CDP - At the Forefront of Sustainable Finance for Greater Positive Impacts

Interview with Manuela Carra, Head of Finance at Cassa Depositi e Prestiti (CDP)

Excerpt from the bachelor’s thesis of Giovanni Silvestri, The ESG Revolution, redefining corporate value and shaping the future economy, submitted to the Department of Business & Management of ESCP Business School (April 2024)

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Could you explain how CDP's strategy prioritizes sustainable projects in alignment with the Italian National Recovery and Resilience Plan and the UN's 2030 Agenda?

Certainly. Our approach focuses on areas with the highest potential for positive impact on the Italian economy. These areas include combating climate change, fostering inclusive and sustainable growth, promoting digitalization and innovation, and rethinking value chains. All these are in line with the Italian NRRP and the UN's 2030 Agenda. This is not just a commitment on paper; our governance and operations have been adapted to assess the ESG impacts from the outset, ensuring our business model aligns with our sustainability mission.

CDP has implemented a Sustainable Development Assessment model. How does this model integrate with traditional risk assessments, and what does it add to the decision-making process?

The SDA model complements the traditional analysis of risk, financial, legal, and compliance aspects by giving an ex-ante evaluation of all positive and negative ESG impacts of each potential operation. This means that before we even commit, we're considering the sustainability of the industry, governance, strategy, reporting, and conduct related to ESG aspects. It's a thorough approach that ensures we are not just funding projects but advancing a sustainable future.

Regarding CDP’s achievements with the Strategic Plan, can you give us a concrete example of how your financial instruments are supporting sustainable projects?

One example is the disbursement of a €35 million loan (CDP share) to ReLife, which is active in the circular economy, funded through the 2023 Green Bond's proceeds. This investment plan is geared towards achieving zero landfill, which showcases our direct involvement in projects that make a significant environmental impact.

Can you talk more about CDP's updated ESG framework and how it reflects the latest sustainable finance market developments?

Our recently updated Green, Social, and Sustainability Bond Framework from December 2023 takes into account both our sustainability strategy and the evolving market expectations. We've expanded the Eligible Categories and reviewed the Eligibility Criteria, particularly aligning some Green Categories with the EU Taxonomy's Substantial Contribution Criteria to Climate Change Mitigation. This reflects our dedication to not only being compliant with current standards but also leading by example in the sustainable finance market.

Sustainability-linked financial products are innovative but can be complex. Could you simplify how CDP's Sustainability-Linked Repo works and its significance?

Our Sustainability-Linked Repo is unique in Europe and ties CDP’s ESG performance to the financial terms of the transaction. It's a funding instrument that incentivizes us to meet predefined ESG rating targets, which effectively means our cost of capital is directly linked to our sustainability performance.

How does CDP approach the creation of positive externalities and ensure these are maximized in its projects?

We aim to drive capital towards systematic transition by leveraging our unique role to catalyze additional resources. This means engaging with a broad range of stakeholders to amplify the positive impacts on the environment, economy, and society. For instance, in our ESG bond issuances, we align the project categories with the Social and Green Bond Principles to ensure the capital is truly advancing sustainable initiatives.

With the Corporate Sustainability Reporting Directive coming into play, how is CDP preparing to meet these enhanced reporting obligations?

We're strengthening our reporting practices in anticipation of the CSRD implementation. The preparation of our Integrated Report, now in its fourth edition, reflects our commitment to transparency and detailed disclosure of non-financial impacts, aligning with the robust reporting obligations under the CSRD.

Finally, how does CDP's internal culture reflect its public commitments to sustainability and ESG principles?

Our commitment to sustainability permeates our entire organization. This is evidenced by our ESG ratings and achievements, such as the Gender Equality Certification. Internally, we've conducted around 90,000 hours of training focused on these areas, with a significant increase in women holding positions of responsibility. Additionally, our employees actively engage in volunteer work, showcasing our dedication to local communities and social impact.

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