Improving corporate governance in practice

Improving our clients' corporate governance is a key part of our ESG focus. Here are some of the examples which took place in 2011.

One of the main highlights on the corporate governance front last year was the World Bank meeting in September 2011. This forum saw the leaders of 29 Development Finance Institutions adopt the Corporate Governance Development Framework, a common set of guidelines to support sustainable economic development in emerging markets. By signing the Framework, FMO and fellow signatories are strengthening their coordination and commitment to fostering transparency, accountability, and good corporate governance among the clients we finance. To do so each signatory agreed to appoint a corporate governance representative, responsible for integrating corporate governance considerations on the part of their (prospective) clients as a key part of their investment operations.

We work with fellow DFIs to harmonize the tools we use to assess new clients' corporate governance. For the past few years, DFIs have been using a toolkit that was co-authored by FMO, which helps map their client's strengths, weaknesses and corporate governance goals. The toolkit was officially adopted by the signatories to the framework during the World Bank meeting in September.

FMO used the corporate governance toolkit in select pilots in 2011. It sets a clearly structured roadmap that both we and our clients can consult, yet is flexible enough to differentiate between clients according to their development stage. Last year we organized three sessions to educate FMO investment officers about our corporate governance policy and tools. We also extended these corporate governance trainings to European Development Finance Institutions (EDFI) members, helping enhance understanding throughout the industry of how to best use the toolkit.

We actively participated in corporate governance conferences, seminars, director trainings and other knowledge-sharing activities with sister development finance organizations.