Investments take place through investment funds or investment institutions which are managed by Triodos Investment Management, a 100% subsidiary of Triodos Bank.
Triodos Investment Management is responsible for 20 funds, for both retail and professional investors. The funds invest in sustainable themes, such as inclusive finance, food and agriculture, energy and climate, as well as in listed companies that materially contribute to the transition toward a sustainable society. The investment funds publish separate annual reports and most of them have their own Annual General Meeting.
Developments in 2022
After having just recovered from a period that was dominated by the global COVID-19 pandemic, 2022 turned out to be yet another year filled with challenges. The horrific war in Ukraine has resulted in uncertainties in financial and energy markets worldwide. In addition, both Western and emerging economies have been hit by higher than expected inflation and central banks have responded by (in general) increasing base interest rates at an aggressive pace. This has led to a unique situation in 2022, where both stocks and bonds showed a decline in value due to, respectively, downward moving stock markets and rising capital rates.
The combination of these developments has also clearly impacted investor sentiment. Investors are more reluctant to invest than usual, which was reflected in a more limited inflow of new capital throughout the wider investment market in 2022, or even outflow. At the same time, we see that there continues to be a difference in investment appetite between sustainable investing and mainstream investing. While Article 6 and Article 8 funds in general experienced outflow in 2002, this wasn’t necessarily the case for Article 9 funds.
Triodos Investment Management only manages Article 9 funds, and although the majority of these funds continued to see inflow in 2022, the overall funds under management decreased by 13% to EUR 5.5 billion compared to year-end 2021 (EUR 6.4 billion). This was mainly the result of negative market movements impacting the value of the underlying investments despite the high quality of the funds’ portfolios. The investment funds overall lost 11% of their value following market developments in 2022.
Amidst these challenging circumstances Triodos Investment Management retained its focus on strategy execution, more specifically on implementing the strategic goal to be the asset manager of choice for investors seeking solutions for building impact investment portfolios.
In 2022, Triodos Investment Management launched Triodos Future Generations Fund, a thematic fund aimed at improving the well-being and development of children worldwide. The fund invests in companies that contribute to the basic needs of children around the world as well as their development, to help them reach their full potential as adults.
In addition, Triodos Investment Management launched the Triodos Impact Strategy Funds (TISF) in 2022. The TISF are four funds-of-funds that invest in eight Triodos funds and across all of Triodos Investment Management’s impact themes. As such, the funds invest, both in Europe and in emerging markets, in the energy transition, food transition and sustainable agriculture, financial inclusion and in listed equity and bonds. The funds have replaced Triodos Bank’s managed account solution and have been created to make it easier and more efficient for clients to manage a diversified investment portfolio across different impact themes.
In 2022, Triodos Investment Management continued to work on preparing for the implementation of level 2 of the EU Sustainable Finance Disclosure Regulation (SFDR), which came into force on 1 January 2023. All Triodos Investment Management funds available for investors have sustainable investments as their objective as set out in article 9 of SFDR and have as such been designated as Article 9 investment products. Article 9 investment products are products that focus specifically on achieving a sustainability goal.
Hadewych Kuiper was appointed as Managing Director per 1 February 2022, to further strengthen the Management Board alongside Dick van Ommeren and Kor Bosscher after the transfer of Jacco Minnaar to the Executive Board of Triodos Bank in October 2021.
Prospects for Triodos Investment Management
If the past years have made one thing clear, it is that many of our global economic systems are vulnerable and not resilient enough. Both the COVID-19 pandemic and the energy crisis resulting from the war in Ukraine have shown us that there is an urgent need for sustainable transitions on multiple levels: energy transition, food transition and well-being transition – to name a few. Investors have an important role to play in redirecting capital towards these sustainable transitions.
Within this context Triodos Investment Management will continue to build on over 30 years’ experience of bringing together values, vision and financial returns on investment, helping to meet the European demand for values-based investment solutions that are key in the transition to a more sustainable society. Through its funds, Triodos Investment Management aims to further increase its impact in key areas related to its mission and the Sustainable Development Goals (SDGs).
In 2023, Triodos Investment Management’s strategic focus will continue to be on retail investors through distributors, high net worth individuals, family offices and (semi-) institutional investors.
Although market conditions will likely remain challenging in 2023, Triodos Investment Management will continue to pursue development and growth, through expansion and further development of existing funds and by creating new impact investment products.
To ensure robustness for future growth, Triodos Investment Management is implementing changes to its operating model in 2023. By doing so, Triodos Investment Management will improve its efficiency levels and increase cost efficiency, making the organisation more future-proof and better equipped to respond to external developments.