&S procedures, general project risk management and contractor compliance with company policy and national laws. Further, the Environment Management Plans and Waste Management Plans have been designed to be included as compliance requirements in contractor agreements. These are to be customized to project contexts. The Group HSE Manager, working with OPCO HSE Managers, are responsible for contractor supervision to ensure adherence to the Specifications. Their monitoring roles include onboarding, review of contractor’s HSE Management Plan and method statements, supervision of site HSE practices, incident investigations and contractor audits. This role may be discharged directly by the HSE Managers or through appointed consultants.

Organizational Capacity and Competency.

The Group Board of Directors sets corporate objectives and targets and takes strategic decisions on safety, health and environmental management. The Group CEO is accountable for the overall E&S performance, and is responsible for allocating sufficient human, financial and other resources to secure a high standard of HSE management, taking competent advice on matters of HSE where relevant. The Group Head of HSE coordinates and oversees E&S performance in the company. Every region has a Regional SHE Manager and a SHE Committee comprised of Regional CEO or Regional COO, Group Head of SHE, Regional HSE Manager, chairperson of the Regional HSE Steering Committee and the chairperson of the OPCO HSE Committee. This committee is mainly tasked with monitoring of effectiveness of the ESMS at the regional level with specific reference to the HSE metrics as stipulated in the Group HSE Policy. Each OPCO has an SHE Manager coordinating E&S performance in the country and a SHE Committee tasked with risk assessments and monitoring, training and awareness campaigns at country level.

The ESMS provides for OPCO and Group-level training needs assessments and design of training programs. Training registers are filed for each OPCO. Training is carried out for new staff and contractors, undertaken each time they are engaged, or have significant task revisions.

During Group and in-country projects, the Group Head of SHE works closely with regional and OPCO SHE managers to ensure that HSE Policy requirements are met.

Emergency Preparedness and Response.

The company has a Group Emergency and Response Plan that sets out the requirements and actions to provide efficient and planned action during emergencies at all premises and active work sites in order to minimize and/or where possible prevent losses, injuries, damage and disruption. The document provides the minimum requirements to be included and addressed in office-specific Emergency and Response Plans to be compiled by each OPCO. Each Office’s HSE Team Lead is expected to ensure that each office or workplace Emergency and Response Plans are developed in alignment with the Group Plan.

The Emergency and Response Plan addresses key requirements, including: emergency triggers and types (fire, explosion, spills, impact events, subversive activities (bomb threat, vandalism, sabotage, etc.), civil disturbances, workplace violence, extended electrical outages, medical emergencies and natural disasters/occurrences); drills and procedures; evacuation protocol, emergency structures, roles and responsibilities; coordination with external parties; emergency training; and standard emergency operating procedures for various emergency types.

The company took a proactive approach to the management of COVID-19 with the development of a COVID-19 Task Team including representation from the regional COOs, HR business partners and HSE specialists.  The committee meet weekly to assess the current situation and adopt the approach and strategy as necessary. The company implemented an awareness and communication strategy both internally and with customers as well as prevention and containment measures such Home-Based Work (including the identification of vulnerable employees), travel restrictions and advocating good hygiene. The company has also implemented a Business Continuity strategy as well as Back to Office (BTO) plans for each OPCO informed by the current country context, regulations and internal guidelines.

HSE Monitoring and Review.

To meet the company’s commitment to E&S performance, the key management teams at OPCO, Regional and Group levels have set E&S KPIs. These KPIs are tracked and reported on during monthly OPCO and Regional SHE committee meetings, and quarterly at the Board’s Audit and Risk Committee. Quarterly and annual ESG reports are developed to update the management and Board on the status of these KPIs. Daily, the OPCO and Group Risk Registers will form the primary EHS performance monitoring tools.

To appraise its effectiveness in facilitating the achievement of the set EHS performance standards, the ESMS is slated for review at least every two years or whenever changes in business environment, including legislative requirements, necessitate such a review.

 The company employs a total 2,134 employees across all of their operations, comprising direct employees (87%) and contracted through third parties (13%). The majority of these employees (45%) are based in South Africa with the remaining employees spread across other operations and companies. Women make up a total of 25% of the workforce.

Human Resources Policies and Procedures.

To ensure efficient management of Human Resources (HR) Liquid has established a dedicated HR function at both Group and OPCO level. Each OPCO has a Head of HR and an HR team dependent on the size of the operation. In addition, there are regional HR Heads for Southern and Eastern Africa who are overseen by the Group Head of HR based in London. The HR function includes formulation and implementation of HR strategies and polices, employee advise and support, recruitment, induction, deployment, learning and development and performance management. The company currently has a draft Group level HR Policy that will need to be finalized and implemented, consistent with this Performance Standard (ESAP #2).

Liquid have implemented a Group Code of Conduct which includes topics such as whistleblowing, conflicts of interest, bribery and corruption, respect in the workplace, promotion of a safe and healthy workplace, human rights, social media, confidentiality, information security, tax compliance, money laundering, respecting the environment and information security. Many of the countries in which Liquid operates, such as Zimbabwe and Ethiopia, are considered a high-risk environment for gender-based violence; however, given Liquid’s commitment to identifying and managing incidents related to discrimination and harassment, the risk within the workplace is largely managed but nonetheless remains outside the workplace, within the local communities. This risk with respect to the workforce and the contractors is mitigated by the Code of Conduct and OPCO HR manuals, as described below.

All procurement is managed through the relevant Procurement Departments who are responsible for ensuring compliance against the company’s HSE requirements and polices. As part of the ESMS being developed and rolled out, Liquid will develop a Suppliers Code of Conduct (ESAP #3).

Working Conditions and Terms of Employment.

Working conditions and terms of employment are largely dictated by country specific legislative requirements and are detailed and implemented through individual OPCO HR Manuals / Handbooks (Kenya and Zimbabwe) and Staff Management Policies (South Africa) which are provided to all employees upon appointment.  Liquid currently have a draft Group HR Manual which will be finalized and implemented. All employees are provided with written contracts of employment. These contracts are typically open ended; however, some term contracts are required to fill specific short-term positions. Employment contracts detail terms of employment, probation period (3 – 6 months), remuneration and leave entitlement (annual, sick, paternity, maternity, family responsibility). All employment contracts are signed by the CEO or the appointed representative such as the Head of Department or HR Manager. 

Working hours at Liquid comply with relevant national labor regulations of the country of operation. In South Africa a maximum of 45 hours per five-day week is allowed, in Kenya and Zimbabwe working hours are detailed as 08h00 – 17h00. All operations employ shift work where necessary which are managed as per a shift roster.

Liquid provide fair and equitable pay to employees based on local market practices, individual performance and pre-defined salary bands. Remunerations are reviewed annually together with regular performance appraisals.

Liquid recognizes the need for continuous learning to build capacity and promote an enabling work environment to the benefit of all staff and the company. The company encourages its employees, through training, education and development opportunities, to reach their optimal potential and ensure maximum individual and team performance. All training is aimed at enhancing job related skills and the broader company business objectives to ensure that the appropriate return on investment is realized.

Workers’ Organizations.

Membership or union activity is largely dictated by the relevant country legislation; however, as per the company’s ESMS Manual, employees’ have the right to join or form a labor union without fear of reprisal, intimidation or harassment. Where employees are represented by a union, the company is committed to establishing a constructive dialogue with the relevant representatives. In South Africa and Botswana there is no formal union representation at present; in Kenya and the DRC employees are represented by unions; in Zimbabwe, clerical staff are members of the National Employment Council; however, there is no formal union / worker organization representation in the country. Currently there are collective bargaining agreements in place in Kenya and the DRC.

Non-discrimination and Equal Opportunity.

Liquid promote non-discrimination and equal opportunity across several platforms and policies. The Equality, Diversity and Inclusion Policy is applicable across all operations and entities. The policy promotes a diverse multicultural environment with fair and equitable treatment. The policy focuses on direct and indirect discrimination, victimization, harassment, fair and equitable recruitment and selection, equal opportunity employment practices, learning and development, and grievance management.

The Code of Conduct also promotes an equal opportunity work environment and compliance with applicable employment laws and regulations. The management of sexual harassment in the workplace is managed through the OPCO HR manuals which specify the scope, principles, behavior, procedures, complaint/grievance process (formal and informal) and training and awareness. These requirements are extended to all contractors through the Contractor Specification which states that Liquid do not perform or allow any form of discrimination or any kind of behavior that is sexually or morally coercive, threatening and offensive or aimed at the exploitation of the individual.

Retrenchment.

In South Africa, the company is currently undergoing a retrenchment process in accordance with the Labor Relations Act (LRA), Section 189. As per the LRA, the company is permitted to dismiss employees for operational requirements. As the retrenchment will impact more than 50 employees, Liquid is obliged to engage in a meaningful engagement process in an attempt to reach consensus on, inter alia, appropriate measures to avoid and/or minimise the number of dismissals. As of October 2020, Liquid have offered voluntary separation and early retirement packages to employees affected by the retrenchment. Further retrenchment may occur following the completion of the regulated consultation and appointment process. No other retrenchment is currently anticipated in any other countries of operation. As retrenchment is guided by the relevant country legislative requirements, Liquid will be required to develop a consolidated Group Retrenchment Policy (ESAP #4).

Grievance Mechanism.

The company has implemented several platforms to manage employee related grievances. Firstly, the Whistleblower Policy and Ethics Hotline allows employees, and external stakeholders where necessary, to report unlawful / unethical incidents in a confidential manner. This is managed through an independent ethics reporting line (managed via a third party, Deloitte) who manage complaints and investigations in a confidential manner. Alternatively, a stakeholder or whistleblower can submit a complaint directly to the Group’s internal audit via email.

Liquid have also implemented an internal Grievance Policy that applies across all operations (the external grievance mechanism is applicable to contractors and communities). The policy aims to encourage free communication between employees and their Managers and to ensure that when concerns, problems or complaints are raised, where possible they are resolved quickly, confidentially and to the satisfaction of all those concerned. Employees can submit a grievance by using the grievance application form or by scanning a QR code. The policy details raising a grievance, application, resolution and appeals. The company are in the process of finalizing a digital grievance mechanism in East Africa. The company has also implemented a Bullying, Harassment and Victimization Policy. The Grievance Policy does not detail a gender specific reporting line which will need to be developed and implemented (ESAP #5).

Employee grievances typically relate to issues with line managers and performance ratings where an external party is used as an independent moderator. In 2019, three cases of workplace sexual harassment were reported in South Africa. This was managed through a zero-tolerance internal procedure and also included sexual harassment awareness training for all employees. 

Protecting the Work Force.

The company’s Code of Conduct states that the company will not employ any person under the age of 16 years old, or less than the local minimum employment age or mandatory school leaving age (whichever is higher). No person under 18 years of age will be employed to undertake potentially hazardous tasks. The company has also issued a Modern Slavery Act statement that reiterates this position and their commitment to human rights in general.

This requirement is also extended to all contractors / third parties through the Contractor Specification which requires all contractors to commit basic human rights requirements including the use of child and forced labor.

Occupational Health and Safety.

Liquid has undertaken to safeguard their employees and contractors through providing and maintaining, as far as reasonably practicable, a working environment that is safe and without risk to the health of employees and contractors. The aim of Liquids HSE Policy is to ensure OHS practices meet statutory requirements, international standards and make it applicable throughout the Group. Liquid’s management system is ISO: 45001 certified.

The OHS component of the HSE Policy stipulates that all activities must be assessed for hazards and evaluated for risk, all employees and contractors must maintain a robust HSE training regime including ensuring high risk activities are only completed by trained personnel and all employees and contractors must be provided with the appropriate PPE.

The company is in the process of implementing an Incident Management procedure (including a digital process) at all OPCOs that looks to identify and mitigate hazards that may lead to an accident; prevent or minimize any harm or damage that may result from an incident and correct the problem to avoid a recurrence. Incident reporting is done on a monthly basis and includes near misses and incidents. Incidents include Lost Time Injuries (LTI), fatalities, near misses, disabling injuries, first aid cases, restricted work cases, property damage and medical treatment incidents. Near misses and incidents are recorded in a register, investigated and input into a Smartsheet Tracker.

Workers Engaged by Third Parties.

As indicated above, Liquid employ a total of 285 contract employees (13% of the total workforce). The identification, vetting and contracting of all third parties is managed through the company’s Procurement Department. Where necessary, procurement will engage with HR to confirm certain conditions of employment. In South Africa, a Procurement Policy has been implemented that requires a Request for Proposal (RFP) to be circulated for contracts above a certain value and details the necessary transformation (BBBEE) requirements pertaining to procurement.

In addition of the requirement for contractors to comply with relevant local legislation, Liquid has developed and implemented a Contractor HSE Specification to assist in the implementation and enforcement of safety, security, health and environmental standards with third party contractors and service providers. The HSE Specification provides the requirements to be complied with and gives guidance for the management of HSE related issues during a project lifecycle. The HSE Specification includes contractor requirements pertaining to child and forced labor, discrimination and harassment, roles and responsibilities. As per the HSE Specification, the contractor is responsible for developing and implementing a project specific HSE plan based on their specific scope of work and sign a declaration stating that all HSE requirements will be met and adequately budgeted. All current and potential contractors / third party service providers undergo initial and annual HSE management system compliance vetting before onboarding and contracting with a minimum compliance score of 85% required. The Contractor Specification will be reviewed and updated to detail and monitor the labor and working condition requirements and compliance of contractors against both Liquid policies and local legislation (ESAP #6).

 Resource Efficiency.

Energy: Grid electricity is the main source of energy for the business. Solar power and diesel (by stand-by generators and company fleet) are consumed as well in some facilities. Energy use monitoring is at an early stage having commenced in January 2020 and OPCOs are being progressively co-opted into the reporting regime. Although electricity use is not currently reported for all the OPCOs, monthly consumption is estimated at 2,344,998kWh. Solar power consumption is estimated at an average of 75,395kWh, while diesel use is minimally used during outages, and variably by the company and contractor vehicles.

Water: The company consumes mainly municipal water for the majority of its operations. Quantities are limited and primarily used for routine administrative, sanitary and cleaning purposes. As part of their ESMS implementation, the company has developed consumption tracking templates and commenced recording monthly water consumption across most OPCOs.

Both water and energy consumption have set KPIs against which monthly reports are generated. Reporting will be fully streamlined once all OPCOs are incorporated into the reporting structure.

Air quality and greenhouse gas (GHG) emissions:  The main sources of air pollutants from the business include back-up generator use and vehicle use. The Group Environment Management Plan has set out measures for air pollution control and monitoring and requires that every project and business activity that triggers air pollution risks must adhere to the documented guideline measures. The company has established a methodology and templates for annual GHG quantification and reporting. Between January to July 2020, the GHG emissions are estimated at 934 tons CO2eq, although a few OPCOs are yet to begin reporting. Complete business-wide reporting is expected from December 2020.

Waste and Wastewater Management.

The main wastes generated from routine operations include office general wastes, wastewater from cleaning activities, effluent from sanitary facilities and some hazardous wastes from occasional equipment and vehicle maintenance and repairs. Fiber cable preparation, laying, repair and replacements works also generate a variety of wastes, mostly related to cable parts and equipment parts and general wastes. Data Center operations mainly generate electronic wastes. The company has developed a Waste Management Plan at the Group level, to be customized by the OPCOs. The Plan covers waste management measures for routine operations as well as requirements for projects. Wastewater from the operational facilities, mainly sanitary wastewater, is discharged into municipal sewers while other non-hazardous solid wastes are collected by municipal authorities for disposal, mostly at designated landfills. The electronic waste management procedure in the Waste Management Plan will be revised to explicitly indicate the mode(s) of disposal of unrecyclable electronic waste. (ESAP #7). Currently, waste recycling targets are still being set by individual OPCOs.

Hazardous Materials and Hazardous Waste Management.

The main hazardous materials likely to be handled in the operations and projects include fuel for generators, while hazardous waste includes used paints, asbestos, used batteries and dry cells, used oil and oil filters. The Group Environment Management Plan adequately provides measures and method statements for safe management of the various relevant hazardous materials, while the Waste Management Plan address safe handling, storage and disposal of hazardous wastes. Site Managers are required to ensure that adequate contracts exist with suitably accredited disposal sites and disposal contractors to handle the variety of hazardous waste generated by Liquid, while the OPCO SHE specialists are required to ensure that audits are done on the contractors who handle Liquid’s hazardous wastes to ensure that all their operations are carried out in a legal and environmentally friendly manner.

 Liquid has adopted an Integrated Risk Management Process which includes the company’s management approach towards health and safety of the communities within which they operate. As stipulated in the HSE Policy, procedures that are required to ensure community health and safety include backfilling, barricading, crushing operations, driving, emergency evacuation, excavating and trenching, hazardous and chemical substances, housekeeping, inclement weather, lockout (electrical), scaffolding, site establishment, traffic control and trenching.

Community incidents are tracked using the health and safety KPIs including number of reported near misses and incidents, near miss and incident classification, number of civilian injuries, number of civilian fatalities and health and safety incident costs. Any incidents are reported and investigated through the Group Incident Management Procedure (as described under Occupational Health and Safety).

The company does not have any specific design standards relating to infrastructure and the HSE team is not currently integrally involved during the design process. This can potentially result in technical designs that do not account for community health and safety implications. As per ESAP #1, Liquid will develop a site E&S assessment procedure for new sites to standardize assessment requirements across the business, aligned with IFC’s Performance Standards. As per the Contractor Specification, a contractor is required to submit a Method Statement relating to community infrastructure requirements.

Transportation Safety.

Liquid has developed and implemented a Group Driver Code of Conduct as a component of the overarching ESMS. This is currently a group statement and the company will formalize it in a policy or procedure. The formalization of a Group Driver Policy / Procedure will be extended to contractors to supplement the Contractor Specification (ESAP #8).

As per the Contractor Specification, all contractors are required to develop a Traffic Management Plan (if applicable). In addition, the Contractor Specification provides requirements relating to driving at work, such as not exceeding the speed limit and not using mobile devices while driving.

Security Personnel.

Liquid utilizes private security companies to provide security and access control at their offices and data centers. All security companies are vetted and subjected to the same procurement and HSE requirements of other third-party contractors (see section on Third Parties) in addition to the Code of Conduct and local regulations. Security guards are not armed. The company does on occasion, dependent on the location, require security support and protection when installing various infrastructure. The company has not received any community reports or complaints involving the presence or actions of their security personnel.

Security is managed through the Facilities Management function and report directly to the Chief Operating Officer (COO).  Liquid is in the process of drafting a Group Security Management Plan which will be finalized, in compliance with this Performance Standard and will include a requirement to carry out security risk assessments and implemented / adapted at OPCO level (ESAP #9).