FMO, the Dutch entrepreneurial development bank, announced today the launch of its innovative, ready-to-use ESG Tool tailor-made for financial institutions, at the Future of Finance conference. In collaboration with Steward Redqueen, FMO has developed a web-based Environmental & Social Management System (ESMS) tool, accessible to anyone. The end goal: to empower banks and financial institutions to be supported in managing various aspects of ESG risk on both transaction and portfolio levels.
Through our investments, FMO aims to enable entrepreneurs for sustainable and inclusive growth. One of the key sectors we support is the Financial Institutions (FI) sector, for example through (M)SMEs and the microfinance sector, with the aim of increasing inclusive access to capital and supporting business growth. Increasingly, these customers are reaching out for additional support in enhancing and improving their own ESG capacity and performance as they on-lend to underserved groups, and (M)SME clients—highlighting a segment that could benefit from additional support, advice, and guidance on the environmental, social and corporate government risks related to their business activities. FMO’s ESG Tool aims to provide that support and more.
The complete tool comprises of 3 modules. The first module supports FIs in conducting ESG risk assessments entirely via a web-based application. All the user needs to do is input a couple of transaction data points and let the tool generate an overview of potential ESG risks and suggested practical mitigation measures geared to the sector and location in support of FIs own risk management. Moreover, this can be fully carried out while on-site visiting the customer, thereby providing instant E&S Due Diligence support. The information is stored locally and is not saved in the cloud, which means the data is not accessible for anyone except for the user.
The second module provides assistance with developing and establishing an external grievance mechanism to process and manage risks related to grievances from external stakeholders. And finally, the the third module provides a self-assessment to gauge the progress in meeting the UN Principles for Responsible Banking, a unique framework that ensures FIs’ strategies and practices align with the vision society has set out for its future in line with the SDGs and Paris Climate Agreement. This module will also assist in providing guidance and a deeper understanding of the practical next steps involved.
Rebeca Sanchez de Tagle White, Manager ESG+ at FMO, said: “Through the ESG Tool, we aim to strengthen institutional learning, better support the operational applications of E&S risk management for FIs and enhance the relations between your institution and external stakeholders. Simply put, we are committing to our role as an ESG change agent as we partner with our customers in their transition towards more sustainable operations—in line with our updated 2030 Strategy: Pioneer, Develop, Scale.”
Claire Nooij, Director at Steward Redqueen said:“This solution makes ESG risk management easily accessible to FIs globally. Due to lack of capacity, data sharing constraints, complex guidance or expensive software solutions, FIs are often challenged with successfully identifying and managing ESG risks. As this tool does not save any data, does not require users to sign up and is freely accessible, ESG risk management has never been more accessible. With ESG risk management being essential for mitigating financial- and reputational risks, this strengthens the lending capacities of FIs and improves access to capital.”
The ESG Tool will be officially launched today at our Future of Finance conference on October 4, where we will provide more information about the tool. As of that day, the tool will be accessible via a link on our website here.