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Case Study

Triodos Investment Management - Yamaha: Making music sustainable

By Vanina Farber and María Helena Jaén

12 pages

October 2021

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Reference: IMD-7-2260

In 2020, Triodos Investment Management (Triodos) was a globally active impact investor. It believed the true purpose of investing was to generate social and environmental impact alongside a healthy financial return. Triodos viewed sustainable finance as a driving force in the transition to a more sustainable world. Yamaha Music was a candidate that Triodos was evaluating for inclusion in its investment universe. Henk Jonker, Triodos Investment Management’s head of research, decided to pose the challenge to Clarissa Diaz, a Triodos researcher. Yamaha had a positive impact on people (made music, produced musical instruments and provided musical education), but Diaz had to evaluate the company´s supply chain against Triodos’s approach to establish if the company’s production process was sustainable and contributed to the environment. Diaz had to weigh the controversial ESG issues that merited the exclusion of Yamaha with the company’s financial valuation, innovative products and future potential. Students must decide whether Triodos should exclude or invest in Yamaha. If the decision is to invest, they must decide if active engagement is needed on the controversial ESG issues. Students will conduct real ESG research and a portfolio investment analysis. They will also have the opportunity to reflect on the values and leadership implications of a proactive financial sector that drives corporate transformations toward a greener and prosperous society. Investors integrating ESG criteria into their portfolios will find this case useful because they would have to determine whether to exclude or engage with companies that do not fully meet their ESG standards. The case focuses on the nuances of sustainable finance’s decision making.

Learning Objective

1. Recognize the role of financial institutions as intermediaries in the economy to build a sustainable society. 2. Describe ESG investment methodologies (values based, best-in-class, active ownership). 3. Evaluate how to integrate ESG factors into portfolio investment decisions. 4. Implement ESG integration process in an investment decision. 5. Value a company using a price-to-earnings multiple valuation approach. 6. Critically reflect on the role of financial institution engaging for business transformation

Keywords

Sustainability, Leadership, Responsible Leadership, Environmental Social and Governance, Sustainable Investment, Sustainable Finance, Investment Decision, Engagement Model, Investment, Finance

Settings

Europe, Netherlands
Triodos Investment Management, Finance and Insurance, Banking, Finance and Insurance

Type

Field Research

Available Languages

English

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Teaching note

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