Corporate governance

The Supervisory Board ensures that FMO adheres to 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 2020, the Supervisory Board was comprised of three male and three female members. The Management Board consisted of two female and one male member. 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

In this difficult year, the Supervisory Board held its Lifelong Learning program in a simpler form and by means of virtual sessions. This included several subjects required by the Dutch Banking Code. The Supervisory Board focused on relevant topics such as various aspects of the portfolio pre and post-COVID-19, Compliance, topics related to the KYC remediation and FEC enhancement.

Evaluation

During the year several meetings between Supervisory Board and Management Board members took 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 2020. The Supervisory Board evaluated the individual Management Board members by means of separate interviews that were conducted by two SB members. During those meetings, the self-assessments and the 2020 and 2021 objectives and targets were discussed, as well as the collaboration within the current MB setting. The conclusions from these meetings will be carried forward into the 2021 team and personal goals. The Supervisory Board discussed the outcomes of the evaluation in a concluding 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. The Supervisory Board evaluated its functioning in the new setting in 2020 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 in its new setting. The composition of the Board was evaluated as sufficiently diverse and covering the range of expertise’s necessary for adequate supervision. However, also due to the events of last year, the SB expressed a need for a re-focus on the longer-term strategic challenges of FMO. Regarding the operations of FMO, the SB will more closely monitor the IT-policies of FMO, as well as the design and outcomes of its HR-function. Regarding the SB’s own organization of work, it wants to develop a better sense of the daily operations and the general work culture within FMO. The energy spent on permanent education will be invested in keeping our knowledge and understanding up to date regarding the complex environment in which FMO operates. Suggestions made by the members will be dealt with adequately.

Appointments and reappointments

At our first virtual Annual General Meeting of Shareholders, in April, two Supervisory Board members retired from their roles: Pier Vellinga (Chairman) and Alexandra Schaapveld. We thank them for their contribution during the past 12 and 8 years, respectively. At the same time, we welcomed three new members: Reintje van Haeringen, Marjolein Demmers and Dugald Agble. Reintje van Haeringen brings the required in depth experience with project activities in emerging countries, NGOs, Human Rights and the Sustainable Development Goals. Marjolein Demmers fulfills the corporate social responsibility and sustainability profile. And, Dugald Agble brings the required financial and economic expertise and experience in financial services-/(impact)investment or development finance. In addition, Dirk Jan van den Berg and Thessa Menssen were reappointed for another term of four years. Dirk Jan van den Berg and Koos Timmermans have assumed the roles of Chairman and Vice-Chairman, respectively.

Meetings of the Supervisory Board

During 2020, the Supervisory Board held five regular meetings. As of mid-June the Supervisory Board decided to meet on a weekly or bi-weekly basis when the Management Board went down to two members after the departure of the CEO. At that time, it was also clear that the pandemic was long-lasting and would have an impact on FMO’s customers and FMO’s own results that required close monitoring. Topics that were discussed included: the impact of COVID-19, the nomination of three new SB members and reappointments of two SB members, the departure of the former CEO and ad interim appointments to the Management Board, the Strategy 2021-2024, the KYC remediation and FEC enhancement, FMO’s participation in Invest International and the Business Plan 2021. Moreover, a Special Committee was installed, consisting of two SB members, which met biweekly with the MB in a more informal way, to provide support and advice whenever necessary.

Committee activities

The Audit and Risk Committee (ARC) supervises and advises on FMO’s financial position. It monitors and offers expertise on issues such as our risk management policy, internal and external auditing systems and compliance with legislation and external and internal regulations. One of its key tasks is to monitor the performance of external auditors. The ARC met three times in 2020. These meetings are attended by the ARC members, the CEO, the CRFO, the Director Finance, the Director Risk, the Director Internal Audit and the external auditor. In 2020, the ARC discussed, among others, yearly and half yearly reporting, risk appetite reports, the risk appetite framework, internal and external audit plans and reporting, capital and liquidity adequacy statements and the status of the Know Your Customer and FEC enhancement project. 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 new investments. The ARC requested more information on - among others - Non-Performing Loans due to the effects of the pandemic, a progress update on the integrated control framework and an update on the progress of the look-through approach.

The main task of the Selection, Appointment and Remuneration Committee is to advise on the proposals on the appointment and re-appointment of Supervisory and Management Board members. Other tasks include monitoring the remuneration policy, preparing proposed adjustments and giving advice on the remuneration of individual Management Board members. The Selection, Appointment and Remuneration Committee met three times. In 2020, it discussed, among others, the nomination of three new Supervisory Board members, the profile of and the search for the new CEO and the interim appointments of the CEO ad interim and the CIO ad interim. 

The Impact Committee assists the Supervisory Board in overseeing the quality and integrity of FMO’s statements regarding development Impact. The Impact Committee, among others, prepares the decision-making (and or the advice) of the Supervisory Board around FMO’s strategy (including policies and targets) around Impact and ESG. The Impact Committee was established in 2019 and held four meetings in 2020. Throughout the year, it discussed current impact and ESG policies, impact and ESG targets and steering, harmonization of development impact measurement methodologies, the external evaluation of FMO and met with the three panel members of the Independent Complaints Mechanism to discuss complaints and recommendations. The Impact Committee requested, among others, documentation on the outcome of the policy meetings FMO had with the Ministry of Foreign Affairs in relation to the strategic discussions on impact and fragile states. Furthermore, it held a specific meeting to pre-discuss the 2021-2024 Strategy from an impact and ESG perspective.

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 2020. 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 2020, the Supervisory Board put even 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.

The Supervisory Board encouraged free exchange of views through holding Open Dialogue Sessions with FMO staff during the second half of the year. In principle, two Supervisory Board members took part in each session. The Supervisory Board discussed grievances procedures and had these amended where necessary. The Supervisory Board regularly interacts with the Works Council.