UFF African Agri Investments is a signatory to the UN Principles for Responsible Investment. This is because we see environmental, social and governance (ESG) issues as key to managing investment risks. We integrate ESG factors into the investment process to improve the analysis of all investments and the standards of practice.
What are ESG factors?
Environmental issues: compliance with environmental laws, reduction and disclosure of carbon emissions and reduction of energy consumption. In general, our funds only make use of environmentally sustainable methods of agriculture, as agriculture’s long-term vitality and profitability go hand-in-hand with its ability to coexist on a sustainable basis with the natural environment.
Key environmental priority areas
- Water conservation
- Reducing pathogens and pesticides
- Use of organic matter
- Reducing soil erosion caused by water, wind or tillage
- Reducing particulate emissions, odours and emissions of gases that contribute to global warming
- Ensuring compatibility of agricultural activities with biodiversity
- Noting habitat availability and species at risk
- Reducing economic damage to agriculture from wildlife
- Making use of renewable natural resources wherever possible.
Social issues: compliance with labour laws, employee health and safety, supply chain risks. We consider social responsibility as an inextricable component of investing in agriculture in Africa. The long-term nature of the investments in natural resources such as land puts social responsibility as a key component for any investment decision, as it will directly impact the risk and return characteristics of all investments.
A farm thrives when its employees are invested and involved. As such, farm labourers are empowered through a training programme for the agri-sector that ranges from basic education to training that will enable them to become independent competitive farmers in the foreseeable future. Comprehensive agribusiness courses are offered, covering topics such as: adult basic education and training; life skills; farm management; quality assurance; improving crop yield; benchmarking of investee farms; exporting; and financial management.
UFF African Agri Investments is committed to improving the living conditions for employees who live on the farms. Additional houses are built for seasonal and permanent workers to prevent overcrowding and improved sanitation and access to safe drinking water is provided.
UFF African Agri Investments partners with Care Cross to provide healthcare for farm workers. This provision to prepaid basic healthcare means workers do not have to pay out-of-pocket. Farm employees have unlimited access to CareCross doctors, dentist and optometrists, as well as free provision of acute and chronic medicines, radiology and pathology services according to a protocol in line with World Health Organisation (WHO) standards.
Governance issues: this involves eligibility and risk analysis, all required due diligence, the appointment, composition and functions of the board, evaluations as well as regular ESG reporting. As a signatory to the UNPRI, UFF African Agri Investments also subscribes to the UNPRI Farmland Principles. These five Farmland Principles are designed to guide institutional investors who wish to invest in farmland in a responsible manner that promotes environmental sustainability, respects labour and human rights as well as existing land and resource rights, upholds high business and ethical standards, and reports on activities and progress towards implementing and promoting the Principles.
Regarding our eligibility and risk analysis, our investments also operate in accordance with the Code of Responsible Investing in South Africa (CRISA), the World Bank’s Corruption Perception Index (CPI) and the Organisation for Economic Co-operation and Development (OECD) guidelines.
With our commitment to sound governance, all farms are also subjected to in-depth agronomic and financial evaluations and regular site visits.
Our Responsible Investing Process
To ascertain socially and environmentally responsible investments, each project will be rated through an internally developed ESG screening framework, where minimum criteria will apply. In addition to using the internal procedures and guidelines, as a minimum requirement the International Finance Corporation (IFC) Performance Standards and World Bank Group Environmental, Health and Safety Guidelines will apply, and in addition local environmental and social laws where these are appropriate or sufficient. Companies invested in should adhere to a Business Principles undertaking on business integrity, as outlined in the OECD Guidelines on anti-corruption, bribery and money laundering.
In addition, each Investment Proposal will contain recommendations to further improve the ESG rating. In this respect as the Fund Advisor we will actively cooperate with experienced partners specialising in ESG aspects related to farming.
After investments have been made, annual monitoring will take place on ESG related issues, for example whether recommendations are actually executed.