Triodos Minimum Standards and Exclusions

Transcription

1 Triodos Minimum Standards and Exclusions Triodos Bank, Triodos Investment Management and Triodos Private Banking (in this document Triodos Bank) finance and invest in companies, institutions and projects that add cultural value and benefit people and the environment, with the support of depositors and investors who want to encourage socially responsible business and a sustainable society. Triodos Bank s mission To help create a society that promotes people s quality of life and that has human dignity at its core. To enable individuals, institutions and businesses to use money more consciously in ways that benefit people and the environment, and to promote sustainable development. To offer customers sustainable financial products and high quality service. Ambition Triodos Bank wants to promote human dignity, environmental conservation and a focus on people s quality of life in general. Key to this is a genuinely responsible approach to business, transparency and using money more consciously. Triodos Bank puts sustainable banking and investing into practice. First and foremost, this means offering products and services that directly promote sustainability. Money plays a leading role in this because using money consciously means investing in a sustainable economy. This in turn helps to create a society that enjoys a better quality of life. Positive approach Triodos Bank s positive approach to sustainable lending and investing involves: Identifying sustainable sectors, where we can finance and invest in companies, institutions and projects to emerge, develop and innovate Selecting companies, institutions and projects that will deliver real social, cultural or environmental benefits Evaluating both the quality and the motivation of the people involved Ensuring that selected companies, institutions and projects meet our exclusions (see below) which measures their potential negative impact on people or planet Financing clearly defined assets, activities or projects within each organisation Closely monitoring how the money is actually used. Our business is guided by and complies with the principles underlying the Dutch banking code, Equator principles, European SRI Transparency code, Financial Actions Task Force, IFC Performance Standards and Environmental Health and Safety Guidelines, OECD Guidelines for Multinational Enterprises, UN Global Compact, UN Principles for Responsible Investment, UNDHR, UNEP Finance initiative and Wolfsberg principles.

2 Exclusions In addition to the positive approach to lending and investments, Triodos Bank maintains a list of exclusions to clarify which activities it will not finance or invest in. Nature and environment Triodos Bank strives to minimize the negative impact of its lending and investment activities on the environment and animal world. Environment We expect companies to, if relevant, apply Environmental and Social Risk Management Systems in order to minimise their impact on the environment. Extract or produce conventional oil and gas 1, including producing equipment, making specific components for, or provide specific services to, oil and gas extraction. Extract or produce unconventional oil and gas 2, such as shale gas and oil sands. Are indirectly involved in the extraction of unconventional oil and gas through the ownership of shareholdings in other companies worth more than EUR 100 million or 1% of their equity investments. 3 Produce or retail energy from coal power plants 4. Build or operate coal-fired power plants that were built after Produce biomass energy with feedstock that competes with food production or finds its origin in intensive farming. Operate in energy-intensive industries 6 and do not have a sound programme with clear targets for the reduction of the greenhouse gases they emit. Operate at locations where potential negative consequences of their activities are unmanageable. Are involved in controversial mining. Contamination and hazardous substances We expect companies to use hazardous substances, especially pesticides, as little as possible and, if necessary, only in a responsible way. In addition, companies are expected to manage waste responsibly. Produce or sell pesticides, or other hazardous substances, that form a threat to the wellbeing of humans, animals and the environment. 1 A threshold of 5% of company revenue applies for the SRI funds. 2 A threshold is 0% of company revenue applies for the entire organization and all its activities. 3 We consider involvement above this threshold to be substantial, indicating a conscious decision to be involved in such activities 4 A threshold of 5% of company revenue applies for the SRI funds. 5 After 2009, awareness of climate change and its origin is paramount. Involvement in such activities indicates a conscious decision. 6 Energy-intensive industries are Chemicals, Construction Materials, Metals & Mining, Paper & Forest Products, Transportation, Automobiles and Utilities.

3 Produce or sell the most dangerous internationally acknowledged substances 7. Run their businesses in a way that causes serious and irreversible environmental damage. Do not respect relevant international agreements on the production and use of hazardous or toxic substances. 8 Do not respect relevant international agreements on trade in chemicals and chemical waste. 9 Are involved in riverine tailings disposal and sub-marine tailings disposal. Deforestation Forests are a valuable source of biodiversity and a resource of many forest products, ranging from medicine to timber, and they have an important capacity to absorb and retain greenhouse gases. Are involved in illegal deforestation or controversial logging activities in protected areas. Do not prevent the use of illegally cut and traded timber throughout their wood supply chain. Own forests that are not certified according to one of the four main certification schemes 10. Do not respect the rights of local and indigenous communities on the fair and equal use of forests. Use wood or pulp and do not purchase at least 50% of those materials from certified forests. Use large amounts of paper and do not purchase at least 50% from certified or postconsumer recycled origin. Biodiversity Many products that we use find their origin in or depend on nature and biodiversity, e.g. agricultural products and pollination of plants. To protect biodiversity against declination we exclude companies that: Operate in industries that have a large impact on biodiversity 11 and do not have programmes to reduce this impact. Use palm oil in their products but are not a member of the Round Table of Sustainable Palm Oil (RSPO) or the Palm Oil Innovations Group (POIG) or have not set a clear target for sourcing 100% sustainable palm oil. Cause negative impact on protected areas 12. Develop or commercialise transgenic food or feed crops. 7 For example as identified by the UN Stockholm Convention on Persistent Organic Pollutants. 8 For example as prescribed by the Montreal Protocol. 9 For example as prescribed by the Basel Convention and the Rotterdam Convention. 10 The four main certification schemes are the Forest Steward Council (FSC), Programme for the Endorsement of Forest Certification (PEFC), Sustainable Forest Initiative (SFI) and Canadian Standards Association (CSA). 11 Industries with a large impact on Biodiversity are: Metals & Mining, Paper & Forests Products and Food Production. 12 Protected areas are those identified as such by relevant bodies, for example the I-IV of the World Conservation Union, the UNESCO World Heritage Committee and Ramsar Convention on Wetlands.

4 Process genetically modified food crops, unless they proactively reduce their use. Sell products that contain ingredients from genetically modified food crops, unless they offer alternative product that contain only non-genetically modified products. Use species that are on the CITES-list 13 and do not have sustainable sourcing guidelines for such activities. Fisheries Operate in the fishery industry or process or sell fishery products and do not have a responsible fishery programme and policy. Operate in the fishery industry or process or sell fishery productions and do not comply with relevant international standards and agreements 14. Engage in controversial fishing techniques 15. Resources For some commodities global reserves gradually come to an end. More efficient use, recycling or replacing the commodity are strategies to prevent depletion. The preferred strategy depends on the exact commodity. Extract or process scarce commodities and do not undertake activities to prevent depletion. Extract metals or minerals (mining industry) and do not have a sound environmental management system or emergency response programme in place, or do not conduct Environmental and Social Impact Assessment Studies for new sites and reveal related payments to governments. Process metals or minerals and do not have clear environmental requirements regarding suppliers or a sound environmental management system in place. Operate in water-intensive industries 16 and do not undertake activities to reduce their fresh water use. Produce or sell nuclear power, nuclear power stations or specific components for nuclear power production. Transport or store spent nuclear fuel. Are indirectly involved in nuclear power related activities through the ownership of shareholdings in other companies worth more than EUR 100 million or 1% of their equity investments CITES: Convention on International Trade in Endangered Species of Wild Fauna and Flora 14 Examples of international agreements of relevance for the sector are EU and MARPOL regulations, the Marine Stewardship Council, the FAO Code of Conduct for Responsible Fisheries, the Aquaculture Stewardship Council, Marine protected areas and the International Principles for Responsible Shrimp Farming. 15 Examples of controversial fishing techniques are trawls, drift nets and shark-finning, as well as ghost fishing and disrespecting no-take zones. 16 Water-intensive industries are: Chemicals, Construction Materials, Containers & Packaging, Food & Beverages, Metals & Mining, Paper & Forest Products and Utilities.

5 Do not prevent conflicts over land rights and acquire natural resources only by engaging in meaningful consultation with local communities and obtaining free, prior and informed consent (FPIC) of (traditional) land users. Do not respect International Humanitarian Law and enable settlements in occupied territories. Animal testing We acknowledge that animal testing may be inevitable for the development of safe medical solutions, but we deem this practice only acceptable if no alternatives are available. We believe that for non-medical purpose, animal testing is unnecessary. As a result, we exclude companies that: Manufacture non-medical products that are tested on animals. Carry out animal tests for non-medical products without a legal obligation to do so. Carry out animal tests for medical products, but do not have a three Rs-policy 18 in place. Pharmaceutical companies are by far the main users of animal tests. That is why we set additional requirements for companies that carry out animal testing for pharmaceutical products, in addition to a three Rs policy. We value companies that actively contribute to finding alternatives to alternatives to animal testing, through participation in or financing of initiatives with that objective. We exclude pharmaceutical companies that: Do not perform an ethical review of animal tests. Do not report on the number of animals used. Do not use lower animals 19 where possible. Are not transparent on their use of transgenic animals. Do not actively promote the three Rs tenet. Factory farming In line with the Triodos Bank position that organic agriculture recognises the relationship between our environment, our health and the food we eat, and must promote high standards of animal welfare according to the Five Freedoms principles, we exclude companies that: Operate in high-risk industries 20 for the use of products from factory farmed animals and do not have a policy on animal welfare or do not apply sufficient animal welfare standards 21 to the animal products they buy or produce. 17 We consider involvement above this threshold to be substantial, indicating a conscious decision to be involved in such activities 18 The three Rs tenet is widely accepted as the ethic of animal experimentation and guides those using animals for scientific purposes in some countries. It prescribed to Reduce the number of animals used, Replace animal testing with other solutions if possible and Refine tests to minimize animal suffering. 19 Lower animals are those of relatively simple characteristics as contrasted to advanced ones such as mammals and vertebrates. 20 High-risk industries for factory farming are: Food Products, Food & Staples Retailing, Hotels and Restaurants & Leisure. 21 A sufficient animal welfare policy adheres to the internationally recognised Five Freedoms, or acknowledges the intrinsic value of animals and specifies the responsibility of humans towards animals.

6 Engage in educational or nature protection activities in which wild animals are involved, and cannot guarantee the welfare of those animals. Engage in entertainment activities in which wild animals are involved. Operate in the Food Products industry using animals and do not offer alternative products containing organic animal ingredients. Operate in the Food & Stapling Retailing industry and are not part of initiatives to improve animal welfare, do not promote products with better animal welfare standards and do not offer organic animal products or other products with better animal welfare standards. Operate in the Hotels, Restaurants & Leisure industry and do not offer vegetarian or organic alternatives to regular meals. Offer products and services related to factory farming, like transport, slaughtering or equipment, and do not have a policy or do not apply sufficient standards to reduce animal suffering. Fur Fur and specialty leather are luxury products that do not belong to basic human needs. We consider breeding and hunting of animals for their fur or skin alone as unsustainable and, as a result, we exclude companies that: Make or sell products containing fur or specialty leather. Genetic engineering The consequences of genetic modification of animals for the environment and animal welfare have not been researched intensively. Hence we take a precautionary position, which means we exclude companies that: Genetically modify animals for non-medical purposes. Genetically modify animals for medical purposes for which alternatives are available. Are involved in xenotransplantations, which implies the breeding of animals for the production of organs for transplantation into humans, or in cloning of animals. Human rights General obligation Respect for human rights is one of Triodos Bank s business principles. We exclude companies that: Operate in industries identified as having high-risk for the violation of human rights 22 and that do not have a policy that reflects the company s awareness of and respect for the issue of human rights as defined in the United Nations Declaration of Human Rights. Sufficient animal welfare standards must go beyond legal requirements on animal welfare and address for example housing, transport, feed and national behaviour. 22 High risk industries for the violation of human rights are: Construction & Engineering, Electrical Equipment, Energy Equipment & Services, Information Technology, Industrial Conglomerates, Machinery, Metals & Mining, Paper & Forest Products and Telecommunication Services.

7 Operate in industries identified as having high-risk for the violation of human rights 23 and do not have processes to enable the remediation of adverse human rights impact which they cause or to which they contribute. Are involved in controversies related to: o Human rights violations, including contributing to or benefitting from structural and gross human rights violations by governments or other parties. o Employment of or co-operation with parties that infringe political and civil rights, like security forces or repressive regimes. o Supply of strategic products or services to parties that directly contribute to the violation of political and civil rights. o Occupied territories. o Denial of basic needs. Labour rights The International Labour Organisation (ILO) has identified four issues as being fundamental to the rights of human beings at work: child labour, equality (discrimination), forced labour and unionisation. Companies should establish procedures for processing employee complaints and to solve violations and conflicts, preferably in consultation with labour unions. In addition, health and safety is an important right of workers; individuals with avoidable and treatable diseases should have access to medication. Responsibilities of companies include preventing child labour, discrimination and forced labour. In addition, companies should facilitate freedom of association, the right to collective bargaining, a safe and healthy workplace, living wages and a maximum of working hours and equal treatment irrespective of worker s backgrounds. In acknowledgement of these responsibilities we exclude companies that: Structurally violate the basic labour rights of their own employees or contract suppliers that violate their employees basic labour rights. Operate in a high-risk industry for the violation of the own employees labour rights 24 and do not have policies and programmes addressing industry-specific labour rights issues, such as freedom of association, health and safety. Operate in a high-risk industry for the violation of labour rights of contractors employees 25 and do not have a policy, addressing contractors, on health and safety and the four fundamental labour rights that are covered in the basic ILO conventions, nor an additional management programme including clear targets, monitoring, annual evaluation and corrective measures. 23 Ibid. 24 High-risk industries for the violation of basic labour rights of the own employees are: Automobiles, Construction materials, Food & Staples retailing, Hotels, Restaurants & Leisure and Metals & Mining. 25 High-risk industries for the violation of basic labour rights of contractor s employees are: Communications Equipment, Technology Hardware, Storage & Peripherals, Food Products, Retailing, Textiles and Apparel & Luxury Goods.

8 Conflict minerals Conflict minerals are mined in regions heavily torn by armed conflict between government armies and rebel groups. Control over the mines finances the fighting parties and hence fuels the ongoing conflict, leading to the violation of human rights. In line with our human rights principles, we exclude companies that: Manufacture products using (potential) conflict minerals or extract and supply such minerals and do not have a statement to source conflict-free minerals and ask their suppliers to comply with the statement. Alternatively do not have a statement to source conflict-free (allowing in-region sourcing), in combination with participating in or relying on the (outcomes of) the CFS programme 26. Governance Remuneration and accounting We exclude companies that are involved in accounting irregularities or remuneration controversies that raise important ethical/moral concerns and are in clear violation of local or international standards of best practice, while failing to take credible measures. Corruption Operate in a high risk-industry for corruption 27 without having a formal policy addressing the risk of bribery and corruption. In addition to this policy, companies that operate in the Aerospace & Defense or in the Construction & Engineering industries are required to also have business ethics programs addressing corruption. Have been subject to frequent condemnations for corruption, bribery or money laundering. That directly or indirectly offer, promise or give off demands for bribe or other illegal advantages, to acquire of retain orders or other advantages. Violation of legislation, codes and conventions We exclude companies that are involved in the violation of laws, codes of conduct or conventions, unless there is proof of a structural change within the company leading to fundamental behavioural changes. Other excluded products and activities In general, we do not finance or invest in companies operating in controversial sectors that manage or finance very controversial projects, or deliver products and services to such projects and do not exercise their power to improve the sustainability grade of the project. Product groups and activities that are due to their very controversial nature excluded from financing are described below. 26 The Conflict Free Smelter programme supports companies in making informed choices about conflict minerals in their supply chain. 27 High-risk industries for corruption to emerge are: Construction Materials, Building Products, Electric Utilities, Multi Utilities, Independent Power Producers & Energy Traders

9 Weapons Have any shareholdings, bonds or loans related to companies that are involved in antipersonnel landmines, cluster bombs and biological and chemical weapons. Produce or sell weapons, specifically designed components for weapons and weapons related services. These include conventional weapons and non-conventional weapons such as nuclear, chemical and biological weapons and complete weapons systems. Are indirectly involved in weapons related activities through the ownership of shareholdings in other companies worth more than EUR 100 million or 1% of their equity investments. Supply strategic products or services to parties that (are prone to) infringe human rights. Gambling Develop, produce or sell gambling products. Provide financial services related to gambling. Alcohol We do not consider alcohol itself to be a controversial product, but we do address the misuse of alcoholic drinks. We will not finance companies that: Produce alcoholic beverages and do not have a policy rejecting the sales and marketing of alcohol to minors, the use of alcohol in traffic and the excessive use of alcohol, and do not have programmes underpinning this policy. Retail alcoholic beverages and do not show awareness of the risk of sales and marketing of alcohol to minors and have not implemented programmes mitigating this risk. Pornography Produce or design pornographic products Provide access to the internet without having a policy and programmes showing their concern towards the risk of exposure of minors and of distribution of child pornography and other illegal forms of pornography. Tobacco We exclude companies that produce tobacco products and companies that sell such products under their own label. Some (controversial) products, services or business processes do not fall under one of the categories described in this document, but do constitute a significant obstacle for sustainable development. Such companies may also be excluded. Triodos Bank NV, August 2015 Version 1.0