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CDC International Capital

PRI reporting framework 2018

You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income

ESG incorporation in actively managed fixed income

Implementation processes

FI 01. Incorporation strategies applied

01.1. Indicate 1) Which ESG incorporation strategy and/or combination of strategies you apply to your actively managed fixed income investments; and 2) The proportion (+/- 5%) of your total actively managed fixed income investments each strategy applies to.

Corporate (non-financial)
0 Screening alone
0 Thematic alone
0 Integration alone
100 Screening + integration strategies
0 Thematic + integration strategies
0 Screening + thematic strategies
0 All three strategies combined
0 No incorporation strategies applied
100%

01.2. Describe your reasons for choosing a particular ESG incorporation strategy and how combinations of strategies are used.

CDC International Capital considers that taking into account environmental, social and governance (ESG) issues in its investment policy contributes to the sustainability of its investments and of the economy and society at large.

The responsible investment policy of CDC International Capital combines several approaches that are tailored to each asset type:

- Mainstream / general approach i.e. ESG incorporation: integration of ESG issues in all the investment stages, from the preinvestment stage, through the holding period to the end of the investment.

- Negative screening : Overall compliance of the operation with the anti-money laundering and terrorist financing rules, mainly in order to check compliance issues (compliance of the operation with the anti-money laundering and terrorist financing rules, respect of environmental and social standards recognised by the French and European legislation, compliance with international treaties and laws, etc.) but also restriction of the investment's universe, in particular if the asset's activity is not suitable with general interest or if any improvement won't be possible.

01.3. Additional information [Optional].


FI 02. ESG issues and issuer research (Private)


FI 03. Processes to ensure analysis is robust

03.1. Indicate how you ensure that your ESG research process is robust:

specify description

          CDC IC works closely with an external ESG consultant to crosscheck the accuracy and relevance of its ESG process.
        

03.2. Describe how your ESG information or analysis is shared among your investment team.

          The new ESG process formalised in 2017 states that ESG information (i.e. identification of ESG issues, etc.) are included within the investment note.
        

03.3. Additional information. [Optional]


(A) Implementation: Screening

FI 04. Types of screening applied

04.1. Indicate the type of screening you conduct.

Select all that apply
Corporate (non-financial)
Negative/exclusionary screening
Positive/best-in-class screening
Norms-based screening

04.2. Describe your approach to screening for internally managed active fixed income

CDC IC performs negative screening and general compliance verification:

  • Overall compliance of the operation with the anti-money laundering and terrorist financing rules. Implementation of the "Know Your Customer" due diligence obligation to assess the company CDC IC invests in.
  • Geographical negative screening: exclusion of countries belonging to the "Non Cooperative Countries and Territories" and authorities with high risks of money laundering and financing of terrorism, or sanctioned for serious breaches of human rights.
  • Sectorial negative screening: exclusion of mines munitions and anti-personnel bombs or components and associated equipment, in accordance with the Oslo Convention and Ottawa; exclusion of carbon intensive industries sush as coal and oil in coherence with the CDC Group’s climate strategy; other business industries exclusions can be applied (e.g. alcohol).

04.3. Additional information. [Optional]


FI 05. Negative screening - overview and rationale

05.1. Indicate why you conduct negative screening.

Corporate (non-financial)

Corporate (non-fin)

05.2. Describe your approach to ESG-based negative screening of issuers from your investable universe.

  • Geographical negative screening: exclusion of countries belonging to the "Non Cooperative Countries and Territories" and authorities with high risks of money laundering and financing of terrorism, or sanctioned for serious breaches of human rights.
  • Sectorial negative screening: exclusion of mines munitions and anti-personnel bombs or components and associated equipment, in accordance with the Oslo Convention and Ottawa ; other business industries exclusions can be applied (e.g. alcohol).  

05.3. Additional information. [Optional]


FI 06. Examples of ESG factors in screening process (Private)


FI 07. Screening - ensuring criteria are met

07.1. Indicate which systems your organisation has to ensure that fund screening criteria are not breached in fixed income investments.

Type of screening
Checks
Negative/exclusionary screening?
Norms-based screening

07.2. Additional information. [Optional]


(C) Implementation: Integration

FI 11. Integration overview

11.1. Describe your approach to integrating ESG into traditional financial analysis.

CDC IC drafted a new ESG process in 2017 which was entirely integrated in the global investment process. The objective was to strengthen the ESG approach regarding the integration of ESG issues in all the investment stages, from the preinvestment stage, over the holding period, to the end of the investment (e.g. identification of ESG issues before the investment).

11.2. Describe how your ESG integration approach is adapted to each of the different types of fixed income you invest in.

Corporate (non-financial)

Only one type of fixed income: corporate (non-financial).

CDC uses, if necessary, an external ESG specialist to help with the identification of the most material ESG issues of the Issuer. As such, ESG risks and opportunities within the business industry are analysed, in consistency with the Company profile (mainly its size and geographical implementation). ESG risk mapping per country and business sector-based ESG analysis are thus provided, adapted to each issuer.

11.3. Additional information [OPTIONAL]


FI 12. Integration - ESG information in investment processes

12.1. Indicate how ESG information is typically used as part of your investment process.

Select all that apply
Corporate (non-financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is integrated into security weighting decisions
ESG analysis is integrated into portfolio construction decisions
ESG analysis is a standard part of internal credit ratings or assessment
ESG analysis for issuers is a standard agenda item at investment committee meetings
ESG analysis is regularly featured in internal research notes or similar
ESG analysis is a standard feature of ongoing portfolio monitoring
ESG analysis features in all internal issuer summaries or similar documents
Other, specify

12.2. Additional information [OPTIONAL]


FI 13. Integration - E,S and G issues reviewed

13.1. Indicate the extent to which ESG issues are reviewed in your integration process.

Environment
Social
Governance
Corporate (non-financial)

Environmental

Social

Governance

13.2. Please provide more detail on how you review E, S and G factors in your integration process.

Corporate (non-financial)

CDC uses, if necessary, an external ESG specialist to help with the identification of the most material ESG issues (risks and opportunities) of the Issuer. ESG risk mapping per country and business sector-based ESG analysis are provided, in consistency with the Company’s context (size, activities, etc.).

13.3. Additional information.[OPTIONAL]


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