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Triodos Investment Management

EUR 2.7 billion

In 2014, the Triodos
Investment Management's
total assets under
management increased to
EUR 2.7 billion, a 6% increase
(2013: 15% increase).

  • 100% subsidiary of Triodos Bank
  • Global leader in impact investing
  • EUR 2.7 billion total assets under management
  • Managing 17 funds
  • Active in diverse sustainable sectors; from microfinance to arts and culture

Introduction

Triodos Investment Management, a 100% subsidiary of Triodos Bank with responsibility for the management of the Triodos Investment Funds, is a globally recognised leader in impact investing.

It manages direct investments in a variety of sectors including climate and energy, inclusive finance, sustainable trade, organic farming, organic food and sustainable lifestyle companies, arts and culture, sustainable real estate and listed companies with above average environmental, social and governance (ESG) performance.

Triodos Investment Management manages 17 funds. They invest in Europe and emerging markets with a range of risk-return profiles and financial instruments. Its total assets under management in 2014 grew by 6% to EUR 2.7 billion (2013: 15%).

Private and institutional investors can invest in these funds. The retail investment funds for private investors are distributed by a number of banks, including some of Triodos Bank’s branches. Triodos Investment Management maintains direct relationships with institutional investors, private banks and family offices in the funds under management.

The development and performance of the different funds impact the financial performance of Triodos Investment Management. For this reason a summary of business lines and all relevant funds’ activities, risks and prospects are presented in this report.

Increasing appetite

Triodos Investment Management’s mission is to make money work for positive change. More specifically its aim as an investor is to serve as a catalyst in the transition to an economy where people and planet come first, in line with the vision and mission of Triodos Bank.

Triodos Investment Management is convinced that there is a growing appetite among investors for credible investments that deliver real impact and not just financial results, not least because of continuing growth figures. In 2014 it continued the focus on growing its investor base among mid-size institutional investors, private banks, family offices and high-net worth individuals.

Triodos Investment Management continuously looks for financial solutions to social and environmental challenges. To this end, it has developed a new investment fund, Triodos Organic Growth Fund, which was launched in January 2014. Triodos Organic Growth Fund is a long-term private equity fund that invests in privately-owned sustainable consumer businesses in Europe.

Triodos Bank and Triodos Investment Management have more than 20 years’ experience in investment products that deliver social and sustainable economic change. As a result of this work Triodos Investment Management has become globally recognised as a front-runner in impact investing, producing social, environmental and financial returns.

In 2014 this meant:

  • contributing to a reduction of over 430,000 tonnes of CO2, equivalent to the electricity consumption of 323,000 European households by 630.7 MW of installed clean energy capacity.
  • 83,418 small-scale farmers in 22 countries worldwide were paid directly on delivery of their harvest through trade-finance facilities, bringing 13 different fair-trade and organic products to international markets.
  • the management of EUR 97 million in assets in arts and culture initiatives; projects that reached 2.6 million visitors and provided affordable facilities for 2,144 artists.
  • increasing the quality and sustainability of the built environment through the management of a portfolio of sustainable buildings that emit 60% to 70% less CO2 than the average building.
  • an increase in volume of inclusive finance funds to EUR 633 million. The funds provided finance to 117 emerging and well-established inclusive finance institutions in Latin America, Asia and Africa. These institutions reach 10.7 million low-income people with loans. 8.3 million low-income people use savings services offered by these institutions.

Engaging listed companies

Triodos Investment Management provides opportunities for people and institutions to invest in stock exchange listed companies that meet Triodos Bank’s strictest environmental, social, and governance criteria.

Through these Socially Responsible Investment funds (the SICAV I funds), investors become part of a movement to make some of the world’s largest corporations adopt more sustainable practices. To do this Triodos Investment Management has engaged with 87% of the 287 companies in the Triodos Sustainable Investment Universe in 2014.

As per the end of 2014, the SRI funds managed EUR 1.027 million in assets dedicated to ‘best in class’ and pioneering stock exchange listed companies worldwide, as well as European state and corporate bonds.

Funds performance

The overall increase in total funds entrusted to Triodos Investment Management reflects investors’ appetite for sustainable investments. Worldwide, investors are increasingly opting for meaningful and measurable impact in addition to financial results. This development is of enormous value in the transition to a more sustainable society.

Triodos Investment Management’s total assets under management grew by EUR 149 million to EUR 2.7 billion, a 6% increase (2013: 15% increase) during the year.

The transfer of Ampere Equity Fund to another manager as per 1 January 2014 has reduced the total assets under management by EUR 221 million. This was compensated during the year by solid inflows in the majority of the investment funds, resulting in a net increase of the total assets under management.

The Triodos Sustainable Funds (Triodos SICAV l), which invest in listed companies, experienced marked growth of 53%. The funds passed a notable milestone of EUR 1 billion assets under management in 2014, for the first time. Triodos Fair Share Fund and Triodos Microfinance Fund also realised a significant expansion of 26% and 40% respectively. Triodos Renewables Europe Fund’s assets under management were also up by 7%

The Triodos Organic Growth Fund was launched with an initial fund size of EUR 25.3 million and increased its assets under management during 2014 by 16% to EUR 29.3 million.

The Dutch impact funds Triodos Green Fund, Triodos Culture Fund and Triodos Real Estate Fund experienced a limited decrease in assets under management of 6%, 5% and 2% respectively. Triodos Real Estate was impacted less by negative revaluations than in previous years, resulting in a marginal decrease of assets under management. The fund’s portfolio continues to perform strongly with an occupancy rate of more than 97%. The inflow of new assets under management in 2014 for Triodos Green Fund and Triodos Culture Fund was lower than expected.

Regulations for investment management firms are continuously in development both at a European and Dutch level. In 2014, Triodos Investment Management implemented the regulations of the European “Alternative Investment Fund Managers Directive” (AIFMD). This directive was brought into force from 22 July 2014. From then, Triodos Investment Management became a licensed alternative investment fund manager and submitted a file to the Dutch regulatory authority (Autoriteit Financiële Markten), for pass-porting its AIFM services.

As part of the AIFMD regulation, management companies are required to at least disclose information about their remuneration practices for employees whose professional activities have a material impact on its risk profile. In 2014, Triodos Investment Management committed to the Code of Excellence of the Dutch Fund and Asset Management Association (DUFAS) in which, among other things, transparency about the remuneration policy is addressed. All Triodos Investment Management co-workers are employed by Triodos Bank. Triodos Bank believes good and appropriate remuneration for all its co-workers is very important. The core elements of the international remuneration policy of Triodos Bank are set out in the Principles of Fund Governance.

The American Foreign Account Tax Compliance Act (FATCA) was also implemented in Triodos Investment Management’s operations as well as the European Market Infrastructure Regulation (EMIR). Triodos Investment Management is fully compliant with this new regulatory environment, and has made all necessary adjustments to its operations.

Further streamlining of Triodos Investment Management’s internal operations was also a major priority for 2014, including the introduction of a new core investment portfolio management ICT system.