During due diligence, CDC always screens for gaps in compliance with ESG standards and develops an action plan with the company to close these gaps and add value.
At screening phase, CDC’s ESG professionals identify inherent risk ratings for all investments and update residual risks following our efforts to work toward international standards with the investees. On a quarterly basis, we discuss the residual ESG risk and the ESG performance of individual investments and consider them within the context of our expectations and the whole portfolio. Where ESG risk is above our expectation or performance below our expectation, based on our institutional experience and the portfolio, we would take steps to improve. Where performance is meeting or exceeding expectations, we make efforts to collect and disseminate lessons learned.
While CDC does not systematically measure whether incorporating ESG impacts portfolio returns, this is done on an ad hoc basis.