Managing salient human rights

Managing salient human rights issues

Given the high degree of variation in ESG regulations and practices in our markets, FMO accepts that when we first start working with a customer, the ESG performance may be below international standards or that we might encounter legacy issues and traumas from previous contexts.

We do, however, expect that a customer’s performance on environmental, social and human rights issues improves over time in line with agreed action plans. This is part of FMO’s non-financial additionality in our geographies. Most customers show good progress towards action plans and are receptive to FMO’s ESG advice and support.

FMO is unique in the sense that we register customer performance in our Sustainability Information Management System (SIS) at key steps in the investment process. The SIS gives us visibility of current portfolio ESG and human rights risk.

The 'Performance on our strategy' chapter of our Annual Report gives insight into these issues, with a breakdown of their risk level and likelihood. In addition, we provide an overview of the E&S performance gaps in our portfolio, which includes a description of how rightsholders may be affected in situations where this pertains to human rights infringements.

Every year we update our Annual Report with the most salient human rights issues encountered in our portfolio as well as report on the type and number of fatalities reported by our customers as also illustrated here.

Serious incidents 

We believe that strong occupational health and safety (OHS) management systems are part of an employer's duty of care, it improves job quality and adds value to a business. Unfortunately, OHS norms and regulatory systems can be weak in emerging markets, leading to serious accidents occurring more frequently. FMO’s environmental and social DD identifies areas where existing mitigation practices fall short of (international) standards to be able to agree actions to improve mitigation practices, so our customers can improve their practices to prevent accidents and incidents from occurring. Where a customer’s mitigation practices fall short of (international) standards, FMO develops and agrees an environmental and social action plan with the customer to close those gaps. FMO also helps customers to develop their OHS risk management capabilities, for instance through (funding for) training. You can find information about serious incidents in our Annual Report.