Investment in forest assets is surging, with Gresham House, one of the world’s largest nature capital managers, raising £300m as part of its “Sustainable UK Forestry Fund.”
It comes as global banks are looking to invest in productive forestry, which “combines a large-scale sustainable investment with compelling risk-adjusted returns.”
Wood Central understands the capital-raising target was reached two years ahead of the three-year goal, “reflecting growing recognition by investors of the benefits of forestry as a sustainable natural capital investment,” according to a Gresham House media statement.
Among the drivers for investment include “long-term stable returns, its potential as a diversifier for portfolios, as well as its positive environmental impacts which can align with clients’ net-zero objectives.”
Global investors are looking to forestry to hedge against traditional stocks and bonds, with Wood Central reporting that productive forestry is “resilient to shorter-term market dynamics” and allows forest managers to delay harvesting if wood prices are too low.
According to Olly Hughes, the Graham House Managing Director of Forestry, UK local government schemes are among investors that have backed the fund, which will invest in a combination of new planting land for woodland creation and established sustainable commercial forestry across the UK.
It expects to generate returns from the sale of timber, the sequestration of carbon and the capital growth of the underlying land and trees.
“This successful final close is a testament to the proven expertise of our forestry team and the long-term performance across a range of return drivers for the asset class,” Mr Hughes said.
“With growing recognition of the benefits forestry can bring to portfolios in terms of returns, diversification, inflation-protection and environmental impacts, the pipeline of opportunities is strong, and we will now be deploying this capital at pace into new planting projects around the UK.”
With more than £3.5B in assets under management, Gresham House is one of the UK’s largest forest asset managers.
It is also a founding member of the newly established International Sustainable Forestry Coalition, which aims to increase investment in nature capital markets.
The push to forest investments is supported by Elizabeth Eyre, the chair of the Worcestershire County Council Pension Fund committee, who said, “Forestry has proven a valuable diversifier for our portfolio while also delivering meaningful benefits in terms of reducing emissions.”
“Gresham House is an established leader in forestry, and we are pleased to have increased our investment in this strategy, which we believe offers compelling long-term returns and real-world environmental and social benefits.”
Among the drivers for investment in forestry include the LEAP framework (short for Location, Evaluate, Assess, and Prepare), with financial institutions now under greater scrutiny to demonstrate the “nature positive” impact of investments.
Supported by 40 of the world’s largest financial institutions, the new standard for the first time, pushes for full transparency to ensure that financial investments are ‘nature positive.’
The global pact, which forms part of the Taskforce on Natural Related Financial Disclosure (TFND), represents more than US $20 trillion (or AU $31 trillion) of assets under management and is already investing heavily in ‘spatial finance.’
