Higher impact
We believe in a world in which, in 2050, more than 9 billion people live well and within the means of the planet’s resources. To achieve this vision, many challenges, highlighted by the SDGs, need to be addressed. FMO will pursue investments that support the SDGs in general and three in particular: Decent Work and Economic Growth (SDG 8), Reduced Inequalities (SDG 10) and Climate Action (SDG 13).
The central goal of SDG 8 is increased economic growth and decent work for all. This lies at the core of FMO’s mandate as a development bank and FMO is expected to make a meaningful contribution to this goal. FMO ensures that projects adhere to IFC Performance Standards, including IFC PS 2, which states that employees receive fair treatment, and jobs comply with national labour laws, promote health and safety, and avoid child labour. Since 2014, FMO has been using an input/output impact model to make an ex-ante estimate of direct and indirect employment supported through its investments.
Two tracks underlie SDG 10 – Reducing Inequalities: investments in the least developed countries (reducing inequality among countries) and investments in inclusive business (reducing inequality within countries, for example, in gender, microfinance, smallholders, youth, or refugees). These two tracks are combined in one label: an investment can acquire the Reduced Inequalities label by investing in a least developed country or in an inclusive business. An inclusive business, in line with the IFC and G20 definition, expands access to goods, services and livelihood opportunities on a commercially viable basis, to people living on less than $8 per day in purchasing power parity terms or lacking access to basic goods, services and income.
SDG 13 translates into reducing greenhouse gas emissions, increasing resource efficiency, preserving and growing natural capital, and supporting climate adaptation. Since 2015, FMO has been steering on SDG 13 through its green label, classifying investments as green if they contribute to i) climate change mitigation, ii) climate change adaptation or iii) other types of footprint reduction. A precise set of criteria underlies the Green label supporting green investments, including renewable energy, energy efficiency, certified agricultural production and forestry.
In the context of higher impact, and in line with our ambition defined in 2013, we continue to work on Doubling Impact and Halving Footprint. By 2020 we aim to annually support through our investments, 900,000 jobs[1] on average over 2018-2020, against an annual average baseline of 500,000 jobs in 2010-2012. In terms of greenhouse gases avoided, we aim to improve our baseline of 575,000 tons of CO2 equivalent by avoiding at least an average of 1.15 million tons of CO2 equivalent per year by 2020 over the same period. To achieve the higher impact we aspire to, we focus our investments in three industries: Agribusiness, Food & Water, Energy and Financial Institutions. All three markets meet our criteria for achieving positive impact, and are essential to sustainable, inclusive growth. In addition, we help Dutch companies invest in developing countries with our capital and expertise.
- 1 The ambition has been adjusted from 1,000,000 to 900,000 jobs. In 2017 we updated the FMO Impact Model with new statistical data to reflect macro-economic progress in the countries where we invest. As a result, the jobs supported per Euro invested decreased by 10% on average. The decision to adjust our ambition in line with these macro-economic changes was taken end of 2017 and implemented in 2018.