Triodos Bank’s Executive Board provides a perspective on the wider world it operates in, its impact and activity in 2017 and its prospects for the future.
Triodos Investment Management’s specialised emerging markets funds provided finance to 107 financial institutions working for inclusive finance in 44 countries (2016: 44). These organisations reached approximately 15.1 million individuals saving for their future (2016: 13.1 million) and 20.3 million customers borrowing for a better quality of life (2016: 20.2 million). Of these loan clients, 78% were female. Women are often in disadvantaged positions in many developing countries. Giving women the freedom to manage their income and to provide for their families empowers their position.
Our vision and activities
Percentage of our loans and investments to the inclusive finance sector
Loans and investments by region
Access to finance offers a lifeline to millions of people enabling them to better manage their daily life, cope with unexpected difficulties, fulfil aspirations and plan for the future. Yet, there are still two billion people worldwide who are excluded from basic financial products and services.
Based on our deep-rooted commitment to make money work for positive change, Triodos Bank aims to address this challenge because we strongly believe that access to finance gives people the freedom of choice to pursue the life they wish to live. Inclusive finance offers financial services, including savings, credit, and insurance to underserved people. These services enable them to better support themselves and their families and improve their quality of life.
Through our investment activities, we also aim to contribute to building a robust and transparent financial sector with a sustainable approach to providing financial services to all. In this way, inclusive finance bolsters local economies by stimulating entrepreneurship and job creation.
Evolving and expanding sector
As an early and pioneering investor (since 1994), we have seen the inclusive finance sector rapidly evolve and expand, especially over the past decade. The sector has shown that those with low incomes are bankable and can be offered financial services in a sustainable way.
A rising number of global, national and local leaders have come to acknowledge that access to financial services is an important prerequisite for economic and social development in developing countries and emerging economies. Financial inclusion is therefore an important topic on the agendas of many governments and international forums, and also reflected in the United Nations’ . Not as a goal in itself but as a powerful tool to reach many of the most important development objectives.
What does the future of inclusive finance hold?
Two global trends in particular will impact and shape the inclusive finance sector more and more: the impact of new technologies on the financial services industry and the growth in purchasing power of lower income populations developing countries and emerging economies. The sector focuses on fulfilling basic needs, such as housing, water and sanitation, education and healthcare. As they have matured, financial institutions have also embraced opportunities to finance projects that have a positive impact on the environment. This makes inclusive finance a cross-cutting theme, taking in a range of issues.
We are also looking forward to further developing and executing multiple strategies to engage the small and medium enterprise market segment for their job creation capacity, with a particular interest in renewable energy and sustainable agriculture. By investing in these sectors and building on the in-depth knowledge and experience of Triodos Group as a result, we want to promote access to renewable energy and contribute to sustainable development of the agricultural sector in developing countries.
What challenge was the source of inspiration for your project?
The taxi financing market is quite untouched by formal financial institutions. The Peruvian vehicle loan market is concentrated among a few players and focused on financing the purchase of new cars by wealthier clients. Additionally, the majority of the current taxi fleet consists of older, polluting cars. 30% of the taxis in Lima are over 15 years old, and need to be replaced according to municipal regulations that have been in place since 2016.
A fledgling formal vehicle loan market focusing on drivers living on low incomes and environmentally-friendly taxis in Peru is only served by Acceso Crediticio.
What innovation did you use to address this problem?
Acceso Crediticio, a Peruvian-based financial services firm established in 2011, with extensive experience in vehicle lending, plays a strong role in financial inclusion. 70% of its clients do not having accounts at other financial institutions. One in five are opening an account for the first time when they become customers.
The majority of the institution’s clients are independent, low-income taxi drivers that otherwise would have limited options to own their vehicles. Acceso has a strong focus on providing CNG-based (compressed natural gas) taxi car loans. CNG-based vehicles are a cleaner and more efficient alternative to fossil fuel-powered taxis. As such, Acceso directly contributes to fighting climate change by reducing the number of polluting cars in Peru.
What impact did Triodos Bank have on your company?
The loans provided by Triodos Fair Share Fund and Triodos Microfinance Fund have helped Acceso to increase its outreach. Loans are in local currency which means it doesn’t need to carry currency risk. This is also true for Acceso Crediticio’s clients as its loans are denominated in local currency. Thanks to this borrowing Acceso has been able to expand its outreach to 14,850 clients, without having to create a large and potentially expensive branch network to operate.
What impact has your company had on your business sector?
Acceso Crediticio focuses on financing micro and SME (MSME) clients in the automotive sector, with a clear emphasis on financial inclusion. As a pioneer of this kind of finance in Peru, it is innovating in the market providing an example for its peers to follow.
What has been the local impact of your company on the community?
Acceso Crediticio is the leading provider of CNG-based (compressed natural gas) taxi car loans in Peru. It is this emphasis on compressed natural gas-based (CNG) vehicles that makes the company so unique. Almost 70% of its loan portfolio is allocated to MSMEs looking to purchase CNG-based vehicles or to convert their vehicles from regular gasoline-based to CNG-based. Overall, the Company generates a high social and environmental impact as a result. It both helps to provide a livelihood for drivers and contributes to a healthier, cleaner environment for the communities where it operates.
How does Triodos Bank share your vision?
Acceso Crediticio has a unique business model. This provides a high impact opportunity for Triodos Investment Management’s funds, in terms of financial inclusion and environmental impact, in a segment that is currently under served by local and international investors.
The evidence of the impact of our activity in inclusive finance is drawn from Triodos Investment Management’s Emerging Markets Sustainability Management System. This information is based on detailed quarterly reports by the financial institutions in the portfolio, annual reviews, and on-site visits.
Holdings, Wholesale corporations, Funds and other institutions not working directly for inclusive finance are excluded from the impact measure. Institutional savers are excluded from the total number of savers.
We include 100% of the impact when we co-finance a project. If it is not possible to record 100% of the data required, we use conservative estimates.