Triodos Investment Management’s SRI strategy rests on the firm belief that capital markets, including public markets for listed securities, are a strong mechanism to allocate capital to companies that support the transition to a sustainable society. If large multinational companies begin to move in a more sustainable direction, even if it only is a small step, the wider impact will be significant. Triodos therefore actively engages with companies on issues regarding social, environmental and corporate governance performance, to increase awareness, motivate change and ensure long-term shareholder value. “Active engagement and dialogue with companies we invest in has always been a key element of our Socially Responsible Investment (SRI) strategy”, explains Hans Stegeman, Head of Research and Investment Strategy. “Through active stewardship we leverage on our relationship with them to help companies accelerate their contribution to a sustainable society.”
Main engagement topics
The recently published SRI Engagement Report presents an overview of Triodos’ engagement activities in 2017. “Each year, we carefully choose relevant topics, set goals and select the most appropriate engagement type and tools”, continues Stegeman. “Fundamental company research, thematic research, and a well-managed relation with the investee companies are key ingredients of the engagement strategy. In 2017, three of our main engagement topics were basic labour rights, climate change and animal testing. This year, we will focus, amongst others, on integrated reporting, tax transparency, and animal welfare, besides ongoing topics such as remuneration and conflict minerals.”
Intensified engagement in 2018
In the beginning of this year, Triodos Investment Management took over the asset management of its SRI-funds, from Delta Lloyd Asset Management. Company assessment from a sustainability and financial perspective from then on are performed by the same team, which results in more synergy in the analysis. “In combination with improved impact measuring, integrated sustainability and financial analysis helps us to understand the full business models of the companies. We know what they do well, how their purpose and business model contribute to a sustainable world, their long-term valuation and what their challenges are in terms of sustainability and financial performance”, explains Stegeman. “Triodos has always engaged with companies, but the integration will absolutely intensify our engagement efforts”, he continues. “The quality of dialogue will improve because of our better understanding. It will also change in terms of the people we will have at the table, which will lead to different questions being asked. If we are our own asset manager, it means we can have fund managers and analysts talking to the companies at the same time. In response, the companies are also likely to have different people at the table, not only sustainability or corporate social responsibility specialists, but chief executives and chief financial officers instead.”
”Thus we can be more effective in encouraging sustainable business”, concludes Stegeman. “Not only do we want to raise specific issues, but we also want to challenge companies on their vision of what sustainability is, shift them away from the common way of thinking, and show them what their actual impact is – be it positive or negative.”
Read the published SRI Engagement Report here.