Development finance must include risks

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Global Justice Now
The government owned and funded CDC Group promises a carbon neutral investment portfolio by 2050.

We invest where others don’t. 

The CDC Group is the UK’s publicly owned impact investor and development finance institution. We are funded by the UK government with a mandate to invest in private companies to help tackle some of the world’s biggest global development challenges, including climate change. 

All of our investment is in Africa and South Asia to support the growth of responsible companies and technologies that will help countries leave poverty behind.

Read: Polluting investments not in our name

Daniel Willis, of Global Justice Now, in an article for The Ecologist on 19 November, accuses CDC of investing in polluting companies and disregarding human rights.


CDC is actually leading the fight against climate change. We have invested over $1 billion on climate finance and renewable energy in the last three years and a third of our total investment funds will now go into the fight against climate change.

Our new climate change policy aligns us with the Paris Agreement to limit global temperature rises. Our portfolio will be carbon neutral by 2050.

We also recognise that as an organisation that was founded 71 years ago, there are historic investments in our portfolio that we would not make today.

I don’t think anyone should be surprised by this and neither do I think we should be judged negatively for it, given that these investments do not in any way represent our priorities as an organisation today.

We will divest of them in due course, but a fire sale of these assets will simply pass the problem onto a new owner that would care less about the environment than we do. In other cases these assets are owned through funds which makes them legally hard for us to sell.


Our investee companies are playing key roles in supporting truly sustainable economies.

Like Zephyr Energy, an investee wind power company that is restoring mangrove swamps in Pakistan as a way of protecting the local environment against climate change.

Or 14Trees, a Malawi-based business that is building schools in a matter of days using 3D printing technology.

I have countless other examples of our investee businesses that are transforming people’s lives in the regions of the world where impact investment is so desperately needed.

CDC has investments in well over 1,200 companies in total. Mr Willis cites a single one of those investments, Feronia, a palm oil business (a crop indigenous to the region) in the Democratic Republic of the Congo (DRC) in his article.


We invest where others don’t. 

When CDC originally invested in the company in 2013 it was a broken shell of a business – abandoned by its previous owner, and the surrounding populations were suffering from the diminution of the only significant economic activity in the areas.

The business operates in extremely remote regions of the DRC - arguably one of the poorest countries in the world - locations that pose unique challenges to the running of any successful venture.

Since 2013 over $7 million has been spent on improving educational and healthcare facilities and providing clean water to the 90,000 people in the communities that rely on the company as the sole source of formal employment.

Wages have more than doubled. Production has risen by over 500 per cent. When CDC first invested in Feronia, workers went out into the fields barefoot with no protective equipment. They now have full PPE kit.

Mr Willis’ accusation that a company manager has reintroduced whipping is utterly without merit.

Action plan

In fact, Groupe d'Action pour Sauver l'Homme et son Environnement (GASHE), a respected DRC-based NGO, found that no grievances had been lodged with the company and, after extensive engagement with local communities, uncovered no mention of any whipping incident in any circumstance either inside the plantations or in the community.

We are on record as accepting that much more needs to be done to further improve worker pay and conditions at Feronia.

Because of a prolonged slump in the price of palm oil and the company’s precarious financial position, the funds were simply not there to bring about change at the pace we would have ideally liked. Yet significant positive changes have been made and will continue to be made.

To that end, we have just announced that KKM, an African investment company, is to inject a further $15 million into the business and become its majority shareholder. CDC will remain a lender to the company. The financial restructuring, which has avoided the company entering bankruptcy, gives the business the best possible chance to become truly sustainable.

An environmental and social action plan (ESAP) has also been put in place.


This plan sets out in detail the steps that will be taken by the company management, with the support of the DFI lender, to enhance worker pay and conditions, work in partnership with local communities and maintain and improve environmental standards, such as those raised by Human Rights Watch – a highly regarded campaigning organisation.

The ongoing Independent Complaints Mechanism (ICM) mediation process, for those communities that have expressed concerns about Feronia, will continue with the support of KKM, CDC and the other DFI lenders.

CDC invests in some of the toughest environments in the world. We are asked to take risks in order to achieve impact.

The nature of what we do is inherently risky. War, extreme weather, market crashes and pandemics and much more besides, make our job – and more significantly – the jobs of businesses in those markets incredibly difficult.

Sometimes we make mistakes. Investment decisions do not always pan out as we would have liked. But this is part of the job we’re asked to do. If things did not go wrong in our portfolio we would rightly be accused of playing it too safe.


We invest where others don’t – places like the remote parts of DRC where there are no roads connecting a business to the rest of the vast country; where getting equipment to the sites often take months and where government and all the public services we might expect are largely absent: no healthcare, no schools, no housing, no fresh water. All have to be provided by the company.

At CDC, we have absolutely no problem being criticised where it is merited.

At the end of the day, we have the same motivations as the groups that sometimes criticise us – namely, to bring about positive environmental, economic and social change in the countries in which we invest.

We may beg to differ about the solutions to bring about that change, but a robust debate on the subject is always to be welcomed.

All I would ask is that campaign groups spend time examining the facts - complex as they often may be - as well as visiting the communities they seek to represent, rather than assuming they speak on their behalf by seeking attention grabbing headlines.

This Author

Nick O’Donohoe is the chief executive of CDC Group.