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Letter of the CEO

Last year was a very successful year for FMO. We produced a better-than-expected Development Impact Indicator (DII) and at the same time good economic returns. We realized more than 85% of the environmental, social and governance (ESG) improvement targets we set with our clients, which we see as a major achievement. It is only in the area of catalyzing third-party funds that we did not meet our expectations. This was mainly due to the fact that a lot of Western commercial banks are drastically reducing their lending activities in emerging markets. In low-income countries we saw very limited activity from Western financial institutions.

In spite of this, FMO’s economic performance was very good. These results signify the changes we see taking place around the world, with emerging markets becoming more and more important destinations for finance. FMO is very well placed to empower entrepreneurs. With all the global sustainability challenges it is increasingly important to support those businesses that contribute to a more sustainable future – a world in 2050 where we can live well and within the limits of the planets.

We are now at a point at which we can look back on our 2009-2012 strategy period. Despite the crisis in Europe and the United States, FMO’s performance was very good. Over the 4-year strategy period we realized €4.6 billion in new commitments, with an average Economic Development Impact Score (EDIS) of 66.We integrated ESG in our front office and set SMART[1] targets for our clients with the help of FMO management. We managed to increase our focus on low-income countries, from 30% of the committed portfolio in 2008 to 40% in 2012.

During the previous strategy period we decided to cease our activities in the housing sector for a lack of strategic partners and bankable projects. We began to focus strongly on agribusiness, food and water, because of the great importance of this sector in feeding 9 billion people in 2050.

Beyond being a profitable year for the business and a reflective period for our previous strategy, the past year was also a marker for transition. The last few years have highlighted the increasingly important role that the private sector plays alongside official development assistance in creating lasting development impact. We see our role growing in importance, as we strive to empower entrepreneurs to stimulate sustainable economic growth. This role becomes even more important as the composition of global wealth and poverty changes.

Three global trends are becoming increasingly evident. The first describes the push towards finding a way for nine billion people to live well in 2050, within the means of the planet. The second trend shows the emergence of a multi-polar world, where Western economies no longer dominate the East and South. The third is the reinvention of official development assistance, with many actors moving away from an annual volume target and towards achieving demonstrable, cost-effective impact.

The first trend is the most crucial in the long term, and is central to FMO’s mission. Ultimately, we seek to contribute to this sustainable, inclusive future. We envision a world in 2050 that has achieved a sustainable way of living, producing and consuming, in which people can live good, peaceful lives.

This vision forms the basis of our new four-year strategy, whose development was an important part of the last year. Our 2013-2016 strategy builds on our 2009-2012 ‘Moving Frontiers’ strategy but incorporates the global changes that have become apparent in the last three years.

Our new strategy is built around an audacious goal: to become the leading impact investor by doubling our impact and halving our footprint by 2020. While we continue to invest in the private sector in developing economies, we will do so in a manner that reflects the renewed urgency of our mission. The first step will be to establish measurements for impact and footprint in all our areas of operation. This will enable us to steer our business towards doubling that impact, while also halving the associated footprint.

With an eye on the future, we begin a challenging and highly motivating strategy period. We will actively align the selection of our investments with global sustainability challenges, such as resource depletion and climate change, while redesigning our impact measurement framework so that FMO’s development impact becomes more transparent and accountability increases. We will broaden and deepen the communication channels with our stakeholders, involving them in the pursuit of this most audacious new goal.

I wish to thank all our employees for their sterling efforts and achievements in 2012. I look forward to continuing our journey and increasing our development impact even further in 2013 and beyond.

Nanno Kleiterp

Chief Executive Officer



1] Specific, Measurable, Attainable, Relevant and Timely