Through our socially responsible investment strategy, we invest in listed companies and bonds that outperform others in their sector on ESG criteria and that therefore drive the sustainability agenda of their sector forward. The best-in-class approach can play a catalyst role in encouraging companies to stay in a frontrunner position and can inspire companies that lag behind to improve their performance.

Why Triodos invested in oil and gas in the first place

Believing in ‘yes, unless…’, rather than ‘no, except…’, we made the conscious decision a decade ago to maintain the possibility of investing in the oil and gas industry through our SRI strategy. Products and services from this sector are an integral part of our economy and excluding the companies in this sector would have prevented any opportunity to engage and motivate the companies to improve their sustainability performance. Despite our engagement efforts, however, we haven’t seen sufficient positive change in the sector.

Full exclusion of oil and gas

In many sectors, such as the automotive industry, companies are improving their sustainability performance, whereas we see the opposite happening in the fossil fuels sector. Many oil and gas companies are increasingly moving into areas and techniques that put a lot more pressure on the environment, like extraction of oil in fragile regions and unconventional oil and gas.

Taking into account the ever more pressing challenge of climate change, which calls for a rigorous change in the way we meet our energy needs, Triodos decided to exclude all companies that derive more than 5% of their revenues from the energy sector from its sustainable investment universe. This includes companies that produce tailor-made products that are essential for oil and gas production. As a result of this change, Dong Energy from Denmark has been removed from our sustainable investment universe. Other companies removed were Gasunie, a Dutch gas utility, and Vopak, a Dutch oil and gas storage and transportation company.

Zero tolerance for unconventional oil and gas

Since 2012, Triodos has had a zero per cent threshold for companies involved in unconventional oil and gas exploration, such as shale gas and oil sands. The exclusion came on top of our zero per cent threshold for involvement in nuclear power, and our five per cent threshold for involvement in coal. As a result of the change at that time, Triodos removed the last two oil and gas companies from its investment universe, Spanish Repsol and British Gas.

Future direction

To help the necessary transition from a carbon-based economy to a sustainable economy, we will invest heavily in companies involved in energy efficiency and renewable power producers through our SRI strategy. Already 15% of the companies selected for sustainable investment by Triodos contribute to climate protection. Examples of such companies include American Cree (LED-lighting and lightning technology), American First Solar (solar panels) and Danish Vestas (wind energy).

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.