Accelerating the energy transition

How investing in energy and climate made a difference in 2020

Why do we invest in the energy transition?

The energy and climate challenge

Climate change is a fact of life. The warmer climate already affects natural and human systems around the world, leading to more temperature extremes, rising sea levels, more heavy rainfall and more frequent and intense droughts. In turn, these effects result in desertification, land degradation, scarcity of clean water, loss of biodiversity, acidification of oceans, declining food security, more inequality – to name but a few. It is widely acknowledged that if we do not counter global warming, the environmental and social damage will be enormous.

The social-economic importance of energy can hardly be exaggerated. Access to modern energy technology makes the difference between poverty and prosperity. If we do not address social and economic issues, we will not be able to solve the climate change problem. Yet, all social and economic development will be futile, if we do not address this major challenge.

This holistic view forms the foundation of Triodos Investment Management’s investment strategy for energy and climate. Read our vision paper Towards a low carbon economy (PDF) to learn more about our position on renewable energy and climate change.

Our fossil fuel-based energy system is the largest cause of global warming due to CO₂ emissions. It therefore plays a key role in any approach to successfully countering climate change. Most countries in the world have committed to some form of energy transition away from fossil fuels.

In its updated Renewables 2020 report, published in November 2020, the IEA’s main case scenario forecasts an increase in net renewable electricity capacity additions of almost 4% higher than in 2019. This means the world would have installed over 198 GW of renewable capacity this year, breaking another record and accounting for almost 90% of the increase in total power capacity. In 2021, the IEA expects renewables will achieve another record expansion, with almost 218 GW becoming operational – a 10% increase from 2020.

Global emissions are set to bounce back more slowly than after the financial crisis of 2008-2009, but the world is still a long way from a sustainable recovery. COVID-19 and its aftermath may suppress emissions, but low economic growth is not a low-emissions strategy. Only an acceleration in structural changes to the way the world produces and consumes energy can break the emissions trend for good.

The world has made striking progress regarding access to electricity in the last 10 years, far more than in previous decades. During this period, the number of people without access to electricity fell from about 1.2 billion to 789 million, according to the International Energy Agency in its Energy Progress Report 2020. Although this is good progress, it still means that one in 10 people still have no access to electricity. In addition, millions suffer from frequent power outages, mainly in developing countries. And almost three billion people have no access to clean cooking facilities, relying on dirty fuels, such as charcoal, coal and animal waste.

The world’s access deficit is increasingly concentrated in sub-Saharan Africa, where 580 million people lacked access to electricity in 2019. While the number of people without access to electricity has steadily declined since 2013, it is now set to increase in 2020 as a result of the COVID-19 pandemic, pushing many countries further away from achieving the goal of universal access by 2030.

What are our impact goals?

both on the supply and on the demand side. On the supply side by investing in improvement and modernisation of production and transportation. On the demand side by investing in energy-saving solutions. Our contribution to this goal is measured in the amount of avoided CO₂ emissions.

by offering affordable renewable energy, to replace fossil fuels. Our contribution to this goal is measured in the amount of renewable energy generated, its equivalent in the number of households that could be provided with clean power, and the amount of avoided CO₂ emissions.

by investing in different solutions and techniques that keep the energy system stable and robust. Also turning intermittent sources of renewable energy into a reliable alternative for the fossil fuel-based system. Solutions include storage, electric vehicles and smart grids. Our contribution is difficult to express in a figure but is illustrated in the case study about Giga Rhino.

to stimulate further decentralisation of the energy system by strengthening local ownership of energy generation, and improving public awareness, support and involvement in the energy transition along the way. Our contribution is difficult to express in a figure but is illustrated in the case study about solar park Eerbeek.

What is our investment approach?

Developed countries

In developed countries, we focus on the transformation of an existing energy system into a more differentiated system.

Whereas fossil fuel power is generated in a centralised power system, renewable power, by its nature, can also be generated in decentralised systems. Wind and solar power, for example, can be small in scale and feed into local/regional distribution grids.

In addition, the Paris Climate Agreement target cannot be reached without reducing energy demand by improving energy efficiency.

Developing countries

In addition to reducing CO₂ emissions, our added focus in emerging markets is to improve access to affordable clean energy. We distinguish between centralised and decentralised generation capacity.

Many developing countries have a limited centralised grid, available only in urban areas. We therefore focus on increasing grid-connected generation capacity to meet the rapid growth in demand in proven technologies, such as wind, solar and run-of-the-river hydroelectricity.

The decentralised, off-grid projects we finance aim to improve access to energy of local communities in rural areas, or to provide local commercial and industrial projects with the means to generate their own power.

Impact highlights

The impact data below refer to two of our impact goals: improve energy efficiency, and increase generation and improve access.

288,000 tonnes of CO₂ emissions avoided

CO₂ emissions avoided

The clean energy generated by the projects we (co)financed, resulted in 1,880,000 tonnes of avoided CO₂ emissions. Based on our share in these projects, avoided CO₂ emissions amounted to 288,000 tonnes.

267,000 households provided with clean electricity

Households provided with clean electricity

The projects we (co)financed, generated enough clean electricity to cover the annual demand of 2,900,000 households. Based on our share in these projects, this number amounts to 267,000 households.

500 MW capacity

Generation capacity

The total generation capacity of the projects in portfolio is 1,900 MW. Based on the share we financed, the capacity amounts to 500 MW.

779,000 MWh produced

Electricity production

The total electricity production realised by the projects in portfolio in 2020 is 4,280,000 MWh. Based on the share we financed, production in 2020 amounted to 779,000 MWh.

Impact measurement
When reporting our impact as a sustainable asset manager, we include all the impact of the projects and clients that we finance. This is called the contribution approach.

We used the contribution approach to report the greenhouse gas emissions of our renewable energy portfolio up to 2017. This was previously both practical and, we believe, reasonable. Since 2018, we also include the attribution approach in our carbon disclosures. This means that we calculate the avoided emissions based on the proportion of our finance in a project.

It’s important to note that an attribution approach leads to lower carbon emissions figures than a contribution approach. That is because a contribution approach accounts for all the emissions from a project rather than a proportion of them. The attribution approach is a more accurate reflection of our responsibility for the greenhouse gas emissions of the projects we finance and is consistent with the PCAF methodology. For a detailed explanation, please read the Triodos Bank Greenhouse Gas accounting methodology.

The impact of our funds

Find out in more detail how each of our funds – Triodos Groenfonds, Triodos Renewables Europe Fund and Hivos-Triodos Fund – contribute to the energy transition.

How storage is the key to acceleration of the energy transition

Energy storage is necessary to level-out the imbalances of the supply and demand of renewable energy. Triodos Energy Transition Europe Fund invests in Giga Rhino storage batteries.

Impact on a global scale

Explore a selection of our investments and find out how they work towards a green, inclusive and resilient economy.

By using this tool you agree with the content of this disclaimer.

The purpose of this tool is to inform investors about the type of investments and their potential sustainability impact. The information in the tool is of a general nature and does not constitute an opinion of Triodos Investment Management of the financial instrument. Therefore, the tool is not intended and should not be construed as an offer, invitation or general solicitation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or investment recommendation.

Impact Equities and Bonds

The SDGs mentioned in the company sections are linked to the (main) transition theme that the company contributes to, not directly to its products or services. Refer to the Sustainability Annex in the prospectus for more information.

All investments carry risk and all investment decisions of an individual remain the responsibility of the individual. Past or estimated results are no guarantee or indication of future results. Triodos Investment Management does not accept any liability for any losses.

The information in the tool is updated on a regular basis. However, the tool is not updated on a daily basis. Therefore, the information in the tool can be outdated. Triodos Investment Management can not be hold liable for information that is outdated.

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Find out more about our impact investment funds in energy and climate to make your money work for positive change.

Accelerating the energy transition

Why do we invest in the energy transition?

What are our impact goals?

What is our investment approach?

Impact highlights

CO₂ emissions avoided

Households provided with clean electricity

Generation capacity

Electricity production

The impact of our funds

Triodos Energy Transition Europe Fund

Impact report

Triodos Groenfonds

Impact report

Hivos-Triodos Fund

Impact report

How storage is the key to acceleration of the energy transition

Solarvation Energy develops plan for energy-neutral farm

The road to transition needs energy democracy

Solar panels on landfill site in Eerbeek

Impact on a global scale

Want to invest for impact?

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Triodos Energy Transition Europe Fund

Triodos Groenfonds

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Accelerating the energy transition

Why do we invest in the energy transition?

What are our impact goals?

What is our investment approach?

Impact highlights

The impact of our funds

Impact on a global scale

Want to invest for impact?

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