Corporate governance

The Supervisory Board ensures that FMO complies with 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.

Members

At year-end 2018, the Supervisory Board consisted of three female and three male members. The Management Board consisted of two female and one male member. FMO aims to have a balanced composition of the different boards in terms of gender, experience, age, professional background and nationality. Further personal details on the members of the Supervisory Board can be found in the section Members of the Supervisory Board.

Permanent education

Members of the Supervisory Board follow a formal program of lifelong learning, as also required by the Dutch Banking Code. In 2018, the members of the Supervisory Board followed several lifelong learning sessions, among others on the global climate commitment and FMO’s role, an Africa strategy for the Dutch private sector, ESG tracking and on the risks and opportunities of mobilisation of private capital by development finance institutions.

Evaluation 

During the year several meetings between Supervisory Board and Management Board members have taken place to discuss the changes in the Management Board composition and to monitor its performance. The Management Board prepared a self-assessment and a team assessment of its functioning in 2018. The Supervisory Board evaluated the individual Management Board members by means of separate interviews conducted by two SB members. In those meetings, these assessments and amongst others the 2018 and 2019 objectives and targets were discussed, as well as the cooperation in the new MB setting. The conclusions will be implemented in the 2019 team and personal goals. The Supervisory Board discussed the outcome in a conclusive session without the Management Board present.

The Supervisory Board evaluated its own functioning and the functioning of its committees and individual members over 2018 with the help of a specialized external evaluator. The Banking Code requires an external evaluation once in every three years. The evaluation included an online questionnaire and separate interviews with all members of the Supervisory Board and the Management Board as well as the Corporate Secretary. Amongst others, the culture, team dynamics, cooperation and value creation have been part of the evaluation. It was found that the functioning was according to what can be expected. The SB discussed the preliminary outcome in a separate session and is in the process of further analysing the results. The conclusions will be adequately dealt with.

Appointments and reappointments 

We were honoured that on October 31 Farah Karimi decided to join the Supervisory Board. Mrs. Karimi, for 10 years the Executive Director and Chair of the Executive Board of Oxfam Novib, brings in-depth knowledge in the area of human rights to the Supervisory Board. This will allow us to more effectively support the Management Board and the rest of FMO as they invest in projects where human rights can clash with impact goals, for example with land rights in the context of agricultural or energy projects.

Meetings of the Supervisory Board

The Supervisory Board met 6 times in 2018. Please see the schedule below for a full overview of meetings and attendance. To keep a finger on the organisation’s pulse the Supervisory Board began to have structural bi-annual conversations with the Works Council and every Supervisory Board Member spoke to two of FMO’s Directors during the year.

In 2018, the Supervisory Board approved the four-year plan for 2019-2022, after thorough consideration in an internal meeting and in combined strategy meetings with the Management Board. The four-year plan for 2019-2022 continues in the direction which was set with the Strategy 2025 and the focus on higher impact, deeper relationships and higher productivity. The initiatives, ways of measuring progress and the financials were discussed, as well as the vulnerabilities and how to manage the latter. The Supervisory Board will continue to monitor the progress of the implementation of the strategy in 2019, amongst others by monitoring progress on KPIs, targets and four pathways to strengthen FMO's culture, stakeholder engagement, improve and professionalize and running the business.

Meetings of the committees of the Supervisory Board

The Audit and Risk Committee (ARC) held three meetings in 2018. These meetings were attended by the ARC members (please refer to table SB attendance), the CRFO, Director Finance, Director Risk, Director Internal Audit and the external auditor. Regular topics on the agenda have been the financial statements, annual report, interim report, ICAAP, ILAAP, internal and external audit findings, and the business plan for 2019. Key audit matters were discussed with the external auditor: IFRS 9 adoption and impairment of loans to the private sector; valuation of equity investments; the reliability and continuity of IT systems; and measurement of impact and footprint data, methodology and reporting. In addition, the ARC has discussed the risk appetite framework, the on-site inspection of the Credit Risk Model by the Dutch Central Bank and the annual assessment of the Internal Audit function. Also, the new Private Investments Policy was assessed, as well as the four-year plan for 2019-2022.

The Selection, Appointment and Remuneration Committee (SARC) held two meetings in 2018. These meetings were attended by the SARC members (please refer to table SB attendance) and Director Human Resources. The SARC has discussed the retirement schedule of the Supervisory Board and the reward of senior management positions in Risk and Compliance. Moreover, the updated MB Remuneration Policy has been discussed and will be proposed to the Annual General Meeting.

Independence, conflicts of interest and governance

The Supervisory Board 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 2018. FMO has specific regulations concerning private investments. Compliance by Supervisory Board members, Management Board members and all other employees with FMO’s regulations on private investments is addressed regularly.