Assessing commitment, capacity and track record

Alongside assigning relevant risk ratings to companies based on the inherent ESG risks, impacts and opportunities, it is also important to assess a company’s capacity for ESG management.

The questions in the questionnaire relate primarily to a company’s ability to assess and manage environmental and social (E&S) risks and opportunities. Their commitment, capacity and track record (CCTR) are all leading indicators of its ability to achieve and maintain compliance with E&S requirements and importantly their ability to see where E&S performance can drive business value and opportunity.

The structure of this questionnaire is such that it can be used as part of due diligence and it focuses on the internal processes, practices, capacity and accountabilities that underpin the successful assessment and management of E&S issues.

Together with the findings of the general and technical due diligence, assessing company’s capacity will help to identify the main ESG-related follow-up actions, opportunities and challenges for the fund to consider/address.