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A Reflection On ESG

At Signature, we have been reflecting on the role that ESG plays within our investment thesis and on its evolving importance within the agricultural sector as a whole. In its original incarnation, ESG was a risk management tool, intended primarily to prevent injuries, accidents and conflicts, and allow companies to comply with regulatory requirements and avoid fines and lawsuits. Today however, ESG has evolved to address a host of issues previously unheard of, to identify opportunities as well as reduce risks, and is a key factor in investment philosophy. Environmental issues now include climate change adaptation, policies on water management and the impact and efforts towards net-zero emissions, while social covers human rights, diversity, equity and inclusivity as well as the field of community engagement and development which is so crucial to African agriculture. The G in ESG stands for governance and may refer only to governance of environmental and social issues (the so-called ‘small g’) or may include corporate structures, accountability, decision-making, ethics and compliance (the ‘big G’).

As part of our reflections, we took the opportunity to ask Laila Hassoun to share her insights on what ESG means to her. Laila is Head of ESG for the extensive Zalar Agri portfolio in Morocco, which includes four Signature investee farms. In her role, she has responsibility for the development of the ESG strategy for the company, and the implementation of this strategy at individual farms. Laila manages a team of dedicated ESG professionals and they divide responsibility for different aspects of the strategy, including ensuring that all farms are Global GAP certified, pursuing other certifications as required, and working on an effective and impactful community development programme.

Their presence in rural areas gives Zalar Agri a responsibility to contribute to local development. Employment is the first response to this responsibility to boost the local economic fabric through long-term investments. By listening to local communities, Zalar Agri maintains good neighborly relations to maximize its impact in the regions where their farms are located.

According to Laila, the way in which a company manages ESG is an expression of its values, and ESG creates resilience within an organization and a community by doing things beyond what is expected. At Zalar Agri, ESG is purposefully intended to have a long term impact in terms of environment and social management within their farms – an impact which goes far beyond risk mitigation.

Laila is particularly passionate about the social development aspects of her role, and is fortunate to have the full support of the Zalar Agri management team.

“When referring to the social part of ESG - it starts with the small steps, you don’t need a huge investment when you want to make an impact on people's lives”.

After hearing what ESG means to Laila, we were curious about what projects she is currently working on. She and her team are pursuing a number of initiatives, ranging from renewable energy research to local healthcare initiatives. Gender equality is an priority for Laila, as it is for Signature, and she mentioned two current projects which are close to her heart, namely making the women farm workers aware of their rights, and enabling them to access social security for their children.

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