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CDC - Caisse des dépôts et consignations

PRI reporting framework 2018

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ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

New selection options have been added to this indicator. Please review your prefilled responses carefully.

13.1. Indicate if your organisation executes scenario analysis and/or modelling in which the risk profile of future ESG trends at portfolio level is calculated.

Is this scenario analysis based on a 2°C or lower scenario?

SG 13.1a CC. Pleased describe the resilience of your organisation’s strategy, considering different future climate scenarios.

Strategy affected
Changes to strategy
Description of scenario and time-horizon
How analysis has been used
          Owing to methodological issues, the top down climate-related stress test performed by CDC is not
accurate enough to be used to form significant conclusions on the materiality of climate scenarios.
Estimated VaR due to climate risks over a 5 year horizon appears below 5%, and does not take into
account the environmental quality of individual assets. This analysis does not take into account
Caisse des Dépôts' forward looking strategy and allocation, but only its current asset allocation.
        
          Due to methodology issues, the first climate-related stress test of CDC can not yet be used to change
it's strategy.
        
          We used the extreme scenarios proposed by the consultancy Mercer in its report "Investing in a
Time of Climate Change": a scenario where global warming is limited to 2 ° C and a warming
scenario of 4°C.
The time horizon of this first climate related-stress test is 5 year.
        
          The analysis enabled us to raise the teams' awareness of this issue and to refine our tools as part of
the Group's 2°C roadmap. New developments are planned in order to overcome the methodological
limits which have been identified with current model.
        

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

          The contribution to the general interest and French economic and regional development ( climate change, job creation, health and education...) is a key input for the definition of the strategic allocation for the local investment division.
        

13.3. Additional information. [OPTIONAL]


SG 14. Long term investment risks and opportunity

14.1. Describe the process used to identify short, medium and long-term risks and opportunities that could have a material impact on your organisation and its activities.

The Group global sustainabilibity policy is based on a materiality matrix ( see business and sustainability review) .

ESG risks for financial divisions and subsidiaries are included in the risk map, with exposures being defined  qualitatively by teams and incidents being reported to feed the matrix.   

14.1 CC. Describe the processes used to determine which climate-related short, medium and long-term risks and opportunities could have a material impact on your organisation and its activities.

For instance, this process includes a permanent watch on the subject of climate change, the purchase of data, the financing of research work, the contribution to the Task Force on Climate Related Financial Disclosure and the European High Level Expert Group on sustainable finance work.

14.2. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following you act on.

14.2a cc. Please describe how you define “short”, “medium” and “long term”, and describe your material climate-related issues over these time horizons.

Definition
Description of material climate-related issues
Short term
          1 year
        
          Reputationnal risks, fines or sanctions
        
Medium term
          1 to 5 year
        
          Operational and market risks
        
Long term
          More than 5 yeras
        
          Operational and market risks. Long term risks also include physical risks.
        

14.3. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

14.4. Indicate which of the following tools you use to manage emissions risks and opportunities

14.4a CC. Please provide further details on these key metric(s) used to assess climate related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Metric Trend
Limitations / Weaknesses
Climate-related targets
          
        
          
        
          
        
          
        
          
        
          
        
Carbon footprint (scope 1 and 2)
          listed equity and corporate bonds
        
          reduce portfolio emissions, inasmuch
 as possible by incentivising companies to reduce own footprints
        
          tequCO2/k€ invested
        
          in house
        
          positive
        
          data published by companies subject to quality issues ( change of scope, change in methodologies)
        
Portfolio carbon footprint
          100% listed equity and corporate bonds
        
          This metric provide a proxy tool to manage the exposition to transition risk related to carbon
emission.
        
          tequCO2/k€ invested
        
          Scope 1 & 2. Data are provided by CDP, Bloomberg and MSCI.
        
          
        
          This tool is only a proxy to identify riskier allocations, which then require in depths sector and asset
research in order to assess specific applicable and foreseable regulation ( eg change in tarifs) ,
market (eg shift in consumer demand, ability to pass on costs through prices) and technological
shifts.
        

14.4b CC. Please describe in further detail your key targets.

Target type
Time Frame
Base Year
KPI
Target Methodology
Limitations / Weaknesses
Attachments
          5 years
        
          2014
        
          -20%by tequCO2/k€ invested (scope 1 & 2) for listed equity and corporate bonds
        
          see above
        
          The carbon footprint remains an incomplete indicator because it does not reveal companies’
exposure to and management of climate change risks
        

          20 years
        
          2010
        
          To reduce by 38% our fully owned real-estate portfolio’s energy consumption between 2010 and
2030
        
          Mix of ambitious retrofits, acquisition of labelled assets and sale of less efficient asset
        
          This target is limited to about 37,5% of CDC's total Real Estate portfolio.
        

14.5. If you selected disclosure on emissions risks, list any specific climate related disclosure tools or frameworks that you used.

CDC uses corporate data and questionnaires from the CDP.

14.6. Additional information [Optional]

14.7 CC. Describe your risk management processes for identifying, assessing, and managing climate-related risks.

Please describe

Climate change is now incorporated in the Group risk policy and risk framework, as well as the financial risk policies and frameworks.

The investment teams are encouraged to perform climate risk and opportunity analyses on a given security and use this information, either definitively or as a guide, when building up the portfolio.

A project rating matrix is has been designed for the due diligence phase of local investment
projects, integrating climate climate change into the broader project assessment.

 

14.8 CC. Describe your processes for prioritising climate-related risks.

Caisse des Dépôts measures its carbon footprint on a monthly basis. It analyses how the footprint is changing so that it can distinguish the impact of its own portfolio security reallocation decisions
from intrinsic changes in the footprint of investee companies.
Moreover, since the adoption of the Group’s climate change policy, the consistency of investments with the objectives of the Paris Agreement has been subjected to qualitative analysis.

14.9 CC. Do you conduct engagement activity with investee companies to encourage better disclosure and practices around climate-related risks?

Please describe

Energy and climate performance is one of the Caisse des Dépôts Group’s priority issues in
shareholder engagement. The analysis mentionned above (SG 14.08 CC) encourages shareholder engagement with investee companies, notably to ensure that climate change issues are examined
and discussed by the governance bodies of these companies.

14.10 CC. Describe how you use data from climate-related disclosures.

Climate-related information disclosed by companies is part of the data that CDC is using to
calculate the carbon footprint of its portfolios.
As mentionned above (SG 14.09 CC) energy and climate performance is one of the Caisse des
Dépôts Group’s priority issues in shareholder engagement. The aim is to encourage companies to
deliver greater environmental transparency and performance. CDC therefore expects its investee
companies to formalise an ambitious medium-term energy transition strategy, regularly publish
detailed and audited information on how this strategy is being implemented, and establish a
realistic and ambitious quantitative GHG emission reduction target. This final target must be
consistent with national or international energy transition scenarios and must pertain to a
significant scope of the business. The Group also expects its investee companies to implement a
governance structure that is suited to managing this challenge.
To this end, the Group aims to analyse the environmental and climate change-related issues of each
of its investment decisions. It regularly monitors these issues throughout the lifetime of the
investment for assets for which the energy and climate change transition represents a significant
challenge.


SG 15. Allocation of assets to environmental and social themed areas

New selection options have been added to this indicator. Please review your prefilled responses carefully.

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

4.1 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

% of AUM

Brief description and measures of investment

Parts of our infrastructure debt funds or of our infrastructure and private equity funds are invested in renewable energy schemes ( solar, wind, biomass, hydro), water and waste management,  public rail transportation (highspeed trains, trams).
Direct infrastructures include renewable energies, waste and water plants, low carbon public transportation (highspeed trains, trams)

Asset class invested

% of AUM

Brief description and measures of investment

The Group invested in major green building projects. Moreover most of the recent buildings and assets in development buildings have en environmental certification, some are positive energy buildings.

Asset class invested

% of AUM

Brief description and measures of investment

All our forests are managed according to sustainable principles. Iconic projects include reforestation projects in Landes province and in New Caledonia for nickel mine wasteland.

Asset class invested

% of AUM

Brief description and measures of investment

Support to agricultural short-cycle and organic agriculture and agro-industry in France.

Asset class invested

% of AUM

Brief description and measures of investment

CDC develops and finances French microfinance networks and platforms. It manages the French Social Cohesion Fund, providing access to micro-credit and facilitating synergies between associative networks and the banking sector.

Asset class invested

% of AUM

Brief description and measures of investment

Sponsor of fixed income funds invested in loans or private bonds for SMEs, private equity funds.

Asset class invested

% of AUM

Brief description and measures of investment

CDC finances digital platforms for facilitating contacts between enterpreneurs, to stimulate and fund social innovation, to train and assist micor-entrepreneurs. 

Asset class invested

% of AUM

Brief description and measures of investment

Equity stakes in social housing and intermediary housing operators, and medico-social sector (including specialised residences for students, the elderly, homeless shelters). 

Direct low rates loans to social housing :>135 billion Euros (2016) in Affordable housing and urban renewal projects (mostly through credit, hence not included in asset under management in this or in under other sections of this report).

Asset class invested

% of AUM

Brief description and measures of investment

loans to universities and highschools for property and IT development and refurbishment

Asset class invested

% of AUM

Brief description and measures of investment

The Caisse des Dépôts invested amongst other things in healthcare properties and clinic operators

Asset class invested

% of AUM

Brief description and measures of investment

stakes in operators and water plants

          Public transportation
        

Asset class invested

% of AUM

Brief description and measures of investment

Trams, subways


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