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.

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