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 has potential limited environmental and social risks and/or impacts, which are expected to be generally site-specific and largely reversible. Those risks and impacts can be readily addressed 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 investment include i) adequacy of LTJ’s environmental and social management system and risk assessment and management procedures for both LTH and ADC operations; ii) assurance of fair, safe and healthy working conditions for employees and contractors, including, grievance management, health and safety, harassment and gender-based violence; iii) fire safety; iv) community health, safety and security; and (v) stakeholder engagement.

Environmental and Social Assessment and Management System

Before the split of the Group operational entities in two separate legally registered entities, Liquid Telecommunication Holdings (LTH) and Africa Data Center Holding Company (ADC), Liquid developed and implemented a single Group ESMS as described in disclosed in Project #44798, covering both connectivity and data center business. This ESMS, including the related procedures, will be updated to adequately address the new operating structure and the management of E&S risks at the corporate level of LTJ and at the level of each of the two new entities (LTH and ADC), in compliance with IFC’s Performance Standards (PS) as indicated in the ESRS/ESAPs for Project #44798. Liquid Telecommunication Holdings and Africa Data Center Holding Company will ensure that the corporate ESMS is adopted and implemented by all their subsidiaries (ESAP #1).

Identification of Risks and Impacts and Management Program

The business E&S risk management process is guided by the LTJ Group Risk Management Policy. LTH implements the Risk Management Manual, while ADC implements the Health, Safety and Environment (HSE) Manual to manage E&S risks. To ensure that E&S risks are formally screened during new project concept and feasibility stages by the technical and HSE teams, and that findings guide decisions by the technical teams, the project concept E&S risk screening protocol/procedure included in ESAP #1 of Project #44798 will be added to the LTH Risk Management Manual and ADC’s HSE Manual and applied by both LTH and ADC for new projects developed by them or their subsidiaries. Through the ESMS, LTH developed an Emergency Preparedness and Response Plan (EPRP) that provides the minimum requirements for each subsidiary (Project #44798). The EPRP, including appropriate fire safety procedures, will be adopted by ADC (ESAP #2).

Organizational Capacity and Competency

The LTJ Board of Directors sets corporate objectives and targets and takes strategic decisions on safety, health and environmental management. At LTJ level, an Audit and Risk team headed by the Audit and Risk Manager oversees the business risk management, including E&S risks. They work closely with HSE Leads from both LTH and ADC and they report to the LTJ Board of Directors. The LTH and ADC CEOs are accountable for the overall E&S performance in their respective operations. Currently, ADC is strengthening up their HSE capacity, and have recently recruited an operations HSE Officer to support the HSE Manager and the Governance and Risk Manager.

 Human Resources Policies and Procedures

The LTH HR structure is described in Project #44798. ADC have a dedicated HR function and have established the Staff Management Policy (SMP) as the HR Policy document. The SMP provide company policies on staff leave, travel, overtime compensation, sexual harassment, HIV/AIDs management, recruitment and training, equity and non-discrimination, OHS, workers’ grievance management, employment termination and performance review. The policy is consistent with IFC PS 2 requirements.

Working Conditions and Terms of Employment

Similar to LTH, all ADC employees are provided with written contracts of employment that detail terms of employment, probation period, 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 HR Manager. Working hours at ADC comply with relevant national labor regulations of the country of operation. All operations employ shift work where necessary which are managed as per a shift roster.

Workers’ Organizations

Employees both at LTH and ADC are allowed their right to join or form a labor union. The unionized ADC staff who have been moved from LTH retain their union status.

Non-discrimination and Equal Opportunity

In their entire business, LTJ promote non-discrimination and equal opportunity across several platforms and policies. These commitments are documented in the LTH Code of Conduct and ADCs Staff management Policy.

Retrenchment

As indicated in the disclosed Project #44798, employees were invited to apply for Voluntary Severance Packages (VSP) or Voluntary Early Retirement (VER) (the latter only being applicable to employees aged 55 and above) from 4 to 19 August 2020. Seventy-three (73) applications were approved by LTH and the employees services were terminated. LTH retrenched other 87 employees through December 2020 meeting the relevant requirements under the local labor laws and substantively consistent with PS 2 requirements. All vacant roles during the Section 189 process were advertised and impacted employees were given preference to apply for and to be appointed to the roles. The required 60 days consultation period concluded on October 5, 2020. Unsuccessful employees were ultimately issued with retrenchment letters with exit by December 2020. To limit the number of employees to be retrenched, some of the impacted employees could also apply for vacant roles at ADC. Impacted employees were offered outplacement services, and other support such as health and financial advisory services. The company reported that eleven employees have referred unfair retrenchment disputes to the Commission for Conciliation Mediation and arbitration. ADC is recruiting staff and no plans for retrenchment at the time of appraisal. The consolidated Group Retrenchment Policy required as part of Project #44798 ESAP will be implemented by ADC business as well.

Grievance Mechanism

The LTH grievance management structure is described in Project #44798. ADC have developed a grievance procedure into the Staff Management Policy, including a separate process for reporting and managing sexual grievances. The procedure covers grievance reporting and feedback, documentation and timelines.

Protecting the Work Force

LTH Code of Conduct states that the company does 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). 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. ADC SMP commits to comply with respective employment laws in recruitment of staff.

Occupational Health and Safety

The LTH workers’ occupational health and safety management approach is described in Project #44798. ADC have adopted, with minimal modifications, the LTH Safety, Health, Environmental and Quality Policy developed as part of the HSE Management System. ADC will have HSE committees at their workplaces to review workplace risks, incidents and emergency issues; and discuss any material HSE concerns with management. ADC have also provided detailed roles and responsibilities, emergency procedure guidance, first aid and HSE training guidance to the workers through the Staff Management Policy.

Workers Engaged by Third Parties

The LTH workers’ occupational health and safety management approach is described in Project #44798. ADC will adopt the updated Contractor Specification document referenced in ESAP #6 of Project #44798 (ESAP #3).

 Resource Efficiency.

Similar to LTH, grid electricity is the main source of energy for the ADC business. Solar panels and stand-by generators are also installed at some facilities. In addition to making major advances in data center power usage effectiveness (PUE), ADC is actively launching a program to source large volumes of renewable energy for all ADC facilities, above and beyond what can be generated from on-site solar. As part of the ESMS, LTH and ADC will design and implement energy and water consumption tracking and reporting across the business.

Annual GHG quantification and reporting methodology and templates have been developed for LTH. The last annual (March 2020-February 2021) GHG emission, covering both LTH and ADC operations, was estimated at 59,000tCO2e. These reporting templates and methodology will be adopted by ADC and reporting will be consolidated at the LTJ level.

Waste and Wastewater Management.

Limited wastes are generated from routine operations including office general wastes, wastewater from cleaning activities, effluent from sanitary facilities and some hazardous wastes from equipment and vehicle maintenance and repairs. ADC operations will mainly generate electronic wastes. The Waste Management Plan developed by LTH will be adopted for ADC operations, and the electronic waste management procedure in the Plan will be revised to explicitly indicate the mode(s) of management and disposal of electronic waste.

 The ADC data centers are designed to international standards and all fire and electrical systems comply with local and international fire regulations and electrical standards. As part of the ESMS update, the site-level Fire Safety and EPRPs will be upgraded to fit ADC-specific risk profiles, and ADC will adopt a Security Management Plan consistent with the one developed for LTH.