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Cordiant

PRI reporting framework 2020

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

(B) Implementation: Thematic

FI 07. Thematic investing - overview

07.1. Indicate what proportion of your thematic investments are (totalling up to 100%):

Specify

          ESG investments
        
100 %

07.2. Describe your organisation’s approach to thematic fixed income investing

A structured business approach to ESG disclosure assists Cordiant in managing social, environmental and ethical risks and is increasingly seen as a priority and precondition to sustainable development efforts. Cordiant believes that proper respect for ESG principles can optimize investment strategies, risk management, responsiveness in volatile markets, reduce costs for all parties engaged in investment activities, as well as strengthen stakeholder relations and improve a borrower’s brand, reputation, and profitability.

Each potential investment is subjected to a multi-stage approval process with analysis of the ESG risks incorporated at the outset of the process. Cordiant assesses potential investments on a variety of levels, beginning with the sector (i.e. does it fit into Cordiant’s preferred areas of focus?). The first step of screening is therefore rejecting undesirable investment categories and ensuring that all proposed investments do not show evidence of excluded/prohibited activities.

By investing in sectors with already high potential for positive social, economic, and environmental impact, in addition to financial return considerations, Cordiant seeks companies that support our Impact Investor themes that include bridging the digital divide, food security and the modernisation of agriculture, enhancing energy security whilst reducing greenhouse gas emissions, improving transportation whilst reducing pollution and sustainable urbanisation. Hence, Cordiant seeks to invest  in  well‐managed and commercially-minded  enterprises  that  generate  positive  development  outcomes  (see below).

 

Seeking Inherently Impactful Sectors

 

  • Sustainable production practices and modernization of agriculture
  • Clean Energy
  • Sustainable Transportation
  • Information and Communication Technologies: Digital Communications
  • Other sectors, as appropriate 

 

Cordiant’s ESG analyst then identifies an investment’s potential impact:

 

Seeking Best Practices & Impact Themes: Environment, Health and Quality of Life

 

  • Improving food security
  • Increasing agricultural exports
  • Generating renewable energy
  • Increasing energy efficiency (and storage)
  • Bridging the digital divide
  •  

07.3. Additional information [OPTIONAL]


FI 08. Thematic investing - themed bond processes

08.1. Indicate whether you encourage transparency and disclosure relating to the issuance of themed bonds as per the Green Bonds Principles, Social Bond Principles, or Sustainability Bond Guidelines..

08.2. Describe the actions you take when issuers do not disburse bond proceeds as described in the offering documents.

The following are subsets of all potential IRIS & HIPSO development impact metrics that Cordiant tracks, where applicable, during the life of an investment.
 

General Cross-Sector Indicators:

  • Community Development Contributions (CSR)
  • Direct Employment – Construction Phase
  • Direct Employment – Operations and Maintenance
  • International Sustainability Certification (ISO)
  • Payments to Government

Agribusiness

  • Amount of Hectares of Land (i) Indirectly Controlled (ii) Directly Controlled
  • Amount of Hectares Under Sustainable Agriculture Practices
  • Amount of HA preserved
  • Amount of forest replanted
  • Average Agricultural Yield
  • Improved Market Linkages: Number of individual farmers Reached throughout the Supply Chain
  • Amount Disbursed for project-related CSR programs (yearly)
  • Amount of Water Recycled
  • Amount of Solid Waste Recycled for Energy Production
  • Export Sales Revenue
  • Farmer Sales Revenue

Clean Energy

  • Power Distribution Estimation Methodology
  • Power Production
  • Ratio: Grid / Total Amount Produced
  • Local Grid: Number of Beneficiaries

Information & Communication Technologies

  • Number of Fixed Data Subscriptions
  • Number of Fixed Voice Subscriptions
  • Number of Mobile Subscriptions

 

08.3. Additional information. [Optional]


FI 09. Thematic investing - assessing impact

09.1. Indicate how you assess the environmental or social impact of your thematic investments.

09.2. Additional information. [Optional]

Impact Evaluation: Assessment of Business Contribution to Development Impact (Positive Screen)

During this Phase, Cordiant’s ESG team works closely with the Investment Team. As part of its due-diligence, Cordiant uses Impact Reporting Investment Standards (IRIS) developed by the GIIN to establish a baseline survey. Those are used in conjunction with the IFC’s “Harmonized Development Results Indicators (HIPSO) for Private Sector Investment Operations”. Cordiant selects which relevant subset of cross-sector & sector-specific performance metrics are aligned with the objective of the company. The objective is to have measurable and quantifiable nonfinancial returns, to monitor Cordiant`s own performance in terms of development impact, as well as to monitor the performance of its borrower companies from one supervision to the next.

Monitoring & Evaluation

Monitoring & Evaluation are vital aspects of the process to ensure that the borrower’s actions are consistent with the agreed- upon ESG plan. Monitoring is conducted either on a bi-annual or yearly basis- depending on the materiality of risks- and throughout the life of the loan. Cordiant conducts a yearly monitoring of the firms’ performance through (i) the Annual Monitoring Report (AMR) which quantifies risks E&S indicators; (ii) the Action Plan which forms the compliance indicators and loan agreement; and (iii) the Developmental Impact Baseline Survey.

  1. Monitoring & Measurement of the Developmental Impacts
  2. Monitoring of Compliance with Action Plan & Mitigation Measures: Cordiant is responsible for developing an Action Plan (AP) with the borrower that will serve as a benchmark which is then used as a basis for monitoring compliance and progress.
  3. Annual Monitoring Report (AMR)

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