Major Developments in 2012
FMO made several new achievements in sustainability in 2012. Our commitment to embedding sustainability and pursuing responsible investment was confirmed by the high ratings FMO received from both rating agency Sustainalytics and German rating agency Oekom Research.
Two third-party assessments placed FMO at the forefront of its industry in terms of sustainability. In the Sustainalytics survey, FMO came out number 1 among a peer group of 24 financial institutions, which included the European Investment Bank and the World Bank. In its study, Oekom Research classified FMO as “Prime” with a B-score, the highest ranking among a group of industry peers.
In 2012 FMO placed its first ‘sustainability bonds’ with Triodos and KLM, two leading Dutch companies interested in sustainable investing. The bonds make explicit FMO’s adherence to ESG criteria, as well as an exclusion list, which details activities that FMO does not finance (such as child labor and weapon production). The bonds demonstrate investors’ commitment to sustainability.
We strengthened our partnership with the World Wildlife Fund (WWF) in 2012. FMO and WWF signed a provisional cooperation agreement outlining our intention to participate in joint events and knowledge-sharing activities. WWF’s expertise as an established and respected NGO is highly valuable for FMO, providing, among other things, a sounding board for the exchange of ESG ideas and strategies.
We collaborated with WWF and UK development finance institution Colonial Development Corporation (CDC) on the presentation of a joint study on the palm oil industry. Profitably and Sustainability in Palm Oil Production is the first study made of the financial costs and benefits of producing palm oil sustainably under the Roundtable on Sustainable Palm Oil (RSPO) guidelines. While FMO does not at present finance any palm oil projects, we see this study as an excellent insight into the ‘business case’ for, or financial logic of, sustainability.
We also partnered with WWF and International Finance Corporation (IFC) in a survey of the soy sector. The report was structured in a balance sheet format, which to our knowledge makes it the first of its kind. This study shows there are financial benefits for soy producers in Brazil and Argentina who comply with industry criteria for responsible soy farming. The study demonstrates positive returns on compliance investments within three years.