Higher impact

We create higher impact by investing in regions where our impact can be greatest and in sectors that are crucial to economic, environmental and social progress. We measure our success in line with our core SDGs.

SDG 8 | Decent Work and Economic Growth

By creating or supporting jobs and strengthening local economies, we contribute to stability in underprivileged regions. Private business activity, investment and innovation are major drivers of productivity, inclusive economic growth and job creation.[1] SDG 8 calls for promoting economic growth that is sustained, inclusive and sustainable; and employment that is full, productive and decent.

Total commitments

To stimulate economic growth, FMO provides long-term financing to developing countries that the market does not provide or does not provide on an adequate scale or on reasonable terms. These countries are often characterized by a fragile private sector, little job security and high poverty rates. Our customers operate in volatile markets that are significantly impacted by macroeconomic trends like increasing commodity prices, exchange rate movements and more recently COVID-19. Long-term investments in these markets are needed now more than ever.

Description and methodology

Our contribution toward economic growth is measured by the total committed portfolio and new investments made in developing countries. Total committed portfolio reflects the risk exposure taken by FMO or another party on active commitments. For debt, this includes the outstanding portfolio plus remaining commitments that have not yet been disbursed, reduced by guarantees received from third parties; for equity, it includes the current exposure plus the remaining commitment reserved for all previously made investments; and for guarantees it includes the limit amount. New investment refers to the volume of new commitments made to customers in the first half of 2020. This includes decreases and increases of an existing commitment and new commitments to existing or new customers. Both metrics cover investments made on FMO’s own books as well as investments made through public funds, or through funds that have been mobilized from third party participants. This includes loans, equity investments, guarantees and mezzanine products. It excludes grants.

In H1 2020, our total committed portfolio in developing and emerging markets amounted to €12.7 billion of which €8.6 billion was on FMO’s own books (H1 2019: €8.5 billion), €1.3 billion was through public funds (H1 2019: €1.2 billion) and €2.8 billion through mobilized funds (H1 2019: €2.8 billion). FMO’s committed portfolio grew by less than 1%. The COVID-19 pandemic and subsequent economic climate in our markets have negatively affected the activities in our debt and equity portfolios. In line with emerging market equity prices, the fair value of FMO’s private equity portfolio decreased in the first half of 2020. In addition, we closed fewer new contracts (debt and equity) than the previous year, as explained below. In our equity portfolio, several exits were postponed. But with procedures starting up again in recent weeks these are offering prospects for the near term. Furthermore, we have continued to transfer FMO participations to the FMO Investment Management funds in our efforts to mobilize more private party capital towards achieving higher impact. These funds are reflected in our direct mobilized portfolio.

In the first half of 2020, we invested a total of €520 million in developing and emerging markets of which €386 million was on FMO’s own books (H1 2019: €626 million), €65 million through public funds (H1 2019: €52 million) and €69 million through mobilized funds (H1 2019: €340 million). FMO new investments were 38% lower than the same period last year. This is explained by the current economic recession as well as the travel restrictions that inhibit FMO from carrying out its due diligence process and exploring new viable business opportunities. New investments primarily resulted from existing customers and customers that already advanced through FMO’s due diligence. In line with our strategy, approximately 55% of new investments on FMO’s own books went towards countries in Africa and Asia, while 28% of investments were made in countries in the European Neighborhood.

Jobs supported

Creating and safeguarding jobs is crucial for sustainable development, as employment paves the way out of poverty. The private sector is one of the most important employers across emerging and frontier economies. DFIs are promoters of private sector development, where job provision is a key focus. 

Description and methodology

The measurement of direct jobs is a commonly used indicator for corporates and DFIs. It enables us to report on the impact on employment as supported by our investments. Direct jobs refer to the number of full-time equivalent employees, as defined at a local level, working for the client company or on a project. In addition, we model the estimated indirect jobs supported by our portfolio businesses through supply chains, jobs supported from the spending of wages, and economy-wide employment enabled by bank lending and the supply of electricity. The additional output requires more direct employment and intermediary inputs. This in turn leads to expansion among existing and new suppliers, thereby supporting and/or creating jobs. Some products and services – most notably electricity and finance – remove constraints for other businesses, enabling them also to expand and again support and/or create jobs. In emerging markets, firm expansion is assumed not to significantly displace employment in competing businesses.

This is the first time we report according to the new Joint Impact Model (JIM). The JIM is the successor of FMO’s impact model which was introduced in 2015. Since early 2019, FMO and Steward Redqueen, together with other strategic partners, have worked on the harmonization of the underlying methodology and the inputs required. Given the change in approach, FMO has published a separate article on its public website explaining the new methodology, the first insights and next steps. A full methodological description is available on FMO's public website: Joint Impact Model

An important methodological change in this model is its ability to run at portfolio level instead of only at commitment, which has been the methodology of the current impact model so far. After careful consideration and discussion with the members of the JIM, it is recommended that the best application of the model is backward-looking (ex-post) portfolio analysis. In other words, the use of the new Joint Impact Model provides the opportunity for FMO to review the way it reports on direct and indirect jobs. This means that we are no longer estimating the expected effects in the future. Instead our focus is on what is in our current outstanding portfolio; what has already been built, and the investees of the funds we invest in. For example, we no longer include estimations on power plants built in the future, or funds’ future expected impact. FMO continues to collect information to run the JIM. Assumptions have been made where information is currently unavailable.


Each investment area shows different effects. For example, in Financial Institutions, impact is mainly driven by finance enabling effects. These are Economy-wide jobs generated via financial services due to lending to businesses and individuals. Direct employment is also a strong driver for Financial Institutions as they are one of the biggest direct employers. In Energy, impact is mainly driven by power enabling effects, which attributes the number of jobs as a result of an increase in gigawatt hours (GWh) of electricity supplied to the national system. It also has very high temporary effects, which is due to the number of projects that are currently in construction phase. In Agribusiness, Food & Water, the split is distributed more evenly across supply chain effects related to the impact that stem from sourcing goods and services from producers, and Induced effects that stem from re-spending wages into the economy. Private Equity consists of corporates, funds, energy projects and financial institutions. Their impact stems from power enabling, finance enabling and induced/supply chain effects, reflecting the wide-ranging activities that Private Equity engages in.

For the first time the results also take into account Private Equity investees themselves. However, the portion linked to FMO is very small as attribution is applied at the fund and investee level. It is important to note that the model is used to estimate economy-wide effects using the latest ILO and World Bank data. This means that recent impacts from COVID-19 and other worldwide crises are not being considered in the model. 

SDG 10 | Reduced Inequalities

Through our investments FMO aims to contribute to the targets of SDG 10 – Reduced Inequalities (RI). Specifically to target 10.1: “by 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average” and target 10.B: “encourage official development assistance and financial flows, including foreign direct investment, to States where the need is greatest, in particular least developed countries, African countries, small island developing states and landlocked developing countries, in accordance with their national plans and programmes”.[2]

Reduced Inequalities-labelled commitments

FMO labels investments to capture whether, and the extent to which they contribute towards reduced inequalities.

Description and methodology

An investment is eligible for the RI label when the level of (ex ante) impact is targeted at Least Developed Countries (LDCs) and/or inclusive business. Funds channelled towards LDCs – countries that suffer severe structural impediments to sustainable development – reduce inequalities vis à vis higher income countries. Investing in inclusive business reduces inequalities within countries by increasing access to goods, services, and livelihood opportunities on a commercially viable basis to people at the Base of the Pyramid (BoP). The BoP is defined as people who live on less than US$8 per day in terms of purchasing power parity or who lack access to basic goods, services and sources of income. FMO’s inclusive business investments target the un(der)banked, the unconnected, youth, women, smallholder farmers and rural populations.


In the first half of 2020, FMO invested a total of €185 million in reducing inequalities (H1 2019: €231 million) of which €101 million was from FMO’s own books, €40 million was managed on behalf of the Dutch government and €44 million was from mobilized funds. €69 million contributed towards LDCs and €116 million contributed towards inclusive businesses. Overall, this represents a 20% decrease compared to the same period last year, caused by the lower volumes of new investment achieved by the business. Nevertheless, the total committed portfolio that was labelled RI increased from approximately €3.5 to €3.8 billion in the same period, representing a 30% share of the total committed portfolio. This increase is explained by the new investments that were achieved at the end of 2019.


In May 2019 FMO joined the “2X Challenge – Financing for Women”. The 2X Challenge is a multilateral initiative launched during the G7 Charlevoix Summit with the ambitious objective of deploying and mobilizing unprecedented amounts of capital to support projects and enterprises that empower women as entrepreneurs, as business leaders, as employees and as consumers of products and services that enhance their economic participation.

Description and methodology

As part of the program, evidence-based eligibility criteria have been developed around five focus areas: entrepreneurship, leadership, employment, consumption and investments through financial intermediaries. The Gender Finance Collaborative, in which FMO also participates, translated these into a set of indicators which have been harmonized with the Global Impact Investing Network’s IRIS+ system. To qualify, an investment needs to meet at least one of the criteria with the intent of maintaining it.


In H1 2020, a total of €32 million was committed through our Financial Institutions and Energy investments which qualified under the leadership and consumption criteria. €3 million was on FMO’s own books, €10 million was from public funds and €19 million was from mobilized funds.

SDG 13 | Climate Action

FMO contributes to the commitment among developed countries, as stated by the UN Framework Convention on Climate Change, to jointly mobilize US$100 billion annually by 2020 to address the needs of developing countries in the context of meaningful mitigation actions (target 13.A).[3]

Green-labelled commitments

Tackling climate change has been central to our strategy since we adopted our 2050 vision in 2013. FMO’s ambition is to align its investment portfolio to a 1.5֯ pathway. One way to support this ambition is to grow our “Green” portfolio, which is aimed at reducing greenhouse gas emissions, increasing resource efficiency, preserving and growing natural capital, and supporting climate adaptation. FMO labels investments to capture whether, and the extent to which they contribute towards climate action.

Description and methodology

FMO’s Green Definition is based on the existing common Principles of Climate Mitigation as defined in the Multilateral Development Banks (IDFC-MDB) report for Climate Finance Tracking. All Green investments should meet FMO’s Green principles, leading to genuine improvement as follows: the improvement 1) goes beyond the local regulatory requirements; 2) is unrelated to stress on local resources; and 3) is sustainable throughout the value chain of an industry or a business. Moreover, Green investments should not contribute to a long-term lock-in of high carbon infrastructure. FMO’s Green criteria, eligible investments and internal Green label process are further described in our Green Methodology available on FMO’s public website.


The majority of our Green-labelled investments flow towards renewable energy projects (wind, solar, hydro), agriculture and so-called Green credit lines. In the first half of 2020, FMO invested a total of €151 million in Green projects (H1 2019: €323 million) of which €108 million was on FMO’s own books, €39 million was managed on behalf of the Dutch government and €4 million was from mobilized funds. This represents a 53% decrease compared to the same period last year, caused by fewer Green transactions in the Energy and Financial Institutions sector and an increase in the number of Private Equity fund investments, which only qualify for a Green label if more than 50% of the expected pipeline or portfolio volume of the fund support activities that fall within FMO's Green definition. Nevertheless, the total committed portfolio that was labelled Green increased from approximately €3.8 to €4 billion in the same period, representing a 32% share of the total committed portfolio. This increase is explained by the new investments that were achieved at the end of 2019.

ESG Performance

FMO monitors all customers with high or medium ESG risks against internationally accepted ESG standards and in line with contractual agreements. We support our customers in managing the environmental, social and corporate governance risks and impacts of their business ventures. We step up our engagement when ESG issues arise or a customer’s ESG performance is below standard.

Description and methodology

The ESG target and results cover all customers with a high or medium ESG risk profile. This includes customers with Environmental & Social (E&S) risk categories A or B+ or those supported by a corporate governance officer. In the first half of 2020, this translated to 303 customers. FMO identifies and rates performance on ESG risks that apply to each customer at the start and during the relationship. FMO includes ESG requirements and conditions in all its contractual agreements with its customers. These requirements are based on local laws, the IFC Performance Standards, the World Bank Group Environmental, Health & Safety Guidelines and the G20/OECD Principles of Corporate Governance. Each customer’s ESG performance is re-evaluated as part of FMO’s annual Client Credit Review cycle. We expect 90% of their high and medium ESG risks to be managed in line with international standards, or with a clear strategy in place for meeting them.


In the first half of 2020, we completed annual reviews for 124 customers. Following these reviews, 97% of all high and medium ESG risks in our portfolio appear to be managed in line with, or with a clear strategy towards, meeting international standards. The remaining 3% of risks will be addressed with each customer. FMO has an appetite for managed risk in our portfolio. In case of gaps in ESG risk management, FMO works with its customers to develop and implement an Action Plan to avoid adverse ESG impacts and/or to improve ESG risk management over time.

Later this year we will migrate to a new system and methodology to assess customer ESG performance. To enhance the granularity of our assessments we have redefined the risks under each Performance Standard and introduced five different performance levels, replacing the previous three. In the interest of continuity with respect to ESG performance reporting, the current assessments will be translated to the new methodology. The ESG performance results, based on the new methodology, as well as an update on the known E&S issues in our portfolio will be included in the next Annual Report.

  • 1 United Nations (2015). Addis Ababa Action Agenda of the Third International Conference on Financing for Development. The Addis Ababa Action Agenda – endorsed by the United Nations General Assembly in July 2015 – provides a global framework for financing sustainable development by aligning all financing flows and policies with economic, social and environmental priorities.
  • 2 United Nations. Goal 10: Reduce Inequality within and among countries.
  • 3 United Nations. Goal 13: Take urgent action to combat climate change and its impacts.