Investing in stock market listed companies following strict criteria.
As share holders we apply pressure to the stock-listed companies we invest in. It's an essential element of our approach to impact investing.
Many responsible investors make investment decisions based on external research or exclusion lists. Triodos Bank however conducts its own in-depth assessments to determine whether a company meets the Triodos Bank sustainability requirements. More and more companies are prepared to take immediate action if non-compliance with the Triodos standards is signalled. Recently several financial companies decided to sell their investments in companies that produce controversial arms. For example, insurance company Achmea blacklisted an arms producer in order to fulfil the sustainable investment criteria of the Triodos SRI funds. A number of other companies have also announced that they would develop or expand policies on issues such as animal testing, deforestation and human rights. As a result of Triodos banks dialogue with American SunOpta, the food producer recently developed its product safety policy to include a strict policy to minimize the use of animal testing, and has expanded its environmental principles to include the prevention of deforestation.
Strength in numbers
Triodos Bank is not the only investor to apply pressure about sustainability issues. We often cooperate with other investors, which strengthens our impact. In the Netherlands, Triodos joined forces with VBDO, the Dutch Association of Investors for Sustainable Development, and Eumedion, a platform for institutional investors in the field of corporate governance and sustainability. The topics of engagement vary but have included supply chain monitoring, remuneration and tax. Initiated by Triodos Bank, Eumedion has stimulated Philips Electronics to review its sourcing of tin from the Indonesian islands of Bangka and Belitung. These islands suffer from the heavy pollution and human rights abuse associated to the sourcing of tin.
At an international level, Triodos Bank is a signatory to the United Nations Principles for Responsible Investment (UNPRI). This initiative brings together institutional investors, allowing them to raise sustainability concerns with multinational companies and governments. This has generated many successful outcomes. Examples include substantial improvements in sustainable sourcing of fish by leading food retailers such as Metro, and stimulating companies such as Adidas to sign the Accord on Fire and Building Safety in Bangladesh. Triodos Bank is also one of the 722 institutional investor signatories to the Carbon Disclosure Project. The Carbon Disclosure Project is an independent organisation that distributes an annual questionnaire on behalf of it's signatories to large global companies. The questionnaire is a call for standardised information about climate change, water and forest management, and encourages companies to take account of and be transparent about their environmental risks.
Triodos Bank sees that its engagement activities, be they either independent or as part of a collective, are generating real impact. Several studies confirm that engagement from investors work, and even more encouragingly, it also appears that recommendations regarding sustainability made by investors lead to improvements in profitability and efficiency. More and more companies will seek these improvements opening up more scope for growth in sustainability.
Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market