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Cordaid Investment Management B.V.

PRI reporting framework 2017

You are in Indirect - Inclusive Finance » Contractual agreements and mandate design

Contractual agreements and mandate design

IFI 03. Including issues referred to in the PIIF

03.1. When agreeing contracts and designing mandates with investment managers, in the process, indicate if you consider including the following issues referred to in the PIIF:

Actively supporting retail providers to innovate and expand the range of financial services to low-income people (Principle 1)

Describe and indicate how.

In most of the contracts with indirect investees it is clearly stated what kind of MFIs and what kind of services these MFIs should provide to their clients. Besides, in 50% of our indirect investees Cordaid Investments has a board seat. Board members representing Cordaid Investments address these issues.

Integration of client protection in investment policies and practices (Principle 2)

Describe and indicate how.

In our updated manual it is indicated that future Fund Managers are obliged to integrate CPP in investment policies and practices.

In 50% of our indirect investees Cordaid has a seat on the board of the organization. During board meetings Cordaid addresses the issue of CPP. In countries where there has been a crisis in the financial inclusion sector, like in India, it has become easier to address this issue in boards of indirect investees and discuss it with the management of direct investees. As a consequence the CPP have therefore received more attention in the Cordaid due diligence process of the investment managers. Some of the investments funds have developed their own ESG scorecard and report this to Cordaid. Social Performance criteria, including client protection, are in the process to be set and on which all investment managers of externally managed funds need to report.

Treating investees fairly with appropriate financing needs that meets demand, clear and balanced contracts and fair processes for resolving disputes (Principle 3)

Describe and indicate how.

We do not explicitly refer to fair treatment in our contracts with externally managed investment funds, but during meetings this issue is addressed.

In 50% of our indirect investees Cordaid has a seat on the board of the organization. During board meetings Cordaid addresses this issue of approriate financing. In countries where there has been a crisis in the financial inclusion sector, like in India, it has become easier to address this issue in boards of indirect investees and discuss it with the management of direct investees. As a consequence this issue has therefore received more attention in the due diligence process of the investment managers. Some of the investment funds have developed their own ESG scorecard and report on this to Cordaid. Social Performance criteria, including fair treatment, are in the process to be set and to which all investment managers of externally managed funds need to report.

The inclusion of ESG issues in investment policies and reporting (Principle 4)

Describe and indicate how.

ESG issues are part of some of our contracts with externally managed investment funds. Besides, in 50% of our indirect investees Cordaid has a board seat. During board meetings Cordaid addresses ESG issues.

Some of the investment funds in MFIs have developed their own ESG scorecard and report on this to Cordaid. Some of the investment funds in SMEs have developed a social audit process in which ESG issues of their investees are tracked. We have played an active role in the development of ESG scorecard and social audit systems that are used by some the investment funds in which we invest. One such case is the PYME Capital Fund for Latin America.

Active promotion of transparency in all aspects (Principle 5)

Describe and indicate how.

We do not explicitly refer to transparency in our contracts with externally managed investment funds, but during meetings this issue is addressed.

In 50% of our indirect investees Cordaid has a board seat. During board meetings Cordaid addresses the issue of transparency. In countries where there has been a financial inclusion crisis, like in India, it has become easier to address this issue in boards of indirect investees and discuss this issue with the management of direct investees. As a consequence transparency has therefore received more attention in the due diligence process of the investment managers. Some of the investment funds have developed their own ESG scorecard and report on this to Cordaid. Social Performance criteria, including transparency, are in process to be set and to which investment managers of externally managed funds need to report.

Striving for a balanced long-term social and financial risk-adjusted return that recognises the interests of clients, retail providers and investors (Principle 6)

Describe and indicate how.

“Balance financial and social returns” of the investment fund is one of the key elements for Cordaid that we look into during the pre-investment process. So far in most cases balanced returns have not (yet) been explicitly mentioned in contracts with externally managed investment funds. The issue is addressed during due diligence and board meetings (in 50% of our indirect investees Cordaid has a board seat) and we expect investments managers to report on both financial and social returns.

Collaborating to set harmonised investor standards that support the further development of inclusive finance (Principle 7)

Describe and indicate how.

We do not refer to standards in contracts with externally managed investment funds, but this issue is addressed in meetings. In 50% of our indirect investees Cordaid has a board seat. During board meetings Cordaid addresses this issue. The Social Performance criteria that are set are becoming aligned with the standards of SPTF & IRIS.

03.2. Additional information. [Optional]


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