Statement of institutions with a participating interest of 3% or more
This report of the Board of SAAT accounts for the Board of SAAT’s voting and activities in 2019.
This report is integrated within Triodos Bank N.V.’s annual report 2019. However, the Board of SAAT does not view Triodos Bank N.V.’s annual report prior to publication. This ensures that depository receipt holders and the Board of SAAT have access to this information simultaneously. As a consequence, this Board of SAAT report does not include an assessment of Triodos Bank’s 2019 annual report. The Board of SAAT will account for its voting regarding the Annual Accounts and annual report of Triodos Bank N.V. 2019 at the Annual General Meeting (AGM) and Depository Receipt Holder Meeting on 15 May 2020. An explanation of the vote will be given at the AGM where depository receipt holders will have the opportunity to ask questions about the explanation.
The Board of SAAT observed during 2019 that Triodos Bank was challenged to realise its mission and ambition in a healthy balance between impact, risk and return. The increasing call to Triodos Bank to create impact and the macro-economic developments and increasing regulatory costs might strain Triodos Bank towards the limits of its business model.
Triodos Bank’s annual report 2018 and the half year report 2019 reflect the Executive Board’s view on developments in society and in the financial sector and their strategic, tactical and operational actions to maintain healthy financial results and increase Triodos Bank’s impact.
Regarding the developments in society the Executive Board highlights increasing imbalances in society. These imbalances are based on highly interrelated problems, which call on Triodos Bank to increase its efforts to realise its mission and ambition.
Regarding the developments in the financial sector the Executive Board articulates the difficult macro-economic environment and its clear responsibility to comply with – and to pro-actively implement all regulatory requirements while maintaining a healthy cost-income ratio.
In the context of these developments the Executive Board has refreshed its strategic approach. Triodos Bank’s focus areas have been re-articulated supported by position papers which show the long lasting commitment with these focus areas.
Voting in 2019
General Meeting 17 May 2019
The Board of SAAT exercised the voting rights at Triodos Bank’s AGM which took place in Utrecht on 17 May 2019.
The Board of SAAT approved the following proposals:
- adoption of the 2018 Annual Accounts and the proposed dividend;
- discharge of the members of the Executive Board of responsibility for their management during the financial year 2018;
- discharge of the members of the Supervisory Board of responsibility for their supervision during the financial year 2018;
- appointment of Mr Mike Nawas as member of the Supervisory Board;
- indemnification to the members of the Supervisory Board and Executive Board; and
- granting a power of attorney to the members of the Executive Board to obtain depository receipts in Triodos Bank and to issue shares and to exclude or limit pre-emptive rights.
The approval is based on the assessment of the annual report 2018 taking into account the introductory remarks above and taking into account the following paragraphs regarding mission, economic rights of the depository receipt holders and the independence of the bank. The annual report 2018 accounts for the policy of the Executive Board and the supervision of the Supervisory Board in 2018.
Regarding SAAT’s policy to safeguard the mission, the Board of SAAT paid more specific attention to:
- The observations of the Executive Board regarding developments in society because these observations give context to the challenges for Triodos Bank’s mission to improve human dignity at its core. The Board of SAAT wants to understand the developments the Executive Board identifies as pivotal for the realisation of Triodos Bank’s mission and for the strategic choices of the Executive Board as a consequence of that. The Board of SAAT challenged these observations internally in the context of its view on societal developments relevant for the mission of Triodos Bank; specifically regarding the increasing imbalances. This view of the Board of SAAT on developments is that society – individuals and institutions – struggle to unite and to combine forces to bridge increasing gaps. In its 2018 report, the Board of SAAT referred to these gaps in society (see report 2018). The diverging tendency in society would benefit from an integrated approach. The Board of SAAT challenged the strategic refreshment of Triodos Bank from this perspective. Whilst focussing on three clear areas which support human dignity and social renewal from and integrated approach the Board of SAAT welcomes this strategic approach and will critically follow the outcomes of its implementation.
- The Executive Board’s strategic approach: Triodos Bank focusses at three strategic perspectives; on products with a purpose, on an agile way of working and on delivering a modern online environment that puts relationships first. The rationale of these perspectives was clear to the Board of SAAT. We cannot yet observe the effect of the implementation of this strategy which started in 2019. Its impact will be shown in future results.
- Redefining focus areas as part of the strategy: Triodos Bank redefined its impact focus areas on social inclusion, food and agriculture and energy and climate. The Board of SAAT adheres to the rationale of these focus areas since in the area of energy and climate and in food and agriculture Triodos Bank is highly experienced and has gained front running knowledge. Regarding social inclusion Board of SAAT welcomes the ambitions of Triodos Bank. Its integrated approach to the societal issues should enable the bank to contribute to these topics significantly. Triodos Bank committed to deliver position papers on these focus areas which will help guide it in its activities in these areas.
- During 2019 Triodos Bank delivered two position papers; ‘Triodos Bank’s vision paper on food and agriculture systems’ and ‘Towards a low carbon economy. Triodos Bank’s vision paper on energy and climate’. We value these developments and will closely follow the implementation of these visions and how they translate into the strategy of the bank.
- Impact reporting: Triodos Bank announced the implementation of a more in-depth method to do this. The Board of SAAT invites Triodos Bank to set impact goals in order to articulate its ambition to realise its mission.
- The various activities of the banking entities including Triodos Investment Management: The Board of SAAT observes a diverse spectrum of loans and in the investment portfolio in the various countries where Triodos Bank operates. The cause of this variety is clearly linked to the local context. The transition of Triodos UK from a branch to a subsidiary implies that depository receipts will no longer be traded in the UK.
- Triodos Bank as a frontrunner in responsible finance: Among its ongoing activities, which can be derived from announcements on various platforms like the Sustainable Finance Lab, Triodos’ website and the website of the GABV, Triodos Bank contributes to the debate in the financial sector about how to create a more responsible financial system in, for example, the context of the Sustainable Finance Lab and the PCAF initiative and the reporting that comes from it.
- Stakeholder dialogue and materiality matrix: SAAT would welcome Triodos Bank to give more information on the various stakeholder interactions and their results on Triodos Bank’s strategy and policy.
The economic rights of the depository receipt holders.
Regarding SAAT’s policy to safeguard the economic rights of the depository receipt holders in the context of the financial interests of Triodos, the Board of SAAT payed more specific attention to:
- a decline in Triodos Bank’s financial performance as reflected in the various parameters of return on equity, net profit per share, the cost income ratio and the BIS ratio, as described in Triodos Bank’s Annual Accounts 2018 and in the half year report 2019.
- Concerns regarding the mid-term profitability. The Board of SAAT would like to know the perspective on the financial performance given the current circumstances and that it is in line what is realistically and sustainable possible in these circumstances.
- The increased loan to deposits ratio. This increase shows that Triodos Bank is able to support projects within the areas of Triodos Bank’s focus and therefore should contribute to increasing the impact of Triodos Bank.
- Triodos Bank’s strategic/ tactical approach towards increasing fee income and increasing integrated operational activities across all its country operations, as described in Triodos Bank’s Annual Accounts 2018 and half year report 2019.
- The risk appetite paragraph which shows a consistently prudent risk approach.
- The transfer from Dutch GAAP to IFRS, and the effect on the buying and selling and the price of the Depository Receipts. Triodos Bank suspended its buying and selling of depository receipts from 4 June until 3 July. Through the half year report 2019 Triodos Bank informed the Board of SAAT about the impact of Triodos Bank’s decision to transfer from Dutch GAAP to IFRS accounting standards, the implementation of this decision and its effects on the share/ depository receipt price and on the effect on buying and selling. With the perspective of the three principles that guide the Board of SAAT’s execution of its voting rights, the Board of SAAT sought external advice on two questions in order to be able to assess if Triodos Bank did respect the economic rights of the depository receipt holders:
- The prudence of the decision to change accounting policies from Dutch GAAP to IFRS;
- Did Triodos Bank disclose this decision in a timely and prudent way including the consequences of this decision to its relevant stakeholders, particularly to the Board of SAAT and to the depository receipt holders.
Based on the information it received the Board of SAAT came to the conclusion that Triodos Bank did respect the economic rights of the depository receipt holders. In the current banking environment, the change of accounting standards from Dutch GAAP to IFRS is a prudent decision. The effect of that decision was disclosed as early as it could have been to the depository receipt holders.
Triodos Bank’s independence
Regarding SAAT’s policy to safeguard Triodos Bank’s independence the Board of SAAT paid more specific attention to the strategic, tactical and operational goals. These goals aim to increase the integration between impact, risk and return. As set out in the sections regarding mission and economic rights, the Board of SAAT challenged the Executive Board and Supervisory Board to set clear impact goals supported by coherent impact reporting and would welcome an enhanced accountability regarding stakeholders.
Appointment of Mr Nawas
The Board of SAAT wholeheartedly approved the appointment of Mr Mike Nawas as a member of the Supervisory Board. Mr Nawas was previously a member of the Board of SAAT.
He stepped down from this role in April 2019.
The approval is based on the assessment of the nomination in the context of the generic profile of the Supervisory Board and more specifically the competence matrix of the Supervisory Board. The Board of SAAT interacted with Mr Nawas on his nomination more specifically on:
- the continuity of Triodos Bank over the mid-term;
- the increasing call to Triodos Bank to contribute significantly to human dignity in terms of social inclusion;
- the contribution of the Supervisory Board to the continuity of Triodos Bank and to the implementation of the strategy of Triodos Bank.
The Board of SAAT has been able to observe over the years by working with Mr Nawas a clear connection with the mission combined with a very mature experience as a banker and as a board member.
For details on the approved proposals visit www.triodos.com/agm, where a webcast from the General Meeting is also available.
Annual Meeting of depository receipt holders
The Annual Meeting of depository receipt holders was also held on 17 May 2018 in Utrecht. This formal meeting followed a series of informal meetings with depository receipt holders in the countries in which Triodos Bank operates. The Board of SAAT articulated the rationale underlying its voting decisions as set out in the section “Decisions at the General Meeting” and entered into relatively free-format dialogues with depository receipt holders.
The Annual Meeting of depository receipt holders approved the appointment of Mercedes Valcarcel as a member of the Board of SAAT.
Voting at the Extraordinary Shareholder Meeting 13 December 2019
The Board of SAAT exercised the voting rights at Triodos Bank’s Extraordinary Shareholder Meeting which took place in Zeist on 13 December 2019.
Appointment of Mr D’Hondt
The Board of SAAT approved the proposal of the Supervisory Board to appoint Mr Sébastien D’Hondt as a member of the Supervisory Board.
The approval is based on the assessment of the nomination in the context of the generic profile of the Supervisory Board and more specific the competence matrix of the Supervisory Board. The Board of SAAT interviewed Mr Sébastien D’Hondt twice, focussing on:
- the adherence of the mission of Triodos Bank and the relation of Mr Sébastien D’Hondt towards human dignity and social renewal;
- interpretation of Mr Sébastien D’ Hondt of the various key parameters for Triodos Bank’s performance. More specifically, his perspective on the context of Triodos Bank’s ambitions and its approach to impact, risk and return;
- interpretation of Mr Sébastien D’Hondt of the strategic approach of Triodos Bank regarding its current challenges and, more specifically, his approach towards innovation in the banking environment.
The Board of SAAT observed a clear willingness to contribute to the mission of Triodos Bank from the perspective of an experienced banker, used to working in the area of innovation in the financial sector.
Activities/meetings of the Board of SAAT
During 2019, the Board of SAAT convened:
- with The Executive Board to discuss the annual report and Annual Accounts 2018, as set out in paragraph “Decisions at General Meeting” of this report (1 April 2019).
- with the Supervisory Board, together with an Executive Board guest, to discuss the annual report and Annual Accounts 2018, as set out in paragraph “Decisions at General Meeting” of this report (1 May 2019).
- with the Executive Board to discuss the half year figures 2019 and impact of the transition from Dutch GAAP to IFRS accounting. The Board of SAAT reports in a sub section of this report on the “Impact of IFRS”. The assessment of the half year figures will be integrated in the reporting on the Annual Accounts and annual report 2019 at the AGM 2020 and in the SAAT annual report 2020. The recruitment of SAAT member(s) was also discussed and a decision taken to approve the nomination of Mr. Sébastien D’Hondt.
- with the Executive Board and Supervisory Board on an educational initiative to explore the governance of Triodos Bank, roles, responsibilities and social renewal. This was an historical, legal and purpose-oriented education with specific contributions from Professor Mr Geert Raaijmakers and the interactive contribution of all participants (4 October 2019).
- with the Executive Board to discuss stakeholder interaction at Triodos Bank, evaluate the education initiative above, recruit new Board of SAAT member(s) (17 December 2019) and topics related to depository receipts and capital.
The three Chairs of Executive Board, Supervisory Board and the Board of SAAT convened on three occasions. In these meetings topics were discussed which effect the overall value creation of the three boards; evaluation and preparation of the General Meeting(s) and client meetings at the Triodos Bank’s country operations; stakeholder interaction; alignment regarding representation at various meetings; and preparation for the three boards’ education above.
The Board of SAAT participated in various client/ informal depository receipt holder meetings at Triodos Bank in Spain, the UK, Belgium and The Netherlands.
Composition of the Board of SAAT and independence of its members
SAAT’s articles of association stipulate that the Board of SAAT shall consist of three or more members. At present, it has five members, from the various countries where Triodos Bank operates: one Belgian, one German and three Dutch nationals. The composition of the Board of SAAT changed in 2019 because of the appointment of Mercedes Valcarcel by the Annual Meeting of depository receipt holders of 17 May 2019.
For information about the remuneration of the members of the Board of SAAT, please refer to the Triodos Bank Annual Accounts.
The Board of SAAT expects that it will again be able to deepen its role as a committed shareholder in 2020. Maintaining and intensifying a dialogue between Triodos Bank, the Board of SAAT and the depository receipt holders is an essential part of this effort. It will undertake this work during the General Meeting and at meetings of depository receipt holders in The Netherlands, Belgium, the UK, Spain, Germany, and at an additional meeting in The Netherlands, where informal meetings for depository receipt holders will take place. Its perspective and fulfilment of its role will also be informed by the interests of a wider group of stakeholders.
Triodos Bank’s constitution reflects a clear choice to issue all shares to an independent Foundation in order to safeguard the mission of the Bank. As a consequence of that the Board of SAAT upholds the following principles in exercising its voting rights:
- safeguarding Triodos Bank’s mission;
- safeguarding Triodos Bank’s independence and continuity;
- safeguarding the economic interests of the depository receipt holders and balance this with the interests of the economic interests of Triodos Bank.
SAAT has defined its vision on how to fulfil its role guided by these principles. This vision is published at triodos.com.
Because of its independence and the principles guiding its voting rights, there is an ongoing dialogue in the Board of SAAT itself about societal developments and their relevance for Triodos Bank. Based on its observations and this internal dialogue the Board of SAAT challenges the Supervisory Board and the Executive Board on its strategy and implementation as reflected by the annual report. The Board of SAAT gives its opinion on the Executive Board policy and the Supervisory Board supervision by executing its voting rights at the AGM.
The Role of SAAT in the Corporate Governance of Triodos Bank
All shares of Triodos Bank are held by SAAT. SAAT issues depository receipts to finance the shares. Depository receipt holders benefit from the economic rights associated with these shares, such as the right to dividends, but do not exercise the voting rights related to the shares. Voting rights are vested in SAAT. A more detailed description of the corporate governance structure of Triodos Bank, and the rights and responsibilities of SAAT and the depository receipt holders, can be found in the chapter on corporate governance, on page 59 of this annual report.
SAAT fulfils its role according to its policy as described in the document “SAAT’s vision on fulfilling its role” which can be found at www.triodos.com/corporateinformation.
For an overview of the shares taken in trust and the issued depository receipts of Triodos Bank, as at 31 December 2018, please refer to page 215 of this annual report.
Zeist, 18 March 2019
Board of SAAT,
Josephine de Zwaan, Chair
Willem Lageweg, Vice-Chair
SAAT’s registered office is Nieuweroordweg 1,
3704 EC, Zeist, The Netherlands.
This report is available in full, including additional context for the Board of SAAT’s work, online at www.annual-report-triodos.com.