Development Partners International LLP (“DPI LLP”, “DPI” or the “Firm”) is a regulated financial institution, acting as an investment adviser, providing investment advice on private market transactions, principally pan-African private equity investments (“Portfolio Company “, Portfolio Companies”, “Investment” or “Investments”) through diversified collective investment schemes (the “ADP Funds” or “Funds”).
DPI believes that management of environmental, social and governance (“ESG”) issues are essential to the long-term success of these Portfolio Companies. Therefore, responsible investment (‘RI’) means growing sustainable businesses, whilst also delivering competitive returns and generating positive environmental and social outcomes. As a responsible investor DPI, through the Investments in the ADP Funds, is also committed to its core stewardship objective of active engagement and will use its influence over the Portfolio Companies to maximise long-term value.
The key tenets of RI have been a part of the DPI DNA since its inception, which was formalised by the partners of DPI with approval of the DPI Impact Management system (DPIMS) in February 2020. As such this policy has been developed, from those foundations, to ensure the responsible management of ESG matters at each of these Portfolio Companies. It seeks to set out DPI’s commitment to the integration and management of material ESG risks and opportunities across the Firm’s investment process, from origination to exit, as well as DPI’s approach to value creation.
DPI has a mission to drive positive, long-lasting social, environmental and economic impact across Africa. This is reflected in the ADP Fund’s intentionality to contribute towards the UN Sustainable Development Goals (“SDGs”) and create impact within the Portfolio Companies across gender equality, job growth and job quality, and climate change. DPI also seeks to identify additional impact themes specific to each Portfolio Company, such as financial inclusion, access to health products or food, and support in scaling the businesses to increase the reach of the company’s products and services.
Impact considerations, alongside ESG issues (together “IESG”), are firmly integrated into the DPI investment process. This allows the Firm to measure and monitor the IESG performance of Portfolio Companies against the ADP Fund impact objectives, as well as their contribution towards the SDGs.
The PRI (one of the pillars in DPIs reference framework – see below) defines stewardship as “the use of influence by institutional investors to maximise overall long-term value including the value of common economic, social and environmental assets, on which returns and clients’ and beneficiaries’ interests depend. DPI, through the Investments it proposes to the ADP Funds, seeks to exert its influence by collaborating, as a shareholder, with the board of directors of each of the Portfolio Companies – through both active engagement and voting (for example, through voting rights and. board resolutions).
DPI is a member of the Global Impact Investing Network and a signatory of the Operating Principles for Impact Management, drawing on guidance from industry bodies, as set out below, in applying its impact framework.
This policy applies to each of the ADP Funds, with adoption across the firm by all DPI staff members.
DPI’s RI Policy is guided by its duty to ESG matters, and the approach has been developed from internationally recognised ESG principles and standards. These pillars form part of DPI’s Reference Framework surrounding ESG, and include but are not limited to:
These standards provide guiding principles in addressing environmental, social, governance, stewardship and human rights factors across investments in each of the Portfolio companies.
DPI has been developing these principles since inception, with each Investment reviewed on its own merits. As such these principles are applied on a case by case, where DPI believes it can add the most value at the time of investment, but often cannot be applied retrospectively. In specific cases, especially with separately managed accounts (“SMA”) DPI will apply the RI policy as deemed appropriate for each SMA.
DPI has committed to providing sufficient resources for the effective implementation of responsible investment and the Firm’s ESG and Impact Management System (DPIMS). This includes providing DPI staff with knowledge, training and tools to enable them to identify and manage ESG matters across the ADP Funds. This includes having dedicated staff responsible and accountable for the day-to-day implementation of the policy as well as the use of external matter experts where appropriate. The overall responsibility of implementation of this policy also lies with the senior management of the Firm, with oversight from the CEO of the Firm.
IESG,RI and stewardship are embedded across the firm’s investment cycle from screening and due diligence, through to monitoring and exit. This is illustrated by the DPIMS, as set out below:
DPIMS is reviewed on an annual basis to address industry developments, or any new material ESG matters which may arise from time to time. This is also verified every 2 years against the framework of the Operating Principles for Impact Management (“OPIMS”).
The Firm has also developed a governance toolkit to ensure that decision making at the boards at the Portfolio Company level are equipped to make decisions, with oversight from DPI, for a sustainable long-term outlook.
DPI has a dedicated team (“IESG Team”), that is responsible for both IESG and DPIMs. This is headed by the Head of ESG and Impact, who directly reports into the CEO of the Firm. The IESG team have the ultimate responsibility for overall management of ESG issues, including developing, implementing and supervising the DPIMS, as well as ensuring all RI and ESG matter are extended to all staff.
The Head of ESG and Impact is directly responsible for the integration of IESG matters across the investment process, as well as the application of the DPIMS. The IESG team includes ESG and Impact Analysts and associates, whose role it is to identify, assess and manage IESG risks and opportunities, including conducting operational level IESG due diligence, monitoring of each of the Portfolio Companies and reporting of ADP Fund IESG activities.
The Investment Committee of the Firm analyse IESG issues and opportunities as an integral part of the investment decision-making process.
Post-investment, the investment professionals, work with portfolio managers, and are responsible for deal assessment and on-going monitoring of Portfolio Companies. This includes formal governance board positions which ensure the progress against the IESG Action Plans.
DPI supports the Portfolio Companies in addressing and mitigating ESG risks, whilst still maximizing the impact value creation opportunities, by ensuring compliance with international standards and best practice.
The Firm encourages Portfolio Companies to reduce ESG risks and their overall sustainability performance on a continuous basis through:
The Firm seeks to invest responsibly by ensuring transparency and communicating its process, goals and progress against clearly defined action actions plans with all relevant stakeholders, including investors, prospective portfolio companies, and industry organizations.
To support its commitment to the UNPRI and contribute towards improvements within the private equity industry, DPI engages with stakeholders on IESG matters by:
Further detailed engagement practices on stewardship are set out later in this policy document.
The Firm reports on its responsible investment approach and activities through its Annual ESG Report to investors, highlighting ESG performance across the ADP Funds and underlying Portfolio Companies. In addition, ESG metrics surrounding employment and health and safety statistics are included within the Firm Portfolio Report which is issued to investors on a quarterly basis.
DPI also publishes an Impact report, on an annual basis, providing further information on its impact management and monitoring process as well as Portfolio Company-level results.
This policy has been approved by the senior management of the Firm, the DPI Partnership and will be reviewed on an annual basis.
This Policy addresses key ESG factors and includes the following:
These exclusions apply to all DPI Investments; DPI will not invest in the following ‘Prohibited Activities’:
* provided that (o), (p) or (q) shall not be Prohibited Activities if such activities contribute 10% or less of the annual turnover of the (Investee) Portfolio Company and its Associates or assets used for such activities represent 10% or less of the value of the assets of its balance sheet (on a consolidated basis where appropriate), or represents 10% or less of the financed volume (which means the activities being financed by the investment by the Partnership), or, in Financial Institutions, if financing of such activities account for 10% or less of the Institution’s portfolio volume (which means that, where an Investee Company is engaged in the business of lending, no more than 10% of the sums advanced are advanced to finance such activities);
DPI is committed to protecting the environment and minimising the effects of climate change through its activities. As part of this, the ADP Funds commit to:
In addition, DPI will work with Portfolio Companies where applicable to ensure each company implements and complies with environmental policies and guidelines that accord with the following key principles:
DPI seeks to work with Portfolio Companies to ensure they implement and comply with the following workplace policies, principles and guidelines that accord with the key internationally accepted norms and standards on labour related issues:
It is vital for a credible corporate culture of integrity to be underpinned by effective direction, processes, control and reporting. For this specific reason, DPI only makes Investments in entities that can exhibit honesty, integrity, fairness, diligence and respect in all business dealings.
DPI uses all reasonable best efforts to encourage Portfolio Companies to maintain sound corporate governance practices as are customary and commonly applied by entities organised under the laws of their respective jurisdictions of organisation.
Appropriate governance structures are implemented to provide adequate levels of oversight in the areas of audit, risk management, and potential conflicts of interest, and to implement compensation and other policies that align the interests of owners and management.
To this effect, DPI contractually requires that the Portfolio Companies in which it makes Investments will:
DPI engages with its Portfolio Companies to encourage proactive ESG disclosures, board and management diversity, and long-term sustainable business practices.
DPI advocates strong corporate governance structures that enhance transparency, accountability, and stakeholder inclusivity. The Firm also measures and reports on the impact of the Investments, considering social, environmental, and economic aspects on a periodic basis
Direct engagement is carried out with both the management teams and the boards of each of the Portfolio Companies at all stages of the investment process, through the life of the Investment and ultimate exit
DPI is an advocate of strong corporate governance structures that enhance transparency, accountability, and stakeholder inclusivity. As part of this goal, transparent reporting mechanisms are being established to provide stakeholders with meaningful information about ESG performance and progress toward impact goals. In addition, DPI has a well-developed tool-kit on corporate governance, as illustrated below, with Portfolio Companies, that enable the Firm to address many of the facets of good stewardship.
1 As defined by the ILO Freedom of Association and Protection of the Right to Organise Convention (No. 87) and the Right to Org anise and Collective Bargaining Convention (No. 98). See https://www.ilo.org/ilolex/english/docs/declworld.htm
2 Respecting any collective bargaining agreements that are in place or where these do not exist or do not address working conditions, make reference to conditions established, by collective agreement or otherwise, for work in the trade or industry concerned in the area / region where the work is carried out. and local or national law, IFC Performance Standard 2 and relevant ILO Conventions (https://www.ilo.org/dyn/travail/travmain.home). For working hours, see also, the ILO Hours of Work (Industry) Convention (No.1) (see https://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/workingtime/%20lang–en/index.htm)
3 See IFC Performance Standard 2 and the “Effectiveness Criteria for Non-Judicial Grievance Mechanisms” within the UN Guiding Principles on Business
and Human Rights (GuidingPrinciplesBusinessHR_EN.pdf (ohchr.org) for guidance.
4As covered by the ILO Equal Remuneration Convention (No. 100) and the ILO Discrimination (Employment and Occupation) Convention ( No. 111), allowance could be made where positive discrimination is mandated in law and is intended to address a historical imbalance. See https://www.ilo.org/ilolex/english/docs/declworld.htm