Which investments does Triodos IM have in Ukraine?
We finance three financial institutions in Ukraine, which are all deeply rooted in the local economy and communities. In addition, we also finance a solar energy project in the West of Ukraine. So, four investment companies in total.
To give a clear picture: with our Private Debt & Equity funds we manage over 150 investments in emerging markets, with dedicated investment teams for each region. Our investment team for Eastern Europe, Caucasus and Central Asia seeks engagement with our investees in Ukraine and the region and support them where possible.
How are the financial institutions and the banking sector coping?
As we can all see in the news updates, the war in Ukraine dramatically impacts every aspect of the lives of the Ukrainian people. The implications differ per region. Two of our investee companies, a bank headquartered in Kharkiv and a Kyiv-based leasing company, had to close their doors. The third one is located in Lviv, in the West of Ukraine, which is further way from the areas of conflict and continues the provision of financial services with the help of its partners.
Ukraine’s central bank continues to operate and support bank operations. Except for directly impacted locations, basic services are still working in most banks: people can transfer money, receive salaries and pay online in shops for products.
How does Triodos IM act further?
We look at the situation from various angles. First and foremost, we care for our colleagues, some with family and friends impacted, our investees and their clients. We assess political and macro-economic developments and engage with all our investees. A specific topic of attention is related to compliance. Heavy sanctions have been imposed on individuals and entities including banks in Russia and Belarus. We have conducted a scan and concluded there are no direct links in our portfolio to any sanctioned individual or entity. We daily check updates of all relevant sanction lists. We are also engaging with all our clients in the wider and confirmed no indirect links. Think of correspondent banking relations, deposits or other accounts between our investees and sanctioned entities. We are in close contact with our investees to address this.
Which impact do you foresee for the region?
With Russia as the dominant economy for the region, the indirect impact wider in the region will be significant but will differ from country to country. Take, for example, strong fluctuations of the Russian ruble, which impacts local currencies in neighboring countries, such as Tajikistan and Kyrgyzstan. Also, the sharp increase in energy and food prices will affect countries without natural resources and regional trade is being impacted.
Our investment team knows the region very well, closely monitors these developments and regularly engages with the companies in our portfolio to assess how this might impact their loan portfolios and operations. We derive comfort from the strong quality of our investee companies in the region and their proven ability to deal with economic challenges, such as during the credit crisis and, more recently, during COVID-19 times.
How do you see the role of Triodos IM moving forward?
Triodos IM is not just a finance provider; we engage in long-term relationships. We will continue to remain in close contact with our investees in Ukraine and the region and help where we can. In these challenging times cooperation within the sector is important. We can build on the excellent cooperation with other investors in the financial inclusion space. By working together to exchange insights we can act jointly and continue our support. We intensified this cooperation when we were confronted with the impact of COVID-19. The Memorandum of Understanding that we put in place among the largest private finance providers globally in inclusive finance is still in power and fully applicable to the current situation in the region.
While managing the current risks and challenges, we keep our long-term focus in mind: building green, resilient, and inclusive economies in emerging markets.