As well as financing progressive entrepreneurs, we aim to influence the financial sector and the shape of the economic system at a national and global level to help deliver our mission. We believe that the more sustainable, diverse and transparent are financial industry operations, the more money will be used consciously, and the greater the improvement in people’s quality of life. This is a cornerstone of a regenerative and inclusive economy that enables people and communities to prosper with respect to ecological limits.
We change finance in different ways. We publish vision papers, write opinions, support letters to government bodies and join calls for action. We share our knowledge and expertise on sustainable finance with policymakers, politicians and supervisors in meetings or through feedback in public consultations. We encourage other financial institutions to make different choices and commit to sustainable finance. We work together with like-minded organisations and create formal and informal partnerships to strengthen each other. This is done locally in the countries in which we operate as Triodos Bank, but also at European and international levels.
In 2022, we actively contributed to different consultations, including the Basel Committee's consultation on principles for the effective management and supervision of climate-related financial risks and the European Commission’s consultation on the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings. Furthermore, Triodos Bank published a position paper and initiated a petition on the revision of the Alternative Investment Fund Managers Directive (AIFMD) to counter a flaw in the European Commission's proposal. Triodos Bank also initiated an open letter with 11 other financial institutions to call for the inclusion of obligations to the financial sector in the Commission's proposal for a regulation on deforestation-free products so as to ensure that financed activities do not contribute to the loss of forests and biodiversity. Among other topics we have been discussing with (European) policymakers, politicians and other stakeholders are the Sustainable Finance Disclosure Regulation (SFDR), climate risk in Pillar 1 in the new Banking Package and the Corporate Sustainability Due Diligence Directive (CSDDD).
Climate and biodiversity are major societal topics in the financial sector. The yearly gathering of the Conference of the Parties (COP) 27 in Sharm-El-Sheik on climate change ended in disappointment with meagre progress on the five key areas. Existing commitments to keep global warming limited to 1.5ºC were not strengthened with, for example, firm commitments to phase out gas and coal. On the other hand, the 15th UN Biodiversity Conference of the Parties (COP15) was more promising. A historic deal was reached to halt biodiversity loss by 2030. In the run-up to COP15, Triodos Bank signed the Business open letter of Stop Ecocide, calling on governments to support the recognition of ecocide at the International Criminal Court and to positively engage in the growing global conversation to make this a reality, for which there is currently an opportunity in the EU Environmental Crime Directive. We also supported Business for Nature's call to adopt ambitious mandatory requirements for all large businesses and financial institutions to assess and disclose their impacts and dependencies on biodiversity by 2030.
Triodos Bank is not only active in European and international debates, but also works at a national level to change finance. Triodos Bank Belgium supported research about the status of impact finance in Belgium, which led to the launch of Impact Finance Belgium (IFB), which aims to increase the share of impact capital in Belgium. In the UK, Triodos Bank UK has worked with the government and financial sector partners to influence the new UK Green Finance Strategy. Triodos Bank Netherlands is pleased that the Dutch Government now intends to link the energy use of a home by 2024 to the maximum mortgage a buyer can obtain, after advocating for this since 2016 and introducing this in its own lending standards for mortgages in 2020. The Managing Director of Triodos Bank Germany was reappointed as member of the sustainable finance council of the new German Government. He represents other sustainable banks in Germany and leads the working group that works on more transparency of financial products. For several years, Triodos Bank Spain has been advocating with partners the legal recognition of purpose-driven businesses. In 2022, the Crea y Crece Law was approved to promote an entrepreneurial ecosystem that generates a new economy. During 2022, Triodos Investment Management has been advocating for more transparency for non-sustainable funds. These are all specific examples of how we try to change finance in the broadest sense. In all our public appearances, opinion pieces, publications or interviews we highlight the transformational power of money and the role of the financial sector in society.
Our view on EU developments in regulations and directives
Since the EU’s Sustainable Finance Action Plan (SFAP) was presented in May 2018, many new regulations and directives have been drafted, discussed and are now being implemented. We fully support and recognise the importance of many of these regulations and directives, although we are disappointed by some of the outcomes this year.
Deforestation Regulation
Triodos Bank is pleased that the EU has reached an agreement on regulation on deforestation-free supply chains, no longer allowing products on the EU market that contribute to deforestation. We believe this is an important step against deforestation and for the restoration of biodiversity. Triodos Bank would have liked other wooded lands to have been included in the regulation, because we strongly believe the EU should not limit its ambition to protect forests but should also seek to prevent conversion of other wooded ecosystems. We are disappointed the financial sector is not included at this time, but at the same time consider it an important step the EU will reassess this at a later date.
Corporate Sustainability Due Diligence Directive (CSDDD)
Triodos Bank believes financial institutions have a responsibility to understand the impact of their loans and investments, including of the value chain of the financed activity. That is why we support a strong EU-wide Corporate Sustainability Due Diligence Directive for all financial institutions, which will require financial institutions to know the impact of their clients and their value chains and create a level playing field for the EU’s financial sector. We are disappointed with the position of the Council on the CSDDD, which does not include an obligation for all EU financial institutions to perform due diligence on the activities and value chains of their clients.
EU Taxonomy
The green taxonomy, the EU list of sustainable economic activities, was introduced in 2021 to establish unambiguously what is and what is not a green investment. Triodos Bank welcomed such a list, because it potentially equipped European investors with a better understanding of sustainable investment. That would drive the sustainable transition and combat greenwashing. In 2022, the European Parliament voted for the plans of the European Commission to classify natural gas and nuclear energy as sustainable in the new taxonomy. Triodos Bank is very disappointed by the outcome of this vote. We believe natural gas and nuclear energy are not sustainable and do not belong in a green taxonomy.