Explaining the template

To align with future reporting requirements, Triodos Bank has reported on the EU Taxonomy using Template 7 of the CRR ESG Risk disclosure templates which is largely similar to Template 1 of Annex VI of the Taxonomy regulation published in December 2021. The main difference is that the EU Taxonomy Annex VI Template 1 includes off-balance sheet exposures and the CRR template does not. As our guarantees (which are off-balance sheet exposures) are not material, we do not disclose the eligibility of these positions in FY2022. For the funds under management we provide a voluntary disclosure.

Triodos Bank has made a restatement for the FY2021 figures. To align with the EU Taxonomy and CRR Pillar 3 ESG Reporting templates, we report all financial corporations in the numerator. This means that we do not make a distinction in our disclosure between financial corporations that are subject to NFRD disclosure or not. In line with regulatory requirements we do not disclose eligibility of these financial corporations that are not subject to NFRD. Addtionally we no longer report seperately on green bond exposures as these are included in debt securities. Furthermore we have adjusted the methodolology to identify NFRD-obligatory companies based on EU-level regulations in stead of local country regulations. The local NFRD regulations are more strict in several countries such as Spain, meaning more companies are obligatory to provide NFRD reports but not per se to provide EU Taxonomy information. This change has led to a reduction in exposure to NFRD-obligatory counterparties in 2021 from EUR 313 million with EUR 98 million to EUR 215 million.

The 2022 Taxonomy-eligibility assessment includes our business loans, Treasury positions, mortgage loans, specialised lending to) municipalities and equity positions on our balance sheet. Exposures within Triodos Bank UK are to be considered if they are to (subsidiaries of) an EU based group. Triodos Investment Management activities are seen as ‘funds under Management’ which is not included in the mandatory reporting for FY2022. Additionally, while Triodos Investment Management is active in Europe, the global activities outside the EU fall out of scope for Taxonomy-eligibility. Other asset management activities within Triodos including private banking and activities of TRMC also remain out of scope as these do not meet the UCITS/AIF qualification. In the future these activities will be relevant for the EU Taxonomy KPI on Fees and Commissions, which will become applicable as per 2026.

On the website of our 2022 annual report we have published a more detailed methodology on how we report on the EU Taxonomy. There are three main data sources that flow to the EU Taxonomy reporting template: Business Banking, Triodos Investment Management and our Treasury positions. The EU Taxonomy information is disclosed at the level of “prudential consolidation”, meaning on the basis of the prudential consolidated financial statements that are disclosed in the context of supervisory financial reporting (FinRep). To ensure consistency with the annual accounts, FinRep is reconciled with the IFRS figures. The major difference stems in the requirement to report EU Taxonomy figures in gross carrying amounts (amortised cost of a financial asset before adjusting for any loss allowance) , whereas the IFRS balance sheet total is reported in carrying amounts. While FinRep is reconciled with the annual accounts, the external audit on the FinRep figures commences in Q2 2023, meaning that the FY2022 FinRep figures are not audited at the time of publication of the FY2022 annual report and therefore may be subject to change.

Assumptions and limitations

This is the first reporting year to disclose on a mandatory basis using information obtained bilaterally from counterparties or their public disclosures. Also for these clients the EU Taxonomy is in an implementation phase, meaning that their eligibility towards Climate Change Mitigation and Climate Change adaptation is also limited and may vary in the future.

For a correct categorisation of the numerator and denominator we need to know if a counterparty is subject to NFRD disclosure obligations. For this NFRD assessment, no public database or repository is present in the EU to determine which counterparties must report on non-financial information. The process therefore is a complex and manual exercise. Triodos has made the assessment on a best effort basis and used professional judgment to determine which clients are under the scope of the NFRD. The NFRD check consisted of two steps. In the first phase we determined whether counterparties on an entity or consolidated basis met the size thresholds for NFRD. If these size thresholds were met, a PIE (Public Interest Entity) assessment was performed. In several instances clients have indicated they are not obligated to report under NFRD. In those situations we consider the client information to be leading and we do not consider the client as being NFRD-obligatory.