Core focus SDGs

SDG 8 | Decent Work and Economic Growth

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 investment volume

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.

Description and methodology

Our contribution towards 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 the guarantees received from third parties. For equity, it includes the current exposure plus the remaining commitment reserved for all previously made investments. For guarantees it includes the limit amount reduced by the guarantees received from third parties. New investments refer to the volume of new commitments made to customers in 2020. This includes 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 that are under FMO’s management or through funds that have been mobilized from third party participants. This includes all loans, equity investments, guarantees and mezzanine products but excludes grants.


In 2020, our total committed portfolio in developing and emerging markets amounted to €12 billion of which €8.2 billion was on FMO’s own books (2019: €9.1 billion), €1.1 billion was through public funds (2019: €1.2 billion) and €2.7 billion through mobilized funds (2019: €3 billion). FMO’s committed portfolio decreased by 10%. This is short of our target of €8.9 billion and is explained by the direct and indirect impact of the pandemic and subsequent economic climate in our markets. Key drivers were the depreciation of the US dollar against the euro, affecting three-quarters of our portfolio, lower valuation of our equity portfolio and fewer new investments. At the start of the pandemic, FMO decided to prioritize customer support by keeping a close ear to the ground and provide emergency lines and payment deferrals to customers. At the same time, FMO pursued business development opportunities with existing and select new customers that had further advanced through the investment process.

We were able to proceed with several exits of investees that had been in FMO’s equity portfolio for several years. Furthermore, we 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 investments are still monitored through our direct mobilized portfolio.

In 2020, we invested a total of €1.9 billion in developing and emerging markets of which €1.3 billion was on FMO’s own books (2019: €1.8 billion), €145 million through public funds (2019: €223 million) and €483 million through mobilized funds (2019: €722 million). In line with our strategy, 54% of new investments flowed towards Africa and Asia, while 26% of investments flowed towards countries in the European Neighborhood.

FMO started the year with a healthy pipeline but – like the rest of the world – was soon faced with the effects of the pandemic and resulting economic downturn. Particularly the Energy, Financial Institutions and Private Equity markets were affected. Travel restrictions and lockdowns, as well as internal capacity constraints due to KYC remediation later in the year, prevented FMO from carrying out its due diligence process and exploring new viable business opportunities in the conventional way. As a result, several deals were put on hold or took longer to materialize than normal. Deals that were closed in 2020 were mainly investments in existing customers with whom FMO has a well-established relationship, and in customers that had already advanced through FMO’s due diligence and KYC process.

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 promotors of private sector development, where job provision is a key focus. 

Description and methodology

Direct jobs are a common indicator for corporates and DFIs. It enables us to report on how our investments impact employment. Direct jobs refer to the number of full-time equivalent employees, as defined at a local level, working for the customer 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 – notably electricity and finance – remove constraints for other businesses, enabling them to expand and support and/or create jobs. In emerging markets, firm expansion is assumed not to displace employment in competing businesses to a significant extent.

In our 2020 interim report, we reported for the first time on jobs supported using the new Joint Impact Model (JIM), which was founded by FMO, AfDB, BIO, CDC, FinDev Canada and Proparco. Prior to that, we reported on this metric using FMO’s impact model that was introduced in 2015. Since early 2019, FMO and Steward Redqueen, together with other partners, have worked on the harmonization of the underlying methodology and the inputs required. Given the change in approach, we have published a separate article explaining the new methodology, the first insights and next steps. A full methodological description is available on our website.

An important methodological assumptions of this model, which fundamentally changes the result as compared to the previous model, is to run it at portfolio level (i.e. taking a snapshot of all customers of FMO at the time of reporting) instead of for new investments (i.e. new investments of FMO for a given year), which has been the methodology of the previous impact model. Another important assumption is reporting on actual results (ex-post) instead of forecasts (ex-ante). Our focus is on what is in our current portfolio; what has already been built, and who the investees of our funds are. This means we no longer estimate the expected effects in the future. For example, we no longer include estimations on power plants built in the future, or funds’ future expected impact. Another important assumption which changes the results fundamentally is the attribution we apply. At FMO we have always believed in taking the same share of financing (attribution) for positive (jobs supported) and negative (financed absolute GHG emissions) impacts. For this we are aligning with the PCAF methodology. For more information refer to the SDG 13 section of this chapter.

The JIM is based on data from the Global Trade Analysis Project (GTAP), the most widely used source for analyzing and modeling global economic issues. The reference years for the most recent GTAP 10 database are 2004, 2007, 2011 and 2014. This means, the JIM does not reflect the negative effects of the COVID-19 pandemic. Customer data may also not be fully up-to-date. At this stage of the pandemic, we do not yet know the actual effects it has had on the economy, productivity and how the interlinkages have changed between sectors. In the meantime, FMO has conducted a preliminary assessment of the effects of COVID-19 on the results of the JIM that is currently being finalized and undergoing peer review. Once finalized, we will share the results of this study on our website.


In 2020, FMO’s outstanding portfolio resulted in an estimated 427,000 jobs supported. 88% of jobs supported were from FMO’s own balance sheet, while 12% were from public funds. In relative terms, for the Agriculture, Food and Water portfolio this translates to 72 jobs per EUR million outstanding. This is split evenly between supply chain effects, where impact stems from sourcing goods and services from producers, and induced effects that stem from re-spending wages in the economy.

For the Energy portfolio, this translates to 50 jobs per EUR million outstanding. Here impact is mainly driven by power enabling effects, which attributes the number of jobs to 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.

For the Financial Institutions portfolio, this translates to 52 jobs per EUR million outstanding. FI impact is mainly driven by finance enabling effects. These are economy-wide jobs generated by lending to businesses and individuals. Direct employment is also an important category for FI as they are one of the biggest direct employers.

For the Private Equity portfolio, this translates to 67 jobs per EUR million outstanding and 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 PE engages in. For the first time the results also take into account PE investees themselves. However, the portion linked to FMO is very small as attribution is applied at the fund and investee level.

SDG 10 | Reduced Inequalities

Through our investments FMO aims to contribute towards the targets of SDG 10 – Reduced Inequalities (RI). Specifically, towards target 10.1 that aims to “progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average”; and towards target 10.B that aims to “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] Reducing inequalities is also connected to gender and equal opportunity for women and men.

According to the United Nations Development Programme (UNDP) the COVID-19 pandemic is “exposing the gaps between the haves and the have nots, both within and between countries”.[3] More than half of the world's population lacks access to essential healthcare and social protection. This is pushing over 100 million people into extreme poverty. Differences between countries are also apparent as fewer hospital beds, doctors and nurses are available in less developed countries and lockdowns – exacerbated by the digital divide – limit the ability to work, be educated and socialize.

RI-labelled investments

FMO labels investments to capture whether, and the extent to which they contribute towards reducing inequalities, between and within countries.

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 channeled towards LDCs – Low Income 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 2020, FMO invested a total of €745 million in reducing inequalities (2019: €784 million), representing 39% of FMO's total new investment volume (2019: 29%). Of this total, €387 million was invested from FMO’s own books, €93 million from funds managed on behalf of public entities (including the Dutch government) and €265 million from mobilized funds. €280 million was invested in companies and projects operating in LDCs, including Burkina Faso, Myanmar and Mozambique. €508 million was invested in inclusive businesses, focusing mostly on microfinance, women-owned SMEs and smallholder finance. Despite the COVID-19 crisis, FMO was able to close several large transactions targeting LDCs and inclusive businesses. We fell short of our target of €888 million as a result of the restrictions on our usual investment process. The depreciation of the US dollar and lower valuation of our equity portfolio have also had an effect on the total RI-labelled committed portfolio. This decreased from approximately €3.9 in 2019 to €3.8 billion in 2020, representing a 31% share of the total committed portfolio at the end of 2020.

As an example, in 2020, FMO provided a US$5 million loan to Vitas, a microfinance company that operates in the Palestinian Territories, where more than 50 percent of adults do not use banks or banking institutions. Vitas’ mission is to support economic activity and improve the income of unbanked people. The majority of their loans consist of an amount between US$1,000 and US$5,000, mostly to owners of market stalls. The collaboration with Vitas fits in with FMO’s strategy to increase its activities in the Middle East and North African region. The funding will be provided by the Dutch government’s MASSIF fund, which aims to take early investment risks and act as a catalyst for the growth for the private financial sector, while stimulating financial inclusion in developing countries.

Number of micro and SME loans

FMO invests in microfinance to increase access to finance and support growth of business among micro entrepreneurs. Poor households can use micro loans to raise and smooth household income thereby reducing their vulnerability to economic stress. The intended impact of increasing access to finance of SMEs is job creation, inclusive development and economic growth. FMO targets SMEs because they are financially underserved and typically provide more jobs than corporates relative to the capital invested. FMO specifically targets women-owned and youth-owned SMEs as part of the Reducing Inequalities label.

Description and methodology

The number of micro and SME loans represents the number of loans our customers have provided to micro and SME customers. In line with the IFC definition, microloans are those that have an original value up to US$10,000 remaining on the customer’s balance sheet at the end of the reporting period, whereas SME loans have an original value between US$10,000–1,000,000 remaining on the customers balance sheet at the end of the reporting period.

Both the number and volume of micro and SME loans are requested via templates from our customers. As for the other impact indicators, we include the latest available information in the results, meaning that in some cases only 2018 data is available.


The number of micro loans in outstanding loan portfolios of FMO customers was 22 million (2019: 22 million), similar to last year. Despite several micro finance institutions exiting the portfolio, there was a strong performance from current micro finance institutions and an increase in customers providing microloans. The number of SME loans in outstanding loan portfolios of FMO customers was 1.8 million (2019: 1.4 million). This is explained by an overall increase in the number of SME loans provided per financial institution in our portfolio. There were relatively small changes in the number of financial institutions with SME loans that exited and entered the portfolio.

In 2020, FMO financed several financial institutions with microfinance loan portfolios. For instance, FMO concluded a debt transaction of US$8 million with Cofina, one of the few home-grown microfinance groups in Africa. Its products and services are customized for micro-, small- and medium-sized businesses whose needs are too large for smaller microfinance institutions, and whose structure is too informal or risky for commercial banks. Thanks to its innovative business model of providing tailor-made financial products and services to this missing middle, Cofina experienced considerable growth in recent years. The majority of FMO’s funding, provided by the Dutch government’s MASSIF fund, will support on-lending to women- and youth-owned businesses in countries where nearly half the population still lives below the poverty line.

SDG 13 | Climate action

FMO aims to contribute towards the targets of SDG 13 – climate action. Specifically, towards target 13A: to implement the commitment undertaken by developed-country parties to 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.[4]

Green-labelled investments

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 with 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, meaning: the improvement goes beyond the local regulatory requirements, is unrelated to stress on local resources and is sustainable throughout the value chain of an industry or a business. Furthermore, 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 our website.


The majority of our Green-labelled new investments flow towards renewable energy projects (wind, solar, hydro), agriculture and Green credit lines. In 2020, FMO invested a total of €466 million in Green projects (2019: €861 million), representing 25% of FMO's total new investment volume (2019: 32%). Of this total, €354 million was invested from FMO’s own books, €81 million through public funds and €31 million from mobilized funds. This is short of our target of €1.1 billion. This is due to fewer investments in renewable energy, which during the pandemic have taken longer to materialize. Green investments in other sectors increased, including in sustainable agriculture, forestry and Green lines to financial institutions. The depreciation of the US dollar against the euro, lower valuation of our equity portfolio and fewer Green-labelled new investments have also had an effect on the total Green-labelled committed portfolio. This decreased from approximately €4.2 in 2019 to €3.9 billion in 2020, representing a 32% share of the total committed portfolio at the end of the year.

Nevertheless, there were still achievements to celebrate in 2020. For instance, FMO supported Ameriabank in successfully placing its first ever Green Bond in EUR for the equivalent of US$50 million. As the first ever Green Bond project in Armenia, this is a major milestone for the local financial market. The Green Bond is structured in accordance with internationally recognized ICMA Green Bond Principles (the GBP), and is issued in close cooperation with FMO, which is also the anchor investor in the transaction.

GHG emissions

Measuring and reporting the greenhouse gas (GHG) emissions linked to FMO’s activities and investments provides insights into our climate impact and how to steer on climate in the future.

Description and methodology

We focus on the following:

  • Absolute GHG emissions from FMO’s own operations: the emissions associated with heating and electricity used in our office buildings as well as personnel travel. These are naturally much smaller than our financed absolute emissions but show what steps we are taking to reduce our own direct footprint. 

  • Financed absolute GHG emissions: the emissions generated through our investments, for example the emissions of agricultural activities at a financed cattle farm. These emissions, which we are reporting for the first time in this annual report, give an understanding of our portfolio’s overall climate impact and the opportunity to reduce such emissions to align with a 1.5º pathway. 

  • Financed avoided GHG emissions: the emissions avoided through our investments, for example through the power production of a new solar park. These emissions quantify our contributions to climate change mitigation activities, which cannot be fully captured by absolute emissions. For example, a museum and a solar park might both have low absolute emissions, but the solar park additionally supports climate change mitigation by avoiding emissions of fossil fuel fired power plants.

We report on scopes 1, 2 and 3 in line with the GHG Protocol. Scope 1 relates to direct emissions resulting from the activities of an organization or under their control (e.g. from the use of gas by an office or gas burning of a power plant); scope 2 relates to indirect emissions from electricity used by an organization; scope 3 relates to all other indirect emissions related to, for instance, business travel or construction.


Absolute GHG emissions from FMO’s own operations

The carbon footprint of FMO's own operations amounted to 1,309 tCO2e (2019: 5,865 tCO2e). Scope 1 emissions amounted to 299 tCO2e, which came from cars leased for use by FMO employees. Scope 2 emissions amounted to 28 tCO2e connected to the use of heating that FMO obtains through district heating networks. Scope 2 emissions related to the use of electricity were equal to zero since FMO purchases electricity from renewable sources. Scope 3 emissions amounted to 982 tCO2e, which came mainly from staff travel. As we serve customers around the world, 72% of our own emissions resulted from air travel. The impact of COVID-19 led to reduced staff travel and office use, which has significantly lowered our carbon footprint compared to last year.[5] We made further progress to lower the emissions from our own operations through the renovation of our office in The Hague, which focused on renewable products and emissions reductions. FMO offsets the remaining emissions by investing in a VCS REDD+ certified[6] forest conservation project in Brazil.

Financed absolute GHG emissions

In 2018, FMO published a paper on an ‘Absolute GHG Accounting Approach for financed emissions’. FMO brought this thinking to the development of the first Global GHG Accounting and Reporting Standard for the Financial Industry that was launched in November 2020 by the Partnership for Carbon Accounting Financials. We believe this will become the authoritative standard for carbon accounting and reporting for financial institutions, which will enable FMO to comply with the commitments made to the Dutch Climate Accord, Dutch Carbon Pledge and the Taskforce on Climate-Related Financial Disclosures. 

FMO’s first-time disclosure on absolute emissions is in step with the Dutch Climate Agreement and follows the new PCAF Global Standard with a few exceptions that prevent us from fully aligning to the methodology. First, there are certain data gaps. For example, for the majority of our customers we do not yet collect emissions data and we have not implemented a separate data collection for total debt and total equity, which is necessary to implement the PCAF Global attribution rules. In addition, the PCAF Global Standard does not yet factor in investments in funds, nor loans to financial institutions (FI). As such, FMO has made assumptions to calculate emissions for the investees of funds and the borrowers of FI customers in its portfolio. Data improvements and methodological refinements will be made in the future, which will affect our emissions estimations in subsequent years. Likely these will result in increased emissions compared to current estimations.

We use the Joint Impact Model to calculate our absolute emissions. Therefore, the attribution (share of financing) methodology is aligned with our results for jobs. In 2021, we will work towards fully aligning the Joint Impact Model with the methodology of the new PCAF Global Standard, which will be another methodological factor that will affect our emissions estimates. In addition, the attribution factor we implemented for the Joint Impact Model still uses fair value estimations while the new PCAF Global Standard uses book values which will also be addressed next year. More information on the JIM methodology is available on our website. The emissions calculation follows a data hierarchy based on PCAF whereby emissions data coming directly from the customer is preferred. If customer data is unavailable, the JIM will estimate the emissions. 

In 2020, FMO’s outstanding portfolio resulted in an estimated 980,000 tCO2e (scope 1), 179,000 tCO2e (scope 2), and 1,776,000 tCO2e (scope 3) absolute GHG emissions. 93% of emissions were from FMO’s own balance sheet, while 7% were from public funds. In relative terms, for the Agriculture, Food and Water portfolio this translates to 628 GHG emissions per EUR million outstanding. A number of investments emit methane such as cattle raising or nitrous oxide through fertilizers used for growing crops. Manufacturing of other food products is also a large emitter due to the energy used in transport and processing. Scope 3 emissions included emissions from projects under construction. These were calculated based on the total project size, assuming that this is entirely converted into local expenditure in the construction sector that creates the emissions. Sequestration data from forestry projects has not been included.

For the Energy portfolio, this translates to 355 GHG emissions per EUR million outstanding. Most GHG emissions were caused by the generation of electricity from non-renewable energy sources and a wastewater project. This also included several legacy investments, such as freight transport, from the former Infrastructure, Manufacturing and Services Department. Also here, Scope 3 emissions include emissions from construction projects.

For the Financial Institutions sector, this translates to 406 GHG emissions per EUR million outstanding. Financial institutions and their operations have limited Scope 1 and Scope 2 emissions, as they mainly pertain to office buildings. FMO has not yet collected data on these emissions, but has the ambition to do so in the future. Regardless, most emissions stem from the financial institution’s portfolio coming from sectors such as energy, agriculture, manufacturing and transport, which are important for the banks we invest in. Emissions are calculated based on the portfolio of the entire bank. Specific use of funds is not yet taken into account due to a lack of data.

For the Private Equity portfolio, this translates to 368 GHG emissions per EUR million outstanding. The private equity portfolio consisted of direct equity holdings in companies and fund investments. PCAF provides no conclusive guidance on how to account for the emissions of fund’s investees. FMO has decided that fund’s investees should be included under scope 1, 2 and 3 separately. Similarly to FIs, most emissions come from energy, agriculture, manufacturing and transport.

Financed avoided GHG emissions

In 2020, FMO changed its methodology for avoided GHG emissions to align with the new PCAF Global Standard with a few exceptions similar to those described for financed absolute GHG emissions. As a new methodology has been used, with different underlying assumptions compared to our old methodology, we will not be able to present comparative figures. The most important differences are that we report on the actual instead of the expected avoided emissions and do so for the entire portfolio instead of new investments as done in previous years. Generally, moving to actuals will reduce, while moving to portfolio reporting will increase the number of avoided emissions. It is not possible to quantify the full impact of this switch to PCAF. The reported amount of avoided GHG emissions represents the current annual GHG avoidance by customers in FMO’s portfolio, attributed to the share of FMO’s net carrying value (loan or equity) in a customer’s assets.

Avoided emissions are the emissions that are avoided as a result of a project when compared to a baseline scenario established in accordance with the GHG Protocol. For example, this can be emissions avoided by additional renewable energy capacity that is assumed to replace future fossil fuel-based power plants, or emissions avoided through the protection of forests against illegal logging. GHG avoidance for renewable energy projects is calculated as the annual electricity production during the latest available reporting year, multiplied by the country emission factors in accordance with the IFI harmonized list of emission factors. We are aligning the applied emissions factors with the new PCAF Global Standard. The GHG avoidance for energy efficiency projects is the difference between the project GHG emissions and the most likely alternative (i.e. industry average GHG emission per kWh energy production).

In 2020, FMO’s current portfolio resulted in a yearly estimated 1,578,000 tCO2e avoided GHG emissions. Some 77,000 came from Agriculture, Food and Water, 781,000 from Energy, 23,000 from Financial Institutions, 640,000 from Private Equity and 57,000 from other sectors. 

  • 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 Development Programme (2020). Coronavirus vs. inequality – how we’ll pay vastly different costs for the COVID-19 pandemic.
  • 4 United Nations. Goal 13: Take urgent action to combat climate change and its impacts.
  • 5 The absolute GHG emissions from FMO’s own operations do not include any (additional) emissions as a result of employees working from home, such as (increased) electricity use and heating in home offices.
  • 6 VCS is the Verified Carbon Standard, a standard for certifying carbon emissions reductions. REDD+ refers to the focus on Reducing Emissions from Deforestation and forest Degradation, including sustainable management of forests.