Sustainable asset manager SAIL Investments has scooped the award for the private debt fund of the year and private debt provider of the year, in recognition of its innovative private credit fund targeting sustainable tropical commodity supply chain investments.
The $400 million &Green fund was launched in 2017 and has already invested in rubber, soy-cattle integration, palm oil, coffee, cocoa and animal protein supply chains. The fund directly links loan covenants to sustainability commitments identified through a landscape protection plan (LPP) which specifies actions the borrower will undertake to achieve targets aligned with the companies drive towards sustainability leadership and with the goals of the fund.
SAIL chief investment officer Johnny Brom described the approach as being one of "small tweaks and big disruptions" to help commodity supply chains in tropical countries to improve overall sustainability and remove deforestation and biodiversity impacts from their sourcing strategy, thus better aligning them for growth and access to a broadening market.
"We developed this pre-investment engagement because, ultimately, we think the addressable market for this kind of sustainability-driven financing role – i.e. where you actually go into the asset and drive value alongside management and owners – is going to grow and will spread to multiple capital and human-intensive industries," Brom told Environmental Finance. "We want to lead that space."
For example, SAIL provided a $25 million loan to Vietnamese coffee producer Phuc Sinh in August. The investment will result in Phuc Sinh establishing a 'No Deforestation, No Peat and No Exploitation' (NDPE) monitoring system and upgrading its supply chain management practices to EU Deforestation Regulation (EUDR) standards to achieve targets including forest conservation, improved ecosystem resilience, and tonnes of CO2 equivalent climate benefit.
SAIL said the &Green fund has now demonstrated the "proof of concept" for this innovative approach, delivering "solid" financial returns and sustainability impact. As a result, the fund almost doubled its assets under management in December 2023 with a $180 million investment commitment from the Green Climate Fund (GCF).
The investments made by the fund have already conserved more than 3.1 million hectares of forest, restored 12,000 hectares of forest, and generated more than 13 million tonnes of CO2 equivalent in benefits to date.
"Sustainability is a strategic choice," Brom added. "It is a driver of alpha in our thesis by derisking our borrowers for their future growth and thus our investors' portfolio. SAIL's unique investment approach, coupled with a self-origination and sponsorless model, enables us to build portfolios that are uncorrelated from traditional private credit portfolios."
The award win builds on previous success by SAIL in the Environmental Finance Impact Awards in 2020, 2021, and 2022. This is the first year, however, that SAIL has secured two awards in one year.
