"Environmental and social characterization of individual clients and total portfolio, using integrated scorecards."

Vision FMO

The Netherlands Development Finance Company (FMO) invests risk

capital in companies and financial institutions in developing

countries.

Goal is to create flourishing enterprises which can serve as engines

of sustainable growth in their countries.

> Investing in entrepreneurship includes managing and mitigating

negative social and environmental impacts.

> Environmental & social standards & criteria:

World Bank / IFC & ILO.

> Experience shows: ‘Contribution to economic growth’ and ‘social and

environmental development impact’ are interrelated.

> Integrated approach of economic prosperity, social development and

environmental preservation.

Commitment to sustainable development

> One integrated scorecard for each client

> Sections of the scorecard:- Risks

- Development Impact

- Added Value and Role FMO

> In each section:- Financial / economic

- Social

- Environmental

> Scorecard Manual with defined criteria for each indicator (unsatisfactory / partly (un)satisfactory / good / excellent).

Integrated approach in practice: using the FMO scorecard

Social & environmental indicators – Risk (CF/FI *)

 

Social> Social policies (CF/FI)

> Core labor standards (CF/FI)

> Primary labor conditions

(CF/FI)

> Direct social impacts (CF)

> Specific social liabilities (CF)

> Social management system

(FI)

Environmental> Environmental policy (CF/FI)

> Environmental management

(CF/FI)

> Direct environmental impacts

and safety performance (CF)

> Specific environmental

liabilities (CF)

* CF = Company Finance FI = Financial Institution

Social and environmental indicators – Development impact (CF/FI)

Social> Labor relations (CF)

> Community development

(CF)

> Stakeholder participations

(CF)

> Social performance of

clients (FI)

> Specific social investments

(FI)

Environmental> Exploitation / conservation of

non-renewable resources

(CF)

> Chain stewardship (CF)

> Eco efficiency (CF)

> Environmental performance

of clients (FI)

> Specific environmental

investments (FI)

Results (Example from FMO Sustainability Report 2005)

> Integrated financial/economic, social and environmental evaluation

part and parcel of FMO approach to financing.

> Most clients see added value.

> This approach goes well beyond the GRI guidelines and the FI sector

supplements to that.

> Please refer to FMO Sustainability Reports 2004 and 2005 for more

detailed information & results (www.fmo.nl).

> Looking forward to your comments.

Conclusions