Environmental, social and governance risks are generally identified through a specific screening and due diligence process. Potential investees are assessed against international best practice standards for ESG matters. In the due diligence phase, risks are identified through site visits by CDC, and often also by external specialist consultants.
Exclusionary screening is done to ensure the target is not engaged in any activities on the CDC Exclusion List or barred by the IFC Performance Standards (e.g. the use of pesticides that are identified in the Stockholm Convention on Persistent Organic Pollutants). Norms-based and Positive screening are done against the framework of the IFC Performance Standards, World Bank EHS Guidelines, and good international industry practice to identify compliance gaps as well as opportunities to support a company's move toward international best practice. Any gaps between current and international best practice are included in an action plan, which is included in the legal agreement of the loan.