Priorities in 2023
We will continue to fulfill our mandate as a DFI, investing countercyclically and taking risks that commercial parties are not (yet) willing to take. In line with our 2030 strategy, our ambition for 2023 is twofold:
We strive to grow our impactful business by focusing on deals that contribute to reducing inequalities (SDG 10) and climate action (SDG 13).
To deliver on our impact ambition we will further improve our capabilities, focusing in particular on efficiency, developing skill sets and impact management.
Despite the global uncertainties, we will continue to invest in our people, systems and processes to respond to the increasing complexity of our business in terms of regulatory requirements, stakeholder expectations and evolving impact management standards. This approach also reflects the long-term nature of our work and our purpose as a development finance institution. However, we expect that this will, in the short-term, lead to a further increase in our cost-to-income ratio and result in a lower return on equity. Factors expected to negatively influence our financial performance in 2023 are a) the increasing costs we incur due to necessary organizational adaptations in response to regulatory developments, b) the uncertain economic developments affecting in particular the fair value of our private equity portfolio, and c) the projected weakening of the US dollar in 2023. We will closely monitor our financial performance, allowing us to make budgetary adjustments if needed.
Growing impactful business
To achieve our 2030 ambitions, we need to step up our efforts, especially towards SDG 10 and 13. We have, therefore, set the following targets for 2023:
2030 Strategic ambition
RI-labelled total committed portfolio (€ mln)*
Green-labelled total committed portfolio (€ mln)*
Total committed portfolio (€ mln)*
Committed portfolio mobilized funds (€ mln)*
Committed portfolio public funds (€ mln)*
ESG risks managed at an adequate level (%)
- * Portfolio targets are the result of FMO's forecasting model and are strongly influenced by the EUR-USD exchange rate used by the model.
To bring us to an RI-labelled total committed portfolio of €4.9 billion and a Green-labelled total committed portfolio of €4.9 billion at the end of 2023, we aim to achieve €1,240 million in RI-labelled new investments and €1,405 million in Green-labelled new investments. To achieve our ambitions towards SDG 10, we will invest more in least developed countries and explore opportunities to do more in fragile states. In addition, we will invest in inclusive businesses that - among others - are focused on reaching the bottom 40 percent of income distribution and advancing gender equality.
To achieve our ambitions towards SDG 13, we will strengthen our climate action approach and invest more in Green projects. We will take concrete actions to implement our Climate Action Plan. In 2023, our focus will be on a) raising organizational awareness and increasing organizational capacities to integrate climate considerations into our business activities, b) increasing our support to customers by developing a climate adaptation and resilience approach, and c) further aligning our portfolio with the Paris agreement.
We will continue to use public funds to bear higher risks in projects with high development impact potential. In addition, we will commence our work on market creation to facilitate the development of unbankable opportunities into bankable projects, by further strengthening our support to business development and ecosystem development activities. Overall, we aim to achieve a total committed portfolio - combining investments made through FMO, public and mobilized funds - of €14 billion by the end of 2023.
Improving our capabilities
To help us grow our impactful business, we will invest in developing specific organizational capabilities. We have identified eight areas of focus for the coming years. In 2023, we will focus on a) improving efficiency, specifically with respect to our investment process, to enable us to scale up our investments and, thereby, our impact; b) growing the number of our employees and developing their skill sets to accommodate for changes in impact and ESG management and practices, regulations and stakeholder expectations as well as our strategic ambitions; and c) improving our impact measurement and management to help us maximize our impact.