Triodos enters into dialogue with companies to create a lasting positive change for both the companies and for society. We engage both independently and collaboratively with other like-minded investors, but always with the thought that change, even just a small one, can create a significant impact.

Strength through collaboration

Change does not happen without a cause; rather it is the result of how we engage with companies. Recently Triodos combined efforts with other responsible investors, those that have a focus on long-term ownership and constructive dialogue with companies, to steer money to realize lasting positive change. With that in mind, Triodos recently initiated collaborative engagement on the issue of conflict minerals with European companies. The goal was to motivate the companies to conduct supply chain due diligence and to avoid using minerals that originate from mines in conflict zones where the profits end up in the hands of rebel fighters, and thereby finance wars that lead to the death of many innocent people. With the support of six other institutional investors, we engaged with 13 companies in different industries about their use of conflict minerals, knowledge of regulatory developments and the steps they can take to assess their supply chain. To date nine companies have taken action to address the topic. Three companies, Pirelli, Elekta, and Smith & Nephew have expressed a clear commitment to sourcing conflict-free minerals. Many other companies are working on supply chain due diligence procedures.

Appeal to the European Union

In 2014, Triodos initiated a joint investor statement addressed to the European Union to adopt stronger conflict minerals legislation. In the US there is striking progress on due diligence of conflict minerals, which is mostly driven by legislation that aims to prevent mineral sourcing revenues from fuelling the armed conflict in the Democratic Republic of Congo. It has turned conflict minerals disclosure from a reputational issue to a multi-sector reporting requirement. Our joint investor statement represented more than EUR 855 billion assets under management and urged EU policy makers to ensure more compatibility between the proposed EU conflict minerals regulation and US legislation. We believe that European regulation of comparable strength is needed to drive change in the European market.  Our statement was presented well in time to be part of the discussion in the European Parliament. We expect the European Parliament to vote on the proposed regulation around March 2015.

Flutter of a wing

A highly topical issue at present it tax avoidance and an increasing number of companies are being criticized for irresponsible tax practices. Triodos believes that companies should pay taxes in the countries where their earnings are realised. Responsible tax payment is particularly important for developing countries because governments in those countries rely heavily on corporate income tax to fund essential public services such as health care, education, and transport. In 2014, for the third year in a row, Triodos approached all investee companies, and asked them to develop a policy on responsible tax and tax transparency. Although the response has been slow to date, we are witnessing small changes and companies are increasingly more transparent about effective tax rates. One of the companies we approached, Svenska Handelsbanken, informed us that our questions inspired the company to develop country-by-country reporting. As long as we and other investors keep challenging companies to report on the taxes they pay in individual countries, companies can no longer ignore the investors’ concerns on this issue. 

Change is like the flutter of a butterfly’s wing; one beat can cause a hurricane creating a ripple effect that starts the change. Triodos will continue to actively engage with the companies we invest in to influence the way they do business, and to continue to raise awareness of sustainability, stimulate action and create lasting change.

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.