ESG & Impact Sustainability-related Disclosures

The Sustainable Finance Disclosure Regulation (SFDR) is a core component – alongside the EU Taxonomy Regulation and Low Carbon Benchmarks Regulation – of the European Commission’s (EC) Action Plan on Sustainable Finance aiming to promote sustainable investment and reduce ‘greenwashing’. The SFDR aims to standardise and reduce asymmetries in sustainability (ESG) related disclosures enabling end-investors to make informed investment decisions. The regulation is applicable to financial market participants operating in the EU or those who market financial products into the EU, requiring sustainability disclosures at both both entity and financial product level. The disclosures are designed to increase transparency on the integration of sustainability risks, the consideration of adverse impacts of investment decisions on sustainability factors and a standardised set of ESG indicators.

Cordiant supports the aims of the SFDR and as a manager of European domiciled funds is subject to the regulation. As such Cordiant will include SFDR disclosures on its website, pre-contractual documents and periodic reports. Cordiant will continue in its efforts to provide more transparency regarding the SFDR and sustainability matters important to the company.

Cordiant Entity Level Sustainability-related Disclosures

A central pillar of Cordiant’s investment approach is the combination of sustainability and responsibility with attractive risk-adjusted returns within Cordiant’s chosen investment sector. Cordiant merges traditional investment approaches with ESG analysis and impact Investing principals to consider both risk mitigation and positive ESG impacts on investment IRRs. Cordiant has a long-standing recognition that ESG risk mitigation and analysis has frequently been of significant financial relevance, recognising the need to identify, reduce and mitigate material risks posed by ESG factors, events and/or conditions. Full details of Cordiant’s approach to responsible investment and the integration of ESG and impact analysis can be found in the respective entities’ Responsible Investment Policies.

Sustainability Risk Integration – Dedicated ESG Risk Management Process

Cordiant seeks to use a dedicated ESG Risk Management Process to assist in the identification, management, and mitigation of ESG risks that may have a material impact on investee companies. The process will, where possible, be implemented as follows:  

  • Phase 1: Identification of Applicable Environmental and Social Laws & Standards
  • Phase 2: ESG and Impact Risk Assessment and Categorisation
  • Phase 3: Environmental, Social and Governance Assessments (including the use of SASB Metrics)
  • Phase 4: Stewardship and Engagement with Investee Company
  • Phase 5: Development of ESG Action Plan ‘ESGAP’
  • Phase 6: Monitoring and Reporting (using SASB Metrics)
  • Phase 7: Annual Review

Sustainability factors are defined by Article 2(24) of Regulation (EU) 2019/2088 as ‘environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.’ Cordiant therefore defines principal adverse impacts of investment decisions on sustainability factors as the most significant negative impacts to environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters arising from activities, events, or conditions from investment decisions. 

While the Cordiant Group considers material sustainability factors in its investment decisions and aims to collect relevant data given the size and sectors of the company it invests in, at the release of this statement the Group does not consider principal adverse impacts as defined by the SFDR regulation. With the adoption of the Regulatory Technical Standard, Cordiant recognises that it might not currently be able to consider and report all applicable PAI indicators, with a challenge at present being the sourcing of reliable information directly from Cordiant’s financial products’ investees or borrowers. Therefore, Cordiant is currently in the process of working towards implementing processes and policies to ensure accurate reporting of indicators.

The Cordiant Group holds firmly the principle that all employees, regardless of age, disability, gender, race, religion or belief, sexual orientation or any other distinction should receive equal pay for the same, or broadly similar, work, for work rated as equivalent and work of equal value. Remuneration is overseen by the Boards of the relevant related entities and is implemented by senior management. Employees’ remuneration includes a combination of fixed (salary and benefits) and variable remuneration (including merit bonuses and profit sharing). While Cordiant does not currently have a remuneration policy explicitly considering sustainability factors, variable remuneration takes into account compliance with the Group’s policies and procedures including its Responsible Investment Policy. Moreover, Cordiant does not encourage short-term risk-taking  that exceeds the level of tolerated risk of the affiliated entities and considers sustainability factors to have an important impact on the risk profile and performance of investments.  

The Group is currently reviewing its remuneration policy in relation to the integration of sustainability risks. 

These statements are consistent across The Cordiant Group, or ‘Cordiant’. ‘The Cordiant Group’ or ‘Cordiant’ refers to Cordiant Capital Inc. (registered as a Portfolio Manager and an Exempt Market Dealer with the Autorité des Marchés Financiers, the Ontario Securities Commission and other Canadian regulators as well as a Registered Investment Advisor with the U.S. S.E.C. and as an Investment Fund Manager in Quebec and Ontario); Cordiant Luxembourg S.A. (regulated as an AIFM by the Commission de Surveillance du Secteur Financier of Luxembourg); Cordiant Digital Infrastructure Management LLP as well as affiliated entities.

Cordiant Product Sustainability-related Disclosures

Article 8 financial products promote environmental and/or social characteristics, provided that the companies in which the investments are made follow good governance practices. Cordiant has two funds, which are no longer being marketed, which are classified as Article 8. Some investment within these mandates being made prior to the SFDR coming into effect.

EM Loans SCS Sustainability related Disclosure Article 10

Cordiant VII Sustainability related Disclosure Article 10

Cordiant VIII Sustainability related Disclosure Article 10

Article 6 financial products do not integrate sustainability into the investment process. Cordiant has one vintage fund that is neither being marketed nor making new investments and that closed before Cordiant’s change in management with ESG and impact becoming a central pillar of the management strategy. As such the fund is classified as Article 6.

Documents

Entity Level Sustainability-related disclosures 210 KB