Advances in impact monitoring are enabling SLM Partners to show impact trends for its regenerative agriculture investments, Alessia Lenders tells Michael Hurley
SLM Partners has reported the environmental outcomes across the properties in its 'regenerative agriculture' portfolios for more than 12 years – but its 2023 report "was a key milestone" for its improved accuracy and transparency, it said.
It sets out the investor's 'theory of change' for each land use system it invests in, detailing the challenges and opportunities for each.
The report includes SLM's first integration of the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), adding seven core and sector-specific TNFD metrics to its quantitative reporting, selected through a materiality and feasibility assessment.
To improve the accuracy of its reporting in line with the TNFD, SLM used data from sources new to the investor, such as IBAT Key Biodiversity Areas and the WWF physical water risk database.
The coverage of its carbon accounting increased from 21% in 2022 to 100% of all assets owned for longer than nine months.
For the first time, an SLM impact report included contributions from the farmers and foresters who manage land in SLM's portfolio.
An Environmental Finance IMPACT Awards judge praised SLM's "excellent report – granular and comprehensive but easy to follow and clear ... the impact results are clear and compelling".
The extended coverage of impact reporting for SLM Partners' investment portfolio brought with it several challenges the investor navigated in the last year, Alessia Lenders, head of impact at SLM Partners, tells Environmental Finance.
"Our business has grown a lot in the past three years, from less than $200 million in assets under management to $750 million this year.
"With that growth also comes a lot of different types of investments that need to be included in the report. There's a lot of work that had to make sure that the report evolved as our business did, while also adapting to the new frameworks [including TNFD]."
SLM Partners has direct access to primary data because it invests directly in land and works closely with local operators.
"Rather than struggling with data access, our main challenge is identifying cost-effective monitoring solutions and selecting the most relevant datasets for our stakeholders," it adds.
"It is very resource intensive to collect data directly from our local operators, specifically the very granular data needed for carbon accounting. There is a lot of risk of 'put garbage in – get garbage out', so we did a lot of work to collect more precise data from farms and to find the appropriate tools, which need to be specific to each land use context.
"The bigger your business and the more diverse the type of land systems you invest in, the higher the number of different carbon accounting tools and methodologies you need to use," Lenders adds.
SLM is also working to further improve its monitoring, including on carbon accounting. In Europe, it co-funded a methodology for Mediterranean orchards in partnership with Climate Farmers, a German regenerative agriculture project manager. This methodology is undergoing independent verification and will be implemented across SLM's Iberian orchards in 2025.
Lenders says a "key priority" for future impact reports will be presenting historical data across its investments to show trends.
"We don't include that yet, but now that we're getting much better at putting in place consistent data collection, we'll be able to start showing how things are evolving on the farms that we own," she says.
In its 2024 report, due in March next year, it will show historical trends of key environmental impact indicators for the properties in its first fund, a 2012 vintage, which is now coming to the end of its life.