Presentation is loading. Please wait.

Presentation is loading. Please wait.

June 2003.

Similar presentations

Presentation on theme: "June 2003."— Presentation transcript:

1 June 2003

“Labour Standards in Development Finance” Conference Washington DC, 18 April 2006

3 Content FMO in a Nutshell Why did FMO adopt a Social Policy?
Introduction of Social Policy into the organization FMO Social Policy Criteria Social Management System

4 I. FMO in a nutshell Development Impact Return on Investments
Twofold mission Development Impact To have a significant impact on the financial-economic, environmental and social development of developing markets, by providing private companies with financial means and know-how. Return on Investments Appropriate economic and financial returns are a pre-condition for effective risk partnership and continuity.

5 Shareholder structure
Public-private partnership (share ratio %) Bron: FMO

6 FMO features Operation at “arms length” from Dutch government
Financing on commercial terms plus: Additionality Catalytic role Environmental & social standards Corporate governance

7 FMO’s Clients Financial institutions Private enterprises
Indirectly servicing SME’s Private enterprises Dutch & other European companies investing in & exporting to developing countries

8 Geographical spread portfolio
EUR 1.8 billion gross (% portfolio, including commitments) Bron: FMO

9 Sector focus Financial sector: “brains of development”
Banks Leasing, insurance and housing finance Micro Finance Institutions Infrastructure: “backbone of development” Transportation (roads, ports, etc.) Energy (water, power) Telecom

10 Food for thought “We were not developing wealth for its own sake, wealth is the means and people are the ends.” Franklin D. Roosevelt on "Century of the Common Man."

11 II. Why a Social Policy? Evaluation of FMO development impact (mid 90s) Part of FMO Policy on Sustainable Development - triple bottom line (People, Planet and Profit) - corporate governance - environmental policy - social policy - exclusion list Social development a key element of FMO objective - mitigation of social risks (FMO reputation and social justice) - social development (added value) - social accountability

12 Why a Social Policy? (cont’d)
Professional upgrading Risk mitigation in banking Identifying trends & opportunities Competitive edge Investment bankers with a vision… Global trend Companies are increasingly being held accountable for the wider societal & environmental impacts that result from their operations Companies no longer just sell their products, but also the circumstances under which these are produced


14 Labour on International Agenda
World Conference on Human Rights Renewed effort to strengthen and further implement the body of human rights instruments 171 States adopted by consensus the “Vienna Declaration” ILO Declaration on Fundamental Principles and Rights at Work – 1998 Priority of core labor standards in the global economy Global Compact – 1999 10 principles on human rights, labour and the environment Based on Copenhagen Social Summit and ILO constitution

15 Labour on International Agenda (cont’d)
The OECD Guidelines / 2000 corporate governance multinational enterprises national OECD centers for lodging complaints against MNCs WSSD – Johannesburg 2002 Increased participation of trade union sector in global sustainability debate WB report on "Unions and Collective Bargaining“ – 2003 High unionization rates/ highly coordinated collective bargaining lead to lower inequality, decreased discrimination, improved economic performance Premium on better labour standards in global production chain

16 Guiding Instruments General Labour Rights & Conditions
Universal Declaration on Human Rights International Covenants on CP and ESC Rights UN Conventions OECD guidelines on Corporate Governance Labour Rights & Conditions ILO Conventions Social & Cultural Impacts World Bank/ IFC standards

17 III. Introduction of Social Policy
2000  social policy approved by FMO Board of Directors 2001  social specialist recruited internal communication strategy seminar for all of FMO 2002  all investment officers trained pilot phase evaluation + advice to management Following years  social training for all new investment staff

18 IV. Social Policy Criteria: Labor Issues
Core Labor Standards - Ban on Forced Labor (including role of security services) - Ban on Child Labor - Ban on Discrimination - Freedom of Association - Right to Collective Bargaining Primary Labor Conditions - Remuneration - Health & Safety - Working Hours - Labor contract - Retrenchment

19 Exclusion List Preliminary decision making tool for “go or no-go” scenario Products/ activities that are deemed illegal at the international level Products/ activities that are not in line with FMO’s view of creating development impact Management tool for both FMO as well as for its FI clients

20 Labour Risk Categories
Category A or B+ projects Large, infrastructure works or “Greenfield” projects construction phase/ legal relationship with contractors Primary sector (agriculture, extractive industries), with large numbers of unskilled/ temporary/ migrant workers Labor-intensive industries, especially those situated in export processing zones or high risk sectors/ countries Hazardous working conditions (physically demanding or risky work, handling of toxins, chemicals etc.) Large-scale retrenchment e.g. due to privatization

21 V. Social Management System
Commitment of top management change in corporate culture invoke change by setting the example internal communication strategy external expertise for sound boarding Resources human and financial Training integrated sustainability training Procedures

22 IMR – Investment and Mission Review
Head of IMR also heads the Investment Committee!!! Financial Analysis Unit 4 staff financial-economic sustainability second pair of eyes next to the investment officer Environmental & Social Unit 8 staff (5 environmental, 2 social, 1 FI) environmental and social sustainability in deal team with investment officer ESRS to finance proposal/ legal documentation/ portfolio management Evaluation Unit ad hoc evaluation of projects 2 staff

23 Social Focal Points (SFP)
Social Specialist SFP SFP SFP Commercial Department Commercial Department Commercial Department

24 FMO Social Procedure »parallel to FMO Environmental Procedure«
[Initial Phase] determine Social Risk Category (A/ B+/ B/ C) sector country determine appropriate steps/ actions/ division of labor investment officer in consultation with Environmental & Social Unit

25 FMO Social Procedure (cont’d)
[Direct Investments] Category A or B+ social specialist takes the lead external impacts: Social Impact Assessment (as part of EIA) labour issues: Social Assessment E&S checklist and labour checklist visit to site (interviews with HR manager/ H&S officer/ workers’ representative/ workers; objective evidence; H&S check) third party consultation (contacts with local unions, NGOs, labor rights lawyers etc) Category B  environmental specialist takes the lead labour checklist (determine scope)

26 FMO Social Procedure (cont’d)
[Financial Institutions] FI as a company investment officer responsible mostly Category B assessment like direct investments FI portfolio management Environmental & Social Unit responsible Category A/B/C, depends on portfolio profile Environmental & Social Management System FI course “Financing Sustainability” FI ESMS support programme

27 FMO Social Procedure (cont’d)
[Management Decision Phase] Investment Officer writes project proposal Category A and B: Investment officer writes social paragraph in project proposal IMR writes Advice to IC and Management Category A and B+: Social specialist writes Social Review Summary as part of ESRS (annex to project proposal) Category B: Environmental specialist writes ESRS (annex to project proposal) If not all issues dealt with: follow up or negative advice

28 FMO Social Policy & Score Card

29 FMO Social Procedure (cont’d)
[Contracting Phase] Category B (standard clauses): Social Management System Responsible person in Management HRM and/or H&S staff Annual Environmental & Social Reporting If necessary: Social Action Plan Additional for Category A and B+ Independent third party verification Community liaison staff/ unit

30 FMO Social Procedure (cont’d)
[Monitoring Phase for A and B+ Projects] Annual Environmental & Social Report Conclusions in annual revision report Regular visits to projects check on agreed actions check with management and employees check with local unions, NGO´s, labor rights lawyers,… Action if non-compliance by or in consultation with the Environmental & Social Unit


Download ppt "June 2003."

Similar presentations

Ads by Google