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Cordiant

PRI reporting framework 2020

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

C) 実施:ESG問題の統合

FI 10. Integration overview

10.1. ESGを従来の財務分析に統合するアプローチを説明してください。

At every stage of the process, cordiant includes the ESG risk-management components:

  1. Cordiant Structuring Group: Thematic and Sectoral Decisions (SDG alignment)
  2. Credit Analysis : Internal ESG Credit score and Imapct Summary
  3. Weekly Updates & Meetings: Collaboration and open discussions between all investment team members - Raising any ESG issues, concerns or red flags
  4. Preliminary Approval: Raising both credit, financial and ESG issues.
  5. Portfolio Fit, Macro Allocation, and Sector Outlook
  6. KYC Screens & Impact Investing: Including ESG Due Diligence and Development Impact Survey
  7. Final Approval: ESG Debreifing 
  8. Internal Credit Committee: Final ESG Concerns raised. 
  9. External Credit Committee

Final Assessment & Decision Process

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.

Post-Investment Support

We believe that we have a responsibility, as impact investors, for our investments to serve these dual purposes of stewardship and wealth creation. Accordingly, we engage with management on important issues, whether environmental or economic. This collaboration serves to obviate or minimize adverse impact on the environment or to the local population and workers. Hence, when possible, our ESG officer will collaborate with businesses to set up mitigation measures through readily accessible “remedies toolkits”.

Technical Assistance & Capacity Building Support

Cordiant is committed to understanding the challenges & identifying the solutions that may foster the quality of the investment while fostering the value of the company

Cordiant uses a collaborative, active and dynamic approach borrowers or investee companies can be incentivized to improve ESG standards and practices and achieve development outcomes.

  • Access to Technical Service Providers 
  • Specialized Technical Experts by Sectors
  • Increases Investment Monitoring

10.2. 投資する債券の各種類に対してESG統合アプローチをどのように調整するのか説明してください。

社債(金融)

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.

10.3. 補足情報 [任意]

For each potential project, Cordiant’s applies the International IFC Environmental & Social Standards as baseline "Guiding Principles";

PS 1. Assessment and Management of Environmental and Social Risks & Impacts

  • In keeping with our chosen set of Performance Standards, Cordiant has implemented a thorough process for screening investments aimed at achieving E&S Objectives. This process systematically draws from (i) IFC Performance Standards for ESG risk management (ii) Sustainability Accounting Standards Boards (SASB) standards; and (iii) IRIS Metrics managed by the Global Impact Investor Network (GIIN) for Developmental Impact Performance Management. The strategy involves Cordiant proactively engaging with borrowers on ESG matters, through active monitoring of the evolution of ESG risks and compliance with agreed-upon mitigation measures and Action Plans, throughout the life of the investments.

PS 2. Labour and Working Conditions

  • Cordiant strives to uphold international labour standards.  Through carefully screened investments, Cordiant seeks to promote fair treatment, non-discrimination, and equal opportunity for workers.  Cordiant also seeks to promote safe working conditions and to avoid the use of forced labour and the exploitation of vulnerable workers.

PS 3. Resource Efficiency and Pollution Prevention

  • Cordiant seeks to avoid or minimise adverse impacts on the environment by investing in companies and projects that avoid or generate minimal pollution as a result of business operations.  Cordiant seeks to invest in companies that use resources, including energy and water, in a sustainable fashion and whose operations involve a net reduction in greenhouse gas (GHG) emissions compared to the common regional, sector or industry standards observed.

PS 4: Community Health, Safety and Security

  • At deal origination, Cordiant seeks to identify and anticipate community and employee health and safety hazards related to the investee company’s operations and to ensure that the investee company has measures in place to avoid their potential adverse impacts.

PS 5. Land Acquisition and Involuntary Resettlement

  • Cordiant seeks to avoid displacement and minimize adverse social and economic impacts from land acquisition or restrictions on land use. 

PS 6. Biodiversity Conservation and Sustainable Management of Living Natural Resources

  • Cordiant seeks to protect and conserve biodiversity and to identify the potential adverse effects a project may have on ecosystems.  Cordiant seeks to promote sustainable management of natural resources by investing in companies that have adopted practices that respond to conservation needs. 

PS 7. Indigenous Peoples

  • Cordiant strives to ensure that investee companies undertake to anticipate, avoid or minimise the adverse impacts of their operations on communities, including those of indigenous peoples. 

PS 8. Cultural Heritage

  • Cordiant seeks to avoid investing in companies and projects that pose a threat to cultural heritage.  Cordiant endeavours to identify cultural heritage aspects, as they may relate to the project locale, during due diligence.

FI 11. Integration - ESG information in investment processes

11.1. ESG情報が、通常、投資プロセスの一部としてどのように使用されるのか記載してください。

当てはまるものをすべて選択してください
社債(金融)
ESG分析をファンダメンタル分析に組み込んでいる
ESG分析が発行体の内部信用評価を調整するために利用される
ESG分析が予想財務業績および将来キャッシュフロー予測を調整するために利用される
ESG分析が発行体の同業グループと比較したランキングに影響する
発行体のESG債スプレッドおよび同セクター企業に対するその相対価値が、すべてのリスクが織り込まれているか否かを把握するために分析される
各種デュレーション/満期の発行体債券へのESG分析の影響が分析される。
感度分析およびシナリオ分析が、ベースケースとESG組み込み証券評価の差を比較する評価モデルに適用される
ESG分析が、ポートフォリオのウェイティング決定に組み込まれている
会社、セクター、国、通貨が、ESGエクスポージャーの変化およびリスク制限の違反についてモニタリングされる
ESGリスクが大きい証券についてポートフォリオのESGプロファイルが検討され、ベンチマークのESGプロファイルと比較して評価される
その他(具体的に記載してください)

11.2. 補足情報 [任意]


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

12.1. 組織の統合プロセスでESG問題をどのように検討するか示してください。

E(環境)
S(社会)
G(ガバナンス)
社債(金融)

E(環境)

S(社会)

G(ガバナンス)

12.2. 組織の統合プロセスでE/S/G要因を検討する方法を詳しく説明してください。

社債(金融)

Cordiant’s Environmental and Social Due Diligence framework was modelled after the IFC Performance Standards on Environmental and Social Sustainability, as well as CDC’s Investment Code on ESG.The Due Diligence Questionnaires includes relevant questions to the applicable Performance Standards (to the borrower's activities). Those include;

  • Labour and Working Conditions
  • Resource Efficiency and Pollution Prevention
  • Community Health, Safety and Security
  • Land Acquisition and Involuntary Resettlement
  • Biodiversity Conservation and Sustainable Management of Living Natural Resources
  • Indigenous Peoples
  • Cultural Heritage
  • Business Integrity and Good Corporate Governance

Cordiant follows a set of procedures with respect to the screening of investment opportunities and its engagement with investee companies in matters related to ESG risks.  In order to systematically screen investment opportunities against environmental and social risk criteria. 

These risk ratings determine the necessary level of due diligence into various ESG aspects and help Cordiant decide whether or not to engage a specialist.  Cordiant employs a relevant subset of CDC’s due diligence questions to evaluate, manage and monitor ESG risk, capturing all areas covered by the IFC Performance Standards, as well as the UN Principles for Responsible Investment’s guide for ESG integration in investing. The investment officer will monitor the ESG risks as they evolve over the course of the investment via follow-up conversations with the client and monitoring site visits, as warranted.

Cordiant’s objectives at deal origination include identification and evaluation of environmental and social impact risks relevant to the project.  A clear understanding of the potential risks and impacts allows Cordiant to gauge the likelihood and degree of a negative impact associated with an investee.  A relevant subset of CDC’s ESG due diligence questions are employed to obtain the required information. 

Cordiant’s decision to invest is based on the investee’s ability to anticipate and put in place measures to avoid, mitigate or minimize the negative impacts.  The investee’s willingness to put in place a set of avoidance, mitigation or minimization measures is also assessed and factored into Cordiant’s decision to support its operations with a capital investment. 

Both positive and negative screening is the approach used by Cordiant to discriminate high risk deals. This is done through IFC’s Social and Environmental Categorization, Intentionality, Risk Assessment, and finally the agreed upon Management System and Action Plan for controlling, reducing, and mitigating material risks.

  1. Prioritization and sequencing at the country level assessment: When possible, Cordiant shall make investments in a way that is compatible with the state of development of each country, based on the priorities and stresses of the affected communities.
  2. Ensure compliance with the exclusion list: Ensure all investments comply with any applicable lists of excluded/prohibited activities.
  3. Preliminary due diligence: Consider the country and sector. As part of our preliminary due diligence, Cordiant considers ESG risks in relation to IFC performance standards and requirements for best practices.
  4. Investment opportunities are rigorously assessed on a variety of levels, including;
  5. The identification of firm-level ESG-related value drivers and material ESG-related risks; and identify possible areas for future development and management. This is done through an in-depth process of ESG due diligence and analysis of risks, and that, also via on-site visits.
  6. The findings from on-site visits and outcomes of interviews and discussions with borrower companies and the affected communities form the core of the Due Diligence ESG report, and also set the tone for ongoing engagement and relationship building with the company.
  7. When appropriate, and especially in the agri-business sector, due diligence is also conducted on prospective contractors and operators to ensure appropriate ESG policy is considered.
  8. Monitor and, where necessary, ensure that borrowers’ actions are consistent with the agreed-upon ESG related policies and practices set forth at fund formation;
  9. Build a common understanding with the company’s key ESG aspects to be managed and assess the company’s willingness and capacity to address them.
  10. Build an action plan to address all issues and opportunities, as well as responsibilities and training. This is for means of identifying prospects for improvement, competitiveness, and value creation.
  11. Positive screening and monitoring of Developmental Outcomes

 

 

12.3. 補足情報 [任意]

 

 


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