Triodos Bank’s Executive Board provides a perspective on the wider world it operates in, its impact and activity in 2016 and its prospects for the future.
Triodos Investment Management
In 2016, the Triodos
total assets under
management increased to
EUR 3.3 billion, a 5%
increase (2015: 19% increase).
- 100% subsidiary of Triodos Bank
- Global leader in impact investing
- EUR 3.3 billion total assets under management
- Managing 17 funds
- Active in diverse sustainable sectors; from microfinance to arts and culture
Triodos Investment Management is a globally recognised leader in impact investing and consists of Triodos Investment Management BV and Triodos Investment and Advisory Services BV, both wholly owned subsidiaries of Triodos Bank NV.
Triodos Investment Management manages direct investments in a variety of sectors including energy and climate, 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.
Private and professional investors can invest in these funds. The investment funds for private investors are distributed by a number of banks, including the majority of Triodos Bank’s branches. Triodos Investment Management also maintains direct relationships with professional and institutional investors.
Impact – delivering more than just financial results
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 continues to see an increasing demand from investors for credible investments that deliver real impact and not just financial results, not least because of its own continuing growth. In 2016 it continued to focus on growing its investor base through third party distribution to retail investors, through other banks and Triodos Bank, and professional investors that cater for impact investment solutions for individual investors. In addition, it has further developed its international distribution network and institutional investor base.
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.
In 2016 this meant:
- contributing to a reduction of over 0.9 million tonnes of CO2, equivalent to the electricity consumption of 550,000 European households, by 810 MW of installed clean energy capacity;
- 184,842 small-scale farmers in 19 countries worldwide were paid directly on delivery of their harvest through trade-finance facilities, bringing 12 different fair trade and organic products to international markets;
- that the organically managed land on the farms which Triodos Investment Management financed could produce the equivalent of 7.1 million meals, or enough food to provide a sustainable diet for approximately 6,500 people. Together approximately 8,800 hectares of organic farmland was financed across Europe;
- the management of EUR 97 million in assets in arts and culture initiatives; projects that reached 3.9 million visitors and provided affordable facilities for approximately 1,700 artists, participants and cultural organisations.
- increasing the quality and sustainability of the built environment through the management of a portfolio of sustainable buildings amounting to more than 87,000m2 of office and other commercial space, that emit almost 40% less CO2 than the average for buildings;
- an increase in volume of inclusive finance funds to EUR 857 million. The funds provided finance to 100 emerging and well-established financial institutions working for inclusive finance in Latin America, Asia and Africa. These institutions reach 20.2 million borrowing customers. Approximately 13.7 million people living on low incomes 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 over 467 times with 215 companies in 2016 (2015: 650 times with 280 companies).
Triodos Investment Management’s total assets under management grew by EUR 157 million to EUR 3.3 billion, a 5% increase (2015: 19% increase) during the year. Without Triodos Renewables plc becoming an independent company from Triodos Bank growth would have been 4% higher. As such, and from March 2016, it is no longer managed by Triodos Investment Management.
Triodos Fair Share Fund and Triodos Microfinance Fund realised a significant expansion of 10.4% and 17.1% to EUR 328.6 million and EUR 357.1 million respectively.
Triodos Organic Growth Fund increased its assets under management during the year by 24.7% to EUR 40.6 million while Triodos Renewables Europe Fund increased its assets under management by 14.4% to EUR 73.9 million.
The Triodos Sustainable Funds (Triodos SICAV l), which invest in listed companies, experienced modest growth of 4.1% to EUR 1.347.
Assets under management in the Dutch Triodos Green Fund increased by 14.3% to EUR 773.2 million. Triodos Green Fund was temporarily closed for new inflow of investments as of 15 December 2016 to avoid jeopardizing its fiscal status as a green investment fund by dropping under the 70% limit of approved green investments. The fund reopened for new inflow as per 2 January 2017.
Triodos Culture Fund marginally decreased its funds under management by 0.7% to EUR 97.0 million. Assets under management in the Triodos Real Estate Fund decreased by 2.5% to EUR 66.6 million. The fund’s portfolio, however, continues to perform strongly with an occupancy rate of 92%.
Triodos Multi Impact Fund, the Triodos fund-of-funds, which was launched in December 2015, increased its fund size to EUR 39 million by the year end. The fund enables private investors to invest directly in a mix of Triodos investment funds and impact bonds, meeting the increasing demand for accessible, scalable and daily tradable investment products with a positive impact.
Organisational and Operational developments
As per February 2016 the Management Board of Triodos Investment Management was strengthened with a third Managing Director, adding to the Chair of the Management Board and the Managing Director Risk and Finance.
In 2016 Triodos Investment Management paid attention to several new rules and regulations.
For example the UCITS V Directive and related legislation. UCITS V came into force in March 2016. It is an amendment to the original UCITS directive covering depository safe-keeping and oversight duties, manager remuneration and sanctions. Triodos Investment Management has implemented the additional requirements based upon this Directive.
Triodos Investment Management has started a project to identify and analyze the MiFID II regulation. Based upon the outcome of the analysis it will take necessary measures to comply with this set of rules. In addition, Triodos Investment Management will be in contact with the sub-distributors to assure it is fully implemented.
Furthermore, Triodos Investment Management built on the implementation of European Market Infrastructure Regulation (EMIR). EMIR imposes requirements on all types and sizes of entities that enter into any form of derivative contract. Another part of the EMIR will come into force, concerning the implementation of new collateral rules in the event that new, non-deliverable foreign exchange derivatives are executed. The opportunity was taken to cluster existing and new applied policies and procedures that relate to EMIR regulation with respect to over the counter derivatives (OTC) in a procedural Handbook to ensure EMIR compliance.
As of 1 January, 2016, the Common Reporting Standard (CRS) is in force. CRS requires Financial Institutions like funds in participating CRS jurisdictions to identify and report the tax residency of shareholders/debt providers to the relevant authorities. On-boarding procedures are in place to identify (new) shareholders/debt providers.
There was also a continuing focus on streamlining Triodos Investment Management’s internal operations during the year. In order to further develop a risk management and control framework, Triodos Investment Management initiated the ISAE 3402 project. The project resulted in an ISAE type I report as of 31 December 2016.