MIGA’s due diligence review considered the E&S management planning process and documentation for the Project and identified gaps (if any) between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable time period, are summarized in the paragraphs that follow and in the E&S Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the Performance Standards. Key E&S issues associated with the Project business activities are summarized in the paragraphs that follow.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
Environmental and Social Assessment and Management System:
Raxio has prepared a document including standard specifications and provisions for the design, construction and management of a 1.5MW IT load data centre using modular construction, and is currently developing a Corporate E&S Management System (ESMS), which will apply to the design, construction and operations phases of all Subprojects (ESAP item). Consistent with the requirements of PS 1, the ESMS will include procedures to adjust existing policies and carry out the necessary actions to manage any potential E&S risks and impacts associated with the development and operations of the Project (and any associated facilities) in compliance with the PSs.
Raxio has an E&S Policy in place at group level, which lays out its E&S committments and guides efforts to achieve satisfactory E&S performance. Subprojects are required to adopt the Group E&S Policy, which applies to all Raxio operations and sites planned for development.
Identification of Risks and Impacts:
Site selection includes consideration of potential E&S risks and impacts, and sites with potentially significant risks are excluded for development. Once a preferred site is selected, Raxio identifies E&S risks and impacts associated with the development of its facilities through the conduct of Environmental and Social Impact Assessments (ESIAs). ESIAs consider both Performance Standards and national law in the country where the Subproject is being developed. As part of the ESMS, Raxio will define standard E&S site selection criteria and an ESIA scope of work consistent with PS 1 requirements, which will be used for all Subprojects (ESAP item).
For UG1, an ESIA in line with the requirements of the Performance Standards was prepared by a local consultant and approved by the Ugandan environmental authorities in February 2019. The ESIA report included a set of measures to mitigate potential impacts identified during construction and operations of the DC. Selection of the ESIA Consultants for MZ1 and CIV1 is pending finalization of the land acquisition processes for both sites.
A preliminary climate risk screening has been performed for the Batch 1 Projects, all Subprojects are located in regions expected to see an increase in the frequency and severity of extreme weather events under climate change. Increasing rainfall, temperature and winds will increase the risk for flooding, heatwaves, and in the case for MZ1 near Maputo, Mozambique, impacts from tropical cyclones. These hazards could result in service disruptions arising from impacts to the utility power grid, damage to infrastructure, and performance issues arising from inadequate cooling and ventilation in the data centers. Raxio will undertake, as part of the ESIA or as a stand-alone process, climate risk assessments for all investments to be developed under the Master Contract (ESAP item). The nature of the climate risk assessment will vary depending on the climate risk exposure for the investment, for Subprojects which are at high risk to potential impacts from climate change, Raxio will implement appropriate risk mitigation measures.
Construction and some of the maintenance of Raxio facilities will be sub-contracted to local contractors under the supervision of the Subproject. Day-to-day operations will be undertaken by Subproject staff. Contractors will be required to develop and implement comprehensive Environmental, Social, Health and Safety Management Plans (ESMPs) appropriate to scale and risk of the Subproject. Raxio will include in its Corporate ESMS a procedure to review and approve site-level Construction-ESMPs prior to starting construction of any Subproject. The ESMPs will be based on the findings of the ESIAs, Corporate policies and procedures, and the requirements of the PSs. In addition, a framework ESMP defining mitigation measures to be applied during operations of all Subprojects will be developed as part of the ESMS (ESAP item).
The review undertaken by Meridiam’s E&S Advisor indicates that the civil works contractor for UG1 has prepared and implemented a comprehensive ESMP specifically for the UG1 site. The contractor also has an HSE risk register in place, detailing potential hazards expected at the construction site, their respective risk levels, and control measures to be implemented. In addition, the electro-mechanical contractor for UG1 has management systems certified according to ISO 14001 (Environmental Management) and 45001 (Occupational Health and Safety).
Organizational Capacity and Competency:
Raxio is currently hiring an E&S Manager at the Group level who will be responsible to oversee Environmental, Social, Health and Safety matters at the Group level and to ensure compliance of the Project with Raxio’s policies, regulatory and MIGA E&S requirements, throughout the life of all Subprojects (ESAP item). The E&S Manager will also be responsible for sustainability initiatives undertaken by Raxio. In the interim, Raxio is relying on an external E&S Advisor, who reviews and advises on E&S aspects for all Subprojects. It is anticipated that once the E&S Manager is in place, the E&S Advisor role will continue to provide ad-hoc support to the E&S Manager. Raxio indicated that the E&S Manager will report to the CFO, and will coordinate the network of E&S Coordinators to be appointed at each site (ESAP item). There is currently a Health and Safety Officer for UG1, and appointment of an E&S Coordinator is pending.
Emergency Preparedness and Response:
As per the group-level ESMS, all Subprojects will be required to develop and implement an Emergency Preparedness and Response Plan (EPRP) for construction and operations. Raxio will review Subproject Construction-ESMPs to ensure that emergency preparedness and response procedures in line with good international industry requirements are in place. A standard EPRP will be developed for the operations phase as part of the group-level ESMS. Drills will be conducted at each site on a regular basis.
According to Meridiam’s E&S Advisor, the Construction-ESMP for the UG1 Subproject includes an alert system to inform employees of any emergency situations, which is communicated to all employees during the new hire orientation.
Monitoring and Review:
A monitoring and reporting system related to construction and operations of the DC facilities will be established and implemented as part of the ESMS. Raxio will develop and implement a monitoring framework at group level, which will assess individual site compliance against a set of predefined Key Performance Indicators (KPIs), Corporate policies and procedures, and local regulatory requirements. Raxio’s E&S Manager will hold periodic meetings with the E&S Coordinators at each site, and will provide regular updates to Raxio management. All sites will be required to provide monitoring results against the defined KPIs on a regular basis. Raxio will prepare and submit to MIGA Annual environmental and social monitoring reports.
Raxio has developed a Communication Plan to guide interactions with its contractors. Engagement with other stakeholders, including commercial and industrial businesses established in the vicinity of Raxio sites, regulatory institutions and any other relevant third parties, is conducted on an ad hoc basis. As part of its ESMS, Raxio is currently developing a Stakeholder engagement framework, which will apply across all Project sites (ESAP item).
Stakeholder consulations activities were undertaken during the ESIA process for the UG1 Subproject in 2015. Concerns raised by stakeholders were notably related to waste, wastewater and security management during construction and operations.
External Communication and Grievance Mechanisms:
Raxio will disclose on its website the ESIA reports summaries prepared for development of the Subprojects (ESAP item), and a Corporate Annual Environmental and Social Report. Based on a Grievance Redress Mechanism framework in line with PS 1 to be developed at group level (ESAP item), Raxio will establish an external grievance mechanism for each Subproject and maintain records of grievances.
Ongoing Reporting to Affected Communities:
Reporting to potential affected communities will be conducted as part of the engagement with Project stakeholders.
PS2: Labor and Working Conditions
As of June 2022, at the Group level, Raxio has 42 employees in six countries, of which approximately 75% are men. Ultimately, it is anticipated that Raxio will employ between 150 and 170 staff across all Raxio entities. Construction activities last for 12 to 16 months and are sub-contracted to local civil contractors. The number of sub-contracted employees at peak construction period for a Raxio site is expected to be about 250. At each site, the Subproject is expected to employ about 15 staff members during operations. Raxio indicated that no workforce accommodation will be provided during construction or operations of its DC facilities.
Working Conditions and Management of Worker Relationship:
Human Resource (HR) policies and procedures are in place at the Group level. Raxio’s Employee Handbook covers issues such as wages and benefits, leave, training, discrimination, sexual harassment in the workplace, whistle blowing, and worker grievance management. Raxio’s Human Rights Policy includes provisions with respect to prohibition of child and forced labour, and freedom of association. Raxio will ensure that all employees’ contracts and any Subproject-specific HR policies are consistent with the labor laws of the country where Project staff is employed. In addition, the labor grievance mechanism will be amended to allow employees to raise anonymous complaints, including potential complaints related to gender-based violence and harassment (ESAP item).
Protecting the Work Force:
The minimum employment age for Raxio employees and subcontractors is 18 years. Raxio’s commitments in relation to prohibiting child and forced labor are included in the Corporate Human Rights Policy. Subcontractors will be contractually bound not to use any forms of forced labor, and to observe applicable laws and PS2 requirements related to child labor (ESAP item).
Occupational Health and Safety:
Construction-related risks and hazards will be addressed in the contractors’ E&S management plans. Raxio will develop group-level procedures to review and oversee the implementation of contractors’ occupational health and safety (OHS) procedures for construction (ESAP item).
Raxio will develop an OHS management plan applicable to all operational facilities (ESAP item), which will include procedures to assess and monitor OHS aspects, including safety training, emergency drills, and incidents management.
Workers Engaged by Third Parties:
Raxio will develop group-level contractor management procedures applicable across all its subsidiairies which will include, as a minimum, compliance with local labor laws, terms of OHS management, and access to a workers’ grievance mechanism (ESAP item).
The E&S Advisor’s review of UG1 indicated that contractors have appropriate Environmental, Social, Health and Safety policies and procedures in place, and that contractors are required to adopt Raxio’s grievance management procedure, or to prepare and implement a procedure in line with its requirements.
Raxio will revise its Corporate Procurement Policy by including procedures to ensure that suppliers and service providers are screened against the risks of forced and child labor and, if the potential for such risks is identified, that on-going monitoring provisions are in place (ESAP item).
PS3: Resource Efficiency and Pollution Prevention
Greenhouse Gas (GHG) emission sources during operations of Raxio’s DC facilities will be mainly related to grid electricity use and diesel use for back-up generators.
Raxio has committed to environmental performance and efficient resource use through its group-level HSE and Energy Policies and the standard specifications document used for site development. Raxio is considering installing solar roof panels on some of its DC facilities to supply non-essential loads during daytime operations, and sourcing renewable energy supply to reduce GHG emissions associated with the operations of its sites. As part of its Corporate E&S monitoring framework, Raxio will conduct monthly monitoring of energy use and Power Usage Effectiveness (PUE) of all operational facilities, and results will be reported to MIGA in the Annual E&S Monitoring Report.
Energy and water efficiency design features for UG1 include a high efficiency conditioning system for the data halls based on Indirect Adiabatic Cooling. The review undertaken by Meridiam’s E&S Advisor of the energy performance metrics presented in the design specifications of UG1 indicates that all performance metrics, including PUE (defined as the ratio of the total power to run the DC facility to the total power drawn by all IT equipment), HVAC effectiveness and cooling efficiency, meet or exceed industry best practice benchmarks. From an underlying generation perspective, the high proportion of renewable sources in the Ugandan grid will allow to limit the carbon footprint of UG1.
Risks and impacts for construction and operations of the DC facilities are mainly related to management of solid waste, wastewater and fuel, as well as E&S impacts typically related to construction activities such as increased noise, surface water, soil and groundwater contamination.
Potential E&S risks and impacts during construction are expected to be limited and managed through the implementation of standard mitigation measures, to be provided in the Subproject Construction-ESMPs. As mentioned in the PS1 section, Raxio’s Corporate ESMS will include a procedure to review and approve site-level Construction-ESMPs prior to starting construction of any Subproject. The E&S Advisor’s review indicates that adequate mitigation measures have been developed and implemented by Raxio’s subcontractors at the UG1 site.
Guidelines for waste, wastewater and hazardous materials management during operations will be developed as part of Raxio’s framework Operations-ESMP (ESAP item).
Operational DC facilities will generate both non-hazardous and hazardous waste, including batteries, electronic waste, and potentially end-of-life solar panels. Waste which is not reused or recycled will be disposed at permitted facilities. Site-specific procedures for management of solid waste, including safe management and disposal of batteries and electronics, will be developed and implemented.
For UG1, wastewater will be generated during operations mainly from the adiabatic cooling process and discharged into the public sewage system. Compliance with national effluent standards and WBG EHS guidelines will be monitored at all operating sites and results reported to MIGA in the Annual E&S Monitoring Report. Based on the nature of the wastewater effluent, it is not envisaged that further treatment will be required prior to discharge. However, if exceedances are identified during monitoring, Raxio will implement appropriate wastewater treatment measures to ensure compliance with national effluent standards and WBG EHS guidelines.
The DC facilities will be connected to the power grid with backup power to be provided by diesel generators. Backup power is expected to be used 2-15% of the time for maintenance. Raxio will implement the necessary spill prevention and containment measures for fuel storage tanks at all facilities, and ensure that generators are inspected regularly to verify quality of engines’ filters and oil.
PS4: Community Health, Safety and Security
Community Health and Safety:
It is anticipated that impacts to community health and safety will remain limited, as most Raxio facilities will be developed in industrial parks and the site selection criteria applied at the Group level will exclude any sites with potentially significant impacts to communities. Risks related to labor influx are expected to be low given that employment opportunities associated with the development of individual sites are limited. Batch 1 Projects are all located within industrial parks. There are no communities settled in the vicinity of the UG1 site.
Site access control and security will be provided by private third-party contractors or government security agencies. Security personnel may carry arms depending on local circumstances. Raxio is currently developing a Group-level Security policy and access control procedure consistent with the requirements of PS 4, addressing the vetting process for the selection of security providers and training requirements for security staff, including on the legitimate use of force, code of conduct, and management of gender-based violence (GBV) risks (ESAP item). Based on the guidelines included in the Corporate Security Policy and local security assessments, security management procedures commensurate to the risk of each Subproject will be developed and implemented.