ESRS 2 Basis for preparation

Reporting frameworks

The sustainability statement is prepared on a consolidated basis. The Commission Delegated Regulation (EU) 2023/2772 comprising the ESRS forms the basis of our 2025 sustainability statement preparation. In addition, we have applied the Partnership for Carbon Accounting Financials (PCAF) Standard to report on financed greenhouse gas (GHG) emissions. No other reporting standards have been used.

Consolidation

The scope of consolidation for the sustainability statement is equal to the scope of consolidation for the financial statements. For additional details on the accounting of FMO’s subsidiaries, joint ventures, associates, and programs, please refer to section ‘Group accounting and consolidation’ in the 'Consolidated financial statements' chapter.

FMO also receives funding from the Dutch government for MASSIF, Building Prospects and Access to Energy Fund. Furthermore, FMO receives funding for the Mobilising Finance for Forests (MFF) from the UK government. These programs are reported from a value chain perspective, as explained in the following section.

Scope

Our 'Sustainability statement' covers FMO’s value chain, including FMO’s own operations as well as specific upstream and downstream activities. An overview of FMO’s value chain has been included in the section 'ESRS 2 - Strategy, business model and value chain'.

The double materiality assessment considered FMO’s own operations, FMO’s upstream value chain, including key suppliers and the attraction of third-party capital, and our downstream value chain with respect to customers we invest in across our three core strategic sectors.

As a development finance institution (DFI), the majority of our material impacts, risks and opportunities occur through our financing and engagement with our customers (i.e., our investment portfolio) in the downstream value chain that operate within FMO’s strategic sectors.

In our sustainability reporting, where relevant, we distinguish between three business lines: FMO’s own balance sheet, funds made available by public entities ('public funds') and funds made available by other third parties ('direct mobilized funds'). The following metrics relate to the downstream value chain and are disaggregated according to the proportional share of funding provided by each business line: RI (reducing inequalities)-labelled total new investments, Green-labelled total new investments, number of jobs supported, total gross indirect (scope 3, category 15) GHG emissions, and financed avoided GHG emissions.

Where FMO has identified a material impact, risk or opportunity in its value chain, we report on value chain information or data. If there is no value chain data available, we use estimates. The methodology used to calculate metrics, including where estimations or calculations are performed, is noted alongside the disclosure. The table included in the section 'Value chain estimation and sources of estimation (degree of reliability)' summarizes the metrics for which estimates were used.

FMO has not used the option to omit specific information corresponding to, for instance, intellectual property, know-how, or the results of innovation.

Time horizons

Short, medium, and long-term time horizons are defined in line with the ESRS definitions. When applicable, deviations from these time horizons are clarified within the respective disclosures. Other time horizons were considered in FMO's climate risk assessment as further explained in 'E1 - Impacts, risks and opportunities'.

Value chain estimation and sources of estimation

For reported metrics where (value chain) estimates are used and which are subject to a certain level of measurement uncertainty, please refer to the following table.

This table includes the following guidance for measurement uncertainty:

Low: The reported metric is fully based on primary metric data (e.g. primary metric data for financed emissions is emissions data reported by customers).
Medium: The majority of the reported metric is based on primary metric data. The other part of the metric is estimated, for example using activity data (e.g. revenues, power production).
High: The majority of the reported metric is estimated, for example using activity data (e.g. revenues, power production).

Table 1. Metrics and data subject to measurement uncertainty

ESRS topic	Metrics	Methodology used including (value chain) estimations	Measurement uncertainty	Actions to improve data quality
Climate change (E1)	Gross scope 1 and 2 emissions, scope 2, scope 3 category 6 and category 7 GHG emissions	The emissions are calculated based on measured data collected internally, such as information on commuting and flights and heating consumption of the FMO office in The Hague.	Low	No further actions needed
	Gross scope 3 category 15 GHG emissions (financed absolute GHG emissions)	Where primary GHG data is not available, financed emissions are estimated using the Joint Impact Model (JIM). The majority of FMO’s financed absolute GHG emissions are estimated with the JIM. The JIM modeling has clear limitations and it depends on 6 simplistic assumptions. Assumptions of the model include: No supply and capacity constraints (model assumes additional output is generated regardless of the availability of resources [e.g. labor, raw materials, production capacity], which may be tied up in other activities), fixed prices (price changes in the local economy are not considered, thus prices do not constrain input availability), and sector averages (all companies in a certain sector have the same production structure). FMO is using the JIM model 3.1.6 (referencing GTAP 11A database) for this statement. For additional details on the assumptions and limitation associated with the JIM, please reference The JIM Methodology on FMO's website.	High	Continuously increase primary data collection and improving JIM estimations
	Avoided emissions	GHG avoidance for renewable energy projects is calculated as the annual electricity production during the latest available reporting year, multiplied by the country emission factors in accordance with the International Financial Institution (IFI) harmonized list of emission factors (version 3.2). For avoided emissions in other sections, all figures are based on data reported by our clients.	High	Further refine estimation and verification methodologies
	Power generation target	Emissions data for fossil fuel customers is based on reported data by customers or estimated based on power production. For renewable energy customers without reported emissions data, the assumption is made that their scope 1 emissions are zero.	Medium/Low	For the purpose of the target, no further actions are required
Workers in the value chain (S2)	Number of direct jobs supported	FMO mainly relies on primary data for reporting on direct jobs which are provided by the customers and reviewed by FMO. However, when this data is not available, the JIM model will estimate the number of direct jobs based on the customer’s available financials, sector and country of operations. The JIM modeling has clear limitations and it depends on 6 simplistic assumptions. Assumptions of the model include: No supply and capacity constraints (model assumes additional output is generated regardless of the availability of resources [e.g. labor, raw materials, production capacity], which may be tied up in other activities), fixed prices (price changes in the local economy are not considered, thus prices do not constrain input availability), and sector averages (all companies in a certain sector have the same production structure).FMO is using the JIM model 3.1.6 (referencing GTAP 11A database) for this statement. For additional details on the assumptions and limitation associated with the JIM, please reference The JIM Methodology on FMO's website.	High	Continuously increase primary data collection and improving JIM estimation

Changes in preparation or presentation of information

FMO has limited structural changes to this year’s disclosures. The focus has been on reinforcing our sustainability policy framework through policy updates and launches, including the launch of a new Diversity, Equity, Inclusion and Belonging (DEIB) policy (see 'S1 Own workforce') and targeted updates to the Climate-related and Environmental Financial Risk Policy (see 'E1 Climate change'), and the Anti-Bribery and Corruption Policy (see G1 Business conduct). These updates reflect our commitment to aligning with evolving regulatory expectations and strategic ambitions.

This year also marked the following significant developments:

The refinement of our Green Label methodology, which now includes biodiversity finance- and adaptation & resilience- tracking aligned with our Strategy 2030 and SDG 13 ambitions (see E4 Biodiversity and ecosystems).
Minor editorial adjustments have also been made to some descriptions of impacts, risks, and opportunities in E1, E4, S1 and G1, ensuring consistency and clarity across disclosures.
A new FMO entity specific metric ‘Gender lens investments – total committed portfolio (TCP)’ is presented in S4 Consumers and end-users.
Financed avoided emissions (FMO entity specific metric – E1 Climate change): The 2024 figure has been restated due to incorrect data identified for one customer, which on its own exceeded the significance threshold. The previously reported 2024 figure was 2,134 ktCO₂e, compared with the restated figure of 1,959 ktCO₂e. This represents an eight percent decrease.
The 2024 figures in the Employee Age Distribution table (section S1‑9 Diversity metrics) were restated because the age categories were updated from 30-49 to 30-50, resulting in adjusted numbers.
The estimated computer-based training time on the topic of bribery and corruption (section G1 -3 Prevention and detection of corruption and bribery) for 2024 has been restated. While most employees take approximately 25-45 minutes to complete the computer-based training, the estimate has been updated to 25 minutes to reflect the duration shown in the learning management system.

Further details on the revised IROs, Green label methodology update, and the new S4 metric are explained alongside the disclosures in which our sustainability-related metrics and targets are presented.

Comparability of information

FMO reports on ESRS-defined and entity-specific metrics that are used to evaluate the performance and effectiveness of material impacts, risks, or opportunities. Since this is the second ESRS aligned report, the comparative figures are being presented in the relevant sections in ESRS 2 and the topical statements.

FMO acknowledges that comparability of sustainability information between entities and over time may be affected by the lack of historical sustainability information presented in accordance with the ESRS, and by the absence of a uniform practice on which to draw, and to evaluate and measure this information. And that this allows for the application of different, but acceptable, measurement techniques, especially in the initial years.