Our financed emissions

For a second year we assessed 100% of our assets using the PCAF methodology. Guided by PCAF's Global GHG Accounting and Reporting Standard for the Financial Industry and in collaboration with the PCAF consulting team from Guidehouse, we defined our reporting and measurement principles as follows:

• While GHG emissions include more than just carbon, we use the latter as shorthand for GHG emissions in our reporting GHG emissions are measured in tonnes CO₂ eq. and categorised as three main types:

  • Generated emissions: GHG emissions arising from various economic activities. This refers to carbon that is emitted into the atmosphere.

  • Sequestered, or absorbed, emissions: GHG emissions stored in carbon sinks, such as trees, plants and soil etc. This refers to the actual removal of carbon from the atmosphere.

  • Avoided emissions: GHG emissions that are avoided from fossil-fuel power generation due to renewable energy. While avoided emissions play a very positive role, they do not remove existing carbon from the atmosphere. That is why we present these avoided emissions in our graphs and tables, beneath actual emissions. And it is important to note that our avoided emissions figures will, eventually, start to decline, even as the amount of energy generated by the renewable energy projects we finance increases. This is because the wider energy system is in the process of becoming less carbon-intensive overall. Energy from fossil fuel sources is, and will, continue to decline while energy from renewable sources is increasing, creating a more sustainable energy system.

• With our financed emissions we have applied the attribution approach. This means that we calculate the emissions as they relate to the proportion of our finance in a project or on a customer's balance sheet. For example, if we are responsible for half of a project’s finance, we report half of the emissions generated or avoided by that project. This attribution approach is a more accurate reflection of Triodos Bank’s responsibility for the GHG emissions it finances and is consistent with the PCAF methodology. In 2020 we have also applied this attribution approach to our residential mortgage portfolio by using the loan-to-value ratio. This is in line with the new global PCAF standard.

• We aim to improve the overall data quality level of our carbon footprint measurements every year,in order to improve our insights and better steer on targets (see 'Target setting: hitting the target without missing the point'). The overall data quality this year stayed stable at 3.1 on a five-point scale. The levels of data quality are defined in the table ‘data quality’.

• In our 2020 review we have identified some consolidation differences in the reported attributed emissions of 2019, resulting in higher net emissions. We have restated these 2019 figures in this report.

The year 2020 has proven to provide an unexpected challenge regarding the appearance of COVID-19, which has impacted energy use and GHG emissions globally. Preliminary insights show that overall energy demand has decreased in 2020. The decline in energy demand in industrial and commercial operations has outweighed the increase in demand in residential operations. The analysis of effects of COVID-19 is at this stage not reflected in the emission factors for 2020, as detailed quantitative information per sector is currently not available to perform an accurate impact analysis.

The GHG emissions that can be attributed to Triodos Bank's loans and direct fund investments in 2020 are presented in two graphs and a more detailed table in this chapter.

The first graph shows our portfolio’s emissions in ktonne CO₂ equivalent. The second graph shows the intensity of Triodos Bank’s GHG emissions per billion euro lent and invested. It provides stakeholders with an indication of the impact of our finance on generated, sequestered and avoided emissions that could be compared across financial institutions.

Climate impact of our loans and investments
(in ktonne CO₂eq. 2020)

Climate impact in emission intensity 2020
(in ktonne CO₂eq./billion EUR financed)

In 2020, approximately 372 ktonne CO₂ eq. in emissions were generated by loans and funds' investments covered in this climate impact measurement. This amount has been netted for 3 ktonne CO₂ eq. sequestered emissions from the organic farming sector. The increase in generated emissions compared to last year (2019: 317 ktonne CO₂ eq, restated figure) is mainly due to increased investment volumes in the Impact Equities and Bonds Funds (IEB funds) and higher outstanding in the sector 'Care for the elderly'. Use of the attribution approach for residential mortgages has resulted in lower attributed emissions and a lower emission intensity for this portfolio.

Triodos Bank also finances forestry and nature development projects. This resulted in the sequestration of approximately 14 ktonne CO₂ eq. (2019: 24 ktonne CO₂ eq.), equal to at least 316,000 mature trees and enough to compensate the emissions from the farming sector. The decline compared to last year is due to some repayments in the nature development sector.

The renewable energy and energy saving projects that we finance avoided over 933 ktonne of CO₂ eq. emissions as compared to fossil-fuel power generation (2019: 963 ktonne CO₂ eq., restated figure). This is equal to the avoidance of emissions of over 5.7 billion kilometres travelled by car. The decline compared to last year is primarily due to the application of new emission factors, which has had a negative effect on avoided emissions mainly in The Netherlands. To align with the Science Based Targets initiative (SBTi), we have applied differently sourced (IFI GHG methodology) emission factors.

The number of power-generating projects we finance in Europe and in emerging markets increased by 46 to 484 in 2020. Also, the total electricity production of our financed projects increased, as 2020 has been a good wind year compared to former years, while the hydro power-generating projects profited from wetter conditions.

Overall, the results clearly indicate that financing a sustainable economy for many years has resulted in substantial avoided emissions relative to our generated and sequestered emissions.

The next table provides the GHG emission data of our finance per sector, in both absolute and relative (emission intensity) terms and shows the data quality score for each item.

We will continue to report the climate impact of our own operations and of our loans and funds’ investments in the future. We hope to further improve the quality of this data, the methodology that underpins it and, therefore, the accuracy and relevance of our reporting.

Climate impact of our loans and funds’ investments