Glossary of terms

1. Development impact through responsible investing

The positive indirect social, economic, and environmental influence on local economies achieved through responsible investment processes.

FMO's investments

Strategy & Corporate Affairs, investment departments

Our performance - Higher impact

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1a. Inclusive development

Investing in projects with the specific aim of expanding access to goods, services and livelihood opportunities that are commercially viable with the specific aim of expanding services to people at the Base of the Pyramid (people living on less than USD 8 per day in purchasing power parity or lacking access to basic goods, services, and income). FMO’s definition of inclusive development also targets women, youth, and smallholder farmers.

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1b. Environmentally sustainable development

Investing in projects with a focus on renewable energy and resource efficiency (water, materials, waste) in response to climate change and resource scarcity.

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1c. Early stage and innovative projects

Investing in high-risk, early stage, and innovative projects with potentially high development impact. Early stage investments focus on making projects bankable and getting them past the development phase. Innovation includes new methods, ideas or products aimed to bring essential goods, services and opportunities to those currently underserved (Base of the Pyramid).

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1d. Mobilizing public and private capital

Maximizing the flow of finance to FMO’s client(s) by mobilizing third-party funds.

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1e. Financial additionality

Providing financial services only where the market can or does not do the same, or otherwise does not provide on an adequate scale or on reasonable terms.

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1f. Alleviating root causes of migration

Supporting business activities and related jobs in conflict-ridden countries, thereby improving the prospects of local communities and alleviating migratory pressures.

1g. Support Dutch business opportunities in developing countries

Supporting Dutch businesses by facilitating investments in and export to emerging markets and developing countries.

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2. Financial sustainability and risk appetite of FMO

The extent to which FMO’s financial model results in long-term profitability within the boundaries of its risk appetite and capital requirements.

FMO's operations

Finance, Risk Management, Credit

Our performance - Financial performance

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3. Transparency & accountability of FMO’s activities

Ensuring accountability by reporting on activities and performance in a transparent way.

FMO's operations

Finance

How we report

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4. Environmental footprint of FMO's investments

Any harmful effect on the environment caused by business activities financed by FMO, either directly or via intermediaries.

FMO's investments

Strategy & Corporate Affairs, investment departments

Our performance - Higher impact

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4a. Greenhouse gas emissions

Any harmful effect on climate change caused by greenhouse gas emissions from business activities financed by FMO.

4b. Water scarcity

Any harmful effect on water availability from business activities financed by FMO.

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4c. Pollution and waste

Any harmful effect on air, land and water quality caused by waste and other contaminants from business activities financed by FMO.

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4d. Biodiversity loss

Any harmful effect on habitat loss, degradation and fragmentation, or through invasive alien species, overexploitation, hydrological changes and nutrient loading from business activities financed by FMO.

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4e. Deforestation and land use change

Any harmful effect caused by the removal of a forest or stand of trees where the land is thereafter converted to a non-forest use from business activities financed by FMO. Examples of deforestation include conversion of forestland to farms, ranches, or urban use.

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5. Business integrity of FMO

Ensuring high standards of business conduct regarding anti-money laundering, anti-bribery, and anti-corruption procedures, remuneration of management and ethical behavior of FMO's employees.

FMO's operations

Compliance, Risk Management, Internal Audit

Our business model - Investment process, Our performance - Deeper relationships, Risk Management

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6. Promote ESG best practices

The support and active promotion of ESG best practices by organizing seminars, training and conferences for clients, peers and industry stakeholders to enable knowledge-sharing.

FMO's investments

Investment departments

Our performance - Higher impact

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7. Human rights

Human rights include freedom of expression, labor rights, land rights, and other civil, political, economic, social and cultural rights. Human rights topics are included in FMO's ESG risk management processes.  FMO recognizes that businesses have a responsibility to respect human rights and redress any harm of human rights resulting from their activities and direct or indirect business relationships.

FMO's investments

Strategy & Corporate Affairs, investment departments

Our performance - Higher impact

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7a. Good labor practices and decent work conditions

Providing a healthy and safe work environment; training and education, fair/living wages, freedom of association and collective bargaining, appropriate working hours; and protection from child/forced/compulsory labor and discrimination.

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7b. Local stakeholder engagement

Informing and consulting communities and civil society, including human rights and environment defenders, on the business activities, ensuring they can express their opinions freely and have access to a grievance mechanism.

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7c. Land & livelihood

Protecting legitimate rights to land, forest, fisheries and associated livelihoods, especially in projects that entail land acquisition and/or involuntary resettlement

7d. Community health, safety, and security

Protecting community health, safety and security. Business activities and infrastructure projects may expose local communities to increased risks and adverse impacts related to worksite accidents, hazardous materials, spread of diseases, or interactions with private security personnel.

7e. Indigenous peoples

Minimizing negative impacts on indigenous populations, fostering respect for their human rights, dignity and culture, and promoting development benefits in culturally appropriate ways. Indigenous peoples may be particularly vulnerable to the adverse impacts associated with project development, including risk of impoverishment and loss of identity, culture, and natural resource-based livelihoods.

7f. Cultural heritage

Protecting cultural heritage from adverse impacts of project activities and supporting its preservation. Cultural heritage encompasses properties and sites of archaeological, historical, cultural, artistic, and religious significance. It also refers to unique environmental features and cultural knowledge, as well as intangible forms of culture embodying traditional lifestyles that should be preserved for current and future generations.

7g. Non-discrimination

Preventing discrimination against vulnerable segments of the population such as minorities, women, youth and people with disabilities. Non-discrimination concerns inclusion of vulnerable people in the consultation process as well as access to project benefits or products and services offered by FMO's clients.

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8. Client satisfaction

The extent to which FMO’s products and services meet or exceed client expectations.

FMO's operations

Investment departments

Our performance - Deeper relationships

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8a. Local presence FMO

The availability of local office staff to FMO clients and other key stakeholders to enable more frequent, face-to-face and real-time engagement. 

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8b. Networks & external relations

The access to FMO’s network of select banks, development finance institutions, private investors, business organizations, knowledge institutes and civil society.

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8c. Knowledge transfer

The knowledge transferred from FMO to its clients through providing e.g. technical expertise, trainings, events and publications. 

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8d. Product offering

The range of financial product offering such as loans, local currency loans, equity, and trade guarantees.

9. Responsible taxation of FMO’s investments

The contribution to a healthy tax environment in which compliance and trust from both tax payers such as FMO’s clients, tax authorities and governments exist.

FMO's investments

Finance, investment departments

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10. Environmental impact of FMO’s operations and business travel

Any harmful effects on the environment that follow from FMO's operations.

FMO's operations

ICT

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11. Employee engagement at FMO

The degree to which employees get inspiration from their work. Engaged employees gain energy from their work, are proud of the work they do, and experience their work as meaningful.

FMO's operations

Human Resources

Our performance - Deeper relationships

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12. Role in public debate

The involvement in formal discussions on sustainable development which are open to the public.

FMO's investments

Strategy & Corporate Affairs

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13. Data protection and privacy

The protection of confidential data and compliance with privacy regulations through systems and procedures.

FMO's operations

ICT, Risk Management, Compliance

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