A case study on business ethics performed by Triodos Bank. -Ethical banking-

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An analysis of Triodos bank


Triodos Bank is a social bank lending only to organisations and businesses with social and environmental objectives. Triodos Bank is well known for its innovative and transparent approach to banking. Savers at Triodos Bank know where their money is working. In 2001 the balance sheet totalled 461.841 GBP.


1968 an economist, professor in tax law, senior organisational consultant and a banker formed a study group to see how money could be handled to affect positive social change.

Just over a decade later, in 1980, Triodos Bank was founded in The Netherlands to finance a new generation of enterprises creating social added value and caring for the environment, and to give people new ways to save and invest ethically.

In 1990 launched its first green investment fund becoming the Triodos Green Fund I 1997. The Belgian office opened three years later and, in July 1995, the organisation in the UK was established.

In 2002 Triodos became the first bank in the world to follow the Global Reporting Initiative (GRI) measuring social and environmental performance in its Annual Accounts. Triodos Bank belongs to a widespread network of national and international financial institutions active in the social economy. Triodos Bank is a founding member of INAISE (the International Association of Investors in the Social Economy) and of the Social Venture Network Europe (SVNE). Triodos Bank is a fully licensed bank, regulated by the Dutch Central Bank and by the Financial Services Authority (FSA) for the conduct of regulated activities in the UK.


Triodos Bank is a European bank registered in The Netherlands. The Bank has three

branch offices: in Zeist, The Netherlands, in Bristol, uk and Brussels, Belgium.Triodos

Bank nv is a Dutch public limited company ('Naamloze Vennootschap ').Triodos Bank

is not listed on any stock exchange. To preserve the identity and the independence of the Bank, all our shares are held in trust by the 'Stichting Administratiekantoor Aandelen Triodos Bank ('saat '),a special Trust under Dutch legislation. The saat issues depository receipts for Triodos Bank shares to the public.6,421 investors hold these receipts. Almost 44%of the priority

Receipts are held by 15 financial institutions, investment trusts and pension funds, the

Remaining 56%by private individuals. No depository receipt holder may hold more

Than 7.5%of the Bank 's issued capital. Voting rights at the Annual General Meeting are exercised by the saat .The members of the saat Board are appointed by the General Assembly of depository receipt holders following a proposal by the Board of saat and with the Bank 's Management Board approval. The voting rights of each depository receipt holder in the General Assembly is restricted to (a maximum of) 1,000 votes.

Triodos Holding NV is a sister company of Triodos Bank, legally separate but organisationally integrated (see the Triodos group structure on page 74 and 75). Shareholders and savers play a vital role in making Triodos Bank an instrument for a positive change in society. When money is deposited with Triodos Bank, innovative enterprises can develop, community project can be helped and environmental initiatives like wind energy can be funded.

Mission statement

Triodos Bank seeks to contribute to a more people-orientated society -one which

Respects people, the environment and culture. Triodos Bank finances enterprises which add social, environmental and cultural value, with the support of depositors and investors who wish to encourage the development of responsible business working for social renewal.

Triodos Bank includes social and ethical -as well as financial -perspectives in its business practices. This threefold approach is the source of the name Triodos 'tri hodos ' which means 'threefold way '. As an independent international financial institution, Triodos Bank seeks to bring

Substance to ethical and social banking. Within the framework of our clear social objectives, Triodos Bank strives to make a fair profit.


Transparency, socially responsible business and sustainable banking are on the public

agenda. They are seen to be key parts of the answer to the question of how socially

responsible 'globalisation ' can take place.Triodos Bank is a pioneer and innovator in

this area and will remain so. More than ever, however, to prove this is the

case, to demonstrate it with our actions and actively engage in a discussion with our

stakeholders about these issues.

Triodos Bank attracts savings and investments in the retail market from private

customers and provides loans to small and medium size enterprises which add social,

environmental and cultural value.

Customers expect new social banking and social investment products and

services. They do not necessarily expect Triodos Bank to become their primary bank.

But, longer aspiration is to become the natural choice for bank products and

services for people with a strong interest in social and environmental solutions,

meeting many of their daily banking needs.

The future strategy is to focus in the coming years on the growth of the loan portfolio. Effort will

be concentrated on sectors with strong growth potential Loans to social, environmental and cultural enterprises offer the most concrete evidence of Triodos Bank 's mission.

The focus will be to look for new fund management, private banking, share issue and

insurance brokerage opportunities. Short term expectations are to make a moderate but increasing contribution to the Bank 's profit. Longer term aim is to be less dependent on interest income. The ambition is to operate throughout Europe, continuing to explore the

feasibility of opening new branches in other eu countries and consider cross-

border operations to be a positive step in that direction.

Activities in microfinance in developing countries, venture capital, project

development and the charity sector.

The objective is to generate a modest profit for our shareholders given these major

investments in the Bank 's growth in the coming years.


Triodos Bank finances exclusively the development of renewable energy sources (solar and wind), organic agriculture, art and culture, protection of the environment and conservation of nature. Triodos Bank also plays an active role in the developing world (microcredit).

Triodos Bank has always been a financially viable venture itself, right from the start. It shows that a combination of social and financial criteria are possible for both the projects and businesses the bank supports and the bank itself. Since 1985 a modest dividend could be declared and capital growth was realised.

Triodos Bank is active in the following areas by sector:

"h Social Economy

Innovative businesses, trading, innovative living and working, services and business centres.

"h Nature & Environment

Sustainable energy (sun and wind), organic agriculture, environmental technology and nature conservation.

"h non-profit and Art

Education, special needs, health care, nursing care, individual artists and groups.

"h North-South Development co-operation, fair trade with the South.


From innovative savings schemes to corporate finance, Triodos Bank is an increasingly significant player in the UK and European financial industry. The organisation has been quick to respond to the rapidly growing market in ethically sound products and services and has launched the Triodos Venture Capital Fund to capitalise on these developments. Beneficiaries of this new initiative already include groundbreaking companies such as carbon-offset specialists, Future Forests, and the web-based Organic produce retailers, Simply Organics.

Microfinance for Maximum Returns

Triodos Bank has been active in a number of developing countries for more than seven years. While it doesn't have its own offices in those countries, it is active through the Triodos-Doen and Hivos-Triodos funds. These invest in small, independent banks through Triodos' microfinance programme.

Microfinance fulfils a crucial need, as much of the population in these impoverished countries are refused facilities by conventional banks. This hinders a country's development. Often it would take just a modest loan for small market traders, for instance, to be able to expand their activities. 'For many people, just having their own bank account to pay savings into helps them enormously'.

'The main focus of microfinance banks is the large number of small, independent entrepreneurs who have often become what they are out of sheer necessity, due to a lack of jobs and social insurance benefits. It has become clear that this group of entrepreneurs is greatly assisted by being able to use a number of very basic banking services. In practice, these customers can and want to pay the costs of these services, which are relatively high due to the small sums involved. For them, access to these services is essential. In addition to getting credit, they want to be able to deposit and withdraw money, make payments and save.'

In many cases, the reputation of these countries' banks has been damaged. When a bank goes bankrupt, it is often the poor who suffer the backlash most. For this reason, Triodos Bank not only provides capital via the Triodos-Doen and Hivos-Triodos funds, but also offers its experience and know-how to help turn these banks into healthy financial institutions. Triodos is represented on the Board of Directors of a number of East African banks, such as K-Rep Bank in Kenya, to help improve their management.

Business ethics and Triodos


"h Triodos annual report follows the Global Reporting Initiative (GRI) measuring social and environmental performance in its Annual Accounts.

"h In their mission Triodos Bank 'seeks to contribute to a more people-orientated society ¡Von which respects people, the environment and culture'. Their main customers are enterprises, which add social, environmental and cultural value.

"h In their strategy transparency, socially responsible business and sustainable banking are seen as key parts of how socially responsible 'globalisation' can take place. discussion with stakeholders will be actively engaged.

"h Their banking activities include loans, , fund management, private banking, sharing issues and insurance brokerage opportunities.

"h Triodos Bank is committed to provide space for co-workers to develop. They provide genuine personal and professional growth opportunities. There is an equal numbers of men and women working at Triodos Bank, they seek to encourage women to take up management positions.

"h In all their communication material Triodos expresses their ethical culture and background. In their mission they mention to seek to contribute to a more people-orientated society. The claim to bring substances to ethical and social banking.


Moral issues:

"h A bank will still make a profit on lending money is this general right?

"h How can a person judge what is morally right?

"h Though all the projects are 'morally just' , this is not checked for the money inflow:

"h Is it ethical to accept money from people who gained it dishonestly?

"h Also private banking will become one of their markets, will Triodos question their customers who they earned their money?


"h From a utilitarianism point of view actions and policies seem to be evaluated on the basis of social benefits they will impose on different societies.

"h Social costs: Lending to moral just projects can result in lending to projects which are less beneficial. -The main problem will be the Problems of measuring.-

Moral Rights:

Rights impose prohibitions or requirements on others and thereby enable individuals to choose freely whether to pursue, or must be helped to pursue, they protect the individual's pursuit of those interests and activities.

"h TRIODOS commits itself to provide space for co-workers to develop. Personal and professional growth opportunities are stimulated.


"h The benefits and burdens seem to be equally divided.


"h Closer relationships exist with people who have a savings-account in Europe then with the projects which are run. In their strategy a modest profit is stated paying more attention to the projects abroad then to the lenders in the home country.