Environmental

• Biodiversity conservation
  • IF shall invest in SMEs that do not engage in any activity that might lead or be linked to habitat loss, degradation and fragmentation, overexploitation, hydrological changes or related risks.
• Sustainable natural resource management
  • IF2 shall invest in SMEs that manage natural resources in a sustainable manner, through the application of industry-specific sustainable management practices and available technologies.
  • Sustainable use of resources, including energy and water, should be promoted.
  • This is even more important in regions that are heavily impacted by climate change and may therefore experience an acceleration and/or intensification of negative impacts.
• Climate change mitigation
  • IF2 shall assess portfolio companies’ greenhouse gas emissions at a high level during due diligence, evaluating whether the company is aligned with the relevant nationally determined contributions (NDC) to the goals of the Paris Agreement. If a company’s products or operations are not aligned with the NDC or if there is a risk of carbon lock-in, IF2 will consider this in the investment decision and include mitigation measures in the post-investment action plan. In early stages, companies should focus on reducing scope 1 (direct) and scope 2 (indirect from purchased electricity) emissions. Given that Ibtikar invests primarily in web and mobile-based tech companies, direct environmental impact is typically low, but digital infrastructure energy use should be considered.
• Climate change adaptation
  • IF2 shall assess the climate risk profile of portfolio companies during due diligence, including physical risks (extreme weather events, changes in precipitation) and transition risks. Companies in MENA and Palestine may be particularly exposed to physical climate risks such as water scarcity and heat stress. Where materially affected, companies should develop and implement adaptation measures. IF2 will support companies in identifying relevant climate risks and incorporating resilience into their business planning.
• Pollution
  • IF2 shall invest in SMEs that avoid or minimize pollution from their activities in order to lower adverse impacts on human health and the environment.
  • Pollution prevention is defined as the use of materials, processes, or practices to reduce or eliminate the creation of pollutants or waste. It includes practices that reduce the use of toxic or hazardous materials, energy, water and/or other resources.
  • Pollution abatement refers to technology applied, or measures taken to reduce pollution and/or its impacts on the environment. The most commonly used technologies used in pollution abatement include filters, waste-water treatment facilities, composting, and the use of renewable energy sources.

Social

• Workers’ rights
  • IF2 shall invest in SMEs that ensure their employees’ rights are respected. These include: (1) data privacy and information security — personal data must be secured against unauthorised processing and accidental loss, and employees should be informed of their privacy rights; (2) freedom of association, expression and collective bargaining — workers should be able to form and join a trade union without fear of intimidation; (3) adequate and safe working conditions; (4) equal opportunities; (5) work-life balance; (6) human capital development; (7) inclusion of persons with disabilities; and (8) adequate housing where applicable. SMEs whose products or services rely on AI applications, including machine learning, are expected to identify and address risks arising from algorithm biases or discriminatory models.
• Affected communities
  • IF2 shall invest in SMEs that respect the rights of people working or living in or adjacent to areas where the business operates. Affected communities should not be negatively impacted in their rights to cultural heritage, health and safety, adequate housing, access to food and water, privacy and security, and freedom from violence and harassment. SMEs should have policies in place to engage with and safeguard affected communities. While the digital nature of Ibtikar’s portfolio companies typically limits physical community impacts, companies with physical premises or hardware-related operations should assess these risks carefully.
• Indigenous people and marginalised groups
  • IF2 shall invest in SMEs that take all necessary measures to ensure that indigenous peoples’ rights are respected and that relations with indigenous communities are based on ongoing consultation and engagement.
• Violence at work
  • IF2 shall invest in SMEs that ensure those affected by their business operations, including workers, consumers and communities, are protected against all forms of violence at work, including gender-based violence (GBV) and harassment. SMEs shall minimise the risk of such incidents. The types of violence to be prevented include: psychological harassment, verbal harassment, physical attacks, sexual harassment, economic harassment, and gender-based violence. IF2 will pay particular attention to this principle given the operating context in Palestine and across MENA, where gender-based violence risks may be heightened. All severe incidents of gender-based violence and harassment (GBVH) must be reported to IF2 within 5 business days.
• Non-discrimination and equal treatment
  • IF2 shall invest in SMEs that refrain from any form of discrimination in employment, consumer relations, and business conduct. Discrimination means treating people differently or less favourably because of characteristics not related to merit or job requirements. Consumer discrimination occurs when consumers are treated less favourably due to certain characteristics. Common discrimination grounds include: sex or gender, racial or ethnic origin, age, religion or belief, disability, sexual orientation and gender identity, language, political opinion, and HIV/AIDS status. In countries where women face a greater gender gap, IF2 should pay special attention to gender equality at both portfolio company and Ibtikar level. This principle also applies to the use of AI and automated decision-making, where algorithm bias may produce discriminatory outcomes.
• Health and safety
  • IF2 shall invest in SMEs that provide a safe and healthy working environment and take effective steps to prevent health and safety incidents and occupational injury or illness. SMEs are expected to have policies in place to manage workplace health and safety. Health and safety obligations also extend to consumers and end-users: consumers must be able to access non-hazardous products and services through transparent and fair practices, and vulnerable consumers should be protected.
• Working hours
  • IF2 shall invest in SMEs that are compliant with applicable law, collective bargaining agreements and industry standards on working hours, breaks and public holidays. The normal working week should not be excessive. Furthermore, any overtime should be voluntary and should not be requested on a regular basis. An acceptable standard working week should be a maximum of 48 hours, and a maximum of 8 hours per day, with a maximum of 12 hours of overtime per week. Deviations from these figures are possible, if it can be demonstrated that these deviations are in the best interest of the labourers involved.
• Remuneration (incl. living wage provisions)
  • IF2 shall invest in SMEs that are compliant with applicable law, collective bargaining agreements and industry standards on the right for personnel to receive a living wage.
  • SMEs are expected to ensure that wages for a normal work week, not including overtime, always meet at least legal or industry minimum standards, and are in line with collective bargaining agreements.
  • Deductions from wages for disciplinary purposes are never acceptable.
• Consumer protection
  • IF2 shall invest in SMEs that ensure consumers are well-informed and protected from potential adverse impacts caused by their products or services. This is particularly relevant for Ibtikar’s portfolio given the prevalence of fintech, healthtech, and consumer-facing digital platforms. Key safeguarding elements include: (1) products, services, and channels must benefit consumers and not negatively impact their health, safety, data privacy, or economic position; (2) information must be accessible and communicated in a timely manner; (3) consumers are informed of data collected, how it is stored, and have rights to access, erase and rectify their data; (4) for fintech companies offering financial products, repayment schedules should be tailored to the consumer’s cash flows, pricing must be fair, and loan officers should be aware of client protection principles; (5) all consumers must be treated fairly and respectfully regardless of socioeconomic background.

Governance

• Anti-corruption and bribery
  • IF2 and SMEs shall work against corruption in all its forms, including bribery, facilitation payments and extortion. DGGF defines corruption as the offering, requesting, giving or receiving of a financial or other advantage in order to induce or reward the improper performance of a role, duty or function.
• Fraud
  • IF2 and portfolio companies shall aim to prevent fraud in all its forms. Any activity that relies on deception in order to achieve gain is considered fraud. Companies should ensure that none of their business practices rely on the deception of workers, consumers, or communities. In addition, companies should have processes in place to minimise their risk of being a victim of fraud, including embezzlement and phishing attacks. Digital, financial, and governance controls should be in place and regularly reviewed. Given that Ibtikar’s portfolio consists primarily of tech companies with digital financial systems, data security and fraud prevention are especially relevant.
• Complaints mechanism (access to remedy for all stakeholders)
  • The organisation shall implement a complaints mechanism at IF level (i.e. complaints regarding the IF itself) as well as gathering complaints at SME level (i.e. about the SME). The complaints mechanism must allow for anonymous submissions — staff, the general public, and other parties must be able to submit complaints without disclosing their identity. The mechanism should be transparent, publicly accessible, and include a clear process for handling, communicating, and governing complaints.
• Politically exposed people
  • The organisation shall address risks and take appropriate measures to prevent as well as detect the misuse of the financial system and non-financial businesses by PEPs.
  • PEPs are natural persons who are or have been entrusted with prominent political functions and immediate family members or persons known to be close associates of such persons.

Reporting/Complaints Mechanism