Responsible investment in farmland
Farmland is gradually becoming a mainstream allocation option for many institutional investors due to its potential for cash generation and real long-term growth, with low correlations to mainstream assets and exposure to attractive supply/demand dynamics.
Farmland is one of the essential supporting pillars of the global population and economy and is central to many lives and communities: it is therefore crucial that any investment is responsible and sustainable.
Given that farming is chronically and increasingly undercapitalised and further given that farmland projects lend themselves, by their very nature, to the pursuit of sustainable development goals, investors providing the required capital have the ability to adopt a ‘value-add’ approach, with measurable and auditable ESG metrics.
Below is an extract from Putting principles into practice: 2018 responsible investment report, highlighting Insight's ongoing commitment to sustainability and responsible investment.
Environmental and social considerations feature prominently in farmland investments that Insight oversees. Insight has detailed due diligence procedures incorporating these principles and an independent SRI Committee provides input into different aspects when appropriate.
ESG Guidelines aligned to the UN Sustainable Development Goals
As part of our commitment to responsible investing, and as one of the signatories of the PRI in Farmland and founding signatories of the UN-supported PRI, our approach to farmland is based on aiming to maximise value creation without compromising responsible and sustainable principles. We believe that we have a unique approach to farmland, emphasising strategies that create economic value through disciplined execution alongside a strong commitment to sustainable and responsible farming practices.
Insight has identified a number of key objectives within an ESG framework:
- We have aligned a responsible Investing approach with the evolving Farmland investment strategy and with Insight’s Responsible Investing Framework
- We will develop an appropriate mitigation path to report against the UN Sustainable Development Goals (SDG) and use ESG frameworks to deliver against relevant SDG goals
- We will identify appropriate auditable, quantitative and qualitative key value-add indicators which highlight relevant impact objectives. Annual independent ESG audits will be performed by an independent “Big 4” audit group
- We will provide alignment with investors’ and supply chain partners’ RI policies and procedures
Farmland: helping you navigate the investment universe in this nascent asset class
Explaining the potential benefits of the asset class, the different ways investors typically gain exposure to farmland, what we believe to be the best way to invest in the asset class and ways to address the real or perceived challenges of farmland investment.
Past performance is not indicative of future results. Investment in any strategy involves a risk of loss which may partly be due to exchange rate fluctuations.
The performance results shown, whether net or gross of investment management fees, reflect the reinvestment of dividends and/or income and other earnings. Any gross of fees performance does not include fees and charges and these can have a material detrimental effect on the performance of an investment.
Any target performance aims are not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for the returns to be significantly different than expected.
Portfolio holdings are subject to change, for information only and are not investment recommendations.
Farmland is exposed to the impact of government policy. Subsidies, renewable fuels, trade agreements and attitudes to ownership rights can vary between markets, and may change over time. Farmland is an inherently illiquid asset subject to the range of risks associated with primary production. Land values, like commodities, will experience large deviations from the equilibrium as a result of a range of market forces such as returns across other assets, level of interest rates, and investor sentiment.
Investments in emerging markets can be less liquid and riskier than more developed markets and difficulties in accounting, dealing, settlement and custody may arise.
The investment manager may invest in instruments which can be difficult to sell when markets are stressed.