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CDC Group plc

PRI reporting framework 2019

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You are in Direct - Fixed Income » ESG incorporation in actively managed fixed income » (C) Implementation: Integration

(C) Implementation: Integration

FI 10. Integration overview

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

ESG is integrated into each step of the investment process, and dedicated ESG professionals engage closely on management of ESG issues. Analysis of ESG factors is usually undertaken separately from business modelling, unless there is a material ESG consideration or capital expenditure requirement that is clear before investment; however both are taken into account in all stages of investment decision.

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

Corporate (financial)

CDC's baseline environmental and social standards ​identified in our Code of Responsible Investing are the same across all types of investment and are international best practice. The approach to addressing the gap with international best practice is adapted based on the materiality of specific risks in each project. Corrective action plans are developed for each investment, and are included in the legal agreements. In cases where a specific gap or opportunity is expected, such as a climate change risk or women's economic empowerment, the E&S team may engage a topic-specific expert to provide input during the investment analysis stage.

10.3. Additional information [OPTIONAL]


FI 11. Integration - ESG information in investment processes

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

Select all that apply
Corporate (financial)
ESG analysis is integrated into fundamental analysis
ESG analysis is used to adjust the internal credit assessments of issuers.
ESG analysis is used to adjust forecasted financials and future cash flow estimates.
ESG analysis impacts the ranking of an issuer relative to a chosen peer group.
An issuer's ESG bond spreads and its relative value versus its sector peers are analysed to find out if all risks are priced in.
The impact of ESG analysis on bonds of an issuer with different durations/maturities are analysed.
Sensitivity analysis and scenario analysis are applied to valuation models to compare the difference between base-case and ESG-integrated security valuation.
ESG analysis is integrated into portfolio weighting decisions.
Companies, sectors, countries and currency and monitored for changes in ESG exposure and for breaches of risk limits.
The ESG profile of portfolios is examined for securities with high ESG risks and assessed relative to the ESG profile of a benchmark.
Other, specify

11.2. Additional information [OPTIONAL]


FI 12. Integration - E,S and G issues reviewed

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

Environment
Social
Governance
Corporate (financial)

Environmental

Social

Governance

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

Corporate (financial)

ESG is integrated into each step of the investment process. Members of the responsible investment teams contribute to all investment committee papers and provide verbal input to investment committees, as well as carry out due diligence (usually including site visits) and help negotiate legal agreements​, which include Action Plans to close compliance gaps and add value. As discussed in FI06, this is done through exclusionary, norms-based and best-in-practice screening across E,S, and G. 

12.3. Additional information.[OPTIONAL]


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