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CDC Group plc

PRI reporting framework 2019

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Overview

PE 01. Description of approach to RI

01.1. Provide a brief overview of your organisation’s approach to responsible investment in private equity.

As a DFI, CDC has a public commitment to responsible investment as it seeks to support the building of businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people's lives in some of the world's poorest places. CDC believes that operating to high ESG standards is a key part of long-term business success.

Central to CDC's ethos is a firm commitment to responsible investment. The businesses that receive CDC's capital must also adhere to its Code of Responsible Investing, which stipulates ESG standards that are often above those required by local law. Investing in difficult geographies means that standards sometimes fall short, but in these cases an action plan must be put in place to make the necessary improvements to ensure compliance with CDC's Code of Responsible Investing. CDC recognises the challenges in meeting the standards set in its Code but expects management teams in its businesses to be committed to work towards good international practice and will work with companies to review internal systems and mentor companies to understand their commitments.

An additional part of CDC's role as a DFI is to support companies as they develop policies and systems and actively engage with them to manage the ESG risks associated with their operations. In this way CDC looks to add value to its investee companies through ESG improvements that go beyond compliance. In CDC investment papers, CDC's ESR team highlight ESG risks but will also flag opportunities for 'value add' through quality improvements and strategic advice. 


PE 02. Investment guidelines and RI

02.1. Indicate whether your organisation’s investment activities are guided by a responsible investment policy / follow responsible investment guidelines.

02.2. Describe how your organisation outlines expectations on staff and portfolio companies’ approach towards ESG issues in investment activities.

All  businesses receiving CDC capital must sign up to and comply with CDC's Code of Responsible Investing, which stipulates CDC's ESG requirements. These are often above those required by local law. Among other things, the Code requires companies to assess, monitor and improve E&S standards.

The Code is structured to reflect CDC's ESG requirements, recommended good practices, and components of management systems that CDC legally requires. The Code sets out a hierarchy of ESG requirements, including an 'exclusion list' specifying industry sectors where CDC's capital cannot be invested, minimum ESG requirements of all businesses, and additional requirements for industries where the levels of ESG risk requires it. Based on its Code, CDC works with companies to build from compliance with IFC Performance Standards and strive towards the adoption of internationally recognised standards of good industry practice and areas of ESG 'value add' to the business.

CDC recognises that many businesses in Africa and Asia will not be in full compliance with its Code at the date of investment. In such cases, CDC will work with the business during due diligence to develop an action plan that seeks to achieve compliance within a reasonable timeframe, with clear deliverables and responsibilities.


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