General Information Triodos SICAV II

Foreign Accounting Tax Compliance Act

The Foreign Accounting Tax Compliance Act (FATCA) is a law enacted by the United States of America (US). This law is aimed at ensuring that income earned and assets held by US persons in offshore accounts or indirectly through ownership of foreign entities is reported to the US tax authorities (IRS). FATCA achieves this via the requirement that US and foreign persons - also including entities and therefore financial institutions such as investment funds - identify and document payees and ultimately disclose information to the IRS. To mitigate foreign legal impediments due to FATCA compliance, intergovernmental agreements (IGA) with the US are being negotiated. Luxembourg has agreed an IGA with the US. Consequently and due to the specific nature of the IGA, which can be qualified as a model I, FATCA has become Luxembourg domestic legislation.

As a Foreign Financial Institution (FFI), Triodos SICAV II qualifies as a participating FFI (PFFI). Triodos SICAV II is registered with the IRS as a PFFI, which resulted in the issuance of a Global Intermediary Identification Number (GIIN). FATCA became effective as of July 1, 2014, and on-boarding procedures are in place to identify (new) investors and debt providers.

Common Reporting Standard

Similar to FATCA the Organisation for Economic Cooperation and Development (OECD) has developed the Common Reporting Standard (CRS). CRS requires financial institutions, such as investment funds, in participating CRS jurisdictions to identify and report the tax residency and account details of investors and debt providers to the relevant authorities. The respective authorities automatically exchange the aforementioned information with the authorities of other participating CRS jurisdictions on an annual basis. On October 29, 2014, 51 jurisdictions, including Luxembourg, signed the first ever multilateral competent authority agreement to automatically exchange information. As a Financial Institution (FI), Triodos SICAV II is qualified as a participating FI. As of January 1, 2016, CRS is in force and on-boarding procedures are in place to identify (new) investors and debt providers.

Risk Management

Risk management framework of the alternative investment fund manager

The alternative investment fund manager (Triodos Investment Management) has implemented an integral risk management framework throughout its organisation in order to adequately monitor and manage the risks related to Triodos SICAV II and its sub-funds. This risk management framework is based on the COSO (Committee of Sponsoring Organisations of the Treadway Commission) framework for integral risk management, and furthermore contains policies and procedures designed in accordance with European regulations, best market practices and a permanent, independent risk management function in compliance with the AIFM Directive1.

The risk management framework describes the roles and responsibilities of the risk management function; risk governance (the ‘three-lines-of-defence’ model) at the level of both the alternative investment fund manager and Triodos SICAV II and its sub-funds. It also describes the risk management process to identify, measure, mitigate, monitor, report and evaluate all relevant risks related to the sub-funds. The risk management function is responsible for the implementation and execution of the risk management process and policies. The risk management function is functionally and hierarchically separated from the portfolio management function.

1 Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on alternative investment fund managers and amending directives 2003/41/EC and 2009/65/EC as implemented in Luxembourg through the law of 12 July 2013 on alternative investment fund managers (the “Law of 2013”).

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The primary responsibility for the effective identification, management and monitoring of operational risk lies with the alternative investment fund manager of the fund. Triodos Investment Management identifies, monitors and mitigates operational risks through a risk management program that includes a periodic risk and control self assessment. Triodos Investment Management is committed to continuously enhance the effectiveness and controllability of its processes as alternative investment fund manager of the fund. For further details of the operational risks within the alternative investment fund manager, please refer to the annual report of Triodos Investment Management.

Valuation framework

In order to ensure an independent, sound, comprehensive, consistent and auditor-approved valuation methodology, the alternative investment fund manager implemented a comprehensive valuation framework including valuation methodologies and procedures. This framework sets out general requirements regarding the selection, implementation and application of valuation methodologies and techniques for all asset types, taking into account the varied nature of asset types and the related market practices for the valuation of these assets. In addition, this framework sets out the requirements regarding the valuation function at the sub-fund level. It ensures consistent procedures regarding the selection, implementation and application of valuation methodologies and, moreover, ensures a consistent approach to the valuation function, independent valuation committees and the use of external valuers at the fund level.

Liquidity management

Given the special liquidity characteristics of the investments, the risk management function has a specific liquidity (risk) management policy framework applicable to the sub-funds of Triodos SICAV II, in accordance with European regulations and best market practices, to ensure that liquidity risk is appropriately measured, monitored and managed at the sub-fund level. The framework contains policies and procedures to:

ensure the availability of sufficient liquidity to meet financial obligations and adequately manage excess liquidity to act in the best interest of the investors in the sub-funds of Triodos SICAV II. Investors should carefully take note that given the type of assets, there is no guarantee that there will be sufficient funds to pay for the redemption of shares of the sub-fund and that there is no guarantee that the redemption can take place on the requested date;

  • assess the risk of insufficient liquidity by regularly conducting tests under normal and exceptional (stress test) liquidity conditions;
  • provide adequate escalation measures in case of liquidity shortages or distressed situations (liquidity contingency plan);
  • ensure the coherence of the sub-funds’ investment strategies, their liquidity profiles and their redemption policies.

The alternative investment fund manager has implemented standardised methods to monitor the liquidity positions of the sub-funds and to assess near-future developments regarding liquidity, including early warning parameters. The liquidity positions of the sub-funds are monitored both at sub-fund level and at investment manager level.

Risk profile

The sub-funds of Triodos SICAV II are exposed to a variety of risks, including market risk, credit risk, and liquidity risk. The sub-funds each have a sector-specific focus and generally invest in risk-bearing, non-listed assets that cannot be made liquid in the short term and therefore have a relatively high risk profile. In most cases, added value in the sub-funds is generated over the longer term. An investment in the sub-funds of Triodos SICAV II therefore requires a medium- to long-term investment horizon of the investor.

In general, the sub-funds of Triodos SICAV II will only take on such risks that are deemed reasonable to achieve their investment objectives. The sub-funds of Triodos SICAV II have different investment strategies and therefore different risk profiles. There is no guarantee that the sub-funds will achieve their goals, due to market fluctuations and other risks to which the investments are exposed.

Specific risk factors for the sub-funds

As the sub-funds of Triodos SICAV II differ significantly in their investment policies and associated risks, it is important to study the specific risk factors for each sub-fund, as described in the risk paragraph in this report.

Remuneration policy

Based on Article 22(2) of the AIFMD and section XIII (Guidelines on disclosure) of the ‘ESMA Guidelines on sound remuneration policies under the AIFMD’, management companies are required to at least disclose information about their remuneration practices for employees whose professional activities have a material impact on its risk profile (so-called “identified staff”).

All of the staff members of Triodos Investment Management are employed by Triodos Bank. Triodos Bank believes good and appropriate remuneration for all its employees is very important. The core elements of the international remuneration policy of Triodos Bank are set out in the Principles of Fund Governance, which can be accessed via www.triodos.com. The wage system of Triodos Bank does not include bonuses or option share schemes. Triodos Bank considers financial incentives as an inappropriate way to motivate and reward employees. Variable remuneration is therefore limited. The Management Board of the alternative investment fund manager annually assesses the remuneration policy. Identified staff is a definition from the AIFM guidelines and concerns all staff that may influence the risk profile of the fund. Besides the members of the board, these are also the fund manager and the managers of support departments.

Download XLS

Applicable over the year 2015 (amounts in EUR)

Co-workers directly involved in Triodos Organic Growth Fund

Identified staff in senior management positions

Other identified staff

 

 

 

 

Source: Triodos Investment Management B.V.

Number of staff involved

19

4

5

Average FTEs

5.6

0.3

1.2

 

 

 

 

Fixed remuneration

557,530

61,894

167,233

Variable remuneration

8,423

5,092

422

 

 

 

 

 

 

 

 

 

 

 

 

Total remuneration

565,953

66,986

167,655

 

 

 

 

The table above contains the total remuneration, broken down into fixed and variable remuneration, and the remuneration of the senior management and the identified staff. The cost allocation model of the alternative investment fund manager is used for the allocation of staff to Triodos Organic Growth Fund. As this table aims to show the remuneration of employees, all other costs of the manager, such as for housing, workplace, travelling, outsourced activities, external consultants, are excluded. The amounts shown in the tables include income tax, social premiums, pension fees and tokens of appreciation. The largest part of the variable remuneration in 2015 was related to severance payments. Triodos Bank may provide additional individual tokens of appreciation to co-workers to a maximum of one month salary. These tokens of appreciation are for extraordinary achievements and are at the discretion of management in consultation with Human Resources. Such a token is not based on pre-set targets and always offered in retrospect. An annual, collective token of appreciation may be paid for the overall achievements and contribution of all co-workers. This very modest amount is the same for all co-workers with a maximum of EUR 500 for each co-worker. This can be paid in cash or in Triodos Bank N.V. depository receipts. In 2015 a collective end-of-year token of appreciation of EUR 300 was awarded.

Luxembourg, April 5, 2016

The Board of Directors of Triodos SICAV II

Pierre Aeby (Chairman)
Marilou van Golstein Brouwers
Patrick Goodman
Olivier Marquet
Garry Pieters

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