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Triodos Investment Management B.V.

PRI reporting framework 2018

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You are in Direct - Inclusive Finance » PIIF Principle 4: Responsible investment

PIIF Principle 4: Responsible investment

IFD 18. Tools for social performance reporting

Possible action:

Negotiate terms and conditions that are transparent, fair and reasonable, including fair break-up clauses.

18.1. Indicate if you use the following tools for social performance reporting:

Externally developed tools

During due diligence.

For monitoring and reporting purposes.

Describe the approaches used and frequency of use.

  • We use an externally developed tool, which is the Microfinance Transparency Pricing tool that we use to calculate the investees' product prices.
  • For SME Financial Institutions, we employ the Global Alliance for Banking on Values (GABV) scorecard to evaluate the sustainability performance of the institutions and their commitment to servicing the real economy.


 

In-house tools based on externally developed tools

During due diligence.

For monitoring and reporting purposes.

Describe the approaches used and frequency of use.

We use some inhouse-developed tools that are based on externally developed tools to evaluate and monitor the investees' social and environmental performance :

  • We have in house developed Sustainable Banking Assessment tool (scorecard) that evaluates our investees responsible policies and practices and how they embed their misison and vision across governance, treatment to management and staff, responsible finance, product and service offered, and environment elements. This scorecard takes into account various industry initiatives such as the Smart Campaign, Universal Standards for Social Performance Management, SPI4, and others.
  • For SME Financial Institutions, we have an in house developed environmental and social risk categorisation tool that takes into account investees' exposures to high environmental and social risk sectors. This tool was built upon the best practices of IFC and other Development Finance Institutions (DFIs).

 

Tools developed solely in-house

During due diligence.

For monitoring and reporting purposes.

Describe the approaches used and frequency of use.

18.2. Additional information. [Optional]


IFD 19. Retail institutions have independent financial/social rating and/or social audit

19.1. Indicate if you require the retail institutions in which you invest to have an independent financial rating.

19.2. Indicate if you require the retail institutions in which you invest to have an independent social rating.

19.3. Indicate if you require the retail institutions in which you invest to have an independent social audit.

19.4. Additional information. [Optional]


IFD 20. Due diligence on and monitoring and reporting of corporate governance among investees

Possible action:

Assist in developing appropriate references for corporate governance issues.

20.1. In relation to your due diligence on and monitoring and reporting of corporate governance among investees, indicate if you assess:

Compensation of the Board of Directors and Executive Directors (i.e. its transparency, the use of benchmarking)

Pre-investment

Post-investment

Describe what you look at and, if post-investment, the frequency of assessment. [Optional]

    

Composition of the Board (i.e. breadth and depth of experience, effective client representation, diversity)

Pre-investment

Post-investment

Describe what you look at and, if post-investment, the frequency of assessment. [Optional]

    

Whether the Board receives social performance management-related information from the management team that is analysed and contributes to Board decision making.

Pre-investment

Post-investment

Describe what you look at and, if post-investment, the frequency of assessment. [Optional]

20.2. Additional information. [Optional]


IFD 21. Training or assistance for investees on corporate governance

Possible action:

Assist in developing appropriate references for corporate governance issues.

21.1. Indicate if you provide training or assistance for your investees on corporate governance.

21.2. Additional information.


IFD 22. Percentage of investees where board seats are held

Possible action:

Assist in developing appropriate references for corporate governance issues.

22.1. In relation to your direct portfolio in equity (as reported in IFD 04), indicate what percentage of investees you either have board seats with, or with which have selected a board member:

22.2. Indicate how frequently you participate in meetings.

22.3. For those equity investments where you do not hold board seats, indicate how you attain or maintain influence.

          We make sure that our capital has a catalytic effect and is used to support the underserved market in the inclusive finance sector.
        

22.4. Additional information.


IFD 23. Procedure to integrate environmental issues in investment decision processes

Possible action:

Assist in developing appropriate references for environmental issues.

23.1. Indicate if you have a procedure to integrate the consideration of environmental issues in your investment decision processes.

23.2. Describe how your procedure to integrate the consideration of environmental issues in your investment decisions processes affect decisions pre-investment. [Optional]

The procedure differs between microfinance and SME finance investment. For all investments we assess whether the investees have internal environmental policy, external policy (exclusion list and implementation of environmental risk into its credit appraisal), and green credit product. For SME finance investment, certain perceived level of risk, which we assign based on our internal environmental and risk classification system, will result in us requiring the investees to have an environmental and social management system up to a certain extent.

We also incroporate some environmental and social clauses in our loan agreement, including compliance with our exclusion list.

23.3. Describe how your procedure to integrate the consideration of environmental issues in your investment decisions processes affect decisions post- investment. [Optional]

We monitor investees' environmental performance at an annual basis, which is integrated in our internally developed scorecard. The elements that we monitor for all investments are: the existence and quality of the internal environmental policy, external policy (exclusion list and implementation of environmental risk into its credit appraisal), and green credit product (and the % of loans they have here). Specifically for SME finance investment, we also request the investees to report to us their loan exposures in sectors with high environmental and social risks (based on our criteria) at an annual basis and what measures they take to manage and mitigate the risks.

23.4. Indicate if you request your investees to comply with an environmental exclusion list.

23.5. Additional information. [Optional]


IFD 24. Anti-corruption and whistle-blowing policies

Possible action:

Promote implementation of anti-corruption practices.

24.1. Indicate if you have anti-corruption policies.

24.2. Indicate if you have internal whistle-blowing policies.

24.3. Indicate if you review whether your investees have anti-corruption policies as part of your due diligence process.

24.4. Indicate if you review whether your investees have internal whistle-blowing policies as part of your due diligence process.

24.5. Additional information.


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