In our impact vision ‘Towards a regenerative economy’ we describe how we want to create positive impact in a changing world. This serves two purposes: guiding us on the journey to reach our goal and stimulating dialogue about this transformation. Investment strategist Federica Masut and chief economist Hans Stegeman tell more about the why and how of our vision.

“We humans are living beyond the limits of our planet’s resources”, explains Hans Stegeman. “Economic, social and political developments in the past three years have once again shown that our current system is unsustainable. More and more people perceive the need for fundamental change.

“For a liveable world, a transformation towards more sustainable production and use of energy, food and resources is needed. Our role is to contribute to financing this transformation. We also need to strengthen our social foundations: such a transformation can only be effective if it brings about true positive change for people, and if we continue investing in our individual and collective wellbeing. Our impact vision provides a clear roadmap to how we are going to reach our destination."  

A prosperous life for people on a thriving planet

“What exactly do we strive for? Is the impact we have made so far in line with our vision? These are questions that our impact vision puts forward”, says Hans.

Firstly, the outside world has changed drastically. We talk often about the biggest challenges for our future, like climate change, resource scarcity, inequality, or social exclusion, but we rarely talk about the underlying drivers. Financial institutions that truly want to incorporate sustainability in their thinking face a fundamental question: how to address those underlying challenges?

Hans explains: "You cannot blindly invest money in everything that has a green tinge. There must be a clear idea of how to make progress towards a more sustainable economy and what your theory of change is to make the most impact with your money.” This requires thinking ahead, setting strong principles and clear processes to make sure sustainability is actively embedded in all decisions.

Systemic transformation

Our vision charts the way forward to achieve deep, systemic transformation.

“We are not moving our sustainability beacons”, assures Hans. “Our core values remain the same as when the bank was founded more than 40 years ago. We have always envisioned a world in which all people have the necessary tools and resources to live fulfilling lives, and in which the economy operates in harmony with nature rather than against it. We have a forward-looking lens to our activities and an integrated and holistic approach to the transformations we want to finance. We want to make sure that with any financing and investment opportunity, we ask ourselves: ‘does this have transformative potential? Does it contribute to changing the world for the better?’ If the answer to the first question is affirmative, Triodos Bank wants to be there to support such ideas and initiatives.”

Five transitions

Transformation is a process of different changes, or transitions, explains Hans. “They have been made before, and we ourselves have lived through some – think of the steady digitalisation in recent decades. However, transitions rarely happen in isolation: multiple transitions generally take place in parallel, and combined they can substantially change, or transform, the way we live. This requires intention and direction by addressing the underlying causes that make the system unsustainable, in addition to reducing the symptoms, such as carbon emissions and inequality.”  

“We have identified five transitions, covering food, energy, resources, and individual and collective wellbeing,” continues Federica Masut. “They are interlinked and reinforce each other. Think for example of the link between individual wellbeing and our use of resources.

“Mainstream economics has long defined wellbeing in terms of ‘utility’, which has essentially been translated as: consume more, feel better. Luckily, this view is increasingly being challenged. If we manage to broaden our definition of wellbeing to include immaterial wellbeing, and to stop framing people as ‘consumers’, the pressure we exert on our planet in terms of resource demand should also decrease. Everything we do, whether through lending or through investing and financing, aims at contributing to these five transitions.”

So how does the impact vision trickle down into Triodos Bank’s activities? In some segments, Triodos Bank has already been shifting emphasis. Hans explains: "In the energy sector for example, big solar and wind projects in Europe have become less interesting to us. We still finance them, but there are enough other investors. Such projects are more relevant in emerging markets, which need to massively shift to renewables and still face a funding gap. In Europe, we now focus more on companies that accelerate the energy transition in other ways, such as battery producers or smart-energy technology providers."

Impact across the board

By making the five transitions and their links explicit, Triodos Bank is building the path to set a group-wide strategy on how to best support them. All Triodos Bank’s entities – from the banking activities in various countries to Triodos Investment Management and Triodos Regenerative Money Centre – share the same vision on the future and have sustainability at the centre of their activities.

“We are currently translating this vision into a concrete strategy for all Triodos Bank entities," explains Federica. “This will allow us to better coordinate our work, and create synergies wherever possible within our organisation, and with external, like-minded actors. Using the various financial tools at our disposal, we finance experimentation, growth, consolidation and the broad establishment of sustainable solutions. Our clients entrust Triodos Bank with their money, and we want to live up to their expectations, using it consciously and effectively to make tangible, positive impact. In addition, we count on advocacy and thought leadership to disseminate ideas and share best practices in sustainable finance.”

“The financial sector can play an essential role in the transformation we envisage,” concludes Hans. “If and how the financial world chooses to pick up this challenge may vary tremendously and is not without risk of failure. Yet we need radical change, and we cannot do it alone. Are our ambitions too high? Perhaps. Maybe we won't achieve everything. But there is too much at stake to be cautious. So, no more excuses. Let’s go!"