By voting at and attending Annual General Meetings (AGMs), we challenge the companies we invest in to constantly improve their sustainability performance. Proxy voting is a clear and efficient way to make our voice heard. In 2010, we voted on ballots for 100 company meetings.
Southern Europe provides a pleasant surprise
08-03-2011 | Triodos Research recently selected five Southern European banks for inclusion in its sustainable investment universe. It is rare that so many financial institutions in a study demonstrate the transparency and good practice required to meet Triodos requirements regarding arms.
European banks results
It was a pleasant surprise when results of recent research on 24 southern and middle European banks saw two companies reconfirm their eligibility for inclusion in the Triodos sustainable investment universe and three new ones join them.
The two reconfirmed banks are Banca Monte dei Paschi di Siena (MPS) from Italy and Banco Comercial Portugues from Portugal. The three new banks are UBI Banca from Italy, and Banco Popular Espanol and Bankinter, both from Spain. Both UBI Banca and Banco Popular Espanol had previously been investigated by Triodos Research in 2007, however at that time neither were best-in-class. Both companies have since made considerable improvements in their sustainability performance.
Declining interest in arms companies?
It is unusual for a study of financial institutions to result in such a high number of selected companies. We asked ourselves why and concluded two things. First, banks’ interest in arms companies is declining – three of the banks mentioned have no financial exposure to companies that produce or trade in arms. Second, in response to the financial crisis and increasing demands for clarity, banks are showing greater willingness to be transparent about what they do with the money entrusted to them. The two companies with some exposure to arms companies were highly transparent regarding their involvement and their levels of investment were far below our threshold.
Banks and involvement with arms companies
While the link between banks and arms companies might not be immediately obvious, most banks support the arms industry through loans, shareholdings, bonds or other financial links. In 2008, Triodos Bank sharpened its requirements for financial institutions and investment in the arms industry. This included a total ban on involvement in cluster bombs and anti-personnel mines, as well as strict limits on overall involvement. At that time we reviewed 252 financial institutions and, while some companies made efforts to reduce their involvement, many did not meet our strict criteria and were removed from the sustainable investment universe.
Nine times out of ten, financial institutions hide behind the skirt of confidentiality when asked detailed questions about financial involvement in arms. It was refreshing to receive responses which provided full details of shareholdings, loans and bonds outstanding. It also confirmed our belief that our specific requests for information regarding involvement in arms can be realistically met by financial institutions which choose to be transparent.
More information on our position on arms and our minimum standards on the topic can be found here .
Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.