Sector focus SDGs
SDG 2 | Zero Hunger
By financing businesses across the entire agri-food chain we contribute to SDG 2, Zero Hunger. The world will need to increase agricultural production by 50% to meet the nutritional needs of a growing global population. FMO targets smallholder farmers because they meet more than 70% of the world's need for food but have a weak market position and limited means to invest in business improvements.
An estimated 480 million smallholder farmers around the world can help achieve SDG 2, especially as food market growth shifts to the emerging world. Smallholder farmers are (sub-)marginal farm producers that own and/or cultivate relatively small plots of land, have low access to technology, and have limited capital, skills, and risk management. They depend on family labor for most activities and have limited capacity for storage, marketing, and processing.
Number of smallholder farmers supported
We invest in companies that support smallholder farmers to improve their yields, and/or reduce environmental degradation, and/or improve social practices during the reporting period. In 2021, companies financed by FMO supported 3.6 million smallholder farmers (2020: 2.4 million). For example, FMO provided US$ 60 million in financing to Ecom Agroindustrial Corp. Ltd, global commodity trading and processing company focusing on coffee, cotton and cocoa in major producing and consuming countries. Ecom plays a crucial role in rural areas, especially with respect to inclusive economies and supporting smallholder farmers to produce more in a more sustainable manner.
SDG 5 | Gender Equality
FMO has had a gender strategy since 2017. We seek investments that encourage more women to participate in the economy, support female entrepreneurs, reach women as end-users of goods and services and include women in the labor market. We also aim to protect women’s rights, to understand the gender-specific impact of our investments and to ensure women and men enjoy equal economic opportunities.
We measure impact on SDG 5 in various ways. Firstly, we invest in companies that focus on women-owned MSMEs, women as consumers, and businesses that specifically include women in their value chain. This is covered by FMO’s RI label, explained previously. Secondly, we report on gender metrics aligned with the 2X Challenge. As of 2021, this is part of the 2X Collaborative, a newly established industry body that promotes gender lens investing. FMO identifies investments that can be eligible for the 2X Challenge by talking about gender early on in our collaboration with customers.
Gender financing for women-owned SMEs
In 2021, we invested €216 million in gender financing for women-owned or women-led SMEs (2020: €151 million). One of the supported projects was Fin’Elle, La Finance pour Elle in Ivory Coast, which encourages the financial and social emancipation of women entrepreneurs. FMO earmarked €3 million for MSME loans that create favorable conditions for women-owned businesses in agriculture.
At year end, a total of €83 million of new investments in the agribusiness, food & water, financial institutions, energy and PE sectors qualified for 2X. €43 million was on FMO’s own books, €13 million from public funds and €27 million from mobilized funds. This year, FMO has endorsed Sistema.bio, a company manufacturing biodigesters for smallholder farmers in Kenya. Biodigesters extract the methane gas from cow manure, providing a cleaner source of energy for cooking and lighting than kerosene or fuelwood, while reducing the burden of collecting fuelwood, which often falls to women. Additionally, over 40% of the women working at Sistema.bio are in senior management.
SDG 7 | Affordable and Clean Energy
Access to energy is not a given in many developing countries. The energy supply in developing countries can be unstable and the energy production is often polluting. SDG 7 aims for access to sustainable, reliable and affordable energy for all, which will improve the quality of life and enable sustainable economic development.
FMO invests in the generation of solar, wind and hydro power in developing countries that, combined with investments in power distribution, improves access to energy. By financing off-grid power solutions, FMO supports access to a more stable energy supply for rural populations. In low-income countries 41% of the population has access to electricity compared to 28% of the rural population.
Energy production and equivalent number of people served
In 2021, the companies in FMO’s energy portfolio produced 48,000 GWh per year (2020: 50,000 GWh per Year), of which 61% was generated from renewable energy sources. Approximately 19% came from solar, 22% from wind, 17% from hydro and 3% from other renewable energy sources. The remaining 39% came from non-renewable sources, mostly related to natural gas. While most companies ramped up their energy production, the decrease is due to several customers exiting the portfolio. This served an equivalent of 83 million people (2020: 96 million).
- 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 This is an alternative performance measure (APM) that is not included in the financial statements and is designed for steering purposes. For a definition of this APM, please refer to the chapter ‘How we report’.
- 3 The underlying input-output tables are heterogeneous in sources, methodology, base years, and sectoral detail. Thus for achieving consistency, substantial efforts are made to make the disparate sources comparable.
- 4 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.
- 5 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.
- 6 https://www.fao.org/news/story/en/item/1395127/icode/
- 7 World Bank (2019). Working with smallholders – A handbook for firms building sustainable supply chains.
- 8 Definition according to UN Food and Agriculture Organization (FAO).
- 9 World Bank Development Indicator Database.
- 10 2020 comparable figure has been restated in 2021 from 81 million to 96 million.