The improved quality and growing size of the loan and investment portfolio are important indicators of the contribution Triodos Bank makes towards a more sustainable economy. All the sectors it works in qualify as sustainable and the companies and projects it finances contribute to delivering Triodos Bank’s mission.

To make sure that Triodos Bank only finances sustainable enterprise and enterprises transitioning to sustainable approaches, potential borrowers are first assessed on the added value they create in these areas. The commercial feasibility of a prospective loan is then evaluated, and a decision made about whether it is a responsible banking option. The criteria or guidelines Triodos Bank uses to analyse companies can be viewed at www.triodos.com and www.triodos-im.com for investment management.

Triodos Bank’s focus remains on the existing sectors in which it has already developed considerable expertise and where it considers more growth, diversification and innovation is possible.

Impact, risk and return

Traditionally, banks have focused on risk and return, primarily to avoid negative outcomes, and to enable investors to understand the performance of the institution. But when an institution sees its main goal as maximising returns to shareholders, risk and return are often viewed in a short-term context. This neglects the company’s wider relationship with – and effect on – society and the environment. Triodos Bank uses three parameters – impact, risk and return – to understand its overall development and place in the world. This promotes a long-term perspective. The focus on delivering sustainable social, environmental and cultural impact as well as risk and return implies a positive, holistic outlook and a horizon that is inherently longer term.

Impact: We want to deliver sustainable impact. When we talk about ‘impact’, we are concerned with what our actions, in particular financing and investing, mean to people in concrete terms. Impact means delivering positive outcomes, not only at a transactional level but also at a social and ecological system level.

Risk: Because our starting point is to deliver greater impact over the long term, it is essential that we are financially resilient. We therefore focus on maintaining a consistently high-quality loan portfolio. Triodos Bank’s modest risk appetite is an important building block for this resilience.

Return: We have been able to deliver stable, fair returns over a sustained period. For us, financial performance is important because being a resilient financial institution is essential for the delivery of lasting, sustainable change.

Environment 29% (2019: 31%)

The subsector ‘Energy and Climate’ consists of renewable energy projects such as wind and solar power, hydro-electric, heat and cold storage, and energy-saving projects. It also includes environmental technology projects, for instance through recycling companies.

Within the subsector ‘Sustainable Property’ we finance new buildings and renovation projects to reach high sustainability standards. It also includes nature-conservation projects.

The subsector ‘Sustainable Food and Agriculture’ also includes organic agriculture and projects in Europe and emerging markets, across the entire agricultural chain – from farms, processors, wholesale companies and sustainable trade to natural-food shops.

Social 22% (2019: 23%)

This sector contains loans and funds' investments to a scale of businesses and (non-profit) organisations with clear social objectives, such as social housing, community and social-inclusion projects. It also covers the health and elderly care sector and the inclusive finance and fair-trade businesses sector.

Culture 8% (2019: 9%)

This sector covers loans and funds' investments to organisations working in education, retreat centres, religious groups, recreation, cultural centres and organisations, and artists.

Residential sustainable mortgages 21% (2019: 17%)

The retail sector of the loan book is primarily comprised of residential sustainable mortgages, including a small amount of other private loans and overdrafts on current accounts.

Municipalities 3% (2019: 4%)

Under municipalities we include sustainable loans and funds' investments to local authorities without a specific sector classification and some limited short-term loans to municipalities. These investment-type loans in the public sector are included in the loan portfolio in accordance with regulations related to financial reporting.

Impact Equities and Bonds 17% (2019: 16%)

The Impact Equities and Bond funds that are managed by Triodos Investment Management focus on direct investments into listed equities and bonds of companies, institutions and projects that drive the transition to a sustainable society. Each investment in our Impact Equities and Bonds strategy has been hand-selected for its contribution to our sustainable transition themes, while applying our strict minimum standards.