Engagement - dialogue
of the companies
in the portfolios
were engaged with
As part of its mission, Triodos SICAV I aims to encourage companies to improve their sustainability performance. The fund raises awareness of sustainability issues by engaging with companies throughout the initial research process and further reviews, and by providing them with a written analysis of the sustainability performance of their operations. During 2015, the fund engaged with 87% (unchanged from 2014) of the companies represented in the fund’s portfolios at year-end 2015. The fund engaged with 80% (76% in 2014) of the companies on multiple occasions.
In 2015, the fund continued its engagement efforts on conflict minerals. These minerals include tantalum, tin, tungsten and gold originating from the Democratic Republic of Congo and its adjoining countries. Following an investor statement addressed to the European Commission, European Council and European Parliament in 2014, calling for a more stringent EU policy on conflict minerals, a representative of the fund was invited to speak at a public hearing organised by the Dutch Parliament in the first half of 2015 and later took part in the Forum on responsible mineral supply chains organised by the OECD International Conference on the Great Lakes Region. On May 13, 2015, just ahead of the European Parliament’s vote on this issue, Triodos Investment Management published another investor statement, again in conjunction with a group of US and European investors, calling on the Parliament to adopt a stricter regulation. The fund was pleased that the European Parliament did indeed vote in favour of extending mandatory supply chain due diligence to companies that use conflict minerals in their products, as requested in the statement. The European regulation will, however, only be finalised after a last round of negotiations (‘trialogue’) between the European Commission, the European Council and the European Parliament.
Another topic that the fund focuses on is corporate taxes. In many cases, tax efficiency is legal and can increase the company’s financial performance, particularly in the short term. However, in the longer term, aggressive tax planning entails significant risks. These risks include financial, regulatory and reputational risks. The fund supports a fair and effective tax system, taking into account the interests of all stakeholders. Our principle is that taxes should be paid in the countries where the earnings are realised. In the past, the fund engaged with all its investee companies on the subject of tax transparency and tax policy. The replies from companies made it clear that responsible and transparent tax behaviour is not yet well developed. In that light, the fund advocates country-by-country reporting to the public by all listed companies. Such disclosure increases overall transparency and allows for a more detailed analysis by investors. On June 30, 2015, a representative of the fund spoke at a public seminar organised by members of the European Parliament to discuss the importance of country-by-country reporting for investors. Following the public seminar, on July 8th the European Parliament voted in favour of country-by-country reporting by listed companies on profits made, tax paid on profits and public subsidies received. Members of the European Parliament are now holding informal talks with member states to seek agreement on the final version of the legislation.