Every financing opportunity is assessed with regard to its impact, sustainability and long-term viability. Below are the steps FMO takes to create value on an individual project level.
Sourcing of opportunities
Within our key sectors we identify potential opportunities through a deep-rooted network in developing countries. Our initial assessment focuses on country, investment plan, development impact and our role as financier. Increasingly, we steer our investments towards projects that foster the transition to a more inclusive and greener economy.
Screening of opportunities
If the financing opportunity meets our investment criteria, we continue to analyze potential risks and challenges. To ensure the client complies with anti-money laundering, anti-corruption and anti-terrorist financing regulations, we conduct a Know-Your-Customer assessment. Furthermore, we categorize the project based on its potential effects on environmental, social and human rights conditions, as well as governance structures.
To fully understand the risks and opportunities, we conduct a thorough due-diligence including on-the-ground research through local visits. We visit the client and local stakeholders to discuss the impact of FMO's financing, their business, and environmental, social and human rights risks. We also analyse the client's tax practices and policies. Our tax department provides expert advice where needed. If we identify gaps in meeting international standards or policies, we develop an action plan to mitigate and manage any of the identified risks and promote positive development in these areas.
Besides regular meetings and dialogue sessions with our main stakeholders, we also offer the opportunity to provide input to our decisions on new transactions with a high environmental or social risk profile. We disclose the potential investment online to ensure that we have not overlooked any important concerns. From identification to implementation, we consult key stakeholders to properly assess, monitor and manage the impacts of the project.
For each investment, we have assessed the environmental, social and governance risks, identified where improvements can be made, and established action plans for further development. After internal approval, we sign an agreement with our clients ensuring that our requirements and conditions are legally binding. We disclose our investments on our website after contracting.
Monitoring and value creation
Throughout the lifetime of the investment we monitor our client's financial performance as well as progress on the environmental, social and governance requirements. We receive annual or more frequent financial reports, conduct (ESG) audits with the help of local consultants and visit them, depending on the nature of the project, every other year. If needed, we support our clients with capacity development and technical assistance to improve their business and identify new opportunities.