Sustainable Investment Awards 2022

Environmental fund of the year, Europe: SLM Silva Fund

The SLM Silva Fund from asset manager SLM Partners claimed Environmental fund of the year after becoming the first of its kind to adopt an innovative type of forest management called continuous cover forestry (CCF) in Ireland.

CCF retains the permanent presence of some forest cover through the selective felling of trees – instead of the usual process of felling all trees in an area.

The strategy can improve biodiversity, carbon sequestration and resilience to climate change, while delivering stronger cash yield, SLM said.

Launched in 2018 with the backing of the European Investment Bank, the €30 million ($32 million) fund aims to aggregate small, undermanaged forest properties in Ireland into an institutional-scale portfolio.

The majority of European forests are highly fragmented and often undermanaged, SLM said. With rural depopulation and a lack of economies of scale, private owners increasingly want to exit the industry.

"Across the continent, the lack of active management is hampering the ability of the forest industry to respond to the rising demand for wood needed to meet net-zero goals in the construction and energy industries," SLM said.

SLM has worked to address the problems through applying CCF to forests in Ireland. It has acquired 1,500 hectares of mixed conifer and broadleaved forest.

The fund has begun to implement CCF on 60% of its properties and plans to cover the remainder over the next five years.

Over the course of its tenure the fund has scored "above-target, double digit returns – demonstrating that impact strategies can outperform", SLM said.