Higher impact portfolio

COVID-19 has slowed progress towards the Sustainable Development Goals. The deceleration in economic activity has caused per capita income to decrease in more than 90 percent of emerging markets and developing economies. The World Bank estimates that more than 100 million people have been pushed into extreme poverty since the start of the pandemic.^[1] We will strive to further anchor our contribution to the SDGs in our new 2030 strategy that we will start to develop in 2021.

Knowing what we know now and keeping in mind the uncertain outlook ahead, we have lowered our 2021 impact ambitions compared to those set for 2020. For 2021, we decreased our portfolio target for FMO to €8.8 billion by year end, significantly below our 2020 target of €9.8 billion that was set before the pandemic. This is the result of lowering the target for FMO new investments from €2.2 billion in 2020 to €1.6 billion in 2021 as well as lower realized new investments at the end of 2020.

We are, however, resolved to continue to reduce inequalities within and between countries through our investments (SDG 10). In 2021, we aim to make €596 million in new Reducing Inequality-labelled new investments and plan to increase the share of the RI-labelled committed portfolio to 31% (or €4 billion). Moreover, as the crisis has unevenly affected women^[2], we will continue our efforts in gender financing to better support women’s economic empowerment.

We continue to contribute to SDG 13 by aligning our portfolio with a 1.5° pathway, reducing our portfolio emissions and building a portfolio of investments to deliver innovative solutions to clean energy and negative emissions. We plan to invest €592 million in green projects and project that 34% of our committed portfolio will be labelled green by year end. We plan to realize this by investing in forestry and other climate mitigation projects through, for instance, the Mobilizing Finance for Forests (MFF) Program that FMO manages on behalf of the UK government.

With the rollout of our new Sustainability Information System, in 2021, we will be better positioned to track the impact of our investments and monitor our customers’ ESG improvements. Despite ongoing challenges to our day-to-day investment processes in the beginning of 2021, we aim to ensure more than 90% of ESG risks are managed at an adequate level.

1 World Bank Group (2021). Global Economic Prospects.
2 UN Women (2020). Explainer: How COVID-19 impacts women and girls.