News / 13 December 2023

Response from Both ENDS and OxfamNovib to new FMO climate fund

Both ENDS and Oxfam Novib welcome the new SDG Loan Fund launched by FMO. The fund aims to invest more than a billion euros in loans to small and medium-sized enterprises in low- and middle-income countries, in the energy, inclusive financial services and sustainable agriculture sectors. At the same time, both organisations are concerned about the impact of money from the fund on normal people in future recipient countries.

Welcome contribution to climate funding

The fund is a very welcome contribution to the financial efforts required to achieve the targets laid down in the Paris Climate Agreement. According to the International Energy Agency, (IEA), more than 1,000 billion dollars a year are required to pay for the energy transition in developing countries alone, a substantial part of which (around 60%) has to come from private investors. According to the UN Environment Programme (UNEP), almost 400 billion dollars a year are also needed for climate adaptation, to which the FMO SDG fund can also make a contribution. In addition, hundreds of billions of dollars in public funding are also required for both the energy transition and adaptation. Mobilizing private investments does not relieve the Dutch government from the obligation to make more money available itself for climate funding for developing countries.

FMO must put people before profit

As a development bank, FMO is obliged to give the highest priority to the interests of normal people in future recipient countries of money from the fund. In the recent past, these people have sometimes been the victims of investments by FMO, including investments in clean energy. These include megaprojects like hydroelectric dams or solar parks as a result of which people have been driven from their land, not allowed a fair share of the revenues, or silenced if they expressed criticism. For all the projects and businesses that this climate fund will support, FMO must conduct thorough investigations to ensure that local people also approve of the investments and, if that is the case, that they are involved in the development of the projects.


“We applaud the fact that, through this fund, FMO is more emphatically committed to financing sustainable initiatives,” says Nick Middeldorp of Both ENDS. “But practice shows that FMO more often supports ‘green’ projects that turn out not to be green.” A selection of some of FMO’s previous investments, such as the Feronia palm oil plantation in Congo and the Barro Blanco dam in Panama, shows that the bank often provides financial support for highly controversial projects.

Also recently, a 'sustainable' initiative in Malawi turned out to have negative impact on local residents: they had to make way for a gigantic solar park.

FMO still investing in fossil projects

FMO likes to present itself as a progressive and sustainable bank, and this new fund is no exception. A growing proportion of FMO’s investments, however, are provided through financial intermediaries. Some of these investments end up in fossil projects, and FMO is not transparent about this.

Real solutions for people and planet

Both ENDS and Oxfam Novib call on FMO to do something radically different with this climate fund. That includes creating space for funding local, bottom-up initiatives that are not owned by wealthy elites in countries characterized by extreme inequality. In addition, FMO must guarantee that investments in fossil fuels, also through financial intermediaries, are a thing of the past. Middeldorp:  “The future of our planet demands nothing less.”

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