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.

Composition of the Supervisory Board

At year end 2019, the Supervisory Board comprised three male and two female members and there is one vacancy. The Executive Committee (ExCo) consists of five male and four female members, with one vacancy. 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

For the first time the Supervisory Board held its Lifelong Learning program in one of FMO’s working areas, namely Kenya. Most of the subjects required by the Dutch Banking Code were included. The Supervisory Board looked at the sectors FMO invests in, discussed NL Business, the challenges and opportunities of clients, the SDGs, (measuring) impact and additionality, co-investments, partnerships, innovation, cyber security and FMO’s local office. The Supervisory Board visited several clients in Kenya and more clearly saw where and how dilemmas occur. In October 2019 the program was completed with an in-house session around IT, Tax and Treasury.

Evaluation 

During the year several meetings between Supervisory Board and Management Board members have taken place to discuss the Management Board composition and to monitor its performance. The Management Board prepared a self-assessment and a team assessment of its functioning in 2019. 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 among others the 2019 and 2020 objectives and targets were discussed, as well as the cooperation in the current MB setting and in the new setting of the Executive Committee. The conclusions will be implemented in the 2020 team and personal goals. The Supervisory Board discussed the outcome in a conclusive session without the Management Board present.

The Banking Code requires an external evaluator to conduct the Supervisory Board evaluation once every three years. This was done over the year 2018 in the current SB setting. The Supervisory Board evaluated its functioning in 2019 by means of a self-assessment questionnaire and discussed the outcome in a separate session. The functioning of the SB committees and the functioning of the individual members were part of the evaluation. It was found that the SB functioned according to what can be expected. Suggestions made by the members will be dealt with adequately. During the selection process of the three new SB candidates, the SB profile, the composition, competences, experience and knowledge were extensively discussed. Based on these meetings individual profiles were adapted to the current environment FMO finds itself in.

Meetings of the Supervisory Board

During 2019, the Supervisory Board held four regular meetings and three conference calls on topics that came up during the year. The SB had several sessions during the Kenya site visit. Among others the following topics were discussed: Invest NL, the Supervisory Board Impact Committee, the establishment of the Executive Committee, Business Process Optimization, specific issues and a large investment framework.

Committee activities

The Audit and Risk Committee (ARC) met three times. These meetings are in principle attended by the ARC members, the CEO, the CRFO, the Director Finance, the Director Risk, the Director Internal Audit and the external auditor. The Audit and Risk Committee discussed, for instance, yearly and half yearly reporting, risk appetite reports, the risk appetite framework, the impact of Basel IV, internal and external audit plans and reporting, ICAAP and ILAAP, and the status of Know Your Customer projects. 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, reliability and continuity of the information technology and systems, and Green labelled investments. 

The Selection, Appointment and Remuneration Committee met three times. It discussed among others the succession of the Supervisory Board members, the establishment of the Executive Committee and the Change & Implementation Plan of the corporate values that were introduced in 2019.

The Impact Committee was established mid-2019 to assist the Supervisory Board among others on FMO’s strategy with regards to Impact and ESG, and held one meeting. It discussed current impact and ESG policies, impact and ESG targets and steering, harmonization of development impact measurement methodologies and complaints.

A Nomination Committee has been active in recruiting three new SB members. By December 2019 the preferred candidates had been identified. The SB renewal is envisaged to be formalized at the General Shareholders meeting end of April 2020.

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 2019. 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.

Culture, including compliance

The Supervisory Board ensured that the compliance function is safeguarded within the Management Board and the Supervisory Board. In 2019, the Supervisory Board put more emphasis on supervising the improvement of KYC procedures. The Supervisory Board is updated in writing on compliance at every regular meeting. The Chairman of the Supervisory Board regularly meets with the Compliance Manager during the year and discusses issues where relevant.

On all levels of the organization, FMO puts strong emphasis on diversity. This regards diversity of cultural backgrounds, gender and skills and competences. FMO’s Human Resources department continues to pay special attention to strengthening the diversity of FMO’s workforce. The Supervisory Board welcomes this.