Report of the Supervisory Board

Letter from the Supervisory Board

In 2025, despite a challenging external environment, FMO made significant progress toward its impact ambitions for 2030. The organization continued to grow its new investments in 2025, achieving another record level and building on last year’s success. Also, both the Green-labeled investments and Reduced Inequalities-labeled investments grew compared to last year. This performance underscores FMO’s strong position in emerging markets, the resilience of its customers, and the growing demand for development finance, particularly as Official Development Assistance (ODA) budgets face reductions. Despite the negative effect of the euro/US dollar exchange rate (minus ~€180), the organization still made a net profit of €48 million in 2025. FMO continues to demonstrate that impact-driven investing in emerging economies, when combined with robust risk management, delivers sustainable returns.

Increase in regular income

The volatility of the exchange rates reinforces the Supervisory Board’s close monitoring of trends in FMO’s regular income relative to organizational expenditure. Thanks to the organization’s cost-consciousness and commitment to efficiency - both fully supported by the Supervisory Board - FMO has successfully kept expenditure growth under control. At the same time, higher investment activity over recent years has strengthened returns; since 2021, FMO has about doubled its new investment level, resulting in a steady increase in regular income. Nevertheless, the organization will need to remain vigilant on cost control in the coming years to offset anticipated increases in expenses, driven primarily by higher wage costs and the risk of further negative currency effects.

New appointments within the Management Board

One of the key priorities for the Supervisory Board in 2025 was to identify two candidates to restore the full composition of FMO’s Management Board. Fatoumata Bouaré was close to ending her second and final term on the Management Board as Chief Finance & Operations Officer and continued her career at the European Bank for Reconstruction and Development (EBRD). In addition, Peter Maila transitioned to Zvilo, a supply chain finance company headquartered in London, leaving a vacancy for the role of Co-Chief Investment Officer. The Supervisory Board is pleased that two successors have now been identified, including one from FMO’s own ranks. Starting May 1st, FMO’s current Director Financial Institutions Juan Jose Dada will assume the role of Co-Chief Investment Officer, working alongside Huib-Jan de Ruijter as fellow Co-CIO. For the position of Chief Finance & Operations Officer, Idil Kural will join FMO, bringing along over 25 years of financial leadership experience in the international banking sector. We are pleased that both individuals will enhance the diversity of the Management Board, bringing complementary expertise, varied backgrounds, and strong connections to FMO’s geographies. We warmly welcome Juan Jose and Idil to FMO and look forward to constructive dialogue and close cooperation in the years ahead. We also take this opportunity to thank Huib-Jan for taking on the responsibilities of both Co-Chief Investment Officer positions throughout the year, and David Wyatt for supporting the Management Board as Senior Director Finance & Operations.

Changes in the Supervisory Board

The Supervisory Board itself also experienced changes in 2025 and recently in 2026. During the Annual General Meeting (AGM) on 23 April 2025, Rob Becker was appointed Chair of the Supervisory Board, succeeding Dirk Jan van den Berg, who completed his second and final term. We extend our sincere gratitude to Dirk Jan for his steadfast leadership during complex times. He guided the organization through significant growth and helped define Strategy 2030, which we are confident will steer FMO successfully into the future. At the upcoming AGM in April, we will also say goodbye to Koos Timmermans, chair of the Audit and Risk Committee, who served on the Board for 8.5 years. We will miss Koos’ extensive knowledge of FMO, his collegial and constructive approach, as well as his remarkable ability to simplify complex issues. His successor will be introduced to the AGM also this April.

Private Equity

The Supervisory Board continued to keep a close eye on portfolio composition and valuation matters, particularly within FMO’s private equity portfolio, where fair value adjustments – also mostly due to FX fluctuations – introduce volatility. We are encouraged to see that the increased focus on exits is beginning to deliver first results, a positive development against the backdrop of the evolving Basel capital framework and its implications for equity exposures and market risk. Equity investments remain a vital impact instrument; as is often the case, without equity investors, debt investors do not follow. Effective deployment of equity capital is therefore essential to our impact, ensuring that these investments strengthen and complement FMO’s broader ecosystem.

Data governance

In 2025, the Supervisory Board devoted particular attention to data governance and cybersecurity. FMO strengthened its governance framework and implemented resilience testing alongside rigorous third‑party oversight. As part of this effort, FMO outsourced its data center, improving efficiency, scalability, and cyber resilience. FMO also showed material compliance with the European Digital Operational Resilience Act (DORA). The Supervisory Board is confident that FMO is aligned with evolving regulatory requirements and industry best practices, reinforcing operational resilience and safeguarding stakeholder trust.

Independent Complaints Mechanism (ICM) policy

Following the conclusion of the public consultation in November, the Supervisory Board’s Impact Committee is pleased with the outcome of the updated policy for the Independent Complaints Mechanism (ICM), which FMO shares with DEG and Proparco. The consultation process engaged a broad range of stakeholders, including civil society organizations, peer DFIs, accountability experts, and customers. This inclusive approach ensured that diverse perspectives were considered. The Supervisory Board views the updated policy as an important step in safeguarding FMO’s commitment to accountability and stakeholder engagement and expresses its appreciation to the ICM Panel for their time and efforts in reaching this new policy.

Market creation

The Impact Committee is also pleased to see the progress made in the innovative Market Creation initiative. With regard to Market Creation, FMO established a platform to channel donor capital toward market‑development activities in Least Developed Countries. This platform aims to remove barriers, build markets, and help companies reach a level at which they can be financed by FMO and other DFIs. Noteworthy is also the alignment of FMO’s portfolio with the 2050 net‑zero target of the Paris Agreement.

CSRD

On sustainability reporting, 2025 marked FMO’s second CSRD cycle. The Supervisory Board acknowledges the significant effort required to meet these evolving standards and emphasizes the importance of maintaining efficiency as the European sustainability reporting framework continues to mature.

Outlook

In 2026, the midterm review of the 2030 Strategy will be an important element. The impact of an increasingly volatile geopolitical environment – amplified by the escalating conflict in the Middle East – combined with high fluctuations in FX-rates, and the influence of AI, requires careful consideration. We need to maintain the balance between impact, risk and return. The shifts in global, European, and Dutch foreign aid and development budgets also highlight the importance of remaining sensitive to donor priorities. We are looking forward to being a sounding board for the Management Board during this process.

The Supervisory Board greatly values the constructive and transparent cooperation with the Management Board throughout 2025. This close collaboration has been essential in navigating a year of significant change while maintaining strategic focus and operational resilience. We also extend our gratitude to FMO staff for their hard work, professionalism, and ongoing dedication to FMO’s mission. Your commitment has enabled the organization to deliver impact and achieve strong results.