Triodos Investment Management (Triodos IM) claims the guidelines by which it ensures the effectiveness of its approach to sustainable and impact investing have "consistently become stricter" since the inception of its first listed equity strategy more than 20 years ago.
Since March 2018, its listed equity funds have required each portfolio company to positively contribute to at least one of seven 'transition themes', each of which is central to helping society overcome systematic sustainability themes, according to Triodos IM.
Triodos IM then applies an exclusionary screen, according to which companies must prove that their business does not harm the environment or society. At any point after investment, if a company no longer meets these standards, all positions in the company need to be sold within three months. Triodos IM says its minimum sustainability standards "are among the strictest in the investment industry".
It engages with portfolio companies where the investor believes the business could improve its sustainability practices. Triodos IM discloses its full voting records, including reasons for any opposition to management.
It also reports on the impact its listed equities funds generate. Triodos IM says that because it distinguishes between holding companies' contribution to the Sustainable Development Goals (SDG) through products and services (direct) and through operations (indirect), this gives "a more complete and transparent overview of our SDG exposure".
Triodos IM invests for impact in global large-cap companies, through its Triodos Global Equities Impact Fund, as well as through global small- and mid-cap companies, through Triodos Pioneer Impact Fund.
William de Vries, director, impact equities and bonds at Triodos Investment Management commented: “We are very pleased to have received this recognition by Environmental Finance as Listed equities manager of the year. While 2020 was a challenging year in many aspects due to the impact of the Covid-19 pandemic, our listed equities funds have managed to perform well. This is for a large part a result of the strong and clear focus our funds have on investing for positive change. Investors are becoming more convinced of the need to invest in a more impact-conscious way. And that’s exactly what we do. Moving forward, we will continue to build on the successful track record of the transition themed investment strategy, benefitting both a sustainable society and the investment return of our clients.”
Last year, Triodos Global Equities Impact Fund posted an annual net return of 6.7% compared to 6.5% for the MSCI World Index, while Triodos Pioneer Impact Fund posted a net 2020 return of 22.2%, compared to 6.3% for the MSCI World Small & Mid Cap Index, based on data from RBC Investor Services.
Awards judges praised Triodos IM's "compelling story, clear rationale [and] clear focus on impact".
