Triodos Bank’s Executive Board provides a perspective on the wider world it operates in, its impact and activity in 2016 and its prospects for the future.
How the World Looked in 2016
Sustainability has become an integral part of many people and business’ lives. This is a movement, and not a trend. In many countries dialogue about the role of business and finance in society, was prominent throughout the year demonstrating an appetite for change from the public. In 2016 the impact of this debate included growing ‘divestment’ initiatives from a variety of organisations including financial institutions, charities and universities – moving their investments out of fossil fuel companies on both moral and financial grounds.
Sustainability has been increasingly embraced by large and small banks alike, some of whom see this as a key market opportunity in a post banking-crisis world; others see this as a better long term trajectory for the future health of their organisations.
This trend has also led more banks to promote themselves as more ethical and transparent and to compete more actively for sustainable loans and investments in 2016, creating more competition for Triodos Bank in all the countries where it operates.
Large numbers of people continue to choose Triodos Bank as their first bank because it meets their financial needs and is aligned with their values. This has again resulted in growth in savings, lending and investments during the year.
Notably during the year UK voters chose to leave the EU in a much-publicised referendum. Triodos Bank managed the short and longer term implications of the referendum which did not have an impact on underlying trends driving growth in the UK branch. Triodos Bank remains committed to operating in the UK.
Higher costs, lower margins and greater impact: the challenge for the banking sector.
Historically low central bank interest rates continued throughout 2016, in part because of the oversupply of money from quantitative easing – the authority’s monetary answer to a lack of economic growth during the year. While low interest rates are good for borrowers they are bad news for ordinary depositors.
The higher costs of meeting regulation and lower margins as a result of low interest rates and competition for personal and business customers (either solely on price or from banks eager to lend to attractive ‘sustainable’ loans) increased during the year.
For many banks this has meant increasing fees for products and services. In Belgium tax incentives connected to regulated savings accounts encouraged even more savings and hence liquidity and further tightened the interest rate margin for banks. Collectively, these issues put pressure on the bank’s profitability.
Despite a challenging environment for lending the branches were able to grow the loan book, which is critical to increasing Triodos Bank’s impact. Ensuring a healthy balance between the growth of the loan portfolio and a relatively strong inflow of deposits continues to be an important point of attention.
How we did
Triodos Bank continued to extend its impact during the year across all its sustainable sectors. It completed the most renewable energy deals of any European financial institution during the year, topping the Clean Energy Pipeline’s 'Renewables Infrastructure Investment in Europe 2016' report for 2015 deals.
Offering a full set of services and high quality customer service to personal and business customers, and increasing the volume of our transactions with them, is crucial for Triodos Bank to increase its impact and fulfill its mission.
In some countries, such as The Netherlands and Spain, Triodos Bank already provides a full set of services. The Spanish branch introduced a new core banking system in 2016, renewing its internet banking offering and launching a new mobile banking service. The UK branch continued to develop a current account offering which is now expected to be available for customers in 2017. Triodos Bank was also voted Bank of the Year at the UK Better Society Awards for its work financing charities and not-for-profit enterprises.
Triodos Bank expanded its presence and impact during the year opening a new administrative office in Berlin, making its first loan from the office that opened in Gent last year and opening new offices in London and Malaga with a focus on enhancing relationships with customers and promoting encounters and opportunities to network around the human economy.
Triodos Bank wants to grow its capital so it can continue to develop and expand its activities, particularly lending. In 2016 a total of EUR 97 million in new capital was raised across Triodos Bank’s European network, attracting over 2,403 net new depository receipt holders.
The Dutch branch played an active part in an initiative exploring how Triodos Bank moves beyond its current core operations, through the LEAF (Local Economy and Alternative Finance Initiatives) Lab, by working with colleagues and universities on experiments to make local economies more sustainable and resilient.
Triodos Bank’s representative office in France continued to develop its activities in line with plans, but is not yet a fully-fledged branch.
The organisation continues to grow in popularity on the basis of strong relationships and our customer’s willingness to recommend Triodos Bank. More than half of Dutch customers would promote the organisation to others, an extremely high score for any bank. In Germany, Triodos Bank won two awards during the year as “Beste Geschäftskundenbank” (Handelsblatt) and “Beste nachhaltige Bank”, both as the result of customer votes. Belgian newspapers De Tijd and L’Echo recognised Triodos Sustainable Mixed Fund as ‘Best fund’ in the ‘Mixed funds neutral risk’ category in their 2016 awards during the year. While in Spain, Triodos Bank was recognised as having the highest level of customer satisfaction among its banking peers, by a survey from independent customers’ organisation, the OCU.
Being a learning organisation
Triodos Bank fosters a co-creative culture rooted in its values based mission. An annual co-worker’s conference helps embed this culture for a large and diverse group of colleagues. In 2016 the conference was hosted in Barcelona in close cooperation between the head office and the Spanish branch with the theme of ‘Transformation: meeting the other, enabling change’.
All the branches and Triodos Investment Management developed, and now use, an online social platform, ‘Engage’, to improve how co-workers inform, connect, collaborate and learn. The platform has quickly become embedded in the daily life of co-workers across the organisation.
Co-workers actively collaborate within branches throughout the year. In Spain, for example, the Triodos Foundation and Human Resources department launched a pilot project for ten co-workers to work together to develop a programme of activities in the central office’s organic garden for colleagues and their families, customers and other stakeholders.
In The Netherlands Triodos Bank increasingly works with cross-departmental project teams rather than in traditional departments, speeding up the development of new initiatives that improve customer experiences. The Triodos Heart Head Impulse’s second programme, which took place in The Netherlands, contributed to the development of entrepreneurs and businesses, as well as co-workers, by engaging in a dialogue about leadership development, finance, human resources and marketing.
While in the UK, the branch developed a new people strategy to deliver the foundation for growth in co-worker numbers which is expected with the launch of the personal current account. It also successfully adapted to new financial regulatory requirements.