ESRS 2 General Information

ESRS 2 Introduction

The EU Corporate Sustainability Reporting Directive (CSRD) was adopted by the European Commission (EC) in 2023, but has not yet been transposed into Dutch law. The CSRD revises and extends the requirements of the current EU Non-Financial Reporting Directive (NFRD). As a large public interest entity, FMO is in scope of the NFRD and is, therefore, among the first group of companies required to implement the CSRD. FMO adheres to the requirements of the CSRD in anticipation of its upcoming transposition into Dutch law. By implementing the CSRD, FMO covers all aspects required by the NFRD that is still applicable to FMO under the current situation. Companies subject to the CSRD have to report according to the European Sustainability Reporting Standards (ESRS). This is the first year that FMO is publishing a report that is in accordance with the ESRS.

Sustainability is core to FMO’s business model and strategy, and as such, sustainability reporting has been an integral part of FMO’s Integrated Annual Report for over two decades. From the financial year 2024 onwards, FMO will be reporting on its sustainability-related matters under the umbrella of the ESRS, repurposing the information that has been reported previously under other global sustainability reporting frameworks and principles – including the Taskforce on Climate-related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI) and the Integrated Reporting framework – most of which have been integrated within the ESRS.

In its Integrated Annual Report, FMO continues to disclose information in line with other regulation such as the Dutch Corporate Governance Code and the EU Taxonomy. As the EU Taxonomy regulation is not yet fully rolled out, FMO will implement the changes incrementally, as they become applicable. Based on the current guidance provided by the EC, there are no additional reporting requirements for 2024 that FMO is required to implement apart from the inclusion of 2023 comparative figures in the templates. For more information, refer to the 'EU Taxonomy' disclosure in this 'Sustainability statement'. 

Our sustainability reporting approach

In 2021, FMO launched the EU Sustainable Finance project in response to the EU Sustainable Finance Action Plan, which is made up of seven workstreams including the EU Taxonomy regulation, the CSRD and climate-related & environmental risk. The publication of FMO’s first report in accordance with the ESRS marks a key milestone.

Despite FMO’s experience and recognition in the field of sustainability reporting, it has required extensive time, effort and resources from the organization to implement this new regulation. For the first year, we have focused on remaining compliant with applicable regulation, using – where possible – the phase-ins and other transitional provisions included in the ESRS to reduce the burden on the organization and our customers.25 While we continue to monitor regulatory developments and implement reporting requirements in line with the CSRD and other applicable regulation and obtain lessons learned along the way, in the coming years, we will revise the structure and content as well as improve the report's conciseness.

The 'Sustainability statement' consists of four sections:

1. General information ('ESRS 2 General information')

2. Environmental information ('E1 Climate change', 'EU Taxonomy', 'E3 Water and marine resources', 'E4 Biodiversity and ecosystems')

3. Social information ('S1 Own workforce', 'S2 Workers in the value chain', 'S3 Affected communities', 'S4 Consumers and end-users')

4. Governance information ('G1 – Business conduct')

The double materiality assessment – explained in 'ESRS 2 Double materiality assessment' – has determined the topic-specific ESRS standards as well as the underlying disclosure requirements that are material for FMO to report on. Each section in this 'Sustainability statement' covers detailed information on FMO’s material sustainability-related matters including the relevant policies, actions, targets and metrics FMO has put in place to manage on these matters.

Actions and resources

Because FMO’s mission is to enable entrepreneurs to increase inclusive and sustainable prosperity, FMO manages sustainability-related impacts, risks and opportunities (IRO) as an integral part of its core activities and functions. There are dedicated departments and teams that focus specifically on sustainability to maximize positive impact and minimize negative impact. The so-called OpEx to manage sustainability-related matters includes the expenditures of these departments and teams. It is not possible, nor reasonable for an organization with a mission like FMO, to separate out the OpEx per material sustainability-related matter or IRO. 

As this is the first year we report within the structure of the ESRS, we do not report progress on our sustainability-related actions from prior years. Overall, our actions are focused on growing the investment portfolio towards our SDG 10 and SDG 13 strategic objectives. In addition, we continue to take action to enhance customer environmental, social and governance (ESG) management processes and address gaps by agreeing environmental and social action plans (ESAPs) and corporate governance action plans (CGAPs). Progress on these customer-related action plans is part of our ESG target performance.

Incorporation by reference

To avoid duplication of information, FMO has chosen to disclose certain sustainability-related information that is required under the ESRS, but which is also critical to our strategy or corporate governance, in other parts of the 2024 Integrated Annual Report. The following chapters and sub-chapters in this Integrated Annual Report are referenced throughout in the 'Sustainability statement':

1. At a glance

2. Report of the Management Board
      a. Performance against our strategy
      b. Corporate governance

3. Report of the Supervisory Board

4. Risk management

5. Consolidated financial statements

The chapter ‘At a glance’ contains a snapshot of FMO as an organization and of its annual results. The Report of the Management Board consists of several sub-chapters that are referenced in the 'Sustainability statement'. The sub-chapter ‘Performance against our strategy’ contains detailed information on FMO’s annual results, including those related to the sustainability matters covered by the 'Sustainability statement'. The sub-chapter ‘Corporate governance’ and the chapter ‘Report of the Supervisory Board’ contain information on FMO’s overall governance structure and processes as well as the role of the Management Board and Supervisory Board in monitoring, managing and overseeing sustainability-related matters that are material to FMO. The chapter ‘Risk management’ contains information on FMO’s overall risk management approach, governance and internal control system. The chapter ‘Consolidated financial statements’ contain disclosures regarding the basis for preparation that are similar to the financial information as well as the financial effects of sustainability matters on the financial statements.

The information that has been incorporated by reference is produced using the same basis for preparation of ESRS information, including scope of consolidation and treatment of value chain information.

For a detailed overview of the ESRS disclosure requirements that are material for FMO as well as the (sub)chapters and sections in which these are addressed and disclosures for which we have applied applicable phase-in provisions, refer to the 'Reference tables - List of material ESRS disclosure requirements'.