Financing change, changing finance: Should Triodos invest in Tesla?
Case Study

Financing change, changing finance: Should Triodos invest in Tesla?

12 pages
December 2020
Reference: IMD-7-2238

In 2020, Triodos Investment Management had approximately EUR 4.9 billion in assets under its management (impact investment). Triodos motto was “Financing for change. Change Finance” and understood sustainable finance as a driving force in the transition to a more inclusive and sustainable world. Triodos took a comprehensive view of the companies following the “4P” approach: Product, People, Process, and Planet. Tesla, a clean energy company that produced electric cars, batteries and renewable energy generation, could be part of Triodos’s investment. Henk Jonker, Triodos´s Senior Investment Analyst needed to evaluate Tesla’s inclusion in the investment universe. He decided to pose the challenge to Clarissa Diaz, a high potential Triodos’ researcher. Having in mind Tesla´s mission, “to accelerate the world’s transition to sustainable energy,” Diaz had to evaluate Tesla´s impact on people and planet. She must review the ESG data along with a financial analysis of the company. Diaz was aware that Elon Musk was a visionary promising to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy. Still, she was aware that Tesla and Musk were publicly involved in governance, labour, and human rights controversies. Diaz had to weigh the ESG controversial issues that merited the exclusion of Tesla. The case challenges the students to evaluate a company that do not fully meet all ESG standards and to reflect on the responsible leadership role of financial institutions.

Learning Objective
  1. Recognize the role played by financial institutions to build a more sustainable society.
  2. Describe different ESG investment methodologies.
  3. Evaluate how to integrate ESG factors in portfolio investment decisions.
  4. Implement the ESG integration´s process in an investment decision.
  5. Value a company using a market multiples valuation method and critically reflect on the values-based and responsible leadership role of financial institutions.
Keywords
Finance, Sustainability, Equity, Inclusion, Diversity
Settings
Netherlands
Triodos Bank, Banking
Type
Field Research
Copyright
© IMD 2020
Language
English
Related material
Teaching note
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