Corporate governance

The Supervisory Board ensures that FMO adheres to all applicable corporate governance codes, further described in the chapter on corporate governance. Specific responsibilities include the tasks described in the Dutch Banking Code 2015 regarding sound and ethical operation.

Composition of the Supervisory Board

FMO aims to have a balanced composition of the different boards in terms of gender, experience, age, professional background and nationality. At the end of 2021, the Supervisory Board was comprised of three male and three female members. The Management Board consisted of one female and two male members. Further personal details on the members of the Supervisory Board can be found in the section 'Members of the Supervisory Board'.

Permanent education

In this challenging year, the Supervisory Board held its Lifelong Learning program mainly by means of virtual sessions. This included several subjects required by the Dutch Banking Code. The Supervisory Board focused on relevant topics such as the economic outlook for certain regions of FMO’s working area, FMO’s culture and development program 2021, energy transition including a case study and the outcome of the Employee Engagement Survey 2021.

Evaluation

During the year several meetings between Supervisory Board and Management Board members took place to discuss the Management Board composition and to monitor its performance. The Management Board prepared a self-assessment and a team assessment of its functioning in 2021. The Supervisory Board evaluated the individual Management Board members by means of separate interviews that were conducted by two SB members. During those meetings, the self-assessments and the 2021 and 2022 objectives and targets were discussed, as well as the collaboration within the new MB setting. The conclusions from these meetings will be carried forward into the 2022 team and personal goals. The Supervisory Board discussed the outcomes of the evaluation in a concluding session without the Management Board present.

The Banking Code requires an external evaluator to conduct the Supervisory Board evaluation once every three years. This was done over the year 2021, however, in a virtual setting, due to COVID-19. The Supervisory Board evaluated its functioning in the relatively new setting in 2021 by means of a self-assessment questionnaire and discussed the outcome in a separate session prepared by the external evaluator and the Chairman of the Supervisory Board. The functioning of the SB and its three committees were part of the evaluation. It was found that the SB and its members functioned according to what can be expected in its new setting. The composition of the Board was evaluated as sufficiently diverse and covering the range of expertise necessary for adequate supervision. However, also due to the ongoing pandemic, the SB expressed a need for a continued focus on the longer-term strategic challenges of FMO.

Regarding the operations of FMO, the SB will more closely monitor the IT policies of FMO, as well as the design and outcomes of its HR-function. Regarding the SB’s own organization of work, it wants to develop a better sense of the daily operations within the organization and review the framework it operates in. The energy spent on permanent education will be invested in keeping the SB's knowledge and understanding up to date regarding the complex environment in which FMO operates and several risk management topics. Suggestions made by the members will be dealt with adequately.

Appointments and reappointments

There were no changes in the composition of the Supervisory Board in 2021. However, Thessa Menssen decided to leave the Supervisory Board as per 1 January 2022. We would like to thank her for her valuable contribution during the past five and a half years.

Meetings of the Supervisory Board

During 2021, the Supervisory Board held five regular meetings. As of mid-June 2020, the Supervisory Board decided to meet on a weekly or bi-weekly basis when the Management Board temporarily consisted of two members. At that time, it was also clear that the pandemic was long-lasting and would have an impact on FMO’s customers and FMO’s own results, which required close monitoring. The Supervisory Board held eight extraordinary meetings in 2021. Topics that were discussed included: the impact of COVID-19, the appointments to the Management Board for the CEO and CIO positions, the KYC remediation and FEC enhancement and FMO’s participation in Invest International. In addition, the SB approved the proposed changes to FMO's current pension plan for existing and future employees. Furthermore, the SB discussed the priorities and ambitions for the Strategy 2021-2024 and the Business Plan 2022 as well as the quarterly performance reports on progress against FMO’s strategic targets. The Special Committee, consisting of two SB members, continued to meet biweekly with the MB in a more informal way, to provide support and advice whenever necessary. This committee will cease to meet in the beginning of 2022, or only meet when specifically required.

Committee activities

The Audit and Risk Committee (ARC) supervises and advises on FMO’s financial position. It monitors and offers expertise on issues such as our risk management policy, internal and external auditing systems and compliance with legislation and external and internal regulations. One of its key tasks is to monitor the performance of external auditors. The ARC met three times in 2021. These meetings are attended by the ARC members, the CEO, the CRFO, the CIO the Director Finance, the Director Risk, the Director Internal Audit and the external auditor.

In 2021, the ARC discussed, among others, yearly and half yearly reporting, risk appetite reports, the risk appetite framework, internal and external audit plans and reporting, capital and liquidity adequacy, the status of the Know Your Customer and FEC enhancement project, the quality of the portfolio, the transfer of the NL Business activities to Invest International and the Sustainable Finance Regulation project. The following key audit matters were discussed with the external auditor: IFRS9 impairment of loans to the private sector, valuation of equity investments at fair value, reliability and continuity of the information technology and systems, and the Joint Impact Model. The ARC requested more information on – among others – the hedging policy, the withholding tax exemption in participation structures, and non-performing loans.

The main task of the Selection, Appointment and Remuneration Committee is to advise on the proposals on the appointment and re-appointment of Supervisory and Management Board members. Other tasks include monitoring the remuneration policy, preparing proposed adjustments and giving advice on the remuneration of individual Management Board members. The Selection, Appointment and Remuneration Committee officially met four times and had several deliberation sessions. In 2021, it discussed, among others, the appointments of the new CEO and the new CIO, the new five member MB setting, evaluation and goal setting, the job profiles for the new CRO, Co-CIIO and a new Supervisory Board member and the interim appointments of the CEO ad interim and the CIO ad interim.

The Impact Committee assists the Supervisory Board in overseeing the quality and integrity of FMO’s statements regarding development Impact. The Impact Committee, among others, prepares the decision-making (and or the advice) of the Supervisory Board around FMO’s strategy (including policies and targets) around Impact and ESG. The Impact Committee was established in 2019 and held three meetings in 2021. Throughout the year, it discussed amongst others, impact and ESG targets and steering, a case study, the periodic update of the Independent Complaints Mechanism, several positions statements, investments in fragile states, the Sustainable Finance Regulation project, harmonization of development impact measurement methodologies, the external evaluation of FMO. The Impact Committee requested, amongst others, documentation on the 1.5 degree pathway, in depth information on the Joint Impact Model, a discussion on the ESG target, and next steps with regard to meetings with NGOs.

Independence, conflicts of interest and governance

The Supervisory Board is of the opinion that all of its members are independent, as meant by Best Practice Provisions 2.1.7 up to and including 2.1.9 of the Corporate Governance Code. No direct, indirect or formal conflicts of interest were identified in 2021. FMO has specific regulations concerning private investments. Compliance by Supervisory Board members, Management Board members and all other employees with FMO’s regulations on private investments is addressed regularly.

Culture, including compliance

The Supervisory Board ensured that the compliance function is safeguarded within the Management Board and the Supervisory Board. In 2021, the Supervisory Board put even more emphasis on supervising the FEC enhancement, KYC remediation and improvement of KYC procedures. The Supervisory Board is updated in writing on compliance at every regular meeting. The Chairman of the Supervisory Board periodically meets with the Director Compliance and discusses issues where relevant.

The Supervisory Board regularly interacted with the Works Council. The Supervisory Board discussed FMO’s culture and development program 2021 and discussed its duties as meant in the Banking Code sound and ethical operation.