Environmental fund of the year, Africa; Best sustainability reporting by an asset or fund manager, medium and small: SilverStreet Capital

SilverStreet Capital's Silverlands II strategy won Environmental fund of the year in Africa after its managers claimed the prevention of 31 million tonnes of carbon dioxide emissions related to deforestation in 2021.

The London-headquartered investor said this represented the equivalent to the annual emissions of eight average sized US coal-fired power stations, and was achieved by focussing on raising the yields of smallholder farmers across Sub-Saharan Africa.

Over the next few decades Africa is on track to experience increased food shortages, poverty and environmental damage resulting from land clearing.

Around 60% of the population of Sub-Saharan Africa are smallholders, the majority of whom are women, according to SilverStreet Capital. These farmers typically cultivate up to two hectares and grow low-value crops using ecologically damaging slash-and-burn techniques, SilverStreet said.

The war in Ukraine has "created a renewed need for building and scaling food-systems that integrate smallholder farmers," Gary Vaughan-Smith, CIO at SilverStreet said. “Raising smallholder farmer yields and equipping farmers with the tools to become climate resilient reduces deforestation and ensures nutrition availability for the poorest section of the population, key to facing these current challenges.”

Silverlands II invests to prevent deforestation by increasing the income and yield of Africa's smallholder farmers.

Set up in 2016, Silverlands II has made three investments so far. One is in the seed sector in Zambia, one in a grape and date business in Namibia, and another in a poultry company that operates across Southern and East Africa.

The company aims to equip farmers with the tools to become climate-resilient while raising incomes and increasing nutrition levels.

Vaughan-Smith added: “By fixing key agricultural value chains in Africa, we have demonstrated that it is possible to scale businesses and tackle multiple key developmental challenges faced by Sub-Saharan Africa: poverty, malnutrition, and climate change.”

Other outcomes the fund's managers said it had contributed to in 2021 include:

  1. Saving 104,000 hectares of land from deforestation
  2. Increasing incomes of 165,000 farmers, 61% of whom are women; and
  3. Producing the annual calorie requirements of 1.9 million people.

The firm is also raising a new fund to co-invest alongside Silverlands II into all its current portfolio companies and pursue additional identified investments. The final close of this fund is anticipated within the next year.

SilverStreet also won the award for Best sustainability reporting by a medium or small asset or fund manager.

The company's reports on impact and ESG have demonstrated evidence-based achievements annually for the last nine years.

“As the globe races to develop metrics to communicate ESG performance, we use principle- and evidence-based reporting to show what is material to each business,” explained Julia Wakeling Bird, head of impact and ESG at SilverStreet.

Its reporting strategy focuses on three key areas:

  1. Asset-level ESG reporting: Portfolio companies compile monthly ESG reports that are monitored by SilverStreet. This data enables businesses to monitor ESG risks and identify long-term ESG trends and opportunities.
  2. Asset-level independent ESG audits: Portfolio companies have been audited annually on their compliance with SilverStreet's ESG 'code'.
  3. Fund-level annual impact and ESG report: The report demonstrates strategic intent to achieve impact and ESG objectives and shows progress against these.

The reporting is structured into three sections:

  1. Investment and impact strategy: Summarising SilverStreet's 'theory of change' with the challenges, solutions and impact objectives of the funds.
  2. Impact sectors and case studies: Each impact area includes a summary that aims to succinctly communicate the type of impact that is being created by the investment in alignment with the Impact Management Project impact dimensions and the UN's Sustainable Development Goals.
  3. ESG management and annual ESG audits: To summarise the results from these independent audits, SilverStreet has developed a scoring tool that measures an asset against its own responsible investment code.