Our business model
Since 1970, FMO has made a positive difference in emerging economies by empowering entrepreneurs to build a better world. We create value by investing in the private sector in a socially responsible and environmentally sustainable manner, helping countries to grow their economy, strengthen their communities and protect the environment. In this, we are additional to the market, investing where few others will, preparing the way for other investors.
The diagram above presents our business model, which makes use of elements of the International Integrated Reporting Council (IIRC) reporting framework while focusing on the elements that are most relevant to us.
Our strategic priorities Our strategic priorities – as well as our mission and vision – are developed and adjusted in response to our key stakeholders. Naturally, we align our priorities to broader worldwide developments and priorities. The SDGs are of overarching importance, as they provide a joint public and corporate agenda that supports FMO to steer its priority areas on impact.
Our key inputs Our solid track record as a development bank demonstrates our cutting-edge knowledge of ESG and commercial finance in developing countries. This strength is nourished by an internal culture defined by a drive to fulfill our mission and the willingness to take risks, balanced by our risk awareness. Our employees exemplify our corporate values: engagement, excellence, cooperation, and making a difference. Performance on these values are part of the periodic appraisals and performance management cycle. In onboarding procedures for our new colleagues, FMO’s Code of Conduct plays an important role. Key elements in this code (integrity, transparency, respect and professionalism) are reflected in policies and procedures and monitored by management. Should our colleagues have a concern regarding any of these elements or values, they can raise these concerns via our Speak Up policy. Besides organizational and operational controls we deem softer controls on behavior and culture to be very important. Leading by example and providing open feedback, in which we invested much time and effort in recent years, are important elements in this approach. And lastly, our company culture is a regular topic in our discussions with FMO’s Supervisory Board.
Our networks, including networks of clients or financial partners as well as knowledge partners, are also crucial to our business model. Our financial partners are other development finance institutions, commercial investors and banks as well as governments. They leverage our own capital, allowing us to increase our impact beyond our own financial means. Our knowledge partners help us transfer best practices to our clients.
Finally, yet importantly, FMO has a AAA credit rating, which allows us to attract funding for long-term development at affordable rates. Our AAA rating follows from our ownership structure (the State of the Netherlands owns 51% of the shares) and the Dutch state guarantee.
Additionality FMO aims to be additional with its investments, meaning that we provide products and services which the market does not provide, or does not provide on an adequate scale or on reasonable terms. FMO provides financial additionality by providing financial products that are not readily available from commercial banks or investors on workable terms and conditions. FMO can also provide ESG inputs that other parties do not provide: this applies if FMO offers unique value adding services or provides unique expertise in ESG standard setting or in enhancing green and inclusive outcomes that are of value to the client. In 2017 100% of our investments were financially additional and 40% were both financially additional and ESG additional.