Change is a matter of patience


The number
of companies we
had dialogue with

With our investment products and services we only invest in companies that contribute to a sustainable society or clearly lead the sustainability agenda in a particular sector. We select these companies based on comprehensive analysis along strict sustainability criteria. We also conduct constructive dialogue with companies to stimulate improved sustainability performance. Despite the fact that we invest only in companies that outperform on sustainability, we see it as our role to identify areas for further improvement and to provide recommendations for change to the companies we (may) invest in.

Often such change is visible only after a few years. Dutch chemicals company DSM and British publisher RELX are two examples showing that change usually does not come overnight.

Since 2007, Triodos Research has been in contact with DSM to increase its renewable energy use and production. Given that DSM has an annual energy use to the equivalent of 3 million households, this is an important topic for the company. In September 2015 DSM announced its commitment to purchase 50% of its energy from renewable sources by 2025, and to ultimately increase this to 100%.

British publisher RELX has been the subject of criticism from scientists for years. The concerns mostly relate to the high subscription fees charged by the company for individual journals. Already in 2012, Triodos Research addressed this issue at the Dutch AGM. Since the beginning of 2015, criticism has further intensified. In a telephone conversation with the company held in August 2015, our concerns were again discussed. The company seemed to be well aware of the balance between open access versus income for the company. Until then the company had 140 open access titles and applied a 12 month embargo period for open access. The growth rate in the number of published articles is 5% per year and the subscription costs of access to articles has dropped 80% over the last years. On December 10, 2015, it was announced that the Dutch Universities and Elsevier (part of RELX) had closed an agreement about a transition to open access. We consider this a significant improvement and at the same time we will continue to seek further progress.

Each selected company is reassessed every three years. In 2015, Triodos Research started a re-assessment of Swedish Svenska Handelsbanken. Prior to the start of the re-assessment, Triodos Research had a meeting with the company to discuss its general sustainability performance and areas for improvement. Its sustainability reporting does not reflect the significant progress that the company has made over the past few years. The company is open to our suggestions for further improvement of its reporting and is currently examining how best to integrate our recommendations.

Another company that was reassessed in 2015, but did no longer belong to best-in-class, was Compass group. We informed the company that it is no longer selected for investment. The company asked Triodos Research to provide additional information “as it would greatly help us in driving the continuous improvement that we seek to achieve across our CR activities”. Triodos Research provided additional information about areas for improvement and this feedback was followed by a conversation to further elaborate on our recommendations. Triodos Research already noted in September 2015 that the company had improved its performance.

In 2012, 2013 and 2014 we raised attention for tax policy and transparency. During these three years we noticed only little progress with companies. Since 2014, we are following up on this topic and we are pleased to see that companies are starting to take action. Philips is an example of a company that since 2014 publishes its tax statement. And recently Starbucks, a company that has repeatedly been criticized for abusing the tax system in the UK, announced a tax rate of 24% in the UK over 2015. This rate is higher than the UK corporate tax rate of 20%. The amount Starbucks will pay over 2015 is approximately the same amount it paid in taxes over a total period of 14 years since 1998.

In last year’s engagement report we discussed the topic of conflict minerals quite extensively. We witnessed a lot of positive change on this topic with a number of companies. In 2015, our engagement efforts continued. In 2012, Research discussed the potential use of conflict minerals with Spanish company Gamesa. At that time the company did not have a policy. At the beginning of 2015, the company included an explicit requirement for ‘conflict free’ minerals in its supplier code. Moreover, the company is working with an external partner to develop an approach for supply chain controls. In discussions with Dutch Accell Group, the company informed us that they are currently assessing their supply chain on the use of tin that potentially comes from conflict regions. The company also stated that it will address the issue in the ‘Bicycle working group’ of the World Federation of Sporting Goods Industries.

Thanks to growing pressure from numerous stakeholders, including Triodos Investment Management, the Rana Plaza Donors Trust Fund has finally reached its goal of USD 30 million. This fund was set up in January 2014 by the International Labour Organisation to compensate the victims of the Rana Plaza disaster in Bangladesh in April 2013. You can find more information in section ‘Collaborative dialogue’.

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