T¬B Annual Report 2016 Triodos Bank produces a printed version of the Annual Report. We do this because some of our stakeholders want to read the report in this format and because we are legally required to provide the Annual Report as a discrete, single document. However, we have chosen to put more energy into producing the Annual Report online. The online Annual Report includes content that is not in this document; from films highlighting the extraordinary work of the sustainable enterprises we finance and an interview with our CEO, to an extended chapter about Triodos Bank’s impact. We believe the online Annual Report provides a more complete picture of our performance and our aspirations for the future, and many more people choose to view it than read the report in print. It has also allowed us to reduce the number of printed copies of the report we produce each year. However you choose to read or view the Annual Report, we hope it provides you with a rich picture of Triodos Bank’s values-based mission, strategy and impact in the wider world. We appreciate your feedback, so please contact us via the ‘tell us what you think’ button on the homepage of the website. www.annual-report-triodos.com T¬B Triodos Bank is a co-founder of the Global Alliance for Banking on Values, a network of leading sustainable banks – visit www.gabv.org Important data for Triodos Bank’s shareholders and depository receipt holders. Annual general meeting 19 May 2017 Ex-dividend date 23 May 2017 Dividend payment date 26 May 2017 Annual Report 2016 Triodos Bank NV Page Key Figures 5 About this Report 7 Triodos Bank Group Structure 2016 10 Our Purpose: Sustainable Banking 11 Triodos Bank Business Model: Creating Value 12 Executive Board Report 14 Our Stakeholders 18 Strategic Objectives 21 Results 29 Co-worker Report 30 Environmental Report 33 Triodos Bank Divisions and Results 34 The Impact of Finance from Triodos Bank 38 Risk and Compliance 40 UN Sustainable Development Goals 45 Corporate Governance 61 Supervisory Board Report 65 Triodos Bank NV Annual Accounts 2016 73 Other Information 212 Combined Independent Auditor’s and Assurance Report 212 Report by the Foundation for the Administration of Triodos Bank Shares (SAAT) 229 Appendix – Co-worker and Environmental Statistics 238 Appendix – Reference Overview Disclosures Related to the Capital Requirements 246 Regulation Addresses 248 Production 250 3 Content only available online at www.annual-report-triodos.com Interview with Peter Blom, CEO Annual Report ‘at a glance’ – A brief summary of our performance Europe’s Sustainable Bank – Integrated summary of branch activities Triodos Investment Management – Detailed overview of our activity Impact – Vision and practice, including case studies Stakeholder Engagement – Extensive overview of our stakeholder dialogue and materiality analysis Country Reports – A summary of activities in each of the countries where we operate Global Reporting Initiative (GRI) Content Index 4 Key Figures Amounts in millions of EUR 2016 2015 2014 2013 2012 Financial Equity 904 781 704 654 565 Number of depository receipt holders 38,138 35,735 32,591 31,304 26,876 Funds entrusted 8,025 7,283 6,289 5,650 4,594 Number of accounts 759,738 707,057 628,321 556,146 454,927 Loans 5,708 5,216 4,266 3,545 3,285 Number of loans 50,765 44,418 36,320 29,620 24,082 Balance sheet total 9,081 8,211 7,152 6,447 5,291 Funds under management1 4,373 4,087 3,480 3,199 2,754 Total assets under management 13,454 12,298 10,632 9,646 8,045 Total income 217.6 211.6 189.6 163.7 151.6 Operating expenses –171.7 –150.2 –138.4 –112.6 –100.1 Impairments loan portfolio –5.7 –7.6 –11.1 –17.1 –20.9 Value adjustments to participating interests –1.5 0.2 0.2 0.2 0.2 Operating result before taxation 38.7 54.0 40.3 34.2 30.8 Taxation on operating result –9.4 –13.3 –10.2 –8.5 –8.2 Net profit 29.3 40.7 30.1 25.7 22.6 (Common) equity tier 1 ratio2 19.2% 19.0% 19.0% 17.8% 15.9% Total Capital ratio2 19.2% 19.0% 19.0% 17.8% 16.0% Leverage ratio3 8.8% 8.4% 8.8% 8.7% 9.0% Operating expenses/total income 79% 71% 73% 69% 66% Return on equity in % 3.5% 5.5% 4.4% 4.3% 4.5% Return on assets in % 0.3% 0.5% 0.4% 0.4% 0.4% Per share (in EUR) Net asset value at year end 82 81 78 77 75 Net profit4 2.83 4.40 3.41 3.23 3.37 Dividend 1.95 1.95 1.95 1.95 1.95 5 2016 2015 2014 2013 2012 Social Number of co-workers at year end5 1,271 1,121 1,017 911 788 Co-worker turnover 8% 14% 10% 7% 10% Women as percentage of management team 40% 38% 40% 40% 42% Training costs per co-worker in EUR 1,435 1,692 1,856 2,055 1,731 Ratio of highest to median salary6 5.7 5.7 5.6 5.5 5.5 Ratio of highest to lowest salary6 9.9 9.8 9.6 9.4 9.4 Environment Emission of CO2 (1,000 kg) 3,123 3,041 3,084 2,906 2,986 CO2 compensation 100% 100% 100% 100% 100% 1 Including funds under management with affiliated parties that have not been included in the consolidation. 2 The calculation of the (common) equity tier 1 ratio and the total capital ratio for 2016, 2015 and 2014 is based on the reporting requirement under the Capital Requirement Directive (CRD) and Capital Requirement Regulation (CRR) known as at reporting date. The calculation of the comparative figures is based on the Basel III rules. 3 The calculation of the leverage ratio for 2016, 2015 and 2014 is based on the reporting requirement under the Capital Requirement Directive (CRD) and Capital Requirement Regulation (CRR) known as at reporting date. The calculation of the comparative figures is based on the Basel III rules. 4 The figure of net profit per share is calculated on the average number of issued shares in circulation during the financial year. 5 Concerns all co-workers employed by Triodos Bank NV, excluding co-workers employed by the joint venture Triodos MeesPierson. 6 As of 2015 both the ratio of the highest to the lowest salary is reported as the ratio of the highest to the median salary. The factor between the highest and lowest salary is calculated on a per country basis and reflects the ratio in the Netherlands. The ratio in the other countries is lower due to a smaller size of the offices and because the Executive Board is based at the Head Office in the Netherlands. The ratio of highest to median salary (excluding highest salary) follows the GRI criteria and is considered best practice. It provides a more meaningful indication of the ratio between salaries. All salaries are calculated on a fulltime basis. 6 About This Report In a nutshell The Annual Report – on and offline This Annual Report is produced as a hard copy • Triodos Bank has always reported financial and non- document that’s also available as a PDF and as an financial information in an integrated report because online Annual Report at www.annual-report- it is, and has always been, an integrated sustainable triodos.com. business itself • Its Annual Report is available as a hard copy The offline eporr t is Triodos Bank’s legally leading, document and PDF. This is the legally leading audited document. Please see page 212 for details of document the scope of the auditor’s opinion. It is reproduced, in • This content, plus much more, is also available its entirety, in the online report. But the online report online (www.annual-report-triodos.com) also includes much more information, such as a film • The report’s key content comes from finding out with the CEO and an in-depth impact chapter. what’s most important, or material, to Triodos Bank and its stakeholders While great care is taken to produce the offline eporr t • Triodos Bank’s report challenges the ‘old world’ Triodos Bank invests most time and effort in the orthodoxy of focusing on financial targets only, to online report because it is viewed by many more understand a bank’s performance people with less environmental impact. • Triodos Bank combines qualitative and quantitative evidence of its impact. It verifies its impact data and Report structure intends to improve how it understands, manages and The report’s content begins with what Triodos Bank’s reports on its non-financial impact in the future. stakeholders and Triodos Bank itself think are the most important, or material, issues to it. An integrated report Who Triodos Bank’s stakeholders are, and how the Triodos Bank’s Annual Report is integrated. That bank interacts with them, are explored in more depth means it combines sustainability-related, or online and later in the Executive Board Report on page ‘corporate social responsibility’ (CSR), topics with 18: But, in short, they are: everything else you would expect from a traditional • Those that engage in economic transactions with annual report, such as key financial targets and the business performance information. • Those that do not engage in direct economic For Triodos Bank integrated reporting doesn’t just exchange with the business, but have a close interest mean reporting on how the organisation behaves as a in it responsible corporate citizen – by using renewable • Those that provide new insights, opportunities and energy to power its buildings, for example, important knowledge.