Bron
Financial Times
"You recycle paper, yet your savings fund deforestation." The latest marketing strapline for Triodos Bank sums up the institution well. For Triodos, a good financial return is not good enough; the ethics of its lending and investments matter, too. "Your money will only help finance organisations that benefit people and the environment," the bank states on its website. And to make its activity transparent, from its websites you can access lists of all the bank’s clients, ranging from organic farms to social housing organisations.
Triodos, founded in the Netherlands 25 years ago, has always tried to be different. It offers private investors, businesses and philanthropists opportunities to make their money work for the benefit of a sustainable society.
But CEO Peter Blom is keen to stress that Triodos is a bank, not a charity. It has about 8,000 shareholders and net profit in 2004 was 3.6m. It offers loans, not grants, makes investments, not donations. Nevertheless, the majority of the bank’s savers and investors support its mission to "achieve a more decent, dignified and kinder society and a world that respects people, the environment and different cultures".
"Only 10 to 20 per cent of our investors are only looking for financial returns," says Mr Blom. "Most investors want a return and to maintain values. They want a reasonable return, not a market-leading one." As many as a fifth of investors have little interest in actually making money these are the ones who use Triodos to distribute their wealth to worthy causes."
"Our shareholders are not so interested in profit," Mr Blom continues. "When I said I wanted to grow our profits, our shareholders wanted to know at what cost. It’s not what you see at most AGMs. This is business, not philanthropy, but it is certainly not profit at any cost."
The bank, which has branches in Belgium, the UK and Spain, raises its capital mainly through savings accounts and investment funds. The money is then invested following clear principles. "We’re not about maximising profit, but look at projects in three dimensions: the social and environmental impact, and profitability," explains Mr Blom. "The first question we ask it whether something we finance will serve people. Then we ensure that it does not harm the environment. Only then do we assess whether it is a bankable proposition. Of course, there are tensions between these three factors, but we will not finance projects that are not serving people or will not make a profit."
The transparency of the bank’s investment policy is remarkable enough, yet investors have opportunities to steer their money to even more specific areas of interest. Deposits in partnership savings accounts, for instance, can be directed to finance projects on certain themes (for example, the environment) or particular charities (for example, Amnesty International). Savers can usually opt to direct some or all of the interest they earn to a charity of their choice as well. For some of these accounts, Triodos also donates a proportion of the average annual balance to the partner organisation.
The bank also manages numerous investment funds. In the UK, for example, the bank’s Renewable Energy Fund was established to provide equity finance for small-scale renewable energy projects. Its recent share issue raised £4.75m for renewable energy projects, and two significant investments have already been made in wind power projects.
Some of the bank’s most recent innovative approaches are share and bond issues. "This is something relatively new for us," says Mr Blom. "Normally, for small companies share issues are quite an expensive way to raise capital."
In 2004, Triodos issued bonds in the Netherlands on behalf of Weleda, a manufacturer of complementary medicines, nutritional supplements and cosmetics. In the same year, the bank sponsored the share issue in the UK for Cafedirect, the fair trade coffee company.
Such share issues are not listed on conventional stock exchanges, so Triodos also decided to develop its own trading system, Ethex. The exchange remains in a pilot phase and currently only offers a matching service between prospective sellers and buyers. The bank is in discussions with other partners on how to develop Ethex into a fully functional trading platform.
"Share issues are not necessarily about funding, but to get a strong shareholder base. For smaller companies, it has more of a social component, building up a stronger relationship with stakeholders," says Mr Blom. "Conventional stock markets may not be adequate for companies that want strong communities to support their business. We are looking at how to create liquidity in the stock without the anonymity you have in the stock markets of today."
Another of Triodos’s groundbreaking initiatives is in microfinance for developing countries. While Triodos does not offer microcredit itself, it does make loans to and equity investments in microfinancing institutions in developing countries. The bank is now involved in 60 microfinance institutions in 40 countries.
Triodos does not limit its activities to money management. Knowing that its stakeholders do not go for "profit first", it has also been involved in political lobbying. Mr Blom is particularly proud of the bank’s role in persuading the Dutch government to offer a tax incentive for investments in environmental funds. "We already had green funds, but we convinced the government to make a tax benefit for investors. This was an efficient way for the government to stimulate the market and inject private investment rather than government subsidy into the environmental sector."
Talk of tax incentives highlights the fact that Triodos is interested in investors, not donors. Yet it is evident that by pooling the wealth and speaking out for more than 100,000 investors across Europe who want their money to benefit people and the planet, the bank is undoubtedly stimulating European philanthropy. "We make people conscious of what they can achieve with their money," says Mr Blom.
Financial Times, 15 december 2005
