| Paris alignment | Reasoning |
|---|---|
| Some progress | Although not a key strategic focus, FMO contributes to Energy Access throughout its energy portfolio and specifically through its Reducing Inequalities (RI) sub-label “last mile delivery of power”. Financing dedicated to the last mile delivery of power sub-label remains a relatively small part of FMO´s energy portfolio (8.8% in 2022), but the Bank is encouraging more investment in this area. Central to the Bank’s energy access work are its contributions through the Access to Energy Fund (AEF) and Building Prospects Fund. FMO considers additional renewable energy production (mainly on-grid) contributed under its SGD 7 (access to sustainable energy) work as having a direct positive impact on energy access, with other energy financing for transmission, distribution, and storage also having both direct and indirect positive impacts. In order to accurately determine to what extent such activities contribute to improving energy access in practice, it is recommended that FMO use the Multi-Tier Framework when defining and/or tracking its investments in energy access. |
| Alignment and reasoning | |
| Energy Access Target | FMO does not have an internal energy access target. The Access to Energy Fund is one of the key programs contributing to an overarching target of the Dutch Government to provide 100 million people with access to renewable energy by 2030. FMO manages and invests this fund on behalf of the Dutch government, and annual figures for beneficiaries reached are reported. |
| Minimum Definition of Access | FMO considers energy access as part of its RI label, in relation to SDG 10 aimed at reducing inequality within and among countries. A sub-label within the RI-label denoted as “last mile delivery of power” is defined as “energy solutions for low income or marginalised populations who lack adequate coverage, reliability, or affordability of these services”. This has some overlap with the Multi-Tier Framework, but is not identical. |
| % of Energy Financing Dedicated to Energy Access | The % of financing dedicated to the “last mile delivery of power” sub-label fluctuates minimally with the lowest in 2016 at 2.5% and the highest in 2022 at 8.8%. |
| Is Progress Monitored | FMO tracks how many people were served through energy generation in its energy portfolio. It also specifically labels projects that contribute to energy access under the sub-label “last mile delivery of power” within its Reducing-Inequalities label. However, FMO does not have a distinct category for specifically tracking new household connections. |
| Progress against Metrics | N/A – since they do not have a specific target on energy access. |
Energy access progress
One of the three key sectors in which FMO invests is Energy, with FMO´s activities in the Energy Sector contributing to SDG7 Renewable and Affordable Energy. SDG7 actively looks at ensuring access to affordable, reliable, sustainable and modern energy for all.
In 2022, FMO joined the NL Energy Compact, an initiative led by the Dutch Ministry of Foreign Affairs of more than 25 Dutch organisations aiming to support low and middle-income countries to reach the SDG7 goals.
FMO’s contribution to energy access is furthered through two core initiatives in this area:
- Since 2007 FMO has been contributing to energy access through The Access to Energy Fund (AEF), which is a joint initiative by the Dutch government and FMO “to support private sector projects aimed at providing long-term access to energy services in emerging markets and developing countries”. The fund focuses on sustainable energy solutions for energy generation, transmission, and distribution projects, but also clean cooking solutions. The fund also provides risk bearing funding to unproven renewable technologies. Its total assets were €156 million in 2022.
- FMO also contributes to energy access through its Building Prospects Fund, which supports private investment in infrastructure including off-grid energy.
FMO considers energy access a part of its Reducing Inequalities label (RI-label), which relates to SDG 10’s aim to reduce inequality within and among countries. A sub-label within the RI-label, denoted as “last mile delivery of power”, is defined as “energy solutions for low income or marginalised populations who lack adequate coverage, reliability, or affordability of these services”. The last mile delivery of power sub-label mainly looks at off-grid energy projects, but also includes for example household level devices and systems, mini-grids and grid extensions. The definition of the sub-label has some overlap with the Multi-Tier Framework. In addition, the rest of the energy portfolio is considered by FMO to contribute directly or indirectly to improving or expanding existing energy access via (on-grid) renewable energy generation, transmission, distribution and storage.
All AEF and Building Prospects projects are disclosed on FMO´s interactive map.
Recommendation:
- The Multi-Tier Framework for energy access should be explicitly adopted as part of the FMO’s work on energy access. This will be particularly helpful in the process of getting comparable data which will enable FMO get a better understanding of the contributions its investments are making in terms of energy access (beyond off-grid).