A destructive era
The impact of human activity is altering our planet’s natural environments – from our atmosphere to our forests to our oceans. This negative impact has led to the proposition of a new geological epoch known as Anthropocene. And whilst the period is yet to be formally recognised, the effects are evident. As the ushers of this new era, humans are also responsible for stemming the tide. Companies can contribute by changing the way they do business and as an investor, we can influence a positive change in behaviour.
Turn destruction into development
The impact of biological, chemical and geological processes on Earth is an undeniable reality. From nuclear reactors to nuclear weapons, the radioactive waste they produce has become hazardous and yet, the use of nuclear technology has become widespread. Plastics have integrated into our daily lives, but the waste is devastating our natural environment, particularly the marine environment, and the increased concentration of CO2 is shaping our atmosphere and creating global climate change.
Human habits and human activity have become pervasive and need to be curbed to prevent irreparable damage to our natural environment. The necessary change into a more sustainable human society requires a lot of effort and capital from all different stakeholders, which is where impact investors such as Triodos Investment Management come into play.
As an investor, Triodos IM is in the position to influence and stimulate company behaviour. Based on our strict sustainability standards, we only select companies for investment if they demonstrate awareness of their potential negative impacts, and if they actively try to minimise them.
Selecting positive impact
We select companies for positive impact on social, environmental and governance themes. One company selected for investment is US food production company WhiteWave Foods. WhiteWave has its own strict environmental protection standards and explicitly addresses natural habitats and biodiversity in its Supplier Code of Conduct. In fact, it forbids suppliers to source materials that directly or indirectly contribute to deforestation of high conservation value areas, or to interfere with habitats of endangered species.
Our Triodos Sustainable Equity Fund was found by Sustainalytics to be almost 30% less carbon intense than our benchmark, the MSCI World Index. The lower carbon footprint is the result of our strict investment principles and our selection of industry outperformers. One such outperformer is the British beverage producer Diageo. The company is in the fund's portfolio and is an industry leader in reducing its carbon footprint. Last year, for example, the company turned a challenge at two of its distilleries in Turkey into an opportunity. Leftover organic waste from its operations proved to be a great source of energy – with a little help from bacteria. Diageo started using this renewable energy source in 2015 and the initial results are encouraging: the company expects to reduce the distilleries’ carbon footprint by a further 20% compared to 2014, contributing to an overall reduction of 70% since 2007.
Triodos IM also aims to reduce the use of plastic by promoting alternative packaging materials and to stimulate recovery and recycling of plastic waste. One such company that we’ve selected is Tomra Systems. The company provides automated recycling systems for collecting, sorting and handling the return of plastic beverage containers in supermarkets. According to the company, 35 billion used beverage containers are captured every year by its reverse vending machines.
Exluding negative impact
In addition to positive selection, Triodos IM also has strict exclusion criteria for all companies in its sustainable universe and specifically regarding the use of nuclear technology. For investment decisions, this translates into the rejection of companies involved in the production of nuclear energy. We have a policy of zero tolerance. Any involvement, even a minor one, leads to rejection. This is the case with nuclear energy producers such as ENGIE, but also with companies that provide dedicated components, for example General Electric and Umicore, or specialist services, for example Capgemini.
Does anthropocene need to continue doing damage?
There is a growing awareness that companies have a huge opportunity to positively affect the environment through their intrinsic approach to sustainability. Thereby, companies can change their production processes to make a lasting impact on the environment and investors can urge companies to make a difference for the better. The companies within our sustainable investment universe show that the anthropocene era can be mitigated by us as much as it can be created.