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Triodos Investment Management B.V.

PRI reporting framework 2018

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Our minimum standards ensure that unsustainable products, like weapons and nuclear power, and unsustainable production processes, such as the violation of human rights and environmental damage, are excluded from our sustainable investment universe. But they also include preset requirements for policies and programmes that show the company is aware of the sustainability risks of its industry and that it takes action to mitigate these risks.

 

Screened by

Description

We search for companies that contribute to clean planet, healthy people and climate protection by means of their products and activities, and the sectors they operate in. For the best-in-class screening we look at over 70 indicators which cover environmental, social and corporate governance issues.

Information provided refers to 2017. Please note that, as of April 2018, Triodos Investment Management will bring the asset management of its SRI funds in-house. As of that month, a team of investment analysts will integrate the ESG and the financial performance in their analysis of companies, resulting in the definition of the investment universe. Related organisational changes are being implemented and expected to be fully in place by the end of 2018. See LEI 01.2.

Screened by

          CITES, WHO Code on Marketing of Breastmilk Subsitutes, Roundtable on Sustainable Palm oil, Roundtable for Responsible Soy, FSC, MSC Kimberley Process a.o.
        

Description

The principles listed above help us to identify if companies meet our minimum standards. But being a signatory to these principles and conventions is not always considered enough. Our requirements often go beyond the demands of these principles and conventions. We think that it is important that companies develop their own policies (in which they may refer to the principles and conventions listed) and that they explain how these policies are implemented in the organisation by means of programmes. In addition, we expect a company to report on targets and performance so we can identify if it has successfully incorporated its policies.

See also: https://www.triodos-im.com/binaries/content/assets/tim/sri-theme-documents/minimum-standards.pdf

04.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

The minimum standards are dynamic, evolving over time with our deepening understanding of sustainability, and reflect the latest developments in society. In practice, this means that we are continually tightening them, to ensure that we only invest in companies that are really setting the pace within their industry.

Changes to the minimum standards are established based on a long process of research and interviews with experts and companies. After a careful process of development, the proposed changes are put forward to the Investment Committee of the Triodos Sustainable Investment Funds for approval. This Committee is chaired by the Managing Director of Triodos Investment Management. If changes are required to the minimum standard document or other documentation that is published on the Triodos website, approval is sought also from the Executive Board of Triodos Bank. Changes in the minimum standards are published on the website and in the (semi-) annual report of the funds.

Changes to our approach as of April 2018 (LEI 01.2) will not affect the application of our minimum standards.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

          ESG research includes a four eyes principle and a consistency check on the application of our minimum standards.
        

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]

All companies in our investment universe are subject to comprehensive ESG research, which is repeated every three years. Each company assessement is checked based on a four eyes principle. The primary research is conducted by the analyst in charge of the study and each study result is peer reviewed by another analyst. Moreover, all studies are then checked by a senior staff member for consistency in the application of minimum standards between studies. In case we are unable to identify if a company meets our sustainability criteria or when there are concerns about the performance of  a company, contact is sought with the company for additional information. We inform companies about our research findings to allow them to respond as detailed as possible. All companies that are contacted during research and all companies that are selected for sustainable investment by Triodos are informed in detail about the findings and conclusions of our research.

On a quarterly basis changes to the Triodos Sustainable Investment Universe are put forward to the Investment Committee for approval. This committee is chaired by the Managing Director of Triodos Investment Management.

Information provided refers to 2017. Please note that, as of April 2018, Triodos Investment Management will bring the asset management of its SRI funds in-house. As of that month, a team of investment analysts will integrate the ESG and the financial performance in their analysis of companies, resulting in the definition of the investment universe. Related organisational changes are being implemented and expected to be fully in place by the end of 2018. See LEI 01.2.


LEI 06. Processes to ensure fund criteria are not breached

06.1. Indicate which processes your organisation uses to ensure fund criteria are not breached

06.2. If breaches of fund screening criteria are identified - describe the process followed to correct those breaches.

Sustainability alerts on companies selected for investment are systematically checked by Triodos Research to ensure that all companies in the Triodos Sustainable Investment Universe continue to meet our sustainability criteria. If a company is in breach of one of our investment criteria, this can lead to immediate exclusion. Delta Lloyd Asset Management is informed of this breach and the new status of the company. If the company is in the portfolio of one of the funds, Delta Lloyd Asset Management has six months time to sell our position in this company. In practice Delta Lloyd Asset Management immediately sells any stake in the company.

In August 2014, SICAV I started using an automated IT system from RBC Investor Services Bank SA (custodian and fund administrator) to ensure that no investments are made outside the Triodos Sustainable Investment Universe.

On top, every month we receive the portfolios of all funds managed by Delta Lloyd Asset Management. Triodos then checks if all companies in the portfolios are selected for sustainable investment. If this is not the case Delta Lloyd Asset Management has to sell the share immediately. In 2017 no such incident took place.

Information provided refers to 2017. Please note that, as of April 2018, Triodos Investment Management will bring the asset management of its SRI funds in-house. As of that month, a team of investment analysts will integrate the ESG and the financial performance in their analysis of companies, resulting in the definition of the investment universe. Related organisational changes are being implemented and expected to be fully in place by the end of 2018. See LEI 01.2.

Our new IT system automatically checks whether the companies that are invested in are indeed part of the investment universe. If not, no investments can be made.

06.3. Additional information.[Optional]


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