During the year Triodos Bank signed the ground-breaking UN Principles of Responsible Banking. The principles define the global banking industry’s role and responsibilities in addressing current societal problems, including the climate emergency and social inclusion. They were launched, to some fanfare, during ‘climate week’ in New York during the summer. Triodos Bank played a leading role in developing this global framework, as part of the core group of banks who developed the Principles and shaped the framework. By the year end over 140 banks globally had signed up to the Principles, representing over USD 47 trillion in 49 countries with more banks continuing to sign up.

The participating banks promise to strategically align their business with the goals of the Paris Agreement on Climate Change and the Sustainable Development Goals and scale up their contribution to the achievement of both. By signing up to the Principles, banks said they believe that “only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources”, can they help their clients, customers and businesses thrive.

Triodos Bank is one of them. And as part of this we are committed to provide an update on what we have done or are doing in relation to each principle. The table below highlights this work.

Principle 1

Identifying society’s goals as expressed in the SDGs/Paris Agreement/other relevant frameworks

Aligning the bank’s business strategy with the identified goals

Triodos Bank was created in order to integrate social, environmental and cultural goals in a bank’s core business. As a result we only finance social, environmental and cultural sectors.

This principle is implemented as a consequence of this approach – see the SDG appendix, the Executive Board chapter, and this impact chapter which highlights our work in relation to the Paris climate goals among other things.

Prior to the creation of the SDGs, Triodos Bank has always produced an integrated annual report showing how sustainability is embedded in Triodos Bank’s strategy

Principle 2

Based on a portfolio impact analysis identifying the bank’s most significant (actual and potential) positive and negative impacts.

Setting SMART targets that address the bank’s most significant impacts, and drive alignment with the SDGs/Paris Agreement/other relevant frameworks.

Triodos Bank’s focus is to deliver positive impact, as described above.

More specifically, we have developed the Triodos Impact Prism tool that assesses impact in more depth and has been an integrated part of Triodos Bank’s assessments since the start of 2019, capturing the sustainability value of our loans. During 2020 this tool will also be applied across Triodos Investment Management.

As well as reporting extensively on the greenhouse gas emissions of our loans and investments we expect to set Science-based targets (SBT) after these are agreed by the SBT initiative and available to the financial sector.

We also define our aspirations in relation to the SDGs specifically, in the appendix to this report, on three levels; our baseline activity, direct activity and where we can play a role as a catalyst for systemic change.

Principle 3

Working with clients and customers to achieve more sustainable outcomes

Given the sustainable orientation of Triodos Bank’s business we have always engaged in dialogue with clients about optimising sustainability impact. This includes working with clients to help them think more cross-sectorally to increase their positive social and environmental impact.

During 2019 we engaged with customers working in sectors with the largest greenhouse gas emissions, relative to our wider loans and investments, to improve carbon footprint data quality, and as a first step before discussions about footprint reductions in future years.

We also offer products to incentivise more sustainable outcomes, such as a mortgage which offers a discounted interest rate for more energy efficient houses and additional discounts to help customers make environmental improvements to their home.

Principle 4

Consulting, engaging and/or partnering with stakeholders in order to improve the bank’s impacts.

Developing a stakeholder engagement policy/process.

Triodos Bank was a co-founder of a number of initiatives which foster the development of approaches to improve the impact of the bank and the wider sector; they include the Dutch Sustainable Finance Lab (and a similar initiative developed in Spain in 2019), and the Global Alliance for Banking on Values, a network of independent sustainable banks, which Triodos Bank Chairs.

In addition, we engage with stakeholders throughout the year at a national, regional and sectoral level, including a stakeholder engagement meeting at Triodos Bank’s Head Office, the process and results of which are reported in the stakeholder engagement chapter in this report. This year’s meeting paid particular attention to our impact in reducing our greenhouse gas emission and how best to report this as a leading values-based bank, for example.

We undertook stakeholder interviews, including a discussion on the merits of setting carbon reduction targets. We also reviewed and refreshed our stakeholder engagement activity in relation to identifying the material topics that Triodos Bank should address and report on.

We participated actively in COP25, helping to catalyse the Spanish Banking Association’s commitment on climate emissions reductions. This follows leading and extensive work on a similar financial sector commitment in The Netherlands.

We collaborated actively with many NGOs and other partners in advocating for a robust and ambitious application of the EU sustainable finance taxonomy.This was finally agreed in December 2019.

Principle 5

Having an effective governance structure in place that will enable implementation of the Principles.

Developing a culture of responsible banking within the bank.

Triodos Bank’s governance structure stems from its sustainability agenda which is aligned, and in some ways goes beyond the principles for responsible banking. Triodos Bank does not have shareholders, but depository receipt holders instead, and it is not listed on a stock exchange. This structure helps safeguard its mission and optimise its sustainability impact.

Since sustainability is core to the mission and embedded in all of our operations, we do not have a separate sustainability department.

Triodos Bank’s culture also stems from this mission and is detailed in our co-worker chapter in this report.

A Group Impact Committee will be created in 2020 to further develop Triodos Bank’s operational and strategic focus on impact.

Principle 6

Reporting on positive and negative impacts, and progress made on targets and implementation of the Principles.

This annual report, and this section of it in particular, details our progress in the implementation of our mission, which focuses on delivering positive impact for people, the environment and culture. As such it meets these goals. We have made a deliberate choice to use impact-based targets sparingly to ensure that we ‘hit the target without missing the point’. This approach is explored in more detail in this chapter.

We aim to assess both the positive and negative impacts on sustainability of all the loans and investments we make, via Triodos Bank’s Impact Prism tooling. In addition, we use negative screening criteria to avoid financing sectors we consider to be inherently ‘unsustainable’ such as the fossil fuel industry.

Triodos Bank is actively exploring the creation of plans to extend its positive impact by setting appropriate targets. This includes science-based targets linked to align the organisation’s portfolio with the Paris climate goals. Our intention is not just to set these targets but to identify effective plans to execute them. We intend to use targets when they help to deliver our mission, financing both positive environmental benefits and supporting social inclusion; hitting the target, without missing the point.

Verifying our impact data

The impact data included in the Executive Board report is in scope of the review procedures performed by the independent external auditor. Doing so is a logical extension of the auditing of our financial figures, as an integrated business that has sustainability at the core of its financial activity.