Value creation

We distinguish between short term outputs, resulting directly from our activities, and the outcomes that we believe to result from those outputs. The long-term impact refers to the indirect results we believe our work will contribute to over time. We recognize that each stakeholder group has different expectations and a different interest in what we do as an organization, which will influence the (perceived) value we create for them.

For example, we adopt a balanced approach in our investments and risk-taking, allocating different sources of capital in accordance with our risk appetite. This generates financial returns and a diversified portfolio that allows us to maximize impact by growing our business, which serves the interests of our employees, investors and shareholders. Through our investments and partnerships, we create value for our customers and, indirectly, for the local communities, customers, and suppliers within their markets. It is through these activities that we contribute to long-term impact for all of our stakeholders. In addition, we create value for our employees by offering fair and equal pay, benefits and career development opportunities to ensure we attract, develop and retain skilled employees who are engaged and committed to FMO’s mission.

Creating long-term impact through working with our customers 

We aim to maximize our impact by leveraging the synergies and managing the potential trade-offs between the SDGs we focus on. We have translated this into three long-term development impacts in emerging markets and developing economies that we believe our activities contribute to. In addition, we aim to minimize the negative impacts that may occur as a result of our activities.

A more inclusive, resilient, responsible, and sustainable private sector | To contribute towards a more inclusive private sector, we invest in countries where other investors perceive risks as too high, including LDCs and fragile states. In addition, we encourage our FI customers to increase access to finance to marginalized groups, women in particular. By providing financial capital and expertise, we aim to support customer resilience during economic downturns as well as navigate the adverse impacts of climate change and other uncertainties. We enable our customers to be more responsible and sustainable by supporting the implementation of (improved) ESG risk identification and management and the adoption of responsible business practices within their operations. We believe these activities lead to more robust and resilient customer operations, which in turn enables them to attract additional (commercial) capital and further grow their businesses. Furthermore, we support business ideas that have not yet matured to a commercial phase and strengthen private sector ecosystems to develop more sustainable businesses and scale up impact.  

Improved livelihoods, including for the people in the bottom 40 percent of income distribution, increased gender equality, thereby reducing poverty | We focus on three areas to improve livelihoods of the people in our markets. First, we invest in increased access to goods and services – such as food, finance and electricity – and thereby in income-generating opportunities. Second, we support our customers in growing and/or sustaining the number of jobs in their own businesses as well as in the wider economy, and we encourage them to improve the quality and inclusiveness of those jobs. Third, by investing in climate adaptation and resilience, we aim to protect and strengthen livelihoods from the adverse impacts of climate change. We believe that our approach can be particularly beneficial to the most vulnerable groups such as women, people belonging to the bottom 40 percent of income distribution, and those living in countries that are characterized by a higher proportion of (extreme) poverty. 

A transition towards low-carbon and climate resilient economies in a just and inclusive way and protecting and promoting biodiversity | Climate change poses a threat to people’s livelihoods and to the wider efforts to meet the SDGs. For this reason, we aim to contribute to a just and inclusive transition towards low-carbon and climate resilient economies. We focus on green investments and help to reduce the environmental footprint of our customers and their value chains through energy solutions, forestry and customer engagement. In addition, we target investments on climate adaptation to support our customers to mitigate physical climate risk and to reduce the impact of climate change on their activities. Through our ESG activities, we work with our customers to improve risk management practices, recognizing the linkages between climate, environment, and social risks.  

Minimizing negative impact | We acknowledge that the projects in which we invest may have potential negative impacts on the environment or on people. For example, whilst a hydro power investment provides clean energy, supports economic growth and improves lives overall, it may require the resettlement of surrounding communities. The ESG standards we expect our customers to apply are intended to identify, evaluate and mitigate key environmental and social risks as well as the negative impact of their activities. Furthermore, we require certain customers to put in place a grievance mechanism and to respond to community concerns.