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CDC Group plc

PRI reporting framework 2020

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Context

IFD 01. Mission and investment objective

01.1. Indicate if you have a distinct mission and investment objective for your investment in inclusive finance.

01.2. Describe your inclusive finance mission and investment objective.

In 2019, CDC completed impact frameworks per sector/sub-sector, including Financial Institutions, backed by an external review. These were then incorporated into the FI sector strategy. Our mission with respect to financial institutions and services is to invest in a variety of financial service providers through direct equity, debt and intermediaries to help build and develop financial sectors. By investing in a diversity of providers and enablers, we contribute to more inclusive financial sectors and stronger domestic markets for capital. We do this by supporting their delivery of relevant financial products and services, which are used by households and firms to manage risk, liquidity and investment. As part of this, two main objectives for were determined: more inclusive financial sectors and stronger domestic markets for capital.

01.3. Additional information.

CDC considers "inclusive finance" to be loans to banks and institutions reaching underserved segments and/or offering inclusive products (for example, SME loans, affordable housing loans, or microfinance loans), as well as direct equity investments in companies or institutions that have products that cater to underserved segments (e.g. SME, microfinance, affordable housing loan books). This section is not including any indirect investment into a fund specialising in these categories. Where only part of a bank or institution's book is considered inclusive, it has not been included in our count of "inclusive finance", which means the overall totals are undercounting the full extent of CDC's investments in this space.


IFD 02. Governance, management structures and processes

02.1. Provide a brief description of the governance and management structures and processes you have in place for your responsible investment activities and implementation of the PIIF.

CDC's management structures and governance for responsible investment are the same across all sectors. The ESG-I and BI teams have the primary responsibility for implementing CDC's Code of Responsible Investing. Meanwhile, the DI team quantifies the effect of CDC's investments at the individual investment level and at a portfolio level. DI specialists are also embedded within each deal team, ensuring impact is incorporated into investment theses from an early stage.

On the Financial Institutions team, there are two embedded DI professionals who oversee and coordinate impact reporting and measurement. Each investment also has dedicated individuals from the ESG-I and BI teams. Governance at company level varies on a case by case basis but may include ESG Committees that oversee responsible investment activities and report on a quarterly basis. Issues of material concern to the institution will then be flagged to the board, senior management and/or the investment team.


IFD 03. Social targets

03.1. Indicate if you set social targets for your organisation, specific to inclusive finance.

03.2. Additional information.

Each investment has a development thesis that is formulated during investment analysis. CDC DI staff monitor progress against the development thesis and introduce and track customised measures of DI for specific investments. In addition, the ESG-I team will create an ESG Action Plan that creates a path for companies to bridge compliance gaps and add value. Finally, the Value Creation Strategies (VCS) teams will also work with companies on a case by case basis to integrate social goals, measured by targets and indicators, into planning. All of these indicators -- DI, ESG and VCS -- can include social targets. For example, one indicator could be "number of underserved households reached". Other indicators, such as "increasing revenue generated by clients' businesses", would be monitored by the investment team as both a financial and impact measure. The VCS team, which includes gender, might include indicators to assess women's economic empowerment and initiate grant-funded projects to deliver training and support to achieve these goals.


IFD 04. Percentage in equity, debt and guarantees

04.1. Of your total assets invested directly in inclusive finance, indicate what percentage is invested in the following:

Equity  

Debt
Guarantees

Other, specify

          
        
Total100%

04.2. Additional information. [Optional]


IFD 05. Percentage in microfinance and/or SME finance

05.1. Of your total assets invested directly in inclusive finance, indicate what percentage is invested in the following:

Microfinance

SME finance (provide your definition of SME)

          CDC generally follows IFC's definition of SMEs or local definitions either set by Central Bank or the bank's own product segmentation (more below)
        

Other, specify

          
        
Total100%

05.2. Additional information. [Optional]

CDC generally follows the IFC definition of SMEs: An enterprise qualifies as a micro, small or medium enterprise if it meets two out of three criteria of the IFC MSME Definition (employees, assets and sales), OR if the loan to it falls within the relevant MSME loan size proxy.

In the case where we don’t have visibility, CDC uses local definitions either set by Central Bank or by the bank’s own product segmentation. All proportions of the institution’s assets to this segment are categorised as lending to SMEs.


IFD 06. Geographical spread of microfinance investments

06.1. Indicate if you track the geographical spread of your total assets invested directly in microfinance.

06.2. Of your total assets invested directly in microfinance, indicate the geographic spread as a percentage of your portfolio.

% of portfolio

Indicate the average loan size (in US$) of your investees to active borrowers in this region.

% of portfolio

Indicate the average loan size (in US$) of your investees to active borrowers in this region.

% of portfolio

Indicate the average loan size (in US$) of your investees to active borrowers in this region.

% of portfolio

Indicate the average loan size (in US$) of your investees to active borrowers in this region.

06.3. Additional information. [Optional]


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