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How does the Triodos investment universe work and what makes the SRI funds ethical?

In order to be eligible to be part of the Equity or Pioneer Fund, a company must first be part of the Triodos investment universe. Selecting stock market listed companies for inclusion in the Triodos investment universe is a rigorous and systematic process. To ensure they meet our social and environmental requirements, companies are screened against a wide range of criteria, in a three stage process.

Step 1: Sustainable activities

Companies in the Pioneer Fund are selected for their contribution to the health and wellbeing of people and planet. Any company that derives over 50% of its revenues from sustainable activities of this kind qualifies for the investment universe, provided they also pass step 3. Companies that do not derive 50% of its revenues from sustainable activities but pass step 2 and 3 will also be included in the universe but are only eligible to be selected for the Equity Fund.

Step 2: Best-in-class

Companies that don't meet the step 1 criteria above can still qualify for investment if their all-round sustainability performance puts them among the best in their sector. We assess this using over 70 generic and sector-specific criteria, relating to environmental, social and governance issues. And companies whose score puts them in the top 50% within their sector qualify for Triodos investment, provided they also pass step 3.

Step 3: Minimum standards

Our minimum standards are Triodos Bank's bottom line: the absolute criteria we apply to ensure that we never fund any business engaged in any activities that are harmful to individuals, society or the environment. Companies that qualify through steps 1 or 2 must also meet these requirements before we'll consider investing in them.

Once companies have passed step 3, they can be added to the sustainable investment universe. The actual investment decisions are made by our external asset manager, Delta Lloyd Asset Management. From our investment universe they carefully select the companies that are considered to have the best financial forecasts for inclusion in the funds.

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