Contributions towards the SDGs

In line with our strategy, we aim to maximize our impact toward the sectors and SDGs we are most able to influence through our activities. Our contributions are further explained in the following sections.

SDG 8 | Decent work and economic growth

Private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation. SDG 8 calls for promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. We contribute towards SDG 8 by investing in emerging markets and developing economies, supporting jobs and through our ESG management activities to help customers meet or exceed international labor and working condition standards.

Total investment volume

In stimulating economic growth, FMO provides long-term financing that the market does not provide or does not provide on an adequate scale or on reasonable terms. We measure our contribution in terms of committed portfolio[1] and new investments.[1]

Our total committed portfolio amounted to €13.2 billion (2021: €12.5 billion), of which €8.9 billion was invested through FMO’s own books (2021: €8.3 billion), €1.4 billion through public funds (2021: €1.4 billion) and €2.9 billion through mobilized funds (2021: €2.8 billion). Compared to 2021, our FMO committed portfolio increased by seven percent, exceeding our target of €8.8 billion. This was mainly driven by a higher volume of new investments and the appreciation of the US dollar.

FMO new investments (in € mln)

In 2022, we invested a total of €2.4 billion (2021: €1.9 billion) of which €1.8 billion was made through FMO's own funds (2021: €1.2 billion), €153 million was made through public funds (2021: €233 million) and €457 million was made through mobilized funds (2021: €521 million). Forty-three percent of FMO new investments were made in Africa and Asia, 26 percent in Latin America and the Caribbean and 25 percent in Europe and Central Asia.

Jobs supported

Creating and safeguarding jobs is crucial for sustainable development, as employment creates a path out of poverty. DFIs like FMO promote the development of the private sector, which is one of the most important providers of jobs in emerging markets and developing economies.

We report on jobs supported, which includes direct and indirect jobs. Direct jobs refer to the number of full-time equivalent (FTE) employees working for the company or project that we have invested in. Indirect jobs refer to those that are supported by our customers through supply chains, the spending of wages, and economy-wide employment enabled by bank lending and the supply of electricity. 

The increase of finance and power supply enables companies to produce additional output which requires more direct employment and intermediary inputs. This, in turn, leads to expansion among existing and new suppliers, thereby supporting and/or creating jobs. In the countries in which we operate, firm expansion is assumed not to displace employment in competing businesses to a significant extent. Indirect jobs supported is measured through the Joint Impact Model (JIM).[2]

FMO’s outstanding portfolio resulted in an estimated 750 thousand jobs supported (2021: 644 thousand), of which 43 thousand direct jobs and 707 thousand indirect jobs. Around 87 percent of jobs supported were attributed to investments made through our own balance sheet and 13 percent to investments made through public funds. The amounts reported may not be fully comparable across years because of differences in data quality and data coverage. To estimate the attributed impact, we rely on our customer's latest available information. We continue to implement improvements to ensure we have the most recent and highest data coverage to increase comparability across the years.

Jobs supported by our AFW customers stem mainly from supply chain effects, for instance through sourcing goods and services from others (supply chain jobs supported) and from employees spending wages in the economy (induced jobs supported). A few of our AFW customers include financial institutions that focus on providing loans to SME agribusinesses, which are believed to have resulted in finance-enabling jobs.

Through investments in our EN customers, jobs are mainly supported through power-enabling effects, which attribute the number of jobs to an increase in gigawatt hours (GWh) of electricity supplied to the national system. Some of these jobs will be temporary, as they relate to the construction of a project.

Through investing in our FI customers, jobs supported mainly stem from finance-enabling effects that relate to economy-wide jobs supported by lending to businesses and individuals.

Through our PE investments in corporates, funds, energy projects and financial institutions, our impact on jobs supported stems mainly from finance-enabling effects, reflecting the jobs supported through PE investments in financial institutions and funds that invest in financial institutions.

Enhancing our contribution to decent work through our ESG activities

FMO recognizes that it is not just the number of jobs that counts, but also their quality. We require our customers to respect workers’ rights with regards to their safety, security and health, working terms and conditions, wages, and accommodation. We expect customers to treat their workers fairly, provide safe and healthy working conditions, avoid the use of child or forced labor, and identify and remediate risks in their primary supply chain.

Recognizing that we work in regions with weak regulation and in sectors relying heavily on sub- contracting, we encourage customers to go beyond standard market practices. This includes proactive risk identification, as well as the enforcement and monitoring of requirements. We try to increase the quality and inclusiveness of the jobs we support, for example, by removing barriers for the employment of women and vulnerable people. Furthermore, we encourage workers’ personal development by advocating for and, in many cases, co-creating training for them.

SDG 10 | Reduced inequalities

We invest in least developed countries (LDCs) to reduce between country inequality and in inclusive business to reduce within country inequality by increasing access to goods, services and income-generating opportunities, especially to people who are among the bottom 40 percent of income distribution. SDG 10 is strongly linked to SDG 5 on gender equality (explained further on in this chapter).

FMO labels and steers its investments towards reducing inequalities (RI). When an investment receives an RI label, it identifies ex-ante potential for contributing to this objective in the following areas: investment in LDCs, micro-financial services, financial services to underserved SMEs, smallholders and women in the value chain and last mile delivery of power. Our focus on ESG management encourages customers to increase their inclusivity.

RI-labelled investments

Compared to last year, our RI-labelled total committed portfolio increased by 11 percent from €4 billion to €4.5 billion at the end of 2022. This represents a 34 percent share of the total committed portfolio (2021: 32 percent). The growth is mainly attributed to a higher volume of new RI-labelled investments and the appreciation of the US dollar.

In 2022, FMO invested €810 million in reducing inequalities (2021: €714 million), representing 33 percent of our total new investment volume (2021: 37 percent ). Of this, €580 million was invested from our own books, €87 million from funds managed on behalf of public entities and €143 million from mobilized funds. Some €617 million was invested in inclusive businesses, focusing mostly on microfinance and micro-financial services, women-owned or women-led SMEs and youth-owned or youth-led SMEs. Some €237 million was invested in companies and projects operating in LDCs such as Tanzania, Cambodia and Yemen.

The share of new investments in LDCs, however, was lower compared to previous years. During the pandemic we were unable to visit prospective customers and explore opportunities in these markets. Following the pandemic, we focused on rebuilding the portfolio, including in LDCs. However, such transactions generally have a longer lead time as they take place in riskier markets, and few of these opportunities materialized in 2022. Furthermore, several LDCs were subject to interest rate caps, which did not meet our risk/return criteria, and political conditions in countries like Myanmar and Burkina Faso limited our ability to do business in these markets. 

Number of micro and SME (MSME) loans

FMO targets MSMEs, including those owned by women and youth, because they are financially underserved and typically provide more jobs than larger corporates relative to the capital invested. We require customers to adhere to the Center for Financial Inclusion Client Protection Principles (CPPs) that set the minimum standards that end-customers should expect to receive when doing business with a financial service provider. The CPPs focus, among others, on the prevention of over-indebtedness, transparency, and responsible pricing.

The number of MSME loans represents the number of loans FMO’s customers have provided to MSME customers. In 2022, our customers provided 33 million micro loans (2021: 30 million) and a total of 2.6 million SME loans (2021: 2.8 million).

Enhancing our contribution to reduce inequalities through our ESG activities

Through our ESG management activities we assess the risk of inequality and for high E&S risk customers we perform due diligence using a human rights lens. This is further explained in the chapter 'Our investment process'. At the end of 2022, 293 customers in our portfolio went through such an exercise (2021: 281 customers).

Our ESG engagement supports inclusivity, often targeting vulnerable groups in the bottom 40 percent of the global economy. For example, we ask our customers to focus on empowering women, indigenous peoples, and other groups with impaired rights in consultation processes, resettlement plans, trainings, or livelihood support programs. We also stimulate benefit sharing and advocate community ownership.

SDG 13 | Climate action

Through our investments, we aim to contribute towards SDG 13 with respect to climate action by focusing on climate mitigation and adaptation. Our positive contributions are measured in terms of our Green-labelled investments and financed avoided greenhouse gas (GHG) emissions. Negative contributions are measured in terms of absolute GHG emissions from our own operations and as well as financed GHG emissions generated through our investments. Beyond this, we steer our customers towards a resilient and low-carbon economy through our ESG management activities.

Green-labelled investments

FMO labels and steers its investments towards SDG 13. Tackling climate change has been central to our strategy since adopting our 2050 vision in 2013. One way to act on our SDG 13 strategy is to grow our Green portfolio, which is aimed at reducing GHG emissions, increasing resource efficiency, preserving and growing natural capital, and supporting climate adaptation. We label our investments to capture the ex-ante potential to contribute towards climate action.

Compared to last year, the Green-labelled total committed portfolio increased by seven percent from €4.1 billion to €4.4 billion at the end of 2022. This represents a 33 percent share of the total committed portfolio (2021: 33 percent). The increase is due to a higher volume of Green-labelled new investments and the appreciation of the US dollar.

We invested €1 billion in Green projects (2021: €544 million), representing 41 percent of total new investments (2021: 28 percent). Of this total, €760 million was invested from FMO's own books, €69 million from public funds and €174 million from mobilized funds. Most of our Green-labelled new investments are in renewable energy projects (wind, solar, and hydro), agriculture and green credit lines.

We almost doubled our investments in Green projects compared to 2021 and came close to achieving our 2022 target. This was driven mainly by a number of large renewable energy transactions that materialized at the start of 2022, as well as FI outperforming its target. This marks a notable turnaround compared to last year when we noticed lower demand and greater availability of (concessional) finance in the FI market. However, it should be noted that this turnaround mainly applies to Green opportunities in the FI sector in Latin America, possibly resulting from less available liquidity, fewer concessional funding opportunities, and higher customer demand for sustainable investments in this region.

However, we also observed trends in certain markets that negatively affected the demand for Green financing. For example, in some countries, due to the difficult market conditions and the rise in the cost of living, some local banks and customers were not able to prioritize green investing and instead focused on business continuity. In these markets, transition risks to a green economy are high and often dependent on public financial stimulus, which in the current environment is geared more towards short-term economic goals instead of long-term sustainability considerations. Furthermore, with rising interest rates capital investments have been deferred. 

GHG emissions

Measuring and reporting the GHG emissions linked to FMO’s activities and investments provides insights into our positive and negative climate-related impact and how to steer our investments towards more positive impact in the future.

We report on:

  • Absolute GHG emissions from FMO’s own operations associated with heating and electricity used in our office buildings, as well as staff business travel. These are much smaller than our financed absolute emissions but show our own operational footprint.

  • Financed absolute GHG emissions generated through our investments. These give an understanding of our portfolio’s overall emissions and opportunities to reduce them.

  • Financed avoided GHG emissions as a result of our investments, for example through the power production of a new solar park. These emissions quantify our contributions to climate change mitigation activities, which cannot be fully captured by absolute emissions. For example, a school and a solar park might both have low absolute emissions, but the solar park supports climate change mitigation by avoiding emissions of fossil fuel fired power plants.

We report on absolute emissions Scopes 1, 2 and 3 in line with the GHG Protocol. Scope 1 relates to direct emissions resulting from the activities of an organization or under its control (e.g. a power plant burning gas); Scope 2 relates to indirect emissions from energy (electricity, heat and steam) used by an organization; Scope 3 relates to all other indirect emissions in the value chain related to, for instance, business travel or purchased goods and services.

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). The majority of FMO’s financed absolute GHG emissions are estimated through economic modeling using the Joint Impact Model (JIM). While we continue to improve our GHG emission data collection, in many of our markets such data are not yet readily available. The JIM allows us to have a view on our portfolio and sources of emissions in the meantime.

Absolute GHG emissions from FMO’s own operations

The carbon footprint of our own operations amounted to 3.89 ktCO2e (2021: 0.42 ktCO2e). Scope 1 emissions amounted to 0.09 ktCO2e, which came from lease cars used by our employees. Scope 2 emissions amounted to 0.03 ktCO2e connected to district heating that we obtain for our head office. Scope 2 emissions related to the use of electricity were equal to zero since we purchase electricity from renewable sources. Scope 3 emissions amounted to 3.77 ktCO2e, mainly from staff travel. As we serve customers around the world, 90 percent of our own emissions resulted from air travel. The easing of COVID-19 measures increased staff travel and office use, which significantly increased our carbon footprint compared to the past two years.[3] FMO offsets the operational emissions by investing in VCS REDD+ certified forestry credits.[4]

Financed absolute GHG emissions

Our outstanding portfolio resulted in an estimated 6,530 ktCO2e absolute GHG emissions (2021: 5,355 ktCO2e), of which 1,108 ktCO2e were Scope 1 emissions, 270 ktCO2e were Scope 2 and 5,153 ktCO2e were Scope 3. The scope 3 emissions consist of two main GHG Protocol categories: purchased goods and services (1,643 ktCO2e) and investments (3,510 ktCO2e) related to emissions in the portfolios of our customers, which are particularly relevant for FIs. Overall, 89 percent of emissions were attributed to our own balance sheet, while 11 percent were attributed to funding from public funds.

Our portfolio Scope 1 and 2 emissions declined from 1,408 ktCO2e in 2021 to 1,377 ktCO2e in 2022. Scope 3 emissions increased from 3,947 ktCO2e in 2021 to 5,153 ktCO2e in 2022. This increase is a result of various factors, including data refinements and increased exposure in sectors with significant modelled Scope 3 emissions, such as agriculture. In general, the amounts reported may not be fully comparable across years because of differences in data quality and data coverage. To estimate the attributed impact, we rely on our customer's latest available information. We continue to implement improvements to ensure we have the most recent and highest data coverage to increase comparability across the years.

In our EN portfolio, most Scope 1 emissions come from the remaining investments we have in fossil fuel-fired power plants. When direct emissions data are unavailable, the emissions estimates based on economic models cannot distinguish between different types of energy investments. In particular, this means that Scope 3 emissions are likely overestimated for renewable energy investments.

The AFW portfolio is diverse, giving rise to different sources of GHG emissions. Manufacturing and processing of food products leads to COemissions from energy usage. Primary agricultural production can have significant non-CO2 emissions such as methane emissions from livestock and nitrous oxide emissions from fertilizers. The AFW portfolio also includes a few financial institutions focused on providing loans to SME agribusinesses, which have Scope 3 emissions related to their investments. Emission removals, which mainly come from forestry projects, have not been included yet since we are still in the process of implementing relevant calculation tools.

In the FI portfolio Scope 1 and 2 emissions are limited as these mainly pertain to the energy use by the investee banks’ office buildings. Most emissions stem from the investee banks’ loan portfolios in sectors such as agriculture, manufacturing and energy. Within their portfolios, the JIM-based estimates show that 57 percent come from their customers’ Scope 1 and 2 emissions and 43 percent from emissions related to their customers’ Scope 3 emissions from purchased goods and services. Specific use of proceeds, such as green credit lines, cannot yet be taken into account in emission estimations due to a lack of data.

The PE portfolio contains equity investments in businesses, projects and funds. One source of emissions is the remaining equity investments in fossil fuel-fired power plants. For equity investments in financial institutions and funds, the majority of emissions come from underlying portfolio companies in the energy, manufacturing and agriculture sectors.

Financed avoided GHG emissions

In 2022, our current portfolio resulted in an estimated 1,439 ktCO2e avoided GHG emissions (2021: 1,329 ktCO2e). Some 79.3 percent of these came from energy, 20.6 percent from PE and the remainder from AFW. The majority of avoided emissions come from our debt and equity portfolio in on-grid renewable power projects. These account for 83 percent of total avoided emissions (1,191 ktCO2e).

Enhancing our contribution to climate through our ESG activities

We believe contributing to climate action goes hand in hand with good ESG management on an operational level. We recognize that the social dimensions of the transition to a resilient and low-carbon economy need to be carefully managed. Through our ESG engagement we address workplace issues, community benefits from projects, and aim to steer customers towards ethical supply chains. These issues are deeply linked to a ‘just transition’. For instance, our E&S activities aim to strengthen the resilience of affected communities to climate-related hazards with a focus on women, local and marginalized communities. We are also evaluating our investments for environmental risk and guiding our customers to improve their ESG risk management.

SDG 2 | Zero hunger

By financing businesses across the entire agri-food chain we contribute to SDG 2, zero hunger. With a focus on small-scale food producers, sustainable food production systems and resilient agriculture practices, SDG 2 is closely linked to SDGs 10 and 13. FMO targets smallholder farmers because they meet more than 70 percent of the world's need for food but have a weak market position and limited means to invest in business improvements.[5]

An estimated 480 million smallholder farmers around the world can help achieve SDG 2, especially as food market growth shifts to the emerging world.[6] Smallholder farmers are marginal and sub-marginal farm producers that own and cultivate relatively small plots of land, have low access to technology, and have limited capital, skills, and risk management. They depend on family labor for most activities and have limited capacity for storage, marketing, and processing.[8]

Number of smallholder farmers supported

We invest in companies that support smallholder farmers to improve their yields, and/or reduce environmental degradation, and/or improve social practices during the investment period. In 2022, companies financed by us supported 5 million smallholder farmers (2021: 3.6 million).

SDG 5 | Gender equality

FMO actively strives to advance gender equality. We seek investments that encourage more women to participate in the economy, support female entrepreneurs, reach women as end-users of goods and services and include women in the labor market. We also aim to protect women’s rights, to understand the gender-specific impact of our investments and to contribute towards women having equal access to economic opportunities.

We measure impact on SDG 5 in various ways. Firstly, we invest in companies that focus on women-owned MSMEs, women as consumers, and businesses that specifically include women in their value chain. This is covered by FMO’s RI label, explained previously. Secondly, we report on gender metrics aligned with the 2X Challenge of the 2X Collaborative (now part of 2X Global), an industry body that promotes gender-lens investing. FMO identifies investments that can be eligible for the 2X Challenge by talking about gender early on in our collaboration with customers.

Gender financing for women-owned SMEs

In 2022, we invested €199 million in gender financing for women-owned or women-led SMEs (2021: €216 million). One of the supported projects was XacBank LLC, Mongolia’s 5th largest bank in terms of total assets. FMO provided a US$50 million senior debt facility of which 70 percent (US$35 million) is dedicated to supporting women-owned (SME) businesses. XacBank is eligible as a 2X investment under multiple criteria.

2X Challenge

A total of €133 million of new investments qualified for the 2X Challenge. A total of €126 million was on our own books, €1 million from public funds and €6 million from mobilized funds. This increase in 2X Challenge qualified investments is due to several larger investments in private equity funds. An example of such an investment in 2022 was Adenia Capital (V), a private equity fund targeting buy-out and growth capital investments in medium-sized companies across Africa, which was selected as a 2X flagship fund. Adenia Capital (V) commits to promoting gender balance at the fund manager level, investing with a gender lens, supporting portfolio companies to implement gender smart practices, reporting outcomes, and ensuring accountability at partner level.

SDG 7 | Affordable and clean energy

Access to energy is not a given in some countries. The energy supply in developing countries can be unstable and the energy production is often polluting. SDG 7 aims for access to sustainable, reliable, and affordable energy for all, which will improve the quality of life and enable sustainable economic development.

FMO invests in the generation of solar, wind and hydro power in developing countries that, combined with investments in power transmission and distribution, improves access to energy. By financing off-grid power solutions, FMO supports access to a more stable energy supply for rural and not connected parts of the populations. In low-income countries 43 percent of the population has access to electricity compared to 30 percent of the rural population.[7]

Energy production and equivalent number of people served

Customers in our energy portfolio produced 48,000 GWh (2021: 48,000 GWh), which served an equivalent of 87 million people (2021: 83 million). Some 55 percent was generated from renewable energy sources (a total of 102 customers). Approximately, 11 percent came from solar, 15 percent from wind, 21 percent from hydro and eight percent from other renewable energy sources. The remaining 45 percent came from 14 customers generating power from non-renewable sources, mainly natural gas.

ESG risk management

The following charts show the risk profile for our entire portfolio and for the new customers that were contracted in 2022.

E&S risk profile of full portfolio
E&S risk profile of new customers

FMO categorizes the E&S risk profile of its customers as follows: A and 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 exposure through debt and PE funds.

The type of E&S risks, as per the IFC Performance Standards, and frequency with which high risks occur are displayed in the following chart. The scale of potential issues in our portfolio is determined by the type, frequency and degree to which these risks are managed by our customers. The frequency of E&S risks is sector agnostic in our direct and indirect financing portfolios.

To track ESG performance, FMO uses several tools. We set an annual ESG performance target, agree multi-year environmental and social action plans (ESAPs) with our customers, we monitor E&S performance gaps in our portfolio and keep a serious incident register. In addition, FMO has an Independent Complaints Mechanism (ICM) which allows external parties to file a complaint, including on ESG, concerning projects financed by FMO. These tools are explained in this section. For more information on how ESG risks are incorporated into FMO’s overall risk governance and risk management approach, refer to the ‘Risk management’ section in the ‘Consolidated Financial Statements’.

ESG performance target

The ESG performance target applies to the high ESG risk customers in our portfolio contracted prior to 2022 (‘target list’). We register and monitor the different types of ESG risks of our high-risk customers and aim to have at least 90 percent of the ESG risks managed at a satisfactory level.

We monitor all E&S risks in our portfolio. The target focuses specifically on high-risk customers. Out of a total 692 customers in our portfolio, 333 customers had a high E&S risk category (A or B+). By consolidating customers belonging to the same corporate group or group of companies, this led to a target list of 276 customers, representing a total of 3,770 ESG risks that were tracked during the year. The 2022 results showed that on average, 93 percent of total risks among the customers in the target group managed their high risks adequately. When the performance of a customer deteriorates or when open action items are not implemented on time, customers receive lower ratings, and this brings down the average for the total portfolio.

Environmental and social action plans (ESAPs)

Given the high degree of variation in ESG regulations and practices in our markets, FMO accepts that when we first start working with a customer, the ESG performance may be below standard. We do, however, expect performance to improve over time in line with agreed action plans. This is part of FMO’s non-financial additionality. For customers with contractually agreed ESAPs, we monitor progress towards implementation to ensure that our investments comply with our policies and standards within a reasonable time frame. Most customers show good progress and are receptive to FMO’s ESG advice and support.

E&S performance gaps in our portfolio

During 2022, FMO identified 65 high-risk customers that are not managing E&S risks to our satisfaction, which could lead to incidents or issues. FMO is working with these customers to address these gaps to realize their positive impact potential and minimize their negative impact. In most cases, we are confident that we can bring customers back on track within a reasonable timeframe. Our E&S engagement and approach with our customers is tailored to their unique circumstances. In some instances, E&S non-performance may be the result of a wider (financial) problem that requires the restructuring of a loan or a full exit. Some E&S and human rights impacts are irreversible and together with the customer we look at different remedies.

The following table shows an overview of the current E&S performance gaps we have identified and how we engage with these customers. It includes the number of customers for which subpar performance has been identified (represented by the letter 'n').

E&S performance gaps 2022  


Our engagement

Willingness and commitment (PS1) (n=14)

Resistance to engagement on ESG issues can stem from over-reliance on e.g., DFIs to drive ESG work streams. Commitment can waver due to financial, operational and contextual difficulties. Wavering commitment can have tangible implications on human rights and the environment, for example through delays in implementing management plans or community benefits, or in conducting specialized studies.

We use contractual leverage on specific E&S items, raise issues with customer’s top management and exert influence on their boards, e.g., to push for improvement of organizational culture.

Environmental and social governance and budget (PS1) (n=16)

Where the customer’s leadership is not fully aware of and involved with E&S performance management, and/or has not allocated sufficient budget, resources or time. Governance issues can result in poor workers’ rights protections, a range of risks to communities, as well as damage to the environment.

We use contractual leverage and escalate the issue to top management. We may offer capacity building and advice on integrating E&S costs into financial planning and monitor frequently.

Identification and assessment of risks and impacts (PS1) (n=11)

Weak (initial and ongoing) identification and mitigation of risks. This can adversely impact human rights.

We provide customers with continuous engagement with our ESG staff and capacity building. If needed, we exert formal pressure e.g., through withholding additional financing or triggering default.

Environmental and social management system (PS1) (n=14)

Since the assessment and management of E&S risks and impacts is part of a larger set of processes that the customer uses to manage its projects, the customer needs to deploy an Environmental and Social Management System (ESMS) to warehouse and utilize such processes. A weak system hampers the improvement of E&S performance, and can lead to adverse economic, financial, social, and environmental impacts.

We support customers in the development and improvement of an ESMS that recognizes the roles and responsibilities of stakeholders and identifies risks related to their activities/involvement through due diligence while taking into account the local context and setting up measures to mitigate those risks.

Organizational capacity and competency (PS1) (n=12)

E&S teams can be too small, change often, continue to perform poorly, or lack qualified staff. This is a key issue in many of our target geographies where environmental legislation is developing, and/or state human rights policy and practice are weak.

We use contractual leverage, offer capacity building and look for competent staff in our network.

Stakeholder engagement, external communication, grievance mechanisms (PS1) (n=21)

Trust and communication between FMO’s customer and its stakeholders are eroding or have broken down. Ineffective channels of communication play an important part here, particularly ineffective grievance mechanisms, which don’t capture grievances, and / or don’t enable suitable redress. Poor performance in this area can infringe on the freedom of opinion and expression, and even result in inhuman treatment, retaliation, and risk to lives.

We intensify our customer engagement and offer to connect customers to experts in the field, mediate or providing capacity building.

Voluntary land rights transfer (PS1) (n= 4)

Involuntary land transfer can be masked as voluntary which can weaken community cohesion, cause tension between company and community and affect people’s livelihoods. The customer needs to demonstrate that the land transfer is based on a willing buyer-willing seller principle.

We engage with our customers to help them establish a land acquisition process that honors the willing buyer-willing seller principle.

Working conditions and management of workers relationship (incl. third party workers) (PS2) (n=15)

Project workers working in substandard conditions, unaware of their rights or without access to grievance mechanisms. This can infringe on labor rights.

We discuss gaps with the customer, enable capacity building and set conditions, e.g., by making disbursements conditional on improvement.

Occupational health and safety (PS2) (n=16)

Gaps in ensuring safe and healthy working conditions, possibly leading to serious injuries and fatalities. This could infringe upon the right to health and safety in the workplace, and the right to life.

We discuss gaps with the customer, enable capacity building and set conditions, e.g. by making disbursements conditional on improvement.

Supply chain working conditions (PS2) (n= 4)

When the customer does not monitor its primary supply chain, risks or incidents affecting vulnerable groups are not adequately addressed.

We require customers with supply chains susceptible to high human rights or environmental risks to conduct a supply chain risk assessment; and in some cases to develop a leverage plan and/or action plan to mitigate those risks.

Resource efficiency and pollution prevention (PS3) (n= 11)

Projects reduce the availability of water in arid regions or pollution prevention measures are inefficient. This can infringe upon the right to life, the rights of the child and the right to live in a safe, clean, healthy environment.

We discuss gaps with the customer, enable capacity building and set conditions, e.g., by making disbursements conditional on improvement.

Community health, safety and security (PS4) (n=18)

Risks to local communities from projects are poorly managed, especially when security forces are mandated to protect personnel and assets. The increasing fragility of political environments across the geographies we work in makes this a complex area.

We discuss gaps with the customer, enable capacity building and set conditions, e.g., by making disbursements conditional on improvement. FMO can require a root cause analysis and corrective measures or redress.

Land acquisition and involuntary resettlement (PS5) (n=5)

When resettlement and livelihood restoration plans are poorly managed or insufficiently recognize vulnerable groups and/or have ineffective grievance mechanisms. This can impoverish people and infringe on their right to an adequate standard of living, notably the right to food and adequate housing.

We find an expert to conduct gap analyses and implement recommendations. In the event of an early exit, FMO seeks to provide remedy to those impacted.

Biodiversity and living natural resources (PS6) (n=18)

Biodiversity risks have not been modeled well enough or monitoring and mitigation are insufficient, or new findings are missed or ignored. This reduces biodiversity and access to forest products, thereby infringing on the right to food and/or an adequate standard of living.

We intensify customer monitoring, engage a biodiversity expert and use our leverage to improve the situation.

Indigenous peoples (PS7) (n=5)

Community engagement processes do not meet FPIC requirement and/ or do not allow for sufficient participation of indigenous people. In some cases, we recognize challenging operating conditions where risks to these communities are difficult to control. This may lead to the infringement of indigenous peoples’ right to food, their traditions and their sacred sites.

FMO encourages customers to meet FPIC standards, share benefits with communities, and include indigenous groups in livelihood restoration. We may intensify monitoring of contextual risk factors.

Cultural heritage (PS8) (n=3)

Failure to protect cultural heritage. This can infringe on the rights of people to benefit from their and other people’s cultural heritage.

We use our leverage to improve the situation, looking at past and future risks.

Financial intermediaries: financial institutions and fund managers (n=15)

Substandard system for identifying and managing E&S risks of financed activities. Processes and procedures are unclear, E&S management responsibilities are insufficiently defined and/or capabilities are lacking, or inadequate E&S due diligence and monitoring is performed. Compounded by contextual risk factors, e.g., lack of exposure to and experience in E&S risks management by the financial sector in our markets and the lack of a level-playing field. This can lead to infringements of all types of human rights as referenced before.

We provide expertise and funding for the ESMS or sit on E&S risk management committees. We negotiate improvement plans and, in some cases, initiate or contribute to sector initiatives.

Serious incidents

Unfortunately, serious incidents cannot always be avoided considering the large number of people that are employed by our customers, the higher-risk countries and sectors we invest in and the challenges of operating in emerging markets.

FMO requires its customers to immediately report any 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 – inter alia – and how the incident was dealt with. FMO follows up on each incident to ensure that a meaningful root cause analysis is completed, and corrective action is taken.

We believe that strong occupational health and safety (OHS) management systems are part of an employer's duty of care, improve job quality and add value to a business. Unfortunately, OHS norms and regulatory systems can be weak in emerging markets, leading to serious accidents occurring more frequently. Where a customer’s mitigation practices fall short of (international) standards, FMO develops and agrees an ESAP with the customer to close those gaps. FMO also helps customers to develop their OHS risk management capabilities, for instance through (funding for) training.

In 2022, we regret to inform that 27 FMO customers reported 77 fatal incidents with a total of 85 casualties (2021: 58 casualties). A total of 33 were workers (employees or contractors/suppliers) of either our customers or the underlying companies of funds and 52 were members of the general public. Of the 77 incidents, 53 were road accidents, 11 work-related, seven asset-related, two security-related, and four were classified as ‘other’. FMO aims to provide a total overview of all fatalities resulting from the activities it finances and expects that its customers hold themselves to the contractual agreement to report any occurrence. However, there is a risk that some incidents have not been reported to us and are therefore not included in these numbers.

Incident type 

No. of incidents 

No. of fatalities 

No. of workers 

No. of public 




























Independent Complaints Mechanism

FMO has implemented an Independent Complaints Mechanism (ICM) for project-related complaints. The ICM ensures the right to be heard for complainants who feel affected by an FMO-financed operation, in order to enable resolution of disputes and assist FMO in drawing lessons learned for current and future operations. It also monitors the implementation of measures to bring a project into compliance or agreed as outcome of a mediation process. For governance of the Independent Complaints Mechanism please refer to the chapter 'Corporate governance'.

In 2022, one complaint was finalized when its final monitoring report was issued. Three new project-related complaints were received: two were declared inadmissible and one was declared admissible (2021: zero admissible complaints). For information about the status of complaints filed in earlier years, please refer to our website.

Other key ESG activities

Corporate governance

When onboarding new customers and during our annual credit review, we assess corporate governance risks on five elements: (1) commitment to good corporate governance, (2) structure and functioning of the board, (3) control environment, (4) transparency and disclosure and (5) treatment of minority shareholders. This assessment will determine whether a customer requires additional support from a corporate governance specialist.

In 2022, FMO assisted customers and investees by conducting corporate governance reviews and providing tailor-made recommendations for improvement, both as part of our due diligence and value creation. After a review, we continue to support our customers by (1) providing support (including technical assistance and capacity building) and further guidance on the proposed corporate governance recommendations and how to best implement them, and (2) periodic check-ins to discuss progress.

Another way to improve customers’ corporate governance is using FMO nomination rights for directors in investee companies. We appoint nominee directors that can act independently, possess the right knowledge and skills and increase gender diversity. Furthermore, we seek to provide the nominee directors with training on ESG topics, among others, to help them succeed in their roles. This year FMO and the German Development Bank, DEG, organized two corporate governance trainings for directors appointed to the boards of our investee companies and boards of our partners’ investees.

Sector initiatives

Sector initiatives are projects that target and address systemic ESG and impact issues in a sector or geography. Sector initiatives leverage FMO’s ability to bring together multiple perspectives and stakeholders to create positive change. During 2022, several sector initiatives were ongoing and others started, including:

  • Invest for Impact Nepal (IIN): a collaboration between FMO, British International Investment and the Swiss Agency for Development and Cooperation. It is a market-shaping initiative that supports foreign direct investment in Nepal. IIN aims to accelerate responsible and impactful investment in Nepal by supporting the financial intermediary sector in Nepal to achieve a step change in growth, environmental and social impact, and investment.

  • In partnership with the Consejo Centroamericano de Superintendentes de Bancos, de Seguros y de otras Instituciones Financieras (CCSBSO), IFC and Norfund, the Central America Sustainable Banking Initiative was set up to enable the adoption of international standards and E&S performance standards in the financial sector of countries that are part of the CCSBSO.

SDG 17 | Partnerships for the Goals

FMO attaches strategic importance to deepening relationships with our stakeholders, because by pooling resources and partnering with others we can invest more in our customers and through their activities increase impact. FMO mobilizes and blends funds, builds partnerships, manages programs on behalf of public institutions, including the Dutch Government, and empowers its customers and employees.

Mobilized funds

Private sector investments are among the most important sources of financing for the realization of the SDGs, particularly in low- and middle-income countries. Mobilizing capital and increasing private mobilized capital is, therefore, an important part of FMO’s strategy to contribute to the SDGs. Mobilization efforts result from our direct and active engagements with our public and private partners and are measured in terms of total mobilized committed portfolio and new investments. These efforts lead to greater impact with regard to jobs supported, GHG emissions avoided and climate action (SDG 13) as well as reducing inequalities (SDG 10).

Our direct mobilized committed portfolio amounted to €2.9 billion (2021: €2.8 billion). More than half (€1.7 billion) has been mobilized through commercial investors. This was realized through the private debt funds that FMO Investment Management (FMO IM) advises and through syndications and unfunded risk participations with other commercial parties, such as Munich Re. We achieved our portfolio target of €2.8 billion mainly due to the appreciation of the US dollar, which offset the lower volume of new investments (€457 million). To reach its mobilization volumes, FMO arranged several large, syndicated loans for existing customers and continued its commitment to mobilize private parties. Below we provide some highlights for several of the before-mentioned mobilization vehicles.

Munich Re

The Unfunded Risk Participation Program between Munich Re and FMO continued to grow. During its third investment year, Munich Re’s participation grew steadily from €248 million in 2021 to €293 million in 2022. By the end of 2022, the program combined commitments of 36 loans to financial institutions, renewable energy projects and agribusinesses. Of this, 22 percent had a Green-label and 40 percent had an RI label.

NN FMO Emerging Markets Loans Fund

The NN FMO Emerging Markets Loans Fund[9] attracted a new investor in 2022. The second compartment opened in July 2021 at US$150 million and has increased to US$180 million. The investors are mainly institutional investors based in Asia. Compartment one has, in principle ceased to invest, having invested over US$400 million since 2018. Compartment one is making regular cash distributions to its investors and is decreasing in size. The second compartment committed an additional US$44 million in 2022, having invested well over US$108 million since it was launched. By year-end 2022, the fund had combined commitments to loans to financial institutions, renewable energy projects and agribusinesses. Of the committed portfolio 25 percent had a Green label and 37 percent had an RI label. 

FMO Privium Impact Fund

The net asset value of the FMO Privium Impact Fund[10] decreased slightly to US$152 million (2021: US$155 million). Investors are mainly family offices and private banking customers including those with managed portfolios. Investors are mostly based in the Netherlands, UK, Spain and France. Of the committed portfolio, 39 percent had a Green label and 37 percent had an RI label.

Actiam-FMO SME Finance Fund

With a net asset value by year-end of €82 million (2021: €108 million), the Actiam-FMO SME Finance Fund[10] participates in FMO loans to financial institutions to improve access to finance for SMEs in emerging markets. The investors are mostly institutional investors based in the Netherlands. While the fund’s end of life is drawing closer (2025), the fund has been making cash distributions since 2020. By the end of 2022, the fund had a committed portfolio of €63 million (2021: €90 million) across 35 financial institutions. Of the  committed portfolio, 19 percent had a Green label and 49 percent had an RI label.

ASN Green Projects Fund

FMO IM has been an investment advisor to the ASN Green Projects Fund[10] since 2017. The investors are Dutch private individuals. Since 2021, the fund is making investments in green credit lines to financial institutions. Earlier, the fund solely participated in renewable energy transactions. By the end of 2022, the fund had participated in a total of 11 loans sourced by FMO, bringing the committed portfolio in FMO loans to US$36 million (2021: US$32 million). Of the committed portfolio, 79 percent had a Green label and 18 percent had an RI label.

Public programs

Public investment partners allow us to make investments with a higher risk profile and development impact. Our public investment partners include the Dutch State, the UK Government, the European Commission (EC) and the Green Climate Fund (GCF). On behalf of the Dutch State, we manage the following programs: Building Prospects, the Access to Energy Fund (AEF), the Dutch Fund for Climate and Development (DFCD) and MASSIF. We set up the NASIRA and FMO Ventures program with guarantees from the European Commission and in early 2021 began managing the Mobilising Finance for Forests (MFF) program on behalf of the UK Government.

Finally, as an accredited entity, we receive funds from the EC and the GCF that are ultimately managed by EDFI Management Company (for ElectriFi, AgriFi) by Climate Fund Managers for Climate Investor One and Climate Investor Two, and by Eversource for the Green Growth Equity Facility (GGEF).

Through our public programs we have built up a committed portfolio of nearly €1.4 billion (2021: €1.4 billion). In 2022, we invested €153 million through our public funds (2021: €233 million).

Generally, FMO’s public funds support higher risk transactions. These are often more complex, early stage, or in difficult contexts, such as fragile states, pioneer sectors and public stakeholders. This also leads to longer processing times (often more than 1 year) and a higher risk of cancellation before a contract is signed. Due to the pandemic and the focus on completing the KYC remediation program in recent years, FMO has been working on rebuilding the pipeline. This has resulted in new opportunities but these are still in the early stages.

In the following sections, we provide highlights for each of these programs.

Access to Energy Fund (AEF)

The Dutch Government and FMO set up AEF in 2007. AEF focuses on sustainable energy solutions by supporting energy generation, transmission, and distribution projects in developing countries. New investments made through AEF amounted to €11 million in 2022 (2021: €43 million). For instance, AEF provided a US$ 6 million loan to C-Quest Capital Africa (CQC-A) to aid in financing the deployment of clean cooking stoves and other carbon programs across Sub-Saharan Africa. CQC-A was formed by C-Quest Capital, a diversified impact-investment enterprise and one of the market leaders in the clean cooking sector, offering a scalable model while realizing substantial social impact.

Building Prospects

Building Prospects was established in 2002 by the Dutch Government and FMO to strengthen the agribusiness value chain by increasing access to energy, water, logistics and transport and improving climate resilience and gender equality. New investments made through Building Prospects amounted to €27 million in 2022 (2021: €40 million). For instance, Building Prospects provided a €4 million loan to HPW Fresh & Dry, which is the largest processor of tropical dried fruits in West Africa. HPW cooperates with smallholder farmers and plays a role in improving their standard of living. It is also the most important employer in the region and FMO’s investment can help generate new local jobs.


MASSIF is a Dutch Government fund that finances local financial intermediaries and institutions that can contribute to the development of small businesses and micro-entrepreneurs, women, and youth entrepreneurs, as well as support innovation in inclusive business. New investments through MASSIF amounted to €54 million in 2022 (2021: €57 million). For instance, through MASSIF we provided a US$7 million loan to Banco de Antigua, a small microfinance bank in Guatemala. The facility was advanced in local currency (GTQ) which is very important and additional in the support of microentrepreneurs in the country. The funds are earmarked for micro lending and financing SMEs in rural areas in Guatemala which is line with MASSIF’s strategy towards reducing inequalities (SDG10). Furthermore, capitalizing on our Capacity Development program, we will be working with Banco de Antigua to further improve their consumer protection policies and practices.

Dutch Fund for Climate and Development (DFCD)

The DFCD is a Dutch Government fund that is managed through a consortium of FMO, SNV Netherlands Development Organization, Worldwide Fund for Nature (WWF) and Climate Fund Managers. The DFCD connects the project development expertise of SNV and WWF to the mobilizing and investment power of FMO and Climate Fund Managers. New investments through DFCD amounted to €5 million in 2022 (2021: €8 million). The DFCD Land Use Facility provided US$ 3 million additional financing for existing customer Miro Forestry Development Limited, one of the largest forestry plantation companies in West Africa, with currently 20,000 hectares planted, mainly eucalyptus, acacia, gmelina and teak. Additional financing will help the company expand its planting area and processing capacity.

Mobilising Finance for Forests (MFF)

MFF was established in 2021 by the UK Government and FMO as a blended finance investment program. The program aims to mobilize private investments in the forestry and sustainable land use sectors, such as to combat deforestation and other unsustainable land practices in the tropical rainforest of Africa, Asia and Latin America. In 2022, MFF provided US$ 2.5 million in support to Treevive. The investment is made through MFF’s capacity development facility. Treevive will create a carbon development platform that advises, structures, finances, and accelerates carbon projects that contribute to natural climate solutions. Treevive will support project owners with funding and technical assistance to accelerate the development of the carbon asset of their project.

NASIRA with EC guarantee

NASIRA is an innovative financial program that aims to promote inclusive growth, job creation and sustainable development and, through that, tackle some of the root causes of irregular migration in Sub-Saharan Africa and the European Neighborhood. The program is structured with guarantees from the EC and the Dutch Government (through MASSIF). NASIRA helps to unlock lending to migrants, women and young entrepreneurs that financial institutions consider high-risk. The NASIRA program created new investments of up to €78 million in 2022 (2021: €82 million). In 2022, we made four investments in the State of Palestine, Jordan, Kenya and Egypt. Vitas Palestine Microfinance Company (Vitas), for instance, now benefits from a US$10 million NASIRA loan portfolio guarantee. This risk-sharing facility enables Vitas to support the growth of MSMEs affected by COVID-19, including female and young entrepreneurs, operating in Gaza and the West Bank.

FMO Ventures Program with EC guarantee

The FMO Ventures Program was set up in 2020, combining a €40 million guarantee provided by the European Commission (EC), with €60 million in financing from the Access to Energy, Building Prospects and MASSIF funds and €140 million in financing from FMO’s own balance sheet. The funds are invested in early-stage, technology-enabled businesses, technical assistance and the development of venture capital ecosystems in emerging markets. The EC’s guarantees will allow FMO to take an equity stake in risky but growing companies, so they can become bankable and scalable in two to three years. New investments made through the program in 2022 amounted to €28 million (2021: €21 million), of which €14 million was covered by FMO, €1 million by AEF, €3 million by Building Prospects, €3 million by MASSIF and €7 million by the EC.

For instance, a €3 million investment in SolarX was made via FMO’s Ventures Program. SolarX provides clean, affordable solar power in Mali, Burkina Faso and Senegal. This investment contributes to access to electricity, reducing the cost of electricity, and displacing polluting diesel-powered electricity generation, thereby reducing CO2 emissions and creating local employment.

  • 1 This is an alternative performance measure (APM) that is not included in the financial statements and is designed for steering purposes. For a definition of this APM, please refer to the chapter ‘How we report’.
  • 2 For more details on the Joint Impact Model (JIM), please refer to Chapter 'How we Report'.
  • 3 The absolute GHG emissions from FMO’s own operations do not include any (additional) emissions as a result of employees working from home, such as (increased) electricity use and heating in home offices.
  • 4 VCS is the Verified Carbon Standard, a standard for certifying carbon emissions reductions. REDD+ refers to the focus on Reducing Emissions from Deforestation and forest Degradation, including sustainable management of forests.
  • 5
  • 6 World Bank (2019). Working with smallholders – A handbook for firms building sustainable supply chains.
  • 7 World Bank Development Indicator Database
  • 8 Definition according to UN Food and Agriculture Organization (FAO).
  • 9 The NN FMO Emerging Markets Loans Fund, due to its legal structure as an Unregulated Securitisation Vehicle, does not fall under the SFDR.
  • 10 The FMO Privium Impact Fund, ACTIAM – FMO SME Finance Fund and ASN Green Project Fund are subject to the EU Sustainable Finance Disclosure Regulation (SFDR) and have been declared Article 9. While FMO itself is not in scope of the SFDR, it has the obligation to deliver information to the best of its ability. Initial disclosures have been made by the fund managers in 2021. Some future requirements may be challenging to fulfil as many of the companies invested in are outside of the EU and thus not subject to EU disclosure directives.