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Triodos Bank's position on corporate tax avoidance

A public discussion on tax avoidance by multinational companies is currently taking place. Companies such as Amazon, Google, Starbucks, SABMIller, Nike, Barcadi-Martini, Vodafone and Zara have recently come under scrutiny for minimising their tax obligations. However these companies operate within legal frameworks afforded by the governments of countries in which they operate, and often with the aim of maximising shareholder value. The Treasury is working on a general anti-avoidance rule (GAAR) aiming to tackle artificial and abusive tax avoidance. This measure is due to be introduced in April next year.

Triodos Bank appreciated the efforts from the Treasury and believes that it is down to governments to address tax avoidance and strongly advocates closing legal loopholes at this level. Only once there is full transparency on the tax behaviour of multinationals can we act as considered and, ultimately, responsible investors.

Once norms and a framework for corporate responsible behavior on this issue are commonly accepted and put into regulation we will be able to prudently formulate exclusion criteria on this subject. Until then it will be difficult to implement exclusionary criteria for the Triodos SRI funds that fully do justice to the complexity of this issue.

Since launching the Triodos SRI funds in 1998 we have argued that taxes should be paid in the countries where the earnings of a company are realised. Until a corporate tax framework without loopholes is put in place, we call on companies to consider voluntarily their moral and ethical obligation to pay taxes where they are due and be transparent about it.

Recently, Triodos Bank has sent out 122 letters to all companies we invest in to ask them specific questions about their tax policy and execution of these policies. In cases of tax evasion or illegal tax avoidance, we exclude those companies from our investment universe. We believe that, as an investor, through engagement we can speed up these discussions and place them firmly on boards' agendas, just as has been demonstrated through our engagement on bonuses and executive remuneration.

Triodos Bank continues to oppose excessive remuneration packages at shareholder meetings and gives proactive feedback to create awareness and stimulate amends to disproportionate remuneration policies. Companies like Reed Elsevier Plc en Sonovo Holding show such improvement in response to our engagement.

Triodos Investment Management, the Triodos Bank subsidiary responsible for our SRI policies, will continue to engage on tax avoidance, seeking full disclosure by all companies in our investment universe on whether they are fulfilling their obligations relating to the countries in which they operate, as well as helping governments and policymakers develop new and robust frameworks around the issue.

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