Minimum standards

AGI Africa was founded under the shared vision that the West African community can build thriving economies that put people and planet first. To enable this vision, we make private equity investments in well-run West African businesses accelerating the energy transition, building agricultural productivity, and addressing urgent social needs (SDGs 1 - no poverty, SDG 5 - gender equality, 7 - affordable and clean energy, and 13 - climate action).

Our mission - to accelerate the energy transition, build agricultural productivity and address urgent social priorities in West Africa.

Scope of this document

AGI Africa’s minimum standards set out the absolute minimum standards that AGI Africa applies for all its direct investment, joint venture, and advisory and consulting activities. The minimum standards are applied based on environmental, economic, and social externalities. They are intended to form the basis for screening opportunities that enter AGI Africa’s investment pipeline. The minimum standards are applied based on reasonability and proportionality, with the main purpose of avoiding unreasonable demands for our smallest clients.

All parties that AGI Africa engages with should respect (the spirit of) AGI Africa’s minimum standards.

The minimum standards are based on our values. For all investment activities of AGI, the minimum standards are embedded in the investment and impact processes.

Market and core activities

Our strategy

Do Good – Do Well

Our firm thesis is that an investment can generate positive impact in the world ("Do Good"), while delivering a market-leading financial return ("Do Well"). 

We seek to improve people and planet by making money work for positive social, environmental, and cultural change. To make sure our influence in these areas is positive, we aim to invest in companies that are either actively creating positive societal impact or that are amenable to strategic changes that will result in said impact.

We believe that a true impact investment must materially advance progress towards meaningful environmental, social, and governance goals, and even further advance the fulfillment of the  UN SDGs — giving due consideration to the potential impact pathways for a given investment. The UN SDGs can only be realized with strong global partnerships and cooperation, which underpins the vision of the Fund. 

Environment. We believe profit doesn’t need to be at the expense of the environment. That is why we help our clients to make a positive difference in the environment we share.

Social. The businesses we finance work to improve and enrich the lives of millions of people across West Africa. They tackle inequality and injustice and develop strong communities in the process.

Governance. We believe that good governance is a critical force for positive change in business and provides lasting opportunities for personal development. We work to achieve defined diversity, equity,  and inclusion targets in each investment we make.

The AGI Advantage

In its role as an active impact investor, AGI Africa takes a forward-looking view to each of its investments and joint ventures. Whereas a typical impact investor will evaluate a company based on its activities at the time of investment, AGI actively considers how a change in strategy will influence the impact the organization is creating.

Every opportunity that enters due diligence is assessed for what additional impact AGI’s capital can have relative to the passive investor. This assessment of additionality is referred to the AGI Advantage.

Excluded products and processes

Impact investing requires careful analysis, due diligence, and deliberate decision-making. To help inform these processes, AGI Africa has outlined clear boundaries and standards that we expect our investments to meet.

The rest of this document provides an overview of these boundaries and contains (partial) exclusions that logically follow from our approach. These exclusions are described and categorized within the following topics:

Human dignity

AGI Africa has specified minimum standards relating to alcohol & tobacco, gambling, and weapons (health and safety), human rights, labor rights, and the sex & human trafficking industries.

Planet awareness

AGI Africa has specified minimum standards relating to biodiversity, deforestation, natural resources and mining, and climate change and energy.

Governance awareness

AGI Africa has specified minimum standards relating to accounting and remuneration and taxes.

Principles

AGI Africa takes a holistic approach which means that making choices is not always straightforward. We, therefore, apply the following principles in our due diligence and decision-making process.

Zero tolerance and maximum thresholds

Some of the numerous resources and products that companies use, manufacture, or sell are not aligned with AGI Africa’s positive impact ambitions.

For these products, AGI Africa distinguishes two approaches. For involvement with genuinely unsustainable products, AGI Africa applies a zero-tolerance policy (e.g. for weapons and nuclear energy). Deriving revenue from the production of such products leads to exclusion from investment. For other products, guidelines are in place to minimize exposure (e.g. for tobacco products).

Precautionary requirements

AGI Africa also uses a precautionary approach (norms-based approach) to minimize the risk of negative impact. This approach is used to set preconditions for companies that operate in industries with increased sustainability risks, such as human rights violations or high levels of greenhouse gas emissions. The precautionary requirements relate to the evidence of policies, programs, and performance data through which companies/clients or suppliers demonstrate their awareness and aim to prevent and manage involvement in controversies and the negative effects of their activities. AGI Africa will work with companies that lack the required precautionary approach to ensure negative impacts are accounted for as they scale.

Proportionality

All the companies we invest in are screened against the minimum standards. We apply the exclusions without prejudice to all investments. AGI Africa applies the precautionary requirements proportionally and reasonably. This means that we consider the type of customer, project, or company we invest in (e.g. size and type of products), the local context, and the type of financing. We also apply the precautionary requirements proportionally and reasonably when we look at holdings and financial relationships with third parties. AGI Africa wants to prevent local companies from being confronted with unreasonable policy requirements based on international standards that apply to multinational companies.

Human dignity

One of our main ambitions is to promote human dignity and focus on people’s quality of life. We have therefore developed minimum standards on products jeopardizing people’s dignity, health, and safety as well as on the protection of human rights.

Health and Safety

Health and safety are considered integral aspects for quality of life. AGI Africa developed minimum requirements with respect to companies involved with products or services that may harm people’s health and safety. These products or services include alcohol, gambling products, pornography, tobacco, and weapons.

Alcohol & Tobacco

Alcohol and tobacco have addictive qualities that affect judgment, mood, and physical coordination. The use of alcohol and tobacco can have a serious impact on people’s health, well-being, and accountability. AGI Africa defines involvement in alcohol and tobacco as active participation in the production, marketing, or sales of alcohol and tobacco products.

Tobacco products include cigarettes, cigars, pipe tobacco, smokeless tobacco products (snuff, chewing tobacco), and key materials necessary for the production of tobacco products, such as cigarette paper, tobacco flavoring, and filters. Nicotine, the stimulant in tobacco, is very addictive.

Guiding principle: AGI Africa does not finance or invest in companies involved in the production and sale of alcohol and tobacco.

In practice AGI Africa may invest in a digital marketing company (meeting our positive impact criteria) if this company has a policy on the responsible marketing of alcohol and tobacco products, and concrete programs to support and uphold these policies, for example, an age check.

Gambling

Gambling is the act of betting money or material goods with the intention of winning additional money and/or material goods. The outcome of this wager is partially or totally dependent upon chance. Gambling is a social issue because it can be addictive, especially when it is focused on short odds.

Guiding principle: AGI Africa does not finance or invest in the gambling industry.

Weapons, arms, and munitions

Arms, or weapons, are specifically designed for the execution of physical force by people towards other people, their infrastructure, or animals. Arms include conventional weapons and non-conventional weapons (such as nuclear, chemical, and biological weapons) and complete weapons systems.

The use of arms contradicts AGI Africa’s mission, and we do not finance companies that make or sell them. While we acknowledge the right of democratic governments to defend their citizens and safeguard internal security, as a point of principle, we do not want to be involved in the arms industry.

Guiding principle: AGI Africa does not finance or invest in companies or organizations that produce or sell weapons, specifically designed components for weapons and weapons-related services.

Human rights

Human rights are the rights of people as defined in the United Nations’ Universal Declaration of Human Rights (UDHR) says, ‘All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. Human rights are universal and applicable to all human beings. In the past, upholding respect for human rights was mainly viewed as a government responsibility but nowadays companies share a clear responsibility for this.

AGI Africa uses the principles of frameworks such as the UDHR, the OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, and the UN Global Compact as the basis to assess and select companies and relationships prior to investing, applying the proportionality principle.

Business relations are expected to respect human rights standards as defined by the organizations referenced above, especially the rights of women, members of the LGBTQIA+ community, people with disabilities, indigenous people, children, and other groups that are at greater risk of having their human rights being violated. Human rights are universal, indivisible, and interdependent. AGI Africa will not finance involvement in their violation, and respect for human rights is one of our key values.

It is of the highest importance that companies respect human rights both within their operations and across their spheres of influence.

Guiding principle: AGI Africa only invests in companies that respect and uphold human rights.

Labor rights

Labor rights are a set of rights that concern the labor relations between workers and their employers and are an important part of human rights. Companies should respect their local government’s labor rights. They should treat all workers – including migrant workers – fairly and equally, independent of their gender or background, and eliminate all forms of discrimination and exclusion.

Companies should pay their workers at least a living wage, as defined by the local government, respect a maximum number of working hours, and otherwise aim to improve labor standards for employees and supply chain workers.

Guiding principle: AGI Africa will not invest in companies that do not uphold fair and equal labor standards.

In practice:
AGI Africa can invest in companies that largely rely on low-skilled human labor at risk of being exploited (e.g. in the agriculture sector) if these companies have programs in place to uphold and improve labor rights in their organizations.

Sex industry & Human Trafficking

The sex industry includes pornography, films, photographs, and performances that are sexually explicit and intended to arouse sexual excitement, as well as sex workers.

AGI Africa believes that individuals have the right to pursue the leisure activities of their choice, insofar as these activities are legal and do not negatively affect others or the environment.

People employed by the sex industry are therefore at risk of exploitation and degradation. Those in the sex industry are often at risk of human trafficking. At the same time, we acknowledge that this is not always and everywhere the case, and some people work freely and deliberately in the industry.

Guiding principle: AGI Africa does not finance or invest in the sex industry or do business with any organization involved in human trafficking.

Planet awareness

AGI Africa strives to minimize the potential negative impact of its investment activities, in support of a sustainable society with respect for the environment.

Environment

AGI Africa works to deliver positive environmental impact. Environment-related topics are biodiversity, deforestation, climate change and greenhouse gas emissions, and natural resources and mining.

Biodiversity

Biodiversity refers to the variety of animals, plants, habitats, and genes on which life depends. AGI Africa believes that biodiversity is the foundation of life on earth and that people depend on it for their well-being and survival. AGI Africa closely monitors companies operating in industries that could damage biodiversity.

People – families, communities, nations, and future generations – depend on biodiversity for their well-being and survival. Even a small loss of biodiversity has a negative impact on the quality of life.

Companies should refrain from negatively impacting biodiversity and sensitive ecosystems, mainly caused by climate change, pollution, land and water use change, overexploitation and invasive species.

Guiding principle: AGI Africa does not invest in companies that cause extensive or repeated damage to biodiversity, or in companies that have a high potential risk of causing such damage without having a clear strategy in place for managing them.

Deforestation

Deforestation is the intentional clearance of forests. AGI Africa believes that forests are a valuable source of biodiversity and a resource of many forest products, ranging from medicine to timber. Forests have an important capacity to absorb greenhouse gases and to hold large stores of carbon. AGI Africa expects companies to take responsibility with respect to preserving forest areas.

We do not accept illegal deforestation, illegal timber trade, or logging in protected or otherwise sensitive areas.

Guiding principle: AGI Africa only invests in companies that demonstrate awareness of deforestation as an issue, with sustainable forestry practices and responsible sourcing when required.

Natural resources and mining

AGI Africa recognizes the importance of mining and natural resource extraction to economies and livelihoods in many of the world’s least developed countries. However, AGI Africa will not invest directly in a company that derives its sole source of revenue from extractive goods (traditional mining). This does not include services around mining and providing access to small-scale mining operations or local communities.

Guiding principle: AGI Africa expects that any entity we invest in has clearly defined standards for how they mitigate negative environmental and social risks that often result from the extractive minerals industry.

AGI Africa will not invest in companies that generate more than 10% of their revenues from coal.

In practice: AGI Africa generally does not invest in the mining industry directly, but it may invest in companies that are focused on providing access to small-hold miners or expanding access to sustainable services in the mining sector, such as a barging operator that provides market access to rural miners.

Climate change & energy

Climate change refers to alterations to the climate due to a sustained rise in the earth’s temperature caused by the accumulation of greenhouse gases in the lower atmosphere. Since the Industrial Revolution, widespread use of fossil fuels, extensive deforestation, and particular farming methods have resulted in a sharp rise in the amount of greenhouse gases released. As the high level of greenhouse gases is a consequence of human actions, the process is called anthropogenic (“man-made”) climate change. Climate change already causes an increase in extreme weather such as hurricanes, droughts, floods and wildfires. A further rise in the earth’s average surface temperature will accelerate this process and poses a real threat to our delicate ecosystems and therefore to life on earth.

Energy refers to the sources of energy and energy security as well as the generation, production, supply and use of energy.

AGI Africa believes Climate change must be halted to minimize its impact on the planet and its ecosystems; the longer we wait, the more it will cost, so immediate action is necessary. We stand behind the Paris Agreement and the Glasgow Climate Pact of limiting global temperature rise to 1.5 °C.

Businesses that actively reduce their greenhouse gas emissions and transition to low carbon technologies are better prepared for the future than their competitors.

Guiding principle: We only finance and invest in companies that demonstrate awareness of climate change and make credible efforts to reduce greenhouse gas emissions or play an active role in reducing global greenhouse gas emissions.

Governance

AGI Africa believes that a good corporate governance structure represents the shared philosophy, practices, and culture within a company and is self-regulating to ensure good practices in the future. Relevant issues for corporate governance include accounting and remuneration and taxes.

Corporate governance is the structure of rules, practices, and processes used to direct and manage a company and to balance the interests of all company stakeholders. It covers a wide range of aspects, such as transparency, possible conflicts of interest, accountability, diversity, and fairness.

AGI Africa believes that good corporate governance practices are fundamental for managing a company and for transparency and accountability.

Good governance standards support transparency (including tax transparency), distribution of power, independency of supervision, fair remuneration principles, and a focus on long-term value creation.

Guiding principle: AGI Africa only finances companies that uphold good corporate governance practices.

Accounting and remuneration

Solid accounting and (executive) remuneration policies and compliance therewith are essential for companies’ long-term health and reputation.

Taxes

AGI Africa supports a fair and effective tax system, considering the interests of all stakeholders and believes that taxes should be paid in the countries where earnings are realized. In many cases, tax efficiency is legal and can increase the company’s financial performance, particularly in the short term. However, the long-term consequences of aggressive tax planning may include financial, regulatory and reputation risks.

AGI Africa policies in practice

AGI Africa’s minimum standards are dynamic and may be subject to changes prompted by legislation, public debate, best practice standards and company behavior. In addition, engagement and continuous dialogue with experts, interest groups and civil society organizations may prompt policy amendments.   

Due to the role and nature of AGI Africa, the impact of its active, positive approach in the real world depends on cooperation with its business relations, such as the companies and organizations that we invest in. These and other stakeholders should respect the (spirit of) our policies and principles as outlined in this document and shape their activities accordingly.