Can you briefly describe the impact that Triodos IM envisages? 

For Triodos IM, impact means having the power to transform and directing money in such a way that it benefits people and the environment in the long term. This translates into making conscious investment decisions to ensure that 9+ billion people can live a prosperous life on a thriving planet. 

We want to contribute to building just and inclusive societies, where people can enjoy good health and wellbeing, where they have access to opportunities and where they can pursue their aspirations. And to achieve this, we aim to stay within our planetary boundaries so that our future generations can inherit a flourishing planet.

It’s a bold ambition, particularly in light of the many challenges that our world is facing; the devastating impact of climate change, the increasing divide between the haves and have-nots, loss of biodiversity… the list goes on. And this is accompanied by a growing sense of urgency as our window of opportunity is finite. 

But there is also room for optimism, as there is an increasing awareness and willingness to change the way we think, live and work. This is backed up by our 30-year track record as an impact investor with more than 750 current impactful investments in various themes across the globe. 

What is key to make this impact happen?

We have a clear dual focus: financing change and changing finance.  

To finance change, each investment we make is guided by a four-step approach: positive impact, do no significant harm, manage sustainability risk and investor contribution. The first three steps guide us when selecting the investees we’d like to build long-lasting relationships with. We do this both by focusing on purpose, intentionality and impact potential and performance and by excluding, mitigating and managing sustainability risks. The final step helps us to investigate how we can advance positive change by being an active and involved investor. This ranges from active engagement to investment opportunities where we go the extra mile to make innovative game changers bankable.

We also want to change the financial system from within by proving that values-based banking and impact investing is commercially robust and resilient. We strive for a sustainable, transparent and diverse financial sector and collaborate at a practical and strategic level with other European and global stakeholders, such as other values-based financial institutions, NGOs, governments and banking associations, to help grow a movement.

First and foremost, it is in our relationship with clients and other stakeholders where we can jointly realise our impact ambitions.

What has shaped the impact management and measurement practices of Triodos IM in 2021? 

In 2021, we set up a more extensive impact management structure enabling a flexible response to the quickly developing area of managing and measuring the impact of investments. We established an Impact Management and Measurement domain in the spring of 2021, which functions as a multidisciplinary team. It is an interface between our internal ambition, external requirements and the implementation of impact within the organisation. 

During 2021, the domain mainly focused on its ambitions and internal organisation on further development of the impact frameworks of the funds and on the implementation of European legislation. 

How do you view the increasing role of regulations on the impact management domain? 

For the first time in history, the financial sector is facing regulations on sustainability, guided by the European Union Sustainable Finance Action Plan. Even though the legislations are not perfect in their execution, they do mark a pivotal moment in history as they call for the sound management of sustainability risks and transparency by all financial market participants to prevent greenwashing and impact washing. 

For that reason, we very much support the regulations and actively participate in consultation rounds to share insights on how we believe they can work best in practice.

The regulations are not new to Triodos IM. We have always put impact first, followed by risk and return and have always promoted and practiced transparency regarding sustainability and impact. Nevertheless, the implementation requires a great deal of effort. Different wording is becoming market practice and our sustainability risk and impact management approach as well as supporting data need to be made explicit in strictly prescribed ways. This is translated into tools, processes, policies and precontractual product information and therefore requires a lot of attention from many disciplines within our organisation.

We look forward to and openly welcome the change the regulations will bring to the investment landscape in the years to come.

What ambitions have you set for this year?

This year, our sustainability risk and impact management efforts are geared towards implementing updates in due diligence practices and in our tools and processes, guided by our impact ambition and sustainability legislation.

We plan to further strengthen our proprietary impact assessment tooling. This tooling allows us to systematically assess the sustainability value of our individual investments against social, environmental and economic criteria. It also captures the long-term impact potential of our investees when assessing the company’s strategy and vision. This tooling allows us to provide deeper insights and reports, which will help us to better understand, monitor and equip ourselves to steer more deliberately on impact. These reports will include UN SDG assessments per investment, fund and sector. 

We also put a lot of emphasis on our As One To Zero ambition. Triodos Bank has set the target to reach net zero as soon as possible, at the latest by 2035. The As One aspect translates to building a movement of likeminded people to achieve real change in society. Our To Zero efforts centre around three key elements this year: we aim to validate our net zero ambition with the help of the Science Based Targets initiative, we work to get a product level strategy in action to further reduce current emissions of our operations as well as those of our investees, and finally, we focus on nature-based solutions to sequester carbon and support biodiversity.