The table that follows provides Triodos Bank’s key strategic objectives for 2018 and progress against them in some detail. A ‘progress at-a-glance’ indicator also provides an estimation of our progress against each goal in 2018. This assessment is based on professional
judgement and the opinion of co-workers with an overview of these topics.

The table is followed by strategic objectives for 2019. This work is informed by Triodos Bank’s new three year plan from 2019-2021. This information reflects some of the key issues raised in the materiality analysis that are priorities for Triodos Bank and our stakeholders.

Finance for impact

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Ensure that our new loans go beyond meeting the criteria of making positive impact and bring about a deepening or transforming impact (in line with our strategy to meet the Sustainable Development Goals (SDGs) – see Appendix).

 

We have started drafting Theory of Change for Energy and Climate and Food and Agriculture. And we have created an impact tool with reference to transformative impact and the SDGs. Roll out will take place further in 2019.

 

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Develop new subsectors and follow market developments to remain relevant in each of our countries. In particular, focus on topics of local importance and which contribute to the global SDGs.

 

Some developments at local level, including energy savings and energy storage in particular.

 

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Become more relevant in the major shifts in energy production by financing larger projects. In parallel, we will want to use our expertise to finance smaller energy projects which contribute to a distributed energy system including efficiency and energy storage.

 

Good progress in offshore wind with first offshore wind deal completed by the bank; co-funding relationship with Dutch insurance firm, ASR, is progressing well; our new group vision on Energy and Climate is published and high profile events relating to the Dutch climate agreement hosted in The Netherlands. T-CRUF (pre-financing of community owned renewable energy projects in the UK) is operational with two transactions in 2018, both community solar crowdfunding.

 

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We will support a greater number of pioneering projects using guarantee arrangements from foundations, the European Investment Bank (EaSI) and others.

 

Additional SME lending with the support of the EaSI Guarantee Instrument (above target with 116 transactions across Belgium, France, The Netherlands and Spain).

 

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Significantly step up our Foundation activities to support promising new initiatives by restructuring our gift money organisation in 2018, and continue to improve ways to enable individuals to use gift money to catalyse new sustainable ideas.

 

Preparations have begun and we anticipate restructuring legal entities in the first half of 2019.

 

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Accelerate the growth of our Socially Responsible Investment (SRI) funds following the launch of our new SRI Fund Strategy.

 

Project was finalised six months early and within project budget. Early delivery resulted in approximately EUR 1.2 million savings in outsourcing costs and a net inflow of EUR 131.5 million during the year (2017: EUR 5.5 million). Overall SRI strategy to invest in transition themes published.

 

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Broaden our scope

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Continue our public policy advocacy together with partners to create systemic change within the financial sector to support environmental and social sustainability – including the appropriate treatment of capital, application of regulation and access to impact investments for individuals.

 

Leading role in development of the Dutch Climate Agreement together with hosted events.

We published a road map with other parties in Germany and provided specific proposals and feedback for the European Union’s developing regulations on sustainable finance

 

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Continue the development of our activities in France towards the establishment of a branch with the emphasis on further strengthening our lending activity.

 

The French team progressed well, generating new loans in France. Considering the current business context and the need to focus on other priorities, we decided not to establish a full branch in France yet.

 

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Deepen our relationship approach

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Implement and embed Customer Experience Principles across the Group to improve the quality of the interactions and service our clients receive. Introduce regular monitoring and improve our Net Promoter Scores (NPS) for both retail and business clients.

 

Our average Net Promoter Score (NPS) of 2018 was 25 for retail customers (27 in 2017). This score compared very well with large banks and financial service companies. Our NPS for business clients was 20 in 2018 (14 in 2017) comparing well with other banks.

A mechanism for continuous NPS monitoring has been set up and will start in 2019.

 

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Innovate: new ventures and partnerships

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Further develop and grow our crowdfunding activity to offer more potential alternatives to sustainable companies and investors.

 

Triodos Crowdfunding launched in the UK as the first crowdfunding service from a UK bank; over GBP 20 million was raised in 2018 through thousands of investors. Eight social and environmental organisations achieved their capital raising objectives. Triodos Bank in Germany, via the Triodos Sustainable Finance Fund made a strategic investment into clean energy emerging market specialist crowdfunders, Bettervest. Participate with Passion launched as a full service under Private Banking in The Netherlands for private investors participating directly in social ventures.

 

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Resilient and effective business operations

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Improve our internal and customer processes so that they are more efficient – creating more value for clients and reducing internal waste. We aim to reduce our cost/income ratio.

 

The cost/income ratio increased from 79% to 80% however, due to a decline in margin income in particular, this figure does not highlight process improvements and efficiency that were made in many areas. We are working to identify process redesign opportunities for further process improvements as part of the 2019-2021 strategic plan.

 

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The enterprise risk management framework is the basis for an integrated in control statement process. This process should lead to an internal statement providing positive assurance in the coming years.

 

Our Risk Control Framework has been strengthened to support the development towards a full internal In-Control Statement.

Positive assurance will only be given on a defined number of processes on the basis of evidence from risk control self-assessments. Development towards comprehensive evidencing is still to take place. Managing Directors and management teams have been asked to explain whether they are in control of their operations across the full scope of the business, to practice this reflection. This exercise will be repeated annually, increasing the scope of evidencing each year.

 

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Be a learning organisation and initiate dialogue with society on positive change

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

Encourage and nurture ‘intrapreneurship’ supported by Triodos Academy resulting in more development initiatives and continuous improvements to processes.

 

Co-worker capabilities are enabled so they can take ownership and co-create the future of the organisation through the Triodos Academy programmes, such as the (Advanced) Values Seminars, the U.Lab, and ‘Process Improvement Accelerator’.

 

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Improve our knowledge sharing across the organisation in 2018, both online and offline, to help further enable our co-worker group to learn as a community – from each other, across the group and with the outside world.

 

Knowledge shared via weekly Monday Morning Meetings (offline in all business units) and regularly via Engage, an internal, online tool.

Several small interventions were made by the Learning and Development team. They include:

  • support for knowledge sharing initiatives within specific functional domains
  • Design of collaborations across the group to develop new market sectors for example in offshore wind energy finance.
 

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Deliver balanced portfolio of impact-risk-return

Strategic objectives for 2018

 

How we did

 

Progress at a glance

● ● ● Met     ● ● ○ Mostly met     ● ○ ○ Partially met     ○ ○ ○ Not met

We aim to deliver a relatively stable Return on Equity (RoE) allowing for the continuation of major investments in challenging market conditions.

 

We maintained our overall stable range of RoE achieving 3.6% in 2018 which was in line with our budget. We recognise underlying challenges of profitability within the banking sector which continue to put pressure on our model. However, our new strategy is addressing these through commercial, operational and financial optimisation.

 

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Strategic objectives for 2019

As part of our corporate cycle, we reviewed our strategy during 2018 and have created a new group strategic plan for 2019-21. The Strategic Objectives here are derived from our strategic plan. Overall our intention is to transform and make progress at three levels:

  • internally, at the level of the organisation: One Bank: redesigned, responsive and robust
  • through our relationships, at the level of interactions with our clients and stakeholders: Unlocking our purpose: enabling customer engagement; activating our communities
  • externally and systemically, in terms of how we influence beyond our organisation: The frontrunner in responsible finance: Leading by example; Innovating finance for impact

The strategic objectives are defined in more detail and grouped under the related theme, below:

One Bank: Redesigned, responsive and robust

  • Improve customer satisfaction via simpler and quicker processes: including better Net Promoter Scores (NPS).
  • More adaptive to change in our business via agile ways of working: shorter time-to-market to address emerging risks and opportunities.
  • Improve underlying profitability via financial and commercial optimisation: improving income generation, steering on more profitable lending growth, cost-neutral transaction services and more diversified capital and funding sources.
  • Improve efficiency by redesigning how we do business within domains relating to digitalizing key areas of our core business. We aim to deliver marked improvements by 2020.
  • Remain evidently ‘in-control’ through reduced complexity and greater attention paid to key risk areas.
  • Empower co-workers and senior management: create baseline data for 2019 so higher levels of satisfaction of co-workers regarding efficiency and empowerment can be assessed in future years.

Unlocking our purpose: enabling customer engagement; activating our communities

  • Increase our relevance to customers and society through our suite of ‘products with a purpose’ and focus on our core impact themes of ‘Energy and Climate’, ‘Food and Agriculture’ and ‘Social Inclusion’ – helping our communities better understand and extend their individual, and our collective, positive impact.
  • Implement our new impact assessment methodology (including the Triodos Impact Prism) across our loan portfolio, further improving the understanding of impact within the organisation and amongst our loan clients, savings clients and wider stakeholders. We aim to assess all loans, currently subject to an annual review, by the year end and be reporting on impact performance and further develop our carbon accounting within Triodos Bank and by promoting its wider adoption outside it.
  • Maintain satisfactory profitability of our core businesses through detailed analysis of our business units, commercial and financial optimisation.
  • Increase the proportion of fee income across the group from investment funds distribution and fund management.

Frontrunner in responsible finance: leading by example; Innovating finance for impact

  • Influence the change of the financial system towards greater sustainability through advocacy and engagement, taking up our role as a frontrunner in responsible finance to motivate others.
  • Increase and leverage our long-term impact; by exploring how to finance new business models, developing new ventures, partnering with third parties and/or external funders, and catalysing emerging sustainability themes through gift money.
  • Develop our systemic and external awareness: bringing insights, external partners and future-oriented thinking into our organisation.
  • Create and scale up group-wide business activities that generate additional impact and potentially contribute to long term future profitability.

More information about our work in 2018 is available in the full on and offline annual report.
Visit www.annual-report-triodos.com for details.