Renewable Resources

How to shift to a regenerative economy?

Our use of natural resources, both in quantity and quality, is not compatible with a livable planet in the long run. Material extraction is contributing to deforestation and the destruction of ecosystems; the massive use of fossil fuels for energy production is accelerating climate change and causing pollution-related health issues, affecting the livelihoods of millions of people.

Natural resources exploitation is creating wealth for few, while basic services like reliable energy supply and clean water remain barely accessible to many. A truly sustainable economy can only materialise if we rethink the way we access and use natural resources, optimising the use of those that can be naturally replenished in the course of time (renewable resources) and investing for a future in which our use of resources is efficient and respectful and contributes to everyone’s wellbeing.

Based on our vision Towards a low carbon economy, we strive for a low carbon world through the phasing-out of fossil fuels and their replacement by renewable energy. We also envision a world where resources (raw materials, water, clean air) are used at a speed that allows for sufficient time to regenerate or replace them. The ultimate goal is an economy that is regenerative and that thrives within planetary boundaries.

Transition to a renewable resources-based economy

Our challenge is to transition from an economy that uses far too much fossil energy and non-renewable resources towards an economy that thrives within planetary boundaries and is in general regenerative. This is a multi-faceted transition, which is covered by three different transition themes: renewable resources, sustainable infrastructure and mobility and circular economy. What all three themes have in common is that they contribute to more sustainable and responsible resource use. The distinction is where they contribute in the resource cycle.

Renewable Resources covers resource collection, renewable energy generation, bio-material supply and resource treatment and processing, which belong to the upstream part of the resource cycle (see figure in the 'Read more' section).

Our main focus in this theme is on the following aspects:

The resource cycle

Sustainable Mobility and Infrastructure covers energy transmission and distribution, as well as the provision of solutions for energy storage, efficiency and electrification of mobility, among other topics.

Circular Economy covers specific solutions for material recycling and business models that lead to lifetime extensions of products (repair, products as a service, refurbishment).

Increase, preserve, and ensure

To identify and select companies that contribute to this theme, we have established a set of core impact objectives. We look at each individual company for positive and negative contribution to these objectives, in line with the SDGs. We individually look at each company and use both qualitative information and quantitative data to screen companies and monitor alignment with our theme specific impact objectives and SDGs.

We use impact indicators based on sources of revenue data to track companies’ contribution towards these objectives. We further substantiate our analysis by looking at companies’ product offering and relevant sustainability indicators as well as other qualitative evidence of sustainable practices as stated by companies’ policies and active programmes.

In some instances, contribution to impact objectives cannot be captured fully through revenue analysis, or data might simply not be completely available. This is the case of process-related impact, for example:

Efforts to reduce greenhouse gas emissions in production
Reduction of hazardous chemicals in production
Increased product lifespan
Upholding fair and transparent value chains
Efforts to reduce waste

In such cases our analysts look at qualitative evidence of contribution to these objectives, for example in the form of policies and programmes, or active participation to relevant platforms. This allows to also tackle challenges that can be traced back to other relevant SDGs, in a more qualitative fashion.

We also find that some important transition objectives might not be directly investable through listed equities and bonds at this point in time. Such is the case, for example, of reforestation and responsible management of resources.

Do no harm

After screening companies for positive impact, the selection is further reinforced by the application of our minimum standards, which are internally developed and regularly updated.

The main objective and rationale of minimum standards is ensuring that we do not invest in companies offering products or adopting behaviours that clash with our vision and beliefs.

Companies that are developing and producing solutions related to renewable resources vary from renewable energy producers to utilities (water utilities), producers of paper and forestry products, specialty chemicals companies (e.g. bioplastics), as well as companies active in related industries including semiconductors, industrial machinery, and electrical equipment.

For these companies, we currently apply minimum standards on the following:

Triodos IM will only invest in companies that adopt an overall sustainable strategy. Sustainable products can never be a reason to neglect other negative impact for example corporate governance violations or practices that are not respectful of human rights. A few examples will explain this approach further:

Biomass is only acceptable when highly efficient and produced with waste streams. Using food crops or fresh wood for biomass energy is not acceptable for us.

Many innovations in electrification, including renewable energy devices like solar panels, contain rare minerals. The mining of those minerals is often conducted under very difficult circumstances and in emerging markets or remote areas. Violations of labour rights (safety issues, child labour and long working hours) are common. In addition, some minerals like Coltan come from DR Congo and neighbouring countries, where profits are used to finance local armed conflicts. Triodos requires companies’ responsibility for safeguarding human rights and labour rights, and the avoidance of conflict minerals.

We do not invest in the production or retailing of energy from fossil fuels nor in the mining of coal and in products and services directly related to energy production and coal mining. We do accept a minor involvement in these activities (representing less than 5% of the company’s total revenues) if the company clearly fits into one of the seven transition themes and meets Triodos Minimum Standards.

Nuclear Power is excluded from investments. It does not come from renewable resources and there are still concerns about safety and nuclear waste. Nuclear power is also a very expensive energy source. Considering the large need for renewable energy finance, we focus on this activity.

Arms are not the first topic that comes in mind when looking at renewable resources. Yet this topic can be relevant for companies active in the related industries important for renewable resources, e.g. semiconductors, electrical equipment, and industrial machinery.

Arms are not the first topic that comes to mind when looking at renewable resources. Yet this topic can be relevant for companies active in the related industries important for renewable resources, e.g. semiconductors, electrical equipment, and industrial machinery.

We track controversies related to our minimum standards for all companies we invest in and engage with companies on material controversies that violate our minimum standards or that could lead to a breach of our minimum standards, e.g. following a merger.

For Renewable Resources we invest in companies that are already well aligned with our vision (upper right), and also in companies that display a clear commitment to move towards more sustainable practices, and that we deem suited for the challenge (upper left). We are also open to smaller, innovative actors that can benefit the business ecosystem with their solutions (lower left).

Here we have selected three examples of companies we invest in, and placed them on the transition curve. Scroll down for more examples and an up-to-date list of our investments in this theme.

First Solar provides of photovoltaic (PV) solar energy solutions.
The company designs, manufactures and sells PV solar modules with an advanced thin-film semiconductor technology. It also produces and sells PV solar systems and provides operational and maintenance services to system owners, such as utilities.
100% of the revenue of First Solar is focused on solar photovoltaic modules, contributing to our objective to increase the availability of renewable energy. This is in line with SDG 7 ‘Clean and Affordable Energy’ and indirectly contributes to SDG 13, ‘Climate Action’.
The company is committed to responsible construction practices and minimising the environmental impact of its products across the life cycle, from raw material sourcing to end-of-life recycling. Their recycling process recovers about 90% of the glass in new glass products and over 90% of the semiconductor material in new modules.
Their modules also use up to 400 times less water per MW hour than conventional energy and up to 24 times less water than other PV solar technologies.

Kurita Water Industries provides products, technologies and maintenance services related to water treatment.
It provides a large share of its services to the electronics and semiconductors industries, primarily providing ultra pure water that is necessary for the production of high tech micro devices, but also contributing to water treatment after industrial processes.
With all of its revenue originated from water treatment services, the company strongly contributes to water conservation, in line with SDG 6 ‘Clean Water & Sanitation’.
We engage with Kurita on its water footprint, and specifically on a more informativeScope 3 accounting of its water treatment services. Kurita appears to have a very high water footprint, as the company both filters and recycles/reuses water at clients’ premises, and therefore “uses” large amounts of water in its services. We discuss with the company how to better reflect the true nature of its water footprint in reporting.

Vestas Wind Systems, headquartered in Denmark, is among the largest producers of wind power systems worldwide. The company designs, manufactures, installs, and services wind turbines that generate electricity across the globe.
The totality of its revenue results from wind power equipment and services, clearly contributing to the generation of energy from renewable sources,in line with SDG 7 ‘Clean and Affordable Energy’, and indirectly supporting SDG 13 ‘Climate Action’.
Vestas has declared a target of producing zero-waste wind turbines by 2040, and has recently announced its intention to develop the first fully circular wind turbine. The roadmap includes the reduction of supply chain waste by 50% and increase the percentage of recycled materials in manufacturing up to 94% by 2030.
We engage with Vestas on the topic of conflict minerals in the supply chain. Vestas is committed to use only conflict-free materials for its products, and we actively monitor the company’s progress in this area.

Renewable Resources Investments

Renewable Resources