Reporting definitions

Below we have included the definitions of the reported indicators. These have been aligned with internationally harmonized definitions where available and possible. 

2X Challenge

Eligibility for the 2X Challenge is assessed using evidence-based criteria pertaining to entrepreneurship, leadership, employment, consumption, and investments through financial intermediaries. They have been translated into a set of indicators and harmonized with the Global Impact Investing Network’s IRIS+ system. Each of the metrics has relevant thresholds that need to be met for an investment to qualify.

ESG reporting

ESG risk categorization

During the early stages of the investment process, FMO screens all transactions on environmental and social (E&S) risk and categorizes them in accordance with our Sustainability Policy. This classification is based on inherent E&S risk, irrespective of how it is managed by the customer. It allows us to determine the relevant E&S requirements and the (initial) resources needed. We have the following categories available: A & B+ (high risk), B (medium risk) and C (low risk) for direct investments and ID-A (high risk), ID-B (medium risk) and ID-C (low risk) for indirect investments in Financial Institutions and Funds. The E&S risk category of most customers is relatively stable, but if the risk profile of a customer changes following, for example, a significant shift in a fund’s portfolio or pipeline, we adjust the categorization.

During the early stages of the investment process, FMO makes an initial assessment of the corporate governance (CG) risk for a customer. A questionnaire supports the investment staff with identifying CG risk factors and determining whether a CG Officer should be consulted. The outcome of the CG Questionnaire is either low or high CG Risk. If the outcome is high, a CG officer should be consulted.

ESG performance target

To monitor the E&S performance of our high-risk customers, we use predefined tracking sheets structured around the IFC Performance Standards and international best practices. Our E&S specialists assess customers’ exposure to applicable risks (low, medium, high) and how well they mitigate such risks, efforts we rate as exemplary, good, satisfactory, caution and unacceptable. They update the scoring after due diligence and the assessment is included in the financing proposal to support the investment decision. The rating gets evaluated again during annual review and when significant changes occur. In addition, before contracting, an independent validation of the information is carried out by an E&S specialist in the Credit Department.

To monitor performance on CG, the CG officer or the investment officer assesses the maturity of the corporate governance of a customer, based on five CG attributes derived from the DFI Corporate Governance Framework in a predefined tracking sheet: commitment to CG, structure and functioning of the board of directors, control environment and processes, transparency and disclosure, and shareholder rights. Subsequently, the officer assesses whether the maturity level (basic, emerging, or developed) is adequate for the company. The conclusion on the adequacy of the corporate governance considers the size, risks, and complexity of the company, country context and (absence of) strong CG regulations, as well as the track-record with FMO. If the CG maturity is considered inadequate, FMO agrees on a CG action plan with the customer.

Investment teams complete a tracking sheet after due diligence. The assessment is included in the Financing Proposal to support investment decisions. The CG adequacy assessment gets evaluated again during annual review and when significant changes occur. The Credit Department reviews and approves the CG tracking sheet as part of the transaction approval.

Since 2018 we have been using an ESG performance tracking system. The initial performance target was set for a limited number of new customers classified as high-risk or supported by a corporate governance specialist in transactions where FMO was in the lead. Each subsequent year the target list was expanded to include a bigger part of our portfolio. As of 2021, the list consists of all high-risk customers and those supported by a CG specialist, including investments where another financial institution is in the lead (e.g. IFC, DEG, Proparco, etc.). In the past only high and medium ESG risks were in scope of the target. As of 2021, low ESG risks are also in scope, so our goal since then is to have 90% of all ESG risks managed in line with our standards or evidently towards meeting our standards.

E&S performance gaps

The overview of the E&S performance gaps in our portfolio was prepared in two steps. First, as part of our E&S performance tracking, we identified activities with a potential for (serious) adverse impact on people and/or environment that are not adequately managed. Second, we summarized the performance gaps by theme and prepared a table which illustrates the high priority issues that still require attention. The information was anonymized to respect customer confidentiality.

Energy production and equivalent number of people served

FMO tracks the amount of energy produced per year per project, based on customer reports. This is done both for direct customers such as corporates and operational projects, as well as for indirect customers, which are investees under funds. The reported energy production concerns grid production only. The off-grid energy production, for example from rooftop solar panels installed by our customers, is excluded.

The number of people served via on-grid power generation projects is estimated by dividing the annual amount of electric energy delivered to customers during the reporting period by the power consumption per connected capita. The power consumption per connected capita is calculated as the electric power consumption per capita divided by the electrification rate.

Employee statistics

Employee statistics included in the management report include the following:

  • Total number of (internal) employees: the total number of employees (with a definite or indefinite employment contract with FMO N.V.) at the last day of the reporting period, minus the employees leaving the organization as per that same day. Interns are not included.

  • Employees in senior and middle management: number of employees in a management position including Management Board member and Director, at the end of the reporting period, excluding the incumbents in these positions leaving FMO on the last day of the reporting period. Ad interim directors and managers are included.

  • Number of new joiners: number of new joiners during the reporting period, being between the last day of the previous reporting period and the last day of the actual reporting period. Employees joining and leaving in the same reporting period are included as new joiners and as leavers.

  • Number of leavers: number of leavers between the last day of the previous reporting period and the last day of the actual reporting period. Employees joining and leaving in the same reporting period are included as new joiners and as leavers.

  • Net growth percentage: number of new joiners minus number of leavers divided by the total head count at the start of the reporting period.

  • Staff turnover percentage: number of departures during the reporting period divided by the total head count at the start of the reporting period.

  • Share of bonus amount paid in the period: percentage of total bonus amount paid out to female and male employees related to the performance review over the previous year.

  • Promotion ratio in the period: the percentage (of a category) of employees progressing to a higher salary scale during the reporting period divided by the total number (of a category) of employees.

  • Employee engagement: engagement score based on latest employee engagement survey (November 2021) sent to all employees at least three months in service.

  • Number of internal FTEs: sum of the related full-time equivalents (FTE, as contractually agreed) of all internal employees at the reference date.

  • Percentage non-Dutch employees: total number of employees with a nationality other than Dutch divided by the total number of employees.

  • Number of nationalities: total number of different nationalities of employees in service of FMO N.V. based on employees' passports when joining FMO. Note: if an employee has other nationalities in addition to the Dutch one, this will count as Dutch nationality.

  • Absenteeism: percentage of total sick leave (short, medium and long-term sick leave) calculated as total number of sick leave days divided by the sum of work days during the indicated period.

  • Number of external employees: Total number of people working for FMO as "temporary external" on an agreement not being an employment contract with FMO N.V.

Greenhouse gas (GHG) emissions

Absolute GHG emissions from FMO’s own operations

The absolute GHG emissions from FMO’s own operations are reported in line with the GHG Protocol. The emissions are calculated based on measured data which is collected internally, such as diesel/petrol consumption by leased cars, heating consumption of the FMO office in The Hague as well as information on commuting and flights.

Financed absolute GHG emissions

The financed absolute GHG emissions are reported in line with the Global GHG Accounting and Reporting Standard for the Financial Industry published by the Partnership for Carbon Accounting Financials (PCAF). We use the Joint Impact Model (JIM) to calculate our absolute emissions. In November 2021, the JIM 2.0 was launched, which aligns with the PCAF Global Standard. One important change is the increase in the asset turnover ratio, which leads to higher modelled emissions in the Scope 3 Category Investments. Moreover, the attribution factor was changed from a fair value approach to a book value approach.

In addition, some changes in methodological assumptions were made:

  • Emissions during construction: for project finance in construction, all construction emissions are aggregated in Scope 3 in line with the PCAF Global Standard, as we assume these emissions come from a third-party construction company. The construction emissions were calculated based on the total project size assuming an average construction phase of three years.

  • Imported emissions: the imported Scope 3 emissions from the JIM were included in the Scope 3 estimates in addition to the local Scope 3 emissions.

  • Revenue estimation for investees: in line with the asset turnover ratio in the JIM, we adjusted the ratio used to estimate revenues for portfolio companies in funds when limited information is available

  • Estimate emissions for FI investments: for FI customers without emission or revenue information available, we estimated the revenues using an asset turnover ratio specific for the financial service sector

It should be emphasized that the financed emissions reported still contains a large margin of error due to data quality considerations and methodological uncertainties. First, for the majority of our customers we do not yet have direct emissions data, which means the emissions have to be modelled by the JIM. In addition, the PCAF Global Standard does not yet factor in investments in funds, nor loans to financial institutions (FI). As such, FMO has made assumptions how to classify and calculate emissions for the investees of funds and the borrowers of FI customers in its portfolio. Data improvements and methodological refinements will be made in the future, which will affect our emissions estimations in subsequent years.

Financed avoided GHG emissions

Avoided emissions are the emissions avoided as a result of a project when compared to a baseline scenario established in accordance with the GHG Protocol. For example, this can be emissions avoided by additional renewable energy capacity that is assumed to replace future fossil fuel-based power plants, or emissions avoided through the protection of forests against illegal logging. GHG avoidance for renewable energy projects is calculated as the annual electricity production during the latest available reporting year, multiplied by the country emission factors in accordance with the IFI harmonized list of emission factors.

The financed avoided GHG emissions are reported in line with the PCAF Global Standard, except compared to the PCAF Global Standard we are reporting avoided emissions for all our investments and use a slightly different emission factor for renewable energy. Moreover, due to the aforementioned update to the Joint Impact Model, the attribution calculation has been significantly modified compared to the previous annual report.

Green-labelled investments


Green-labelled investments contribute to climate mitigation, climate adaptation or other footprint reduction (water, waste, biodiversity). Green labels are applied ex-ante for the new commitments in a running year. Please note that we apply the labels to new commitments, but that these are referred to as investments throughout the report. To facilitate steering on SDG 13 through our Green label, we set an annual target on Green as a percentage of new commitments that influences customer selection, project preparation and investment decisions. FMO’s Green criteria for climate mitigation and climate adaptation are in line with the IDFC-MDB list of Green investments. FMO Green definition also recognizes activities that do not directly target climate change mitigation or adaptation yet have a positive impact on the environment, including water treatment, waste management and biodiversity conservation ('other footprint reduction').

All Green investments need to comply with two underlying principles by default. First, Green investments should contribute to a genuine improvement beyond the local regulatory requirements. Second, Green investments should not contribute to a long-term lock-in of high carbon infrastructure. Based on these principles, FMO has defined a non-exhaustive list of pre-approved eligible activities such as making, installing, distributing or financing renewable energy projects/products and agriculture in line with certain certification schemes. Improvements that are not included on this list, may still be eligible if they meet the Green principles. In these cases, a minimum threshold of 20% improvement against a baseline needs to be substantiated. For example:

  • Upgrade: If the investment is going towards an activity/equipment that is 20% more efficient than what it is replacing, FMO’s investment will be labelled 'Green' based on the amount of FMO's in-vestment going towards that specific upgrade.

  • Expansion: If the investment is going towards an activity that is 20% more resource efficient than the company's current practice, FMO’s investment will be labelled 'Green' based on the amount of FMO's investment going towards that specific expansion.

  • Greenfield: If the investment is going towards an activity that is 20% more resource efficient than the norm, FMO’s investment will be labelled as 'Green' based on the amount of FMO's investment going towards that specific greenfield.

Approval process

Investments can only be labelled Green following a robust approval process. The deal team is responsible for assessing its investments based on FMO's Green principles and Green definition. The deal team makes an application for a Green label through FMO’s Sustainability Information System (SIS). The deal team should supplement the request with adequate substantiation for the Green eligibility of the financed activities. A credit specialist independent of the investment teams assesses the label request and determines the Green percentage. For example, if FMO finances an agricultural holding that has 30% of its operations certified under a pre-approved FMO certification while the rest are not certified and don’t have other underlying Green elements, then the Green percentage for that investment will only be 30%. The approval process is traced and documented in SIS.


The volume of Green investments includes a decrease or increase in an existing commitment for an existing customer, a new commitment for an existing customer, or a new commitment for a new customer. The volume of Green investments includes investments from FMO’s own books, funds managed on behalf of public entities and direct mobilized funds. Direct mobilized funds are amounts committed by third parties that are demonstrably mobilized by FMO as well as guarantees provided by third parties on investments on FMO’s existing portfolio.

FMO also reports on its Green investments at portfolio level. Ex-ante labelling is applied to both the volume of new Green investments and the Green portfolio. Therefore, our criteria, the label process and documentation requirements are only enforced prior to providing a credit facility or making an equity investment. FMO’s full Green methodology is available on FMO’s website.

Human rights due diligence indicator

The total number of significant investment agreements in FMO’s portfolio for which E&S due diligence including human rights was performed, or human rights clauses were included in the contract. This includes high E&S risk customers in our portfolio per 31 December 2021 with an approved E&S tracker.

Jobs supported

Direct jobs are a common indicator for corporates and DFIs. It enables us to report on how our investments impact employment. Direct jobs are defined following the HIPSO definition as the “number of full-time equivalent employees as per local definition working for the client company or project”. This includes directly hired individuals and individuals hired through agencies as long as those individuals provide on-site services related to the operations of the customer company. Also, this includes full-time equivalent worked by seasonal, contractual and part-time employees.

Part-time jobs are converted to full-time equivalent jobs on a pro rata basis, based on local definition (e.g. if working week equals 40 hours, a 24 hour a week job would be equal to 0.6 FTE job). Seasonal or short-term jobs are prorated on the basis of the portion of the reporting period that was worked (e.g. a full-time position for three months would be equal to 0.25 FTE if the reporting period is one year). If the information is not available, the rule of thumb is two part-time jobs equal one full-time job.

By using the JIM, we model the estimated indirect jobs supported by our portfolio businesses through supply chains, jobs supported from the spending of wages, and economy-wide employment enabled by bank lending and the supply of electricity. The additional output requires more direct employment and intermediary inputs. This, in turn, leads to expansion among existing and new suppliers, thereby supporting and/or creating jobs. Some products and services – notably electricity and finance – remove constraints for other businesses, enabling them to expand and support and/or create jobs. In emerging markets, firm expansion is assumed not to displace employment in competing businesses to a significant extent.

Net Promoter Score

Net Promoter Score (NPS) shows the extent to which customers would recommend FMO to others. The customer is regarded as 'promoter', 'passive' or as 'detractor', based on the score she gives. The NPS is calculated by subtracting the percentage of 'detractors' from the percentage of 'promoters'. The score is expressed as an absolute number between -100 and +100. The scores for 2021 are based on the responses from customers that participated in a customer satisfaction survey that was sent out in December 2021 and closed in January 2022.

New admissible complaints received

Number of complaints filed with the Independent Complaints Mechanism (ICM) in the reporting period that were declared admissible by the Independent Expert Panel (IEP). When the IEP groups several complaints pertaining to the same project as one case, this is treated as one complaint.

Number of micro and SME loans

In line with the IFC definition, microloans are those that have an original value up to US$10,000 remaining on the customer’s balance sheet at the end of the reporting period, whereas SME loans have an original value between US$10,000–1,000,000 remaining on the customers balance sheet at the end of the reporting period. Both the number and volume of micro and SME loans are requested from our customers.

Number of smallholder farmers supported

Smallholder farmers are defined as marginal and sub-marginal farm households that own and/or cultivate relatively small plots of land, have low access to technology, have limited capital, skills, and risk management, depend on family labor for most activities, and have limited storage, marketing, and processing. Smallholder farmers supported have had active support from a company in order to improve production practices that have beneficial effects on yields, and/or reduce environmental degradation, and/or improve social practices during the reporting period. For Financial Institutions, smallholder farmers supported receive support from a customer company. There is still limited data on smallholders’ economics, therefore counting the number of smallholder farmers supported can be used as a proxy. Information is collected directly from our customers via our impact questionnaires.

Reducing Inequalities-labelled investments


FMO defines two sub-categories in social projects aimed at reduced inequalities: investments in the least developed countries (reducing inequality among countries) and investments in inclusive business (reducing inequality within countries). Least developed countries (LDCs) are identified by the United Nations as low-income countries confronting severe structural impediments to sustainable development.

Investments in inclusive businesses expand access to goods, services and livelihood opportunities on a commercially viable basis, either at scale or scalable, to people at the Base of the Pyramid (BOP). This is done by making them part of companies' value chain of suppliers, distributors, retailers or customers. Deals are eligible for inclusive business in case they relate to investment in inclusive business:

  • Microfinancial services;

  • Financial services to underserved SMEs

    • Agriculture SMEs;

    • Rural SMEs;

    • Women-owned or women-led SMEs;

    • Youth-owned or youth-led SMEs;

    • Migrant or refugee owned or led SMEs;

    • SMEs owned or led by other marginalized groups;

  • Smallholder farmers as part of the value chain;

  • Last-mile delivery of power;

  • Basic goods and services to low-income and marginalized populations.

Whereas the sub-categories are similar to the inclusive business/gender categories of IFC, the eligibility criteria and thresholds are FMO-specific as other DFIs (including IFC) have not developed similar eligibility criteria.

Approval process

Similar to Green labels, requests for Reducing Inequalities (RI) labels are made through SIS. For the LDC sub-label, a request is not needed if the investment is single-country and the country of impact is the same as the Country of Risk Exposure. A request for the LDC sub-label is only needed if the investment is multi-country with at least 50% of the investment expected to benefit LDC countries, or in the case the country of impact is an LDC and is different from the Country of Risk Exposure.

For the inclusive business sub-label, a request through SIS is always required. A deal team submits a request via SIS. The deal team should supplement the request with adequate substantiation for the RI eligibility of the financed activities. A credit specialist independent of the investment teams assesses the request for the relevant labels and decides whether the labels are granted. If the (sub)label is likely to be granted but more evidence is needed at a later stage (e.g. evidence of a use of funds clause in the contract), the label request can be conditionally approved. The approval process is traced and documented in SIS.


Same scope as mentioned for the Green-labelled investments.

Serious incidents

FMO considers a serious incident to be an incident occurring on or nearby any site, plant, equipment or facility belonging to the customer that has resulted in the loss of life, has had a material effect on the environment or has resulted in a material breach of the law.

Taxonomy eligible activities

The EU Taxonomy is a regulatory classification tool encompassing a standard set of definitions for sustainable economic activities centered around six environmental objectives. The tool aims to standardize reporting, provide clarity on what is ‘sustainable’ and encourage investment flows towards sustainable projects and activities.

Starting in January 2022, companies in scope of SFDR and NFRD are required to disclose Taxonomy eligibility on two of the environmental objectives: climate change mitigation and adaptation. An economic activity can be eligible for Taxonomy alignment if it can be mapped to one of the environmentally sustainable activities described in the Delegated Acts accompanying the Taxonomy Regulation.

As all of FMO’s investments are made outside the EU in emerging markets, none of our counterparties are in scope of the NFRD and thus are not required to disclose their taxonomy eligibility or alignment. As FMO’s eligibility disclosures must be based on actual information disclosed by financial or non-financial undertakings, and estimates are not permitted, for FMO’s mandatory disclosures 0% of the balance sheet is Taxonomy eligible.

Total investment volume

Total investment volume is measured in terms of total committed portfolio and new investments. We report these numbers for FMO, public funds and mobilized funds.

Total committed portfolio

Total committed portfolio reflects the risk exposure taken by FMO or another party on active commitments. For debt this includes the outstanding portfolio plus remaining commitments that have not yet been disbursed, reduced by the guarantees received from third parties. For equity, it includes the current exposure plus the remaining commitment reserved for all previously made investments. For guarantees it includes the limit amount reduced by the guarantees received from third parties.

New investments

New investments refer to the volume of new commitments made to customers. This includes increases of an existing commitment and new commitments to existing or new customers. Both metrics cover investments made on FMO’s own books as well as investments made through public funds that are under FMO’s management or through funds that have been mobilized from third party participants. This includes all loans, equity investments, guarantees and mezzanine products. Grants provided through for instance the Capacity Development program and sub-delegated funds under the management of third parties are excluded from the results.

Direct mobilized amounts reflect the commitments made by third parties in a given reporting period, which distinguishes between new investments made to customers and transfers of risk from FMO to third parties. We focus on direct mobilization, which are investments made by other public and private participants due to the direct and active role of FMO. Indirect mobilization, where we participate in deals that are led by other DFIs and MDBs, is excluded. Direct mobilized funds include commitments made by syndicate partners, FMO loan commitments that have been transferred to a third party (funded risk participation), and credit risk related to specific loan commitments that have been transferred to a third party (unfunded risk participation). It excludes equity investments. Parallel loans fall under the definition of direct mobilization but are excluded from the total committed portfolio figures as payments are administered by each parallel partner in the transaction and, as such, are not known to FMO.

Alternative performance measures

In disclosing on our performance, FMO uses specific alternative performance measures (APMs) that are not defined by IFRS and different to what is included in the financial statements. APMs should not be considered as alternatives to the equivalent IFRS measures but rather as supplementary information in conjunction with the most directly comparable IFRS measures. Alternative performance measures do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Where a non-financial measure is used to calculate an operational or statistical ratio, this is also considered an alternative performance measure.

Total committed portfolio

Total committed portfolio is most comparable to the ‘gross exposure’ that is reported in the financial statements, with a few notable differences. Gross exposure includes on balance items for FMO only and includes accruals. Total committed portfolio includes on balance (excluding accruals) as well as off balance items for FMO, public funds under FMO’s management and Direct Mobilized funds. Total committed portfolio is the sum of outstanding portfolio and remaining commitments.

The outstanding portfolio for debt is equal to the ‘principal amount outstanding’ reduced to the amount of the used Unfunded Risk Participation, if any; for the equity portfolio (including associates) this is equal to the sum of fair value of the underlying assets. For guarantees, this is equal to the ‘effective guarantees issued’ (contingent liabilities) that have been called. 

The remaining commitment is an off balance item. This consists of the committed not disbursed amount, or in other words the principal amount available for disbursement to the customer by the funding party. The funding party can be FMO, the public funds under FMO’s management or Direct Mobilized funds. In the case of guarantees, this includes the contingent liabilities that are reported in the financial statements.

New investments

New investments is a business term that is specifically used for steering purposes with a unique set of business rules that cannot be reconciled with any of the items reported in the cashflow or any other information included in the financial statements.

Regular income

FMO’s regular income relates to income following from financing activities and administrative services. Regular income does not include income related to value adjustments of financial instruments and consists of net interest income, net fee and commission income, dividend income and remuneration from services rendered.

Impairments and revaluations

Impairments and revaluations relate to gains/losses following from value adjustments of FMO’s loan portfolio. Impairments can be reconciled to the consolidated profit and loss account. Revaluations include fair value gains/losses (presented under line item ‘results from financial transactions') arising from the loan portfolio measured at FVPL and gains/losses due to derecognition.

Results on derivatives

Result on derivatives relate to gains/losses following from valuation adjustments of FMO’s derivative portfolio. These are included under line item ‘results from financial transactions’ in the consolidated profit and loss account.

Return on average shareholders' equity

A measure to indicate how the profitability is in relation to the average shareholders' equity. This financial metric is expressed in the form of a percentage which is equal to net profit/(loss) divided by the average shareholders' equity for prior year and current reporting year.

Return on assets

A measure that indicates how the profitability is in relation to total assets. The financial metric is expressed in the form of a percentage which is equal to net profit/(loss) divided by the total assets for a specific reporting year.