Organizational efficiency and business integrity

In 2022, we focused on building our change capacity to improve our business operations, adapt to the hybrid way of working and address cultural challenges. Making progress on our digital transformation has been a major element of that. Furthermore, we launched our 2030 strategy to set out our ambitions for the years to come.

Employee engagement

FMO expects its employees to be aware and behave according to the code of conduct and speak out when they feel that the business principles are threatened or compromised. Our Speak-Up policy and our internal Grievance and Complaint mechanisms help us monitor the effectiveness of the code of conduct.

At the end of 2022, we had 689 employees (2021: 614 employees), all covered by the collective labor agreement for banks. We invest in the wellbeing and development of our employees, to support them to be healthy and happy so they will be able to perform at their best. This, in turn, helps us realize our strategic objectives. Offering a healthy and inspiring working atmosphere has become even more important for attracting and retaining employees in the current labor market, something we expect to remain a challenge in the coming years. 

In November 2022, we conducted a thematic pulse survey, which was less extensive than the employee engagement survey conducted in 2021. The pulse survey was used to evaluate the hybrid way of working pilot, which began in early 2022, as well as to determine the employee engagement score. In 2022, the average employee engagement score was 7.3 (2021: 7.2), below our target of 8.0. We are still in the process of exploring ways to improve the overall engagement score and will continue to conduct pulse surveys to gauge results of our actions.

Similar to the previous survey, employees indicated that they are passionate about FMO’s mission and vision and experience pride and joy doing meaningful work. Employees experience a high level of collaboration and support within their team and consider their immediate manager as one of the key contributors towards a positive employee experience. As the number of staff has increased, more attention is needed to achieve efficiency, a more balanced workload and cross team collaboration.

After the pandemic, we explored new ways of hybrid working. We aim to work from the office half of the time and the other half remotely, which may also be overseas for part of that time. Travelling to our customers and partners abroad has resumed, but we are more critical whether face-to-face meetings are really necessary. In the poll, employees indicated they come to the office to meet colleagues, their manager and to attend social events and also expressed their appreciation for the opportunity to work remotely abroad.

Employee developments

Most of our employees are based in the Netherlands. We continue to employ an international staff base, which at the end of 2022 represented 63 different nationalities (including the Dutch nationality) (2021: 57 nationalities). Sometimes working together with many cultural differences can be challenging and requires paying extra attention to the topic. In 2022, most new colleagues joined the Diversity & Inclusion training as a part of the onboarding program. These trainings help to create a climate where people from different backgrounds feel comfortable expressing their opinions. Understanding and accepting diverse cultures starts by being aware of one’s own.

In 2022, 142 new employees joined FMO (2021: 64). It was a challenge to recruit and onboard all of them. More than half of the new colleagues (56 percent) held a non-Dutch nationality. As a result, by the end of 2022, 36 percent of the total staff held a non-Dutch nationality. Our ambition for 2023 is to continue to grow, where we expect to recruit and onboard even more new employees than in 2022. The FMO Academy worked with investment staff to create a better onboarding journey. This gives new employees a better understanding of our vision, mission, and strategy and how FMO integrates the SDGs into our operations. The new onboarding journey commenced in January 2023. In 2022, we re-evaluated our commuting policy with the goal of making it more sustainable, with an emphasis on public transportation, fairness and actual usage.

In 2022, there were 154 external employees working at FMO. Approximately 60 percent of those were hired as part of Business as Usual (BAU) and ICT (maintenance)-related activities, and 40 percent worked on projects. With respect to the working areas, 35 percent took up ICT and data-related positions, 15 percent were employed in KYC-related roles, and the remaining 50 percent worked in diverse areas, mostly non-client facing jobs. The majority of the external employees were self-employed (“ZZP”) and recruited either via an agency or directly (via FMO’s network). Approximately 10 percent were employed via an employment agency.

The net growth of external employees over the previous year was approximately 25 percent, from a headcount of 123 at the end of 2021 to 154 at the end of 2022. This is about 10 percent above the net growth of internal employees, and is a result of a combination of factors, including our building back business strategy as well as the hiring of temporary staff in anticipation of the recruitment of permanent staff.

• * As per 2022, we have adjusted the definition of employees leaving on the last day of the reporting period by including them in the numbers we report as they are still employed on that date. The numbers over 2021 have been restated for consistency.

Diversity and inclusion

FMO aspires to be a diverse and inclusive employer because we believe it leads to better decisions, more creativity and innovation, better solutions for our customers and more impact on the world. In 2020, we published a diversity and inclusion statement in which we express our commitment to a society in which everyone feels valued, respected and included. At FMO, we strive for diversity at all levels of our organization. We want to create an inclusive working culture for our employees and our stakeholders. We promote diversity of gender, gender identity and sexual orientation, culture (topics around ethnicity and race), age and generations and people with occupational disabilities.

It is our ambition to have an equal gender distribution in management roles and, as such, we have set a target for the organization of 50%. To ensure we continue to progress towards achieving this target, we consider gender and other diversity-related factors for all positions (including management roles) along with other important criteria during our recruitment process. This also includes findings related to the gender pay gap, as explained further in this section.

To track our progress and our performance on gender, we report on seven gender diversity KPIs, as follows:

In 2022, the gender pay gap analysis was performed for the fourth year in a row. Compared to previous years, the way the analysis was performed changed. This year, we hired an independent external consultant who used a different methodology which entailed a more advanced statistical analysis (Oaxaca Blinder, multivariate analysis). The outcome showed a statistically significant difference of a 3.1 percent higher income for men compared to women for equal work. This year, the analysis was performed based on October 1 headcount data instead of April 1 as was done in 2021. Due to the change in methodology, last year's figures are not included as they may not be fully comparable. 

The methodology change is estimated to have had a limited impact on the outcome. The increase in the percentage could have been the result of a slight widening of the gender pay gap over the last approximately 18 months. Among the factors that could have contributed to this are differences in job offers for new joiners, structural differences in the appraisal scores related to part-time work (FTE), or work experience. The report shows that the biggest difference is unexplained by the analysis. Further examination is required to find effective ways to close the gap.

Although the gender pay gap is about half of what is seen in the corporate sector in the Netherlands and similar to the gender pay gap seen in the public sector in the Netherlands, we are determined to close this gap. As it may be caused by gender-based pay upon entry into FMO or gender-based progression in salary scales based on the annual performance review, we will review in more detail and take corrective action to close the gender pay gap as we strive to pay women and men equally for equal work.

Further improving the ‘quality of interaction’ plays an important role in promoting organizational culture. In 2022, we focused on clarifying the meaning of our key values and described them in preparation for future learning interventions. As leadership plays an important role in facilitating this process, we launched the ‘Emerging Leadership Program’ for potential new leaders in FMO. 

Learning and development

At FMO we consider continuous learning an important part of working. Via our internal FMO Academy, we continue to encourage employees to develop themselves through internal and external trainings. We offer various trainings and courses, from personal skills development to (development) banking knowledge. 

After the pandemic we picked up face-to-face classroom training, although ‘hybrid’ trainings also increased, where instruction was offered online and offline simultaneously. Following the launch of the updated 2030 strategy, we are aligning the 2023 curriculum with the skills and capabilities needed to achieve our strategic objectives.

In 2022, we provided the following learning and development opportunities to our employees:

To support place and time independent learning, we promoted Udemy for Business, a virtual learning platform where employees can access a wide range of trainings supporting their professional as well as personal development.

In 2022, we continued the facilitation of themed weeks connected to FMO’s values and learning. Related to our key values we organized a week around the value ‘Integrity’ as well as two ‘Learning weeks’ in February and June. Furthermore, we organized an ‘Impact school’ around ‘Making the difference’, a learning lab focusing on reducing inequalities (SDG 10) and finally a ‘Diversity’ week, with deep dives into Diversity and Inclusion topics such as diversity of thought, age, gender, and sexual orientation.

Strategic projects

FMO continues to invest in an effective and efficient organization through its project portfolio. In 2022, we realized 85 percent of our project deliverables (2021: 92 percent), which was on target. The number of projects in the portfolio increased from 13 to 20.

We experienced constraints in resourcing projects caused by limited availability of key internal capabilities and a tight labor market. This impacted delivery for some projects, requiring continued focus on resource management and prioritization of the project portfolio. To enhance focus and increase portfolio- and project support the Portfolio Management Office team was moved to the Strategy department and project management capability was added to the team. Enabling the organization to meet its ambitious change agenda building up additional internal capabilities will continue in 2023.

One of our key projects in 2022 was aimed at calibrating our strategy towards 2030, including the delivery of a multi-year implementation roadmap. The roadmap will provide guidance to our annual business planning and project portfolio prioritization in the next years. The 2030 strategy has defined 'efficiency' as one of the key strategic themes. This is reflected in the start of the multi-year Digitalization Program, focusing amongst others on the digitalization of the investment process to support FMO’s growth objectives.

Another strategic project that was initiated this year was the outsourcing of FMO's data center, leading to a future proof state with reduction of operational risks and improved service delivery to the organization. This was started in 2022 and will take until 2024 to be completed.

Several projects were focused on strengthening internal processes, including a number of projects related to regulations. Examples are the Investment Risk project, which focuses on our credit monitoring policies and processes; the Privacy/GDPR project, which aims at strengthening governance and providing solutions for mitigating Privacy-related risks; and the Internal Control project to provide a stronger framework for conducting our internal control processes. Furthermore, projects focusing on the EU Sustainable Finance directive and Environmental & Climate Risk are delivering on new regulations, which includes implementation of the internal governance, new roles, processes and tooling.

Business integrity

Integrity is one of FMO’s core values. We believe it is important that this value is lived by our employees as well as our customers and suppliers. FMO has embedded integrity into its policies, products and procedures. The KYC framework, the Anti Bribery and Corruption Policy, the Entertainment & Hospitality Policy, among others, stipulate the minimum standards our stakeholders, including our employees, should adhere to.

In 2022, all new FMO employees were required to complete the compliance e-learning that addresses personal integrity topics, such as bribery and corruption. In addition, new investment staff were also required to complete the KYC e-learning as part of their onboarding. All new investment staff were also required to undertake additional training related to the FEC program and remediation project.

KYC remediation and incidents

In 2022, FMO followed up on the recommendations that resulted from the independent external validation that was performed on the FEC enhancement program with one remaining open action that is being followed up. In addition, FMO followed up on the recommendation of DNB to conduct a specific integrity risk assessment on its private equity fund investments. The risk assessment led to an action plan to follow up on the further mitigation of the risks identified.

In 2022, we registered five (low/medium-risk) operational risk events related to KYC (2021: one operational risk event) and one (low-risk) operational risk event related to KYS (Know Your Supplier). In all cases, the relevant KYC/KYS procedure was not fully followed. Remedial actions have been completed or are in progress.

Alleged customer-related integrity issues

This refers to any unusual transactions that could indicate money laundering, corruption, fraud, terrorist financing, or non-compliance with sanctions programs (OFAC/EU/ NL/UN/UK) by customers or other counter parties (such as guarantors, custodians, ultimate beneficial owners). In 2022, four new alleged customer related integrity cases were reported to the Compliance Committee (2021: 12 cases). Issues were triggered by investment or KYC staff, other DFIs and partner (international) finance institutions (IFIs) or whistle blowers. FMO investigates each case together with partner DFIs/IFIs where needed, to verify its legitimacy and to determine solutions. During 2022, we closed eight alleged customer-related integrity cases (2021: 11 cases), where either the issues were resolved or FMO decided to end the relationship.

Alleged employee-related integrity issues

Alleged employee-related integrity issues refer to any indication of suspected involvement with bribery, corruption, fraud, privacy violation, conflict of interest due to outside positions, gifts/entertainment/ hospitality, or use of price-sensitive information. In 2022, two cases were reported to the Compliance Committee (2021: one case), which have been closed.

Reported data breaches

In 2022, no data breaches were reported to the Data Protection Authority (2021: one data breach reported).

Significant instances of non-compliance with laws and regulations

Significant instances of non-compliance constitute as a minimum those breaches of laws and regulations that have led to enforcement measures taken towards FMO by the relevant supervisory bodies or other competent authorities.

No enforcement measures were taken for instances of non-compliance with laws and regulations that occurred during the reporting period. Additionally, no enforcement measures were taken for instances of non-compliance with laws and regulations that occurred in previous reporting periods.

As a result of the file remediation, we reported a limited number of incidents to DNB at the end of 2021 and the beginning of 2022. These involved late notifications of unusual transactions to the Financial Intelligence Unit (FIU). DNB initiated an investigation into these incidents and the related KYC files. We expect this investigation to result in enforcement measures by DNB in 2023.