FMO in the public domain
There are only 10 years left to meet the SDGs and trillions more dollars are needed to achieve them. The public sector, private sector and civil society need to work together to accelerate progress. FMO extends its role beyond that of financing to push forward this agenda, developing meaningful partnerships (SDG 17), sharing knowledge and engaging in public debate.
Our engagement in the public domain
To scale up projects and achieve more impact, FMO sets up investment platforms or acts as their strategic anchor. In practice, this means we help the fund manager launch the fund, are the first to perform due diligence and give approval or enable the fund to close. FMO’s reputation, triple-A status and expertise in ESG and emerging market financing are essential to creating such a platform. This allows platforms to draw in other investors and secure more funding. FMO was a strategic anchor for Arise in 2016 and Climate Investor One in 2017, as well as for multiple clients. FMO also developed ElectriFI (2015) and AgriFI (2016), two EU-funded facilities managed by the EDFI Management Company.
Innovating through leveraging partnerships
Innovation is key to achieving the SDGs. FMO is breaking free from traditional business models and seeking new ways to generate more impact. One way is to form partnerships with NGOs, like we did with DFCD, whose network and expertise is complementary to our own. In the agri-food domain, we partner with the UN Food and
Agriculture Organization (FAO) which enables us to connect knowledge and innovation to market opportunities for more value and impact. The agreement reached with the European Commission to provide guarantees to our Venture Capital Program enables us to invest in early-stage, technology-enabled businesses, technical assistance and the development of venture capital ecosystems in emerging markets.
Transforming the industry
We believe it is our duty to raise industry standards in the countries in which we invest. This not only creates a level-playing field for our customers, but also brings about changes that benefit society. In Honduras, for example, we have worked with local banks and other stakeholders to formalize ESG standards. FMO is also a signatory and board member of the Operating Principles for Impact Management, which increase the transparency and accountability of impact investing.
Harmonizing across EDFIs
FMO believes there needs to be a single way to measure and report impact to track progress towards the SDGs. Within the European Development Financial Institutions (EDFI) community, FMO is playing a leading role towards developing such a taxonomy. We believe that harmonization will lead to higher industry standards, clarity, consistency and alignment between DFIs. In addition, our customers will be able to work more efficiently with multiple DFIs. In 2019, EDFI launched a Joint Impact Model to estimate the number of jobs supported through their investments. We also made steps towards harmonizing our E&S approach for FIs with other EDFIs.
Advising on EU reporting standards for non-financial information
Harmonization across EDFIs is part of the much-needed professionalization of the impact investment industry. This includes the creation of non-financial accounting standards that are on par with financial reporting standards and that are applicable to all investors and enterprises. The upcoming EU Taxonomy is an important driver towards harmonization from a regulatory perspective. FMO is a member of the NVB (Dutch Banking Association), which has several working groups that closely follow the positions from the European Banking Federation (EBF). Through this platform FMO is regularly requested to share its view on public consultations. In July 2019, FMO joined a Working Group by the EBF and UN Environmental Programme (UNEP) Finance Initiative. The project has the objective to assess the application of the EU taxonomy and identify sustainable activities in banks’ lending portfolios for banks that wish to apply the taxonomy on a voluntary basis.
Supporting Dutch national policy
Because the Dutch government has a 51% stake in FMO, we align our work with the country’s development objectives. This is reflected in our articles of association and agreement with the State. With its financial instruments, FMO supports the government’s policy on foreign trade and development cooperation, as well as the Dutch Africa Strategy launched in November 2019 by VNO-NCW, NABC, NLinBusiness, PUM and DECP.