Engagement - dialogue


of the companies
in the portfolios
were engaged with

As part of its mission, Triodos SICAV I aims to encourage companies to improve their sustainability performance. The fund raises awareness on sustainability issues by engaging with companies throughout the initial research process and subsequent dialogues and by providing them with a written analysis of the sustainability performance of their operations. This dialogue strengthens a company’s insight into those issues that are important to shareholders. During 2016, the fund engaged with 88% (87% in 2015) of the companies represented in the sub-funds as per December 31, 2016. The fund engaged with 78% (80% in 2015) of the companies on multiple occasions.

Starting in 2014, the fund initiated an engagement programme aimed at improving (farm) animal welfare practices in the supply chain of food retail and restaurant companies. In total, the fund targeted ten companies. Based on the outcome of this engagement effort, best practices were defined. These best practices were shared with all the companies involved. In addition, tailor-made recommendations for improvement were offered. In early 2016, the fund assessed the companies’ activities based on the recommendations that were given. It was encouraging to note that four companies (Colruyt, Metro AG, Whitbread and Compass Group) had made significant progress. Colruyt introduced a clear animal welfare guideline. Moreover, the company developed new standards for chicken and the use of antibiotics and introduced a project aimed at promoting sustainable pig farming. Furthermore, Whitbread published a new policy that includes improved animal welfare standards, for instance on routine mutilations, antibiotics, growth hormones, slaughtering and transport. The company also announced that in 2020, 100% of its products must meet new sustainability standards for the supply chain. Finally, the company announced plans to develop specific improved animal welfare standards per species. These improvements are very encouraging and are used by the fund as a basis for further engagement with the other companies in the sector.

The fund decided on a stricter application of standards for controversial arms involvement for financial institutions. All six investee companies – ABN AMRO Bank, Achmea, BBVA, Danske Bank, ING and UBI Banca – were informed about this change and were given until January 2019 to comply with this stricter application. Several companies have indicated that they are working towards meeting the stricter requirements.

A meeting was held with German wind turbine manufacturer Nordex, to discuss its strategy and prospects in onshore wind and the potential involvement of the company in conflict minerals. During a follow-up call in the fourth quarter, the fund learned that the company is in the process of assessing the types and volumes of potential conflict minerals used. The fund will be informed about the results of this assessment once they become available.

US biopharmaceutical company Baxalta focuses on therapies for the treatment of blood and immune system disorders and cancer. In July 2015 the company was split off from health care equipment supplier Baxter, which has been selected since 2011. Following this split, the new company needed time to build its ethics and corporate social responsibility policies and programmes. Initially, the company lacked both an animal testing policy and a policy on genetic engineering and discussions were held about the fund’s requirements. In February 2016 the company sent its bioethics policy to the fund. With this policy in place, the company met the strict requirements on animal testing and genetic engineering.

In 2016, the fund initiated a dialogue on living wages in the supply chain with textiles and apparel companies VF Corp and TJX Companies. Wages in the garment and footwear sector remain low and in some countries are even below the national subsistence minimum. There is an urgent need for improving the living conditions of the workers in this industry. The fund joined a broader initiative aimed at improving wages in the garment industry. The dialogue with VF Corp and TJX Companies is part of this initiative. The fund will follow up on this topic in the years ahead.

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