In September 2019 Triodos Bank signed the UN Principles of Responsible Banking. The Principles define the global banking industry’s role and responsibilities in addressing current societal problems, including the climate emergency and inequality. Triodos Bank played a leading role in developing this global framework, as part of the core group of banks who developed the Principles and shaped the framework. Currently over 270 banks globally had signed up to the Principles.

The participating banks promise to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals and scale up their contribution to the achievement of both. By signing up to the Principles, banks said they believe that “only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources”, can help their clients, customers and businesses thrive.

Triodos Bank is one of them. And as part of this we are committed to provide an update on what we have done or are doing in relation to each principle. The summary below highlights this work.

Principle 1

Identifying society’s goals as expressed in the SDGs/Paris Agreement/other relevant frameworks. Aligning the bank’s business strategy with the identified goals

Triodos Bank is in business to help create a society that protects and promotes the quality of life of all its members, and that has human dignity at its core. Since 1980, we have enabled individuals, organisations and businesses to use their money in ways that benefit people and the environment. As a result, we only finance social, environmental and cultural sectors. Principle 1 is implemented as a logical consequence of this approach. Our annual report integrates relevant frameworks and goals throughout all chapters of the executive board report. Specifically, the chapters Impact and financial results , Understanding impact , and the Appendix III – UN Sustainable Development Goals highlight our work in relation to the Paris Agreement and other frameworks. Prior to the creation of the SDGs, Triodos Bank has always produced an integrated annual report showing how sustainability is embedded in Triodos Bank’s strategy (see www.triodos.com/vision-on-impact).

Principle 2

Based on a portfolio impact analysis identifying the bank’s most significant (actual and potential) positive and negative impacts. Setting SMART targets that address the bank’s most significant impacts, and drive alignment with the SDGs/Paris Agreement/other relevant frameworks

Triodos Bank’s focus is to deliver positive impact, as described above. We assess and manage our impact in a couple of ways:

Net-zero in 2035

We measure our own (direct) and financed (indirect) emissions during the lifecycle of a loan or investment. These results clearly indicate that financing a sustainable economy for many years has resulted in substantial avoided emissions relative to our generated and sequestered emissions. Our direct emissions are reported in our Environmental report. Our financed emissions are measured through PCAF and reported in the Climate impact of our loans and funds' investments section.
Although Triodos Bank believes that the emissions of our loans and investment portfolio are relatively low compared to other financial institutions, the analysis identifies high-emissions sectors in our portfolio that need effective plans to support a sustainable and inclusive transition towards a climate-neutral portfolio.

In 2021, Triodos Bank has set the target to be net-zero as soon as possible, at the latest in 2035. Our ambition is that the greenhouse gas emissions of all Triodos Bank's loans and funds’ investments will be greatly reduced, using a science-based targets approach. The remaining emissions will be balanced or ‘inset’ by investing considerably in nature projects that remove greenhouse gases from the air. In formulating its target, Triodos Bank has adopted a holistic approach in support of its mission to create positive impact on people and nature. We want to reduce emissions, respecting the planetary boundaries and social inclusion of all people. We believe we can only get to zero as one.

Triodos has commited itself to the Science Based Targets Initiative. Together with SBTi, in 2022 we will work towards a validated set of (intermediate) targets.

Metrics

For our key sectors, we monitor positive impact in numbers our loans and investments we generate within our three main impact sectors (environmental, social and cultural impact). These metrics can be found in chapter Impact by sector .

Impact Prism

A prism breaks light up into its constituent spectral colours. In a similar way, Triodos Bank Impact Prism takes information about a project we finance, breaks it down and provides insights about its various parts.
Relationship managers assess loans or investments at the outset and periodically against fourdifferent impact areas of the Prism: people, planet, prosperity and purpose.
The Prism scores awarded on all four areas provide insights into the sustainability value of our projects. This mechanism uncovers opportunities to increase the impact of the customers and projects we finance,through engaging conversdations between relationship managers and customers. Ultimately, we can work with our clients to have a greater – and more targeted – impact.
In 2019 and 2020 we have focused on increasing the usage of the Prism. The tool was used for more new clients and the coverage of the total portfolio improved. In 2021, we further increase coverage and did research in both Spain and the Netherlands on how clients experience Prism. From this, we have learned that many clients underscore the uniqueness of having this type of conversation with your bank. For these clients it truly distinguishes Triodos Bank from other banks. Yet, other (of some) clients do not immediately see the added value of Prism; this requires further communication and development of the Prism. Specifically, we have learned that clients see more value in filling in the Prism for their company as a whole, rather than confining themselves to the specific project or part of the organisation being financed. In 2022, we aim to use these insights to develop the Prism further as a tool for stakeholder engagement.

SDG reporting

We also define our aspirations in relation to the SDGs specifically, in the appendix, on three levels; our baseline activity, direct activity and where we can play a role as a catalyst for systemic change.More on the specifics and governance of our impact management can be found in Understanding impact .

Principle 3

Working with clients and customers to achieve more sustainable outcomes

This principle is safeguarded though our policies and implemented through our business as this is key for reaching positive impact. Given the sustainable orientation of Triodos Bank’s business we have always engaged in dialogue with clients about optimising sustainability impact.

Our policies:
Our lending criteria, business principles and minimum standards focus on working with clients to achieve more impact.

Implementation:
Given the sustainable orientation of Triodos Bank’s business we have always engaged in dialogue with clients about optimising sustainability impact. With the Impact Prism we have a starting point for a high quality conversation about customers impact and opportunities to improve this. This includes working with clients to help them think more cross-sectorally to increase their positive social and environmental impact.
We also offer products to incentivise more sustainable outcomes, such as a mortgage which offers a discounted interest rate for more energy efficient houses and additional discounts to help customers make environmental improvements to their home.
Since 2018, The European Investment Fund (EIF) and Triodos Bank have worked on the Social Entrepreneurship guarantee agreement in The Netherlands under the EU Programme for Employment and Social Innovation (EaSI). Through this agreement, Triodos Bank has until the end of 2021 been able to finance EUR 87 million to 412 Social Enterprises in the Netherlands, Belgium, France and Spain. This was more than expected as we originally started with the aim of EUR 65 million.

In 2021, Triodos Bank and the European Investment Fund (EIF) signed a guarantee agreement for the creative and cultural sector. The guarantee facility allows Triodos Bank to provide up to EUR 200 million in loans to entrepreneurs in the creative and cultural sectors in the EU Member States where Triodos Bank operates, namely the Netherlands, Belgium, Spain and Germany.

Principle 4

Consulting, engaging and/or partnering with stakeholders in order to improve the bank’s impacts. Developing a stakeholder engagement policy/process.

Triodos Bank was a co-founder of a number of initiatives which foster the development of approaches to improve the impact of the bank and the wider sector; they include the Dutch Sustainable Finance Lab (and a similar initiative developed in Spain in 2019), and the Global Alliance for Banking on Values, a network of independent sustainable banks, which Triodos Bank chairs.
In our Change finance report , we report on our collaborations in the financial sector at a national and international level.
In addition, we engage with stakeholders throughout the year at a national, regional and sectoral level, including a stakeholder engagement meeting at Triodos Bank’s Head Office, the process and results of which are reported in Our stakeholders and material topics .

In 2021, we have taken additional steps to better embed stakeholder engagement in our corporate strategy cycle. By putting key objectives from our group strategic plan 2023 and the group year plan 2022 on the agenda, the annual stakeholder meeting serves as stakeholder consultation on both. Also, for the first time, we organised an international stakeholder meeting with participants from the Netherlands, Belgium, the UK, Spain and Germany.

Principle 5

Having an effective governance structure in place that will enable implementation of the Principles. Developing a culture of responsible banking within the bank.

Triodos Bank’s governance structure stems from its sustainability agenda which is aligned, and in some ways goes beyond the Principles for Responsible Banking. Triodos Bank does not have shareholders, but Depository Receipt holders instead. This structure helps safeguard its mission and optimise its sustainability impact.
Our values and our mission are continuously reinforced within our culture by being fully integrated into our operations. We have not separated sustainability as a department or a function – it is intrinsic to everything we do in the organisation. In 2020, impact management was explicitly embedded in our governance with the creation of the Triodos Group Impact Committee (TGIC). After one year, the TGIC conducted a self-evaluation. One outcome of the self-evaluation was that the operational activity of our impact management should be better organised. In line with this conclusion, a trajectory was started at the end of 2021 on how Triodos Bank can better align and focus its impact management activities throughout the organization. We want to work with a new structure in the first half of 2022.
Since its establishment in September 2020, the TGIC focuses on target setting; streamlining our impact data capture; external commitments which are in line with our mission; and embedding growing regulatory requirements, resulting from the EU Action Plan on Sustainable Growth (Sustainable Finance Action Plan, SFAP).
Triodos Bank’s culture also stems from this mission and is detailed in the Co-worker report .

Principle 6

Reporting on positive and negative impacts, and progress made on targets and implementation of the Principles.

This annual report, and this section of it in particular, details our progress in the implementation of our mission, which focuses on delivering positive impact for people and the environment. As such it meets these goals. We have made a deliberate choice to use impact-based targets sparingly to ensure that we ‘hit the target without missing the point’. This approach is explored in more detail in Understanding impact .We aim to assess both the positive and negative impacts on sustainability of all the loans and investments we make, via Triodos Bank’s Impact Prism and our PCAF report. In addition, we use negative screening criteria to avoid financing sectors we consider to be inherently ‘unsustainable’ such as the fossil fuel industry.