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

FMO aims to have a balanced composition of the Supervisory Board and Management Board in terms of gender, experience, age, professional background and nationality. At the end of 2023, the Supervisory Board comprised three male and two female members. There was one vacancy. The Management Board comprised two female and three male members. Further personal details on the members of the Supervisory Board are included at the end of this chapter.

Permanent education

This year, three Supervisory Board members took part in a lifelong learning journey to Zambia. The program included an update on the macroeconomic circumstances by a representative of the IMF, networking events with several business communities, visiting a variety of customers in the agriculture and financial sectors and their end-customers, a meeting with the WWF, and meetings with several ministers and government representatives. The other two members received regular updates.

Moreover, the Supervisory Board continued its more regular lifelong learning program focused on aspects required by for instance the Dutch Banking Code and other relevant topics. This included the Independent Complaint Mechanism and several of its cases, market creation, FMO’s internal control framework, the values in action project, and the complexities of the KYC process.

Evaluation

The Management Board functions in its five-member composition since December 2022. The Management Board took efforts to regularly discuss its performance and collaboration throughout the year 2023. Subsequently, the Management Board prepared a self-assessment and a team assessment of its functioning in 2023. This consisted amongst others of the achievement of the financial and non-financial targets, as well as areas of personal development. Non-financial targets included, for example, impact related targets and efforts that strengthen the foundation of FMO’s operations. The Supervisory Board evaluated the individual Management Board members by means of separate interviews that were conducted by two Supervisory Board members. During those meetings, the self-assessments and the 2023 and 2024 objectives and targets were discussed, as well as the collaboration within the relatively new Management Board setting. The conclusions from these meetings will be carried forward into the 2024 team and personal goals. The Supervisory Board discussed the outcomes of the evaluation in a concluding session without the Management Board present. It was concluded that the MB functioned effectively. However, there is always room for improvement, which is being worked on in a senior leadership development program called “leadership impact” and also regularly at MB off-sites. 

Regarding the evaluation of the Supervisory Board, the Banking Code requires an external evaluator to conduct such an evaluation once every three years. This was done over the year 2021. The Supervisory Board evaluated its functioning in 2023 by means of a self-assessment questionnaire and discussed the outcome, and a few additional reflections and observations, in a separate session. The functioning of the Supervisory Board, its three committees and the functioning of the individual members were part of the evaluation. It was found that the Supervisory Board and its committees functioned effectively. The members invest extra time when the agendas require this. The individual Supervisory Board members have a diverse set of skills, which is deemed beneficial for adequate supervision. The Supervisory Board has taken broad and extensive on the ground experience into account as much as possible when nominating a new member to fill the current vacancy.

Regarding the execution of the Strategy 2030, the Supervisory Board expressed a need for a continued focus on the longer-term strategic challenges of FMO. Therefore, the Supervisory Board will amongst others continue to monitor the financial results and the pace of hiring of staff during 2024, and monitor progress more in general. Regarding the operations of FMO, the Supervisory Board will pay attention to efficiency and the digitalization process of FMO. Regarding the Supervisory Board’s own organization of work, the Supervisory Board wants to create more time to reflect on topics that are not on the agenda of meetings. The energy spent on permanent education will be invested in keeping the Supervisory Board’s understanding up to date regarding the developments in the complex environment in which FMO operates, and topics as required by the Banking Code.

Appointments and reappointments

The Selection, Appointment and Remuneration Committee (SARC) continued the search to fill the vacancy in the Supervisory Board. A candidate was selected and has been shared with DNB for approval.

Meetings of the Supervisory Board

The Supervisory Board held five regular meetings during 2023 and six extraordinary meetings. The Supervisory Board closely monitored progress on the 2023 Business Plan, including the pace of hiring staff. The Supervisory Board gave its approval – among others – to the Agreement with the State, the 2024 Business Plan and updated versions of the Risk Appetite Framework and Recovery Plan. Other topics that were discussed included quarterly reports on the integrated results, compliance and risk, the SREP letter of DNB, the DNB measures, progress on KYC files, the Supervisory Board’s own retirement schedule and succession planning, the remuneration policy for members of the Management Board, the developments of a few complex projects and the search for a new external auditor.

Committee activities

The Audit and Risk Committee (ARC) supervises and advises the Supervisory Board on FMO’s financial position and risk. 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 tasks is to monitor the performance of internal and external auditors. The ARC held three regular meetings in 2023. In 2023, the ARC discussed recurring matters such as yearly and half yearly reporting, the business plan for the upcoming year, the risk appetite report and framework, internal and external audit plans and reporting, capital and liquidity adequacy, the status of the KYC files, the recovery plan. In addition, the ARC dealt with the selection of a new external auditor, for the fiscal years 2025 and onwards. The following key audit matters were discussed with the external auditor in March 2024: IFRS 9 impairment of loans to the private sector, valuation of equity investments at fair value and reliability and continuity of the information technology and systems. 

An important task of the SARC is to advise the Supervisory Board on the proposals on the appointment and re-appointment of Supervisory Board and Management Board members. Other tasks include monitoring the remuneration policy, preparing proposed adjustments and giving advice on the remuneration of individual members of the Management Board. The SARC officially met two times in 2023 and deliberated on an ad hoc basis, and discussed, among others, the search for a new member of the Supervisory Board, the search for a new chair and further retirement planning, evaluation and goal setting, remuneration and HR topics such as the company values and quality of interaction.

The Impact Committee assists the Supervisory Board in overseeing the quality and integrity of FMO’s statements regarding development impact. The Committee prepares the decision-making (and the advice) of the Supervisory Board around FMO’s strategy (including policies and targets) regarding impact and ESG. The Impact Committee held three meetings in 2023. Throughout the year, it discussed amongst others, the 2022 Annual Report and 2023 Interim Report, impact focused strategy implementation, the (integrity of) carbon credits and markets, the market creation operational strategy, 2023 progress versus business plan, the Impact Management Framework review, the 2024 Business Plan, the periodic status update of the Independent Complaints Mechanism and updates on complex projects.

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 2023. FMO has specific regulations concerning private investments. Compliance by members of the Supervisory Board and Management Board and all other employees with FMO’s regulations on private investments is also addressed regularly.

Culture, including compliance

At FMO, the compliance function is safeguarded within the Management Board and the Supervisory Board. In 2023, the Supervisory Board continued to focus on the progress made on KYC reviews, KYC quality and improvement and efficiency of KYC procedures. The Supervisory Board received quarterly compliance updates during its meetings. In addition, the Chairman of the Supervisory Board met periodically with the Director Compliance to discuss relevant issues.

Furthermore, the Supervisory Board regularly interacted with the Works Council to discuss matters such as FMO’s culture and development program as well as its duties as outlined in the Banking Code relating to sound and ethical operation.