For the sixth time in 4.5 billion years, the Earth is facing mass-extinctions caused by human behaviour. We are the problem, so we are also responsible for the solution. Companies can contribute a lot by changing the way they do business.

The world’s fast-growing human population and ditto consumption rate lead to a rapid depletion of the Earth’s resources. Our planet’s predicament begins with an increasing demand for land to build homes, to grow food, and to harvest other resources to meet our basic needs. The consumption rate in developed countries is further increasing the need for land. In order to meet demand for meat, for example, farm animals are being fed with soy from South America, which is leading to large-scale deforestation and destruction of natural habitats that are the homes of wildlife. Natural environments are also being destroyed by the spread of hazardous and non-degradable waste, by the depletion of natural water resources, and by the changing climate.

This trend needs to be curbed to prevent irreparable damage to our natural environment. The necessary change into a more sustainable human society requires a lot of effort and capital from all different stakeholders. Here is where impact investors such as Triodos come into play.

Strict environmental protection standards

As an investor Triodos is in the position to influence and stimulate company behaviour. Based on our strict environmental standards, we only select companies for investment if they demonstrate awareness of their potential negative impacts, and if they have measures in place to minimise them. Our selection criteria focus on loss of biodiversity, deforestation and water scarcity. The Food Products industry for example, sources basic ingredients from large acreage farms that are often very intensively cultivated. Loss of biodiversity and/or water scarcity are huge risks here. Another important issue is the effect of genetically modified crops on nature and biodiversity. We only select companies for investment if they proactively seek to limit the use of such crops.

Selected

A company selected for investment is US food production company WhiteWave Foods. The company aims to reduce human addiction to animal-based products by offering a wide range of tasty and healthy foods and beverages from vegetable sources. WhiteWave has its own strict environmental protection standards and explicitly addresses natural habitats and biodiversity in its Supplier Code of Conduct. In fact, it forbids suppliers to source materials that directly or indirectly contribute to deforestation of high conservation value areas, or to interfere with habitats of endangered species. It does not source soybeans from the Amazon region, and only sources palm oil that has been certified according to the standards of the Roundtable for Sustainable Palm Oil (RSPO). It also actively manages water usage, and employs composting and crop rotation on its’ two company-owned farms in the US, which keeps the soil healthy and reduces the need for irrigation. Whole Foods Market also stimulates its suppliers to produce without the use of genetically modified organisms (GMOs), and has committed to voluntarily labelling all products that do contain GMOs by 2018.

In 2015, Triodos signed an investor letter sent to companies in the food sector with low water disclosure practices. Among these companies is WhiteWave. The letter called upon companies to improve their water risk disclosure practices. Whereas the company is recognized for its high level of transparency in the disclosure of climate change-related information, we will continue to engage with the company to also improve its transparency on water disclosure. Given the sustainability ambitions of the company and its progress in fulfilling these, we expect WhiteWave to also address this issue and pick up on our recommendations.

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.