Letter from the CEO

It makes me truly proud to look back on 2017. FMO showed excellent results, creating record development impact and financial profit. We also reviewed our strategy and recalibrated our roadmap towards 2025. I am certain that our results – in impact, numbers and strategy – are the result of the passion and professionalism of our employees as well as the strong relations we enjoy with our partners in the Netherlands and worldwide.

'Your preferred partner to invest in local prosperity' – this is the goal we defined for the period up to 2025 and the result of a thorough review of our operating environment today: one with rising stakeholder expectations, a more crowded development finance market and a stronger international call to reduce economic and social inequalities amongst countries.

We use the term 'local prosperity' to emphasize that positive impact on local stakeholders, their communities and ultimately general society, is at the heart of everything we do. In our strategy for the period up to 2025, we will steer on our contribution to the SDGs in general, and three in particular: Decent Work and Economic Growth (SDG8), Reduced Inequalities (SDG10), and Climate Action (SDG13). These are the areas where we feel we can have the biggest impact in the countries where we can make the biggest difference. Investing in local prosperity is something we do in partnership with others (SDG17). During 2017, we made significant steps in stakeholder engagement. We revised our sustainability policy with specific attention to climate action and human rights through a process of extensive stakeholder consultation. The progress we made is reflected in the open and positive feedback we received from our stakeholders, including the Dutch government and various non-governmental organizations. We are both proud of and grateful for this feedback, as it demonstrates that our stakeholders understand that we are very serious about continuous learning and constructive dialogue.

To be effective in supporting local prosperity, we aim to be the preferred partner to our key stakeholders. Of course, these include our clients, with whom we will strengthen relationships in order to tailor our services to their needs. To this end, we will invest more time in better understanding our clients’ situation, increasing sector knowledge, building partnerships and further tailoring our support to clients’ needs – both financial and non-financial, for example through technical assistance. We will also strengthen our relationships with public and private investors, who are essential impact catalysts as co-investors in our projects. And finally, yet importantly, we aim to be the preferred partner for the Dutch government through private sector investment and climate finance. Our strategy towards 2025 aligns fully with the sustainable development goals, contributing to key priorities of the Dutch government.

To achieve our 2025 goal, we will need to further challenge ourselves as an organization. It is one thing to say that we will increase impact going forward. Actually achieving it will require a different way of working. We have increased the focus of our operations on financing financial institutions, energy and agribusiness, food & water, and downscaled our involvement in infrastructure, manufacturing and services. On an organizational level, we launched several internal projects to strengthen our efficiency and effectiveness, among them a business process optimization project. This project aims to optimize our processes and systems, so we can better serve our clients. It will be implemented in 2018 and subsequent years. Moreover, we are looking at ways to systematically incorporate constructive dialogue with our stakeholders. Because as a partner, we can only continue to evolve if we continue to observe, converse, listen and learn.

On to results. I am truly pleased that in 2017 we outperformed our impact targets. Our new commitments exceeded EUR 3 billion, including more than EUR 1.1 billion of catalyzed funds. Over 40% of our new commitments were green and we made more than 40 investments that contribute to reducing inequalities. Through our new commitments we estimate that we will support 900,000 jobs while avoiding 1,600,000 tons of GHG emissions.

Our results also show that impact and profit can go hand in hand. Our net profit for the year amounted to a record level of EUR 255 million. This performance was supported by several exits from private equity investments and robust performance of our loan business.

The drive and entrepreneurship of FMO’s employees makes a difference to our projects. An important breakthrough regarded the first close of the Climate Investor One fund, an innovative blended finance concept in the renewable energy space. Another example is our co-investment in the Finforward FinTech marketplace. Through this initiative we support African banks to start using FinTech instruments, enabling them to include the unbanked in the African financial system. Last special mention regards the smooth preparations leading to successful implementation of IFRS 9 per January 1, 2018.

For me personally, it was also a memorable year. It was my first full year as CEO of FMO. It was also the year in which I announced my departure after having served on the Management Board of FMO for 9.5 years. This naturally gives me mixed feelings, as it is both an honor to assume a senior position at another development finance institution, and a loss to leave FMO at this point. I will leave FMO with pride – our results for 2017 and the clear strategic direction going forward give me confidence that FMO will become the preferred partner for investing in local prosperity.