Selection processes for sustainable funds, such as ESG or best-in-class approaches, are important and correct, but they are no longer sufficient today. Anyone who wants to change the world positively as an impact investor needs new approaches.
"The fate of our climate is in the hands of impact investors." This quote comes from Christiana Figueres, former Secretary General of the Secretariat of the United Nations Framework Convention on Climate Change and the driving force behind the Paris Agreement. Christiana Figueres thus aims at the important role of banks, fund companies and investors in the fight against the climate collapse.
Triodos Investment Management (Triodos IM) is an impact investor who is aware of the responsibility, Bring money to where it has a positive impact. As Europe’s leading sustainability bank, we want to direct money flows in such a way that they contribute to Climate goals and the United Nations’ Sustainable Development Goals (SDGs) to reach. Triodos IM does its part through managing mutual funds.
Making money work sustainably has been our central goal since our foundation in 1980. We were and are always looking to increase our positive impact. This endeavor is now reflected in the readjustment of our Triodos IM.
A sustainable investment can make a contribution to climate protection. (Photo: © Pixabay)
ESG, exclusion criteria and best-in-class are no longer enough
In Germany, Triodos Bank u. a. sustainable investment funds from its Dutch subsidiary Triodos IM. Many providers now have sustainable funds. Almost everyone has in common that their portfolios are selected using so-called ESG and exclusion criteria as well as best-in-class approaches. Triodos IM believes that this traditional selection criteria are no longer sufficient to meet the ecological and social challenges of our time.
That is why Triodos IM is now going one step further – and thus going beyond traditional sustainable investment approaches. But before that, a brief review: What do ESG stand for? & Co.?
- ESG stands for environmental, social and governance – i.e. for Environment, social issues and good corporate governance. Observing ESG criteria as an investor means selecting companies that do not violate international standards in the three areas.
- Exclusion criteria mean that the investment policy of the respective fund defines clear no-gos, into which investments must under no circumstances flow. For example, these are investments in the armaments industry, in nuclear companies or in the coal industry.
- Best-in-class investments mean investing in the best companies in an industry. Best-in-class does not mean that these are really sustainable companies, they only score better in terms of sustainability compared to competitors from the industry.
As an asset manager, observing these three points is a good and important step for more sustainability in your investment. In the eyes of Triodos IM, however, it is no longer sufficient. That is why the Triodos Bank subsidiary has decided to select companies for a positive selection process for their funds: You are specifically looking for companies that really make a positive difference in the long term. Companies that clearly address ecological and social challenges and Provide solutions to ecological and social problems that make a demonstrably measurable contribution to the transition to a sustainable economy.
Triodos IM invests in companies that make a measurable positive contribution to a sustainable economy. (Photo: © Grant Ritchie – Unsplash.com)
Triodos IM focuses on seven subject areas that are essential for a positive future for our world. Companies in which Triodos IM invests the funds must make a measurably positive contribution to at least one of the following transition issues:
- Sustainable food and agriculture
- Renewable resources
- Sustainable mobility and infrastructure
- Sustainable innovations
- Happy and healthy people
- Social participation and responsible people
If companies are found that are eligible for this positive screening for investments, Triodos IM checks in a second step whether a company meets its strict minimum standards for investments.
Impact beyond the investment
In order to further increase the sustainable impact of the Triodos IM funds, the respective asset manager conducts active dialogues and has various other feedback loops with companies in order to influence their business activities positively, i.e. to make them even more sustainable. Where appropriate, Triodos IM discusses essential and relevant questions about sustainability performance. Another part of the strategy is to vote in the general meetings of all companies in which funds are invested and to influence their strategy by exercising shareholder voting rights. To this end, Triodos IM also works regularly with other institutional investors.
Climate-friendly projects can be financed with sustainable investments
New names for our funds
The realignment of content is also reflected in the name of the funds:
- The Triodos Sustainable Equity Fund becomes the
- The Triodos Sustainable Bond Fund becomes the
- From the Triodos Sustainable Pioneer Fund of the
- From the Triodos Sustainable Mixed Fund of .
More sustainable funds – more impact
In addition, we have opened up in Germany as a platform for funds from other, sustainable providers. Our customers can now also buy investment funds through us that are not managed by Triodos IM. Why did we do it? Because we can increase the impact for our customers. The three additional funds initially complement the offers from Triodos IM. They focus on investment areas that Triodos IM has not yet offered and are carefully selected. They meet the strict sustainability criteria of Triodos IM and have gone through their complex selection process. This is exactly why we were one last year Cooperation with the sustainable crowdinvestment platform bettervest which can be used to invest directly in projects that e.g. make a contribution to climate protection.
In the spirit of Christiana Figueres, the Triodos Bank Group wants to influence our destiny positively, with the means available to it as a bank and asset manager: the money of its customers.
The post originally appeared on the Triodos Bank blog
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