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SilverStreet Capital LLP

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

The investment strategy focuses on building profitable and sustainable businesses that permanently strengthen local economies, raise living standards and meet the needs of a rapidly growing population.

SilverStreet Capital strives for positive development outcomes across the portfolio. An important component of positive development outcomes is the ESG sustainability of projects, which we target achieving, on a project-by-project basis, by applying a comprehensive set of ESG standards. SilverStreet Capital conducts an independent annual review of the progress that each company is making in implementing the highest ESG standards possible using our own Responsible Investment Code and other international standards. 

Specifically, core principles from our Responsible Investment Code state that the portfolio companies will:

  • comply with all applicable laws and regulations (including Luxembourg and UK laws);
  • as appropriate, minimise adverse impacts and enhance positive effects on the environment, workers, and all stakeholders;
  • commit to continuous improvements with respect to management of the environment, social matters and governance;
  • work overtime to comply with the relevant international best practice standards, with appropriate targets and timetables for achieving them; and
  • employ management systems which effectively address ESG risks and realise ESG opportunities as a fundamental part of a company's value.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Ethical business practices - Key Points

  • Our investments are governed by a Responsible Investment Code. In addition, we adhere to the IFC Performance Standards. We adhere to international accounting standards and have strong anti-bribery and corruption policies and training. We support honest and transparent governance and reporting standards.
  • In adopting the IFC Performance Standards, we monitor: environmental and social risk management activities; fair labour practices; conservation of resources, preservation of biodiversity and reduction of pollution; community health and safety; and the safeguarding of cultural heritage. We also conduct annual external reviews and publish reports of ESG compliance. We report on our compliance with the above standards in our Annual Impact and ESG Report. This is available online.

Our goal is to establish high levels of governance through the appropriate board structure and associated board committees at each of our portfolio companies.

Anti-Bribery Policy: The boards of all our portfolio companies have adopted SilverStreet’s Anti-Bribery Policy. SilverStreet is committed to ensuring that all officers, employees and third-party representatives of Silverlands are aware of the UK Bribery Act and the US Foreign Corrupt Practices Act, that they do not infringe them and that they exhibit the highest ethical business standards at all times.

Responsible Investment Code: The boards of all our portfolio companies have signed up to our Responsible Investment Code. A member of the board of each portfolio company has been assigned the responsibility for ESG issues. The board of each portfolio company has committed to adopt and implement a Social and Environmental Management System (SEMS). In each SEMS, ESG risks are identified, procedures implemented to manage the risks, and key ESG aspects reported to management and the boards.

Responsible Investment Code - Key Points

  • Our investments seek to minimise adverse impacts and enhance positive effects on the environment. We encourage the businesses to make efficient and sustainable use of natural resources. We support the reduction  of greenhouse gas emissions. We encourage the development of environmentally friendly technologies and we ensure the fair treatment of animals. 
  • We require the businesses to treat all employees and contractors fairly, and to respect their dignity, well-being and diversity. Our bussinesses are compliant with the International Labour Organization and the UN Universal Declaration of Human Rights.
  • Our businesses seek to attain safe and healthy working conditions for employees, contractors and all those affected by the bussinesses. 
  • We encourage our businesses to recognise and, as appropriate, promote the social development impact from the businesses.
  • We ensure that businesses exhibit honesty, integrity, fairness, diligence and respect in all business dealing. 
  • We seek to promote international best practice in relation to corporate governance in the bussinesses. 
  • We will not be invested in any businesses or activities that involve: forced or child labour, any trade or product deemed illegal or banned by global conventions, the production of or trade in arms, the production of or trade in unbonded asbestos fibres, drift net fishing using nets in excess or 2.5 km in length, cross-border trade of waste, production or distribution of racist, anti-democratic media, and activities that result in the destruction of critical habitat.
  • The General Partner will establish, manage and maintain management systems for the environment, social matters and governance. 
  • To demonstrate the implementation of the investment code, the General Partner will report annually on the implementation of the ESG management systems and performance of Portfolio Companies against the Investment Code in a reasonable and transparent format. 

Positive Social Impact

We believe that if value is created across Africa’s agricultural sector, then a sustainable infrastructure can be built, permanently raising living standards for farmers, mitigating negative environmental impacts, and creating a multiplier effect across local economies to increase overall prosperity. Our end goal is to help build a sustainable business environment that will survive the Silverlands Funds and strengthen economies in Sub-Saharan Africa.

Our strategy identifies opportunities in Sub-Saharan Africa. We benefit from a specialised team who have expert knowledge in delivering complex agricultural projects in the region. We analyse value chains for opportunities and look to find parts of the value chain that need additional investment. We are most attracted when an investment can unlock a value chain by filling a gap. This investment might be into a processing plant, storage, logistics, the seed sector etc. This enables our investments to successfully integrate a positive social impact into our business models by unlocking potential markets in the region and creating sustainable development.

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Risks

Due to the nature of the agriculture sector, the identification and management of climate related risks is integral to all investment decisions, and throughout the holding period. The principle climate-related risk for SilverStreet Capital's portfolio companies is climate variability - the risk that our businesses in the agricultural sector will suffer due to unpredictable weather, changes in the environment or seasons, water security, and temperature changes.

Temperature Variability

To mitigate against possible changes in temperature, SilverStreet Capital exclusively invests in the best possible locations for the production of each crop or animal. This protects our production against changes in the environment.

Water Use

All our operations manage their water use and take extreme care to minimise volumes used. Technologies to aid in water management and improve water use efficiency include flow meters, variable speed drive pumps (VSDs), drip and micro-sprinkler irrigation systems, soil moisture probes, weather stations, evaporation pans and automation methods.

We, additionally, practice minimum tillage on our farms, and teach this to smallholder farmers. This results in increased moisture retention in the soil, reducing irrigation needs and enhancing drought tolerance in lower rainfall years.

Energy Use

We continue to implement clean energy solutions, and solar and hydroelectric power developments to help reduce reliance on fossil fuels and unreliable grids. This includes a solar power facility in Namibia and a hydro-electric power facility in Tanzania.

Opportunities

Globally, agriculture is under pressure to produce more, on the same area of land, and with less resources. The majority of the world's population growth between now and 2050 will come from Africa, with estimates from the UN showing an increase from around one billion people now to over two billion in 2050. Most countries have food deficits already and a huge sustainable increase in yield productivity is necessary to meet future food requirements. This challenge presents a unique opportunity to use strategically invested capital to fix some of the challenges in the various crop value chains. Specifically, to raise productivity sustainably without perpetuating agricultural practices that harm the environment. This can be achieved through investment into products and practices that can increase yields for smallholder farmers across Sub-Saharan Africa, without the need to increase land areas, which results in vast greenhouse gas emissions.

To achieve this smallholder farmers need access to:

  • markets to enable them to grow higher value crops;
  • high quality improved seed;
  • training in conservation farming techniques;and
  • storage facilities.

Using a hub out-grower model, it is possible to integrate these solutions into a centralised investment. In this model a business 'hub' is established that includes processing of a higher value product and provides assistance to smallholder farmers to help grow this product. The hub can also provide technical support, training and improved inputs - enabling farmers to reach their production potentials sustainably. This innovative, and integrated solution has proven successful in galvanising markets, raising incomes and reducing unsustainable land practices.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

We identify, monitor and manage climate related risks in the short-, medium-, and long-term. This depends on the risk or opportunity that we have identified. For example, changing crop varieties to better suit changing environments is a seasonal decision. Water security, and protecting our investments from changes in rainfall, is a significant infrastructural development, for example building a dam. We therefore utilise >20 year timescales.

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

SilverStreet Capital identifies and manages climate-related risks through all stages of the investment process due to the integral nature of climate risks in the agricultural sector. Creating efficiencies, reducing negative impacts, and reducing risks of climate change permeates all our strategic decisions.

  • During screening we exclude businesses that are not situated in optimal locations for agriculture.
  • While conducting due diligence we further this analysis with the help of specialised agricultural teams that conduct soil, location and risk analyses on the investment, ensuring the best possible environments for specific cultivars.
  • Throughout asset management, SilverStreet Capital continues to ensure investments assess and manage climate related risks and impacts.

SilverStreet Capital has drafted a climate change policy that will commence implementation in Q2 2020, although many actions are intrinsic to business operations and are being implemented. The policy commits SilverStreet Capital to support portfolio companies to:

  • be energy efficient and reduce carbon emissions, with specific attention to on-site renewable opportunities;
  • work towards reducing agricultural practices that emit carbon, such as soil tillage and land clearing;
  • monitor and manage water use efficiently;
  • continually adapt to be more resilient and robust to changing climates, such as reassessing crop varieties, irrigation technology, and other such measures; and
  • support our stakeholders such that they are less vulnerable to climate change. This includes teaching conservation farming techniques and increasing access to modern crop and livestock varieties to smallholder farmers in our networks.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

The Fund Manager and the Investment Advisor has put in place conflicts management systems and procedures to manage any potential conflicts of interest. These also cover management of any conflict arising through the Investment Advisor’s strategic relationships with local operating companies or partners. To the extent that there are other conflicts of interest on the part of the General Partner, the Fund Manager and/or the Investment Advisor, the Fund and any other account, company, partnership or venture with which it is, or they are now or later may become affiliated, they will endeavour to treat all of such entities equitably.

The Fund Manager shall be responsible for identifying any potential conflicts of interest that may arise in connection with the Fund. The Fund Manager shall, upon identifying any conflict of interest, consult the Advisory Committee in connection therewith. The Advisory Committee is made up of representatives of the key investors in the Fund.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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