Materiality assessment

Every reporting period we review our material topics. This year, we updated our materiality assessment to align with the revised 2021 GRI Standards. Through the assessment we gathered insights into our actual and potential, positive and negative impacts on the economy, environment, and people (including human rights) across our activities and business relationships and prioritized them based on their significance.

How we determined our material topics

In 2022, we engaged an external party to conduct the materiality assessment, including designing and updating the methodology we use to ensure alignment with the revised GRI Standards. We used the updated methodology to identify our impacts, which entailed reviewing our previously determined material topics and using internal and external sources such as our 2030 strategy, the 2022 business plan, international reporting guidelines, rating agencies, peers and trend analysis to gather additional input. Based on that, we generated a shortlist of topics that represent FMO’s positive or negative, actual or potential impacts.

Following this, we conducted 12 interviews with FMO employees who most frequently engage with our stakeholders to get a broad stakeholder perspective (e.g., customers, investees, regulators, employees, the Dutch government, peers, NGOs, the knowledge community). For FMO's shareholders and Supervisory Board (SB), we gathered insights from our Management Board (MB) who interact with these stakeholders on a periodic basis. During the interviews, we asked the stakeholder representatives to select the top and bottom five topics they consider to have the most and least significant (actual and potential) impact on the economy, environment, and people, including on human rights. This helped us prioritize our material topics. 

We acknowledge that using input from internal stakeholder representatives as a proxy for external stakeholder views may have introduced some bias in determining the significance of the impacts and prioritizing our material topics. To minimize the misrepresentation of stakeholder views, we selected the stakeholder representatives based on their level of expertise and close engagement with the groups they spoke on behalf of.

In our previous materiality assessment, we prioritized our material topics based on how our stakeholders or stakeholder representatives had perceived our performance vis-à-vis our strategic topics. This year, to align more closely with the revised GRI Standards, we prioritized our material topics based on the significance of our impacts on the economy, environment, and people, including impacts on their human rights. Accordingly, it is not possible to make a fair comparison between the prioritization approach or the resulting list of material topics we're reported last year and this year.

Results

The outcomes of the materiality analysis were discussed with and validated by FMO's Management Board. This resulted in the following list of material topics:

There may be overlap between some of our material topics, which could explain why certain topics appear lower on the list. For instance, ‘Supporting customers to safeguard human rights’, which in recent years has been high on the agenda for some of FMO’s stakeholders as well as for FMO, is in 12^th position. However, human rights is also embedded within FMO’s ESG management and value add activities, which is in 5^th position. The same may have occurred for the topic ‘Advancing gender equality’ (in 16^th position), which in FMO’s 2030 strategy is part of ‘Reducing inequalities’ (in 4^th position). The topics that are higher on the prioritization align with the focus areas of FMO’s 2030 strategy. However, we engage with a diverse set of stakeholders that have different needs. Therefore, FMO attaches importance to all 17 material topics. Within this annual report, we provide insights into our performance and management on all of the listed topics.

Most relevant changes compared to last year

Compared to last year, we added ‘Engaging with partners and local communities’ as a new topic. By engaging with a wide range of partners and increasing FMO’s local presence we are able to realize impact, manage risks and connect with local communities. We merged the topics ‘Being a responsible, transparent and accountable bank’ and ‘Being compliant in a changing regulatory environment’ as there is a significant overlap between the two topics with respect to how we operate as a bank. We also merged the topic ‘Supporting economic recovery’ with the topic ‘Contributing to decent work and economic growth’. In 2020, we had added the topic ‘Supporting economic recovery’ in response to the COVID-19 crisis. Since then, we have resumed business as usual and recognized that FMO supports customers throughout this and other (economic) crises. Lastly, we updated the definitions of all material topics to provide more insight into our impacts. The updated list of definitions can be found in the respective GRI index. 

Managing impacts

The SB Impact Committee advises the SB on its decision-making regarding impact and ESG related matters. The daily management of our bank lies with the MB, which has delegated the responsibilities for managing impacts to several key teams within FMO. The Strategy team is tasked with managing FMO’s corporate strategy setting, including the impact strategy. FMO’s strategic goals and objectives are cascaded down to the investment teams, including the impact and ESG team, that are responsible for identifying the areas in which we can minimize our negative impacts and optimize our development impacts. The Credit team is responsible for performing an independent review of our impact and ESG assessments at transaction level. The Finance, Impact & Data team, together with the Strategy team, prepare periodic reports to monitor progress on our strategic and operational targets, which are discussed with the MB on a monthly and quarterly basis. In addition, other relevant impact and ESG related developments can be brought to MB’s attention when deemed necessary. Furthermore, FMO is a signatory of the Operating Principles of Impact Management since 2019.