The Emerging Markets activities consist of the management of internationally operating funds that invest in emerging markets in Latin America, Africa, Asia and Eastern Europe.
The inclusive finance and sustainable trade funds’ goal is to contribute to the development of inclusive financial sectors in developing countries. Inclusive financial systems improve lives by providing financial services in a transparent and responsible way, encouraging trade in certified fair trade and organic products, and stimulating sustainable agriculture. Triodos Investment Management believes that access to financial services plays a crucial role in reaching global sustainable development goals.
The emerging market funds collectively grew by EUR 76 million in 2012, an increase of 19.3% to EUR 469 million.
The activities of the Triodos Fair Share Fund, Triodos SICAV II – Triodos Microfinance Fund, Triodos Sustainable Trade Fund, Stichting Triodos-Doen, Stichting Hivos-Triodos Fonds and Triodos Renewable Energy for Development fund, are all managed from the Triodos Investment Management offices in the Netherlands.
Combined total assets under management in inclusive finance were EUR 442 million, up by 22.1% compared to 2011.
The four Triodos inclusive finance; Triodos Fair Share Fund, Triodos SICAV II – Triodos Microfinance Fund, Stichting Triodos-Doen and Stichting Hivos-Triodos Fonds financed 99 microfinance institutions and banks, operated in 45 countries in 2012. These institutions reach over 6.9 million low-income clients with loans (2011: 7.9 million). 65% of these are women. 6.4 million people with served with savings products (2011: 7.5 million), of which 48% live in rural areas.
Portfolio Triodos Microfinance Funds
31 December 2012
The four Triodos inclusive finance funds hold equity stakes in 17 leading and innovative microfinance institutions and vehicles worldwide (2011: 19). Senior Triodos Bank co-workers sit on the Board of Directors, sharing valuable knowledge and expertise in sustainable banking.
Sustainable Trade Finance
Triodos Sustainable Trade Fund provides trade finance to cooperative and private agricultural exporters in developing countries, producing certified organic and/or fair trade products.
By the end of the year, the fund’s volume of trade finance transactions had decreased by 21.9%% to EUR 20.3 million. In total 31 loans were made benefiting 18 cooperative and private exporters, producing 12 different agricultural products in 19 countries, including coffee, cotton, cocoa, olive oil, cashew nuts and honey.
Triodos Sustainable Trade Fund receives most of its funding from a credit facility provided by Triodos Bank, which is partly secured by guarantees from Dutch and international governmental and non-governmental organisations.
The renovation of coffee plantations is critical because 60% of all plantations in South America are in their final production phase. Overall yield levels are declining as a result and production levels may fall significantly in the coming years. This means that sources of income for coffee farmers, in particular for small-scale farmers, is at risk. Faced with this prospect, Associacion Aldea Global Jinotega (Aldea Global) in Nicaragua has developed ‘Ecoforestral’, a gradual renovation programme to increase yield in the medium and long-term while safeguarding the annual income of small-scale farmers in the first years of the programme. At the same time, the plantation will be restructured according to an eco-friendly design.
Diédericks Aldea, Finance Manager at Aldea Global: “The biggest challenge for small-scale coffee farmers who are considering renovating their coffee plantations is that they have to wait more than three years before they have any income. Hivos-Triodos Fund bridges this gap by having provided a loan.”
Prospects in Emerging markets
We foresee a continuing growth of the inclusive finance funds in line with current trends.
A transformation of Triodos Sustainable Trade Fund is planned in 2013 to allow investors to participate in the financing of sustainable agriculture and trade.