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Cordiant

PRI reporting framework 2020

You are in Direct - Fixed Income » Outputs and outcomes

Outputs and outcomes

FI 17. Financial/ESG performance

17.1. Indicate whether your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or performance.

Select all that apply
Corporate (financial)
We measure whether incorporating ESG impacts portfolio risk.
We measure whether incorporating ESG impacts portfolio returns.
We measure the ESG performance/profile of portfolios (relative to the benchmark).
None of the above

17.2. Describe how your organisation measures how your incorporation of ESG analysis in fixed income has affected investment outcomes and/or ESG performance. [OPTIONAL]

17.3. Additional information.[OPTIONAL]


FI 18. Examples - ESG incorporation or engagement

18.1. Provide examples of how your incorporation of ESG analysis and/or your engagement of issuers has affected your fixed income investment outcomes during the reporting year.

18.2. Additional information.

Cordiant’s capacity in terms of ESG Appraisal and Management in being able to control, reduce, and mitigate material risks lies in our underlying procedure of integrating ESG as part of the In-Depth Due Diligence process. The DDQ and ESG form the core of the Investment Memorandums, decision-making process, and the loan agreements. This ensures a robust management system.

 

                Firm-Level ESG Risk Evaluation & Due Diligence (Negative Screen)

 

A clear understanding of the potential risks and impacts allows Cordiant to assess which IFC Performance Standard applies to a specific business strategy, and thereafter systematically engage in a discussion on the risk-profile of the firm.

As a means to do so, Cordiant has developed sectoral technical guidance documents for an in-depth due diligence that touches upon and aligns with the relevant certifications and principles of sustainable practices on the ground. That way, it is able to consistently and systematically apply best impact and risk management practices across sectors, industries and commodities. This is both time-effective and creates a lot of value for the borrowers, as through our investments, they become aligned with the applicable international standards that are relevant for their operations.

As such, the first due diligence questionnaire, which is based on all SASB, IFC, and IRIS metrics, provides a consistent framework through which to screen the compliance of a potential borrower.

The results of the Due Diligence reflects the potential investee’s commitment to development impact and good ESG management. This is relevant to the issue of “Green Washing” whereby some firms speak the language of impact and ESG as a way of securing financing, but are not committed to either in practice. Hence, Cordiant conducts an internal E&S briefing as a final step in the Due Diligence.

After agreeing upon a potential borrower’s financial, ESG and Impact goals, and applying best practice, Cordiant works with the owner of the company to develop an E&S Action Plan that includes all necessary measures to mitigate adverse outcomes. This Action Plan will be incorporated in the Loan Agreement package (or the structure around it). It will clearly outline how ESG matters will be handled during the life of the investment in order to meet the Cordiant’s requirements and expectations.

As such, covenants and conditions prior to disbursement include that borrowers;

  • Comply with all Applicable National Laws
  • Comply with Applicable IFC Performance Standards
  • Regular monitoring: Cordiant will stay informed and respond to new developments and/or risks by building on the relationship established during DD
  • Commitment to Monitoring & Evaluation: The Borrower will agree to allow Cordiant to conduct baseline surveys & supervisory Monitoring & Evaluations (M&E), so to as to measure the firm’s performance or underperformance of sector-specific impact & ESG performance indicators. Those include;
  • AMR
  • Action Plan’s Monitoring Indicators
  • Agree to report on performance: This will serve towards Performance Evaluation Reports, as well as to assist the company to ensure its ongoing compliance with applicable standards, implementation of ESG Action plan and improvement of ESG performance.

As a means to ensure that procedures for identifying hazards and assessing OHS risks in an accurate and timely manner are in place, Cordiant does assess each borrower`s  capacity, commitment and track record regarding OHS & EHS, as part of the preliminary and final due diligence. This is because it is the objective of Cordiant is to understand the main hazards and risks present within operations of each borrower and to be able to understand which standards are applicable in order to design an adequate OHS management plan and to prioritize management and corrective measures to mitigate, on a preemptive basis, such serious impacts.


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