Corporate governance

The Supervisory Board (SB) 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 Supervisory Board and Management Board (MB) in terms of gender, experience, age, professional background and nationality. At the end of 2022, the SB was comprised of three male and two female members and there was one vacancy. The MB consisted of two female and three male members. Further personal details on the members of the SB can be found at the end of this chapter. 

Permanent education

Returning to a more normal setting after the COVID-19 pandemic eased off, the SB continued its Lifelong Learning program through in person sessions. This included several subjects required by the Dutch Banking Code. The SB focused on relevant topics such as, the EU Sustainable Finance Regulation, the impact of the global food crisis on developing countries and our customers, a session on efficiency and an extensive session on compliance topics. The latter included subjects such as the Money Laundering and Terrorist Financing (Prevention) Act (Wwft), FIU, sanctions, GDPR, outside positions, private investments, gifts and entertainment, and whistle blowing.  

Evaluation

During 2022, several meetings between SB and MB members took place to discuss the MB's new composition of five members and to monitor its performance. The MB prepared a self-assessment and a team assessment of its functioning in 2022. This included amongst others the achievement of the financial and impact targets, as well as areas of personal development. The SB evaluated the individual MB members through separate interviews that were conducted by two SB members. During those meetings, the self-assessments and the 2022 and 2023 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 2023 team and personal goals. The SB discussed the outcomes of the evaluation in a concluding session without the MB present. 

The Banking Code requires an external evaluator to conduct a SB evaluation once every three years. The latest evaluation was done in 2021. The Supervisory Board evaluated its functioning in 2022 through a self-assessment questionnaire and discussed the outcome with the members in a separate session. A more in-depth session will take place in the first half year of 2023. The functioning of the SB and its three committees and the functioning of the individual members were part of the evaluation.

It was found that the SB and its members functioned effectively. The composition of the Board was evaluated as sufficiently diverse and covering the range of expertise necessary for adequate supervision. However, the SB agreed to take broad and extensive on the ground experience into account, as much as possible, when nominating a new member to fill the current vacancy. The SB expressed a need for a continued focus on the longer-term strategic challenges of FMO.

Regarding the execution of the Strategy 2030, the SB will - among others - regularly monitor the financial results and the pace of hiring of staff during 2023 and monitor progress more in general. Regarding the operations of FMO, the SB will pay attention to the digitalization process of FMO. Regarding the SB’s own organization of work, the SB wants to create more time to discuss topics that are not on the agenda of meetings. 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 topics as required by the Banking Code.

Appointments and reappointments

At the end of 2021, Thessa Menssen decided to leave the SB as per 1 January 2022. The Selection, Appointment and Remuneration Committee (SARC) has started the search for a successor.

Meetings of the Supervisory Board

The Supervisory Board held five regular meetings during 2022 and six extraordinary meetings. The Special Committee ceased to meet, as this temporary committee was established when the MB consisted of two members. Topics that were discussed included a Ukraine stress scenario, the appointments to the MB, the KYC remediation and FEC enhancement project and evaluation, risk and compliance quarterly reports, the appointment of the external auditor, quality of interaction, the search for a new SB member, a specific large investment, securitizations, the updates of the MB Standing Rules and of the MB remuneration policy, and the developments of a few complex projects that required attention. 

Furthermore, the SB discussed the priorities and ambitions for the Strategy 2030 and gave its approval for this strategy and the Business Plan 2023 as well as the quarterly performance reports on progress against FMO’s strategic targets.  

Committee activities

The Audit and Risk Committee (ARC) supervises and advises the SB on FMO’s financial position and risk. 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 tasks is to monitor the performance of internal and external auditors. The ARC met four times in 2022. Until the five-member Management Board was in place, these meetings were 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. The last Audit and Risk Committee meeting of the year was attended by all MB members.

In 2022, the ARC discussed recurring matters such as yearly and half yearly reporting, the business plan for the upcoming year, the risk appetite report and framework, internal and external audit plans and reporting, capital and liquidity adequacy, the status of the KYC and FEC enhancement project and evaluation, the recovery plan, and other matters such as a specific large investment, several more specific risk analyses and securitizations. The following key audit matters were discussed with the external auditor: IFRS 9 impairment of loans to the private sector, valuation of equity investments at fair value and reliability and continuity of the information technology and systems. 

The main task of the SARC is to advise the SB on the proposals on the appointment and re-appointment of SB and MB members. Other tasks include monitoring the remuneration policy, preparing proposed adjustments and giving advice on the remuneration of individual MB members. The SARC officially met four times and had several deliberation sessions. In 2022, it discussed, among others, the appointments of the new CRO and the new Co-CIO, the new five member MB setting, evaluation and goal setting, the search for a new SB member, the SB retirement schedule and planning, remuneration and HR topics, such as quality of interaction.

The Impact Committee, established in 2019, assists the SB in overseeing the quality and integrity of FMO’s statements regarding development Impact. The Committee prepares the decision-making (and the advice) of the SB around FMO’s strategy (including policies and targets) regarding Impact and ESG. The Impact Committee held three meetings in 2022. Throughout the year, it discussed, Strategy 2030, including FMO’s theory of change, Business Plan 2023, climate action plan and targets, impact and ESG targets and steering, the periodic update of the Independent Complaints Mechanism and updates on issue projects, among other topics. 

Independence, conflicts of interest and governance

The SB 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 2022. FMO has specific regulations concerning private investments. Compliance by SB members, MB members and all other employees with FMO’s regulations on private investments is addressed regularly. 

Culture, including compliance

The SB ensured that the compliance function is safeguarded within the MB and the SB. In 2022, the SB put continued emphasis on supervising the FEC enhancement program, the remainder of the KYC remediation and improvement of KYC procedures. The SB receives compliance updates at every regular meeting. The Chairman of the SB periodically met with the Director Compliance to discuss relevant issues. 

The SB regularly interacted with the Works Council. The SB discussed FMO’s culture and development program 2022 as well as its duties as outlined in the Banking Code sound and ethical operation.