Our strategy
At FMO, we believe in a world in which, by 2050, more than 9 billion people live well and within planetary boundaries. This is the future we are working towards. This is the world we want to help make a reality.
Our efforts are guided by the three Sustainable Development Goals (SDGs) where our financing of the private sector can have the greatest impact in emerging markets: Decent Work & Economic Growth (SDG 8), Reduced Inequalities (SDG 10) and Climate Action (SDG 13). However, progress towards achieving the SDGs is lagging worldwide: inequality is on the rise while the climate crisis continues to unfold. To counter these trends, we will be working closely with our partners to maximize our impact.
We have set clear impact ambitions for 2030 to focus our organization’s efforts. By then, our goal is to achieve 10 meaningful innovations and build an investment portfolio of at least €10 billion in SDG 10 and €10 billion in SDG 13. We also aim to double our public and mobilized portfolios. Acting as a change agent on ESG issues, we will create value with our customers and together drive impact in the societies and communities where they operate. The 2030 Strategy Pioneer-Develop-Scale visual provides an overview of our key ambitions for 2030.
Pioneer-Develop-Scale
To achieve these ambitions, we ‘pioneer, develop, scale’ across our key sectors: (i) Agribusiness, Food & Water, (ii) Energy and (iii) Financial Institutions. By focusing on these sectors our portfolio contributes to food security, access to renewable energy and a healthy financial sector, all key enablers of inclusive and sustainable development.
Agribusiness, Food & Water - Accelerating sustainable and resilient agricultural supply chains to increase food security
More than 800 million people worldwide face severe food insecurity, and an even greater number lack access to nutritious foods. In Africa, population growth, rising incomes, and urbanization are driving food imports to unsustainable levels, exceeding US$60 billion per year. This undermines local economies and harms farmers. Improving access to food is crucial for reducing inequality, requiring higher economic development in rural areas and greater investments across agricultural supply chains. At the same time, transforming the agricultural sector is critical, as it plays a dual role—both contributing to rising GHG emissions and being heavily impacted by climate change. We address these challenges by supporting sustainable practices throughout the agricultural and food supply chain. We also work to enable local supply chains to increase production and improve access to local food, while reducing food waste and reliance on imports. Moreover, we want to grow the number and quality of jobs supported, focusing on decent work and the inclusion of smallholders and women in supply chains.
These challenges also present opportunities for food and agribusiness companies that can navigate increasing climate risk and supply chain volatility, and acquire the know-how to deal with weak enabling environments, poor infrastructure, limited access to finance, and social and political instability. Besides meeting increased local food needs, a global demand for commodities such as pulses, cocoa, coffee, cashews, avocados and tropical fruits offer opportunities for farmers, processors and exporters in developing countries.
We invest in integrated supply chain managers, input providers (e.g. fertilizers, seeds) and food companies to increase sustainable practices along (international) agricultural supply chains. We also continue to expand our integral landscape approach to sustainable land use, and ecosystem protection and restoration. We do this through our work in forestry, climate-smart and regenerative agriculture, and soil improvements. By 2030, we plan to have increased our engagement with customers, helping them improve the resilience of their supply chains and align with the Paris Agreement goals.
Energy - Driving and supporting sustainable energy access and transition
Limited access to clean, reliable and affordable energy is a key impediment to economic growth and human development. While progress has been made—91 percent of the world’s population now has access to energy compared to 78 percent in 2000—we continue to see stark regional disparities.
Of the people in the world without access to energy, 75 percent live in Africa.16 Transitioning to clean energy is also essential for reducing global CO2 emissions and achieving internationally-agreed climate targets. Investments in renewable energy solutions must increase in emerging and developing markets to meet their growing energy demand and decouple economic growth from rising emissions.17
We want to support a low-emissions future in emerging and developing markets by investing in utility-scale clean energy generation projects, including solar, on- and offshore wind, hydropower and geothermal installations. We will phase out fossil fuels from our portfolio, in line with our Combined Position Statement on Fossil Fuels. By 2030, we aim to have reduced absolute GHG emissions financed in our power generation portfolio by 50 percent. To ensure power grids can accommodate the growth of clean energy, we invest in transmission and distribution infrastructure, as well as storage solutions. We are also exploring the potential of new technologies, including green hydrogen. Additionally, we finance distributed energy solutions, including commercial and industrial (C&I) solar projects and decentralized grids that provide clean, reliable electricity to businesses and communities, bringing energy supply closer to end-users.
We are also expanding cautiously into new energy-related sectors. For example, we are investing in e-mobility to accelerate the decarbonization of road transport. We are also pursuing opportunities in water desalination (a highly energy-intensive process) by investing in desalination plants that use more energy-efficient technologies and are partially powered by renewable energy.
With renewable energy investments heavily skewed to the more advanced economies, we aim to reduce disparities in access to clean energy by expanding our portfolio in LDCs and fragile states. We do so not only through our investments in renewable energy projects but also through our market creation activities. Finally, we aim to reach underserved rural areas and the bottom 40 percent of income distribution by investing in mini-grids and rooftop solar installation, mainly through the public funds under our management.
Financial Institutions - Creating inclusive, resilient and sustainable financial sectors
A healthy financial sector and access to finance are cornerstones of a strong economy and a private sector that can foster entrepreneurship, stimulate economic growth and create jobs. Despite their critical role in the economic development of emerging markets by contributing heavily to employment and GDP, MSMEs face a significant lack of access to finance. The International Finance Corporation (IFC) estimated the MSME financing gap equals roughly US$5 billion or 19 percent of developing countries' GDP.18 Through our investments in financial intermediaries, we facilitate MSMEs to gain access to capital, support business growth, and channel finance to businesses and end-beneficiaries that we cannot directly finance efficiently. At the same time, by strengthening (the capacity of) financial institutions in these markets, we contribute to improving the environmental, social and ethical performance of our markets and the various institutions involved.
Through our work with financial institutions, including increasingly sharing in our customers’ credit risk exposure, we help reduce inequalities. We achieve this by increasing access to finance for inclusive businesses and individuals within the bottom 40 percent of the income distribution, as well as previously underserved groups. This includes MSMEs, women, young people and rural entrepreneurs. In addition, we invest in the nascent financial markets of LDCs and fragile states.
Finally, we provide finance to financial institutions targeting climate mitigation, climate adaptation and resilience, biodiversity, and other environmental footprint reductions. We are increasingly engaging with Financial Institutions’ customers to help them build their climate strategies and capacity, and decarbonize their portfolios. Our focus extends to supporting fintechs, facilitating customers’ digitalization, and helping (SME) banks and non-bank financial institutions develop green propositions. We also (aim) to cater to large financial institutions by buying and facilitating the issuing of green bond financing, expanding existing investable assets, and helping our customers develop climate governance and climate risk frameworks.