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CDC International Capital

PRI reporting framework 2018

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

05.2. Describe your organisation's approach to incorporating ESG issues in private equity investment selection.

CDC IC improved its ESG process in 2017 by strengthening the consideration of ESG issues in all the stages of the investment process and by formalising it within the overall investment process document.

The due diligence performed for each investment integrates a section on ESG information :

1) Preliminary analysis phase

a) negative screening and general compliance verification:

  • Overall compliance of the operation with the anti-money laundering and terrorist financing rules (risk assessment depending on the level of sensitivity of the invested company and the financial transaction). Implementation of the "Know Your Customer" due diligence obligation to assess the company it 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 sanctionned 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).  

b) ESG issue identification:

  • Identification of the ESG issues which are the most material to the Company’s business industry and to the targeted Company according its size and geographical implementation: ESG risk mapping per country and business sector-based ESG analysis synthesis (step realised, if necessary, with the support of an external consultant)

2) Limited or in-depth ESG due diligence (depending on access to management, company size, risk level) : The investment team conducts a due diligence on ESG issues. It can be carried out internally or with the help of an external advisory. Whatever is the chosen model, this diligence shall address all subjects related to governance, social / societal and environmental issues and be more specific on  the most material issues for the company’s sector. 

05.3. Additional information. [Optional]

CDC International Capital has established a risk mapping of money laundering and terrorist financing to assess the degree of exposure of CDC International Capital in light of the terms and conditions under which the financial services are provided and the characteristics of the clients.

PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

          CSR policy, CSR organisation within the company, CSR management, risk management, ESG initiatives, CSR action plan

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

This information is collected either directly by CDC International Capital or with the help of external consultants, and then presented to CDC International Capital's teams.

ESG information (including the ESG due diligence synthesis, ESG issues identification, etc.) are included in the “General Secretary’s Note”.

In the end, it is always presented, firstly to the Direction Comittee.

PE 07. Encouraging improvements in investees (Private)

PE 08. ESG issues impact in selection process (Private)