New Forests says the forestry sector has an investment role to play in both removing and storing carbon from the atmosphere, as well as its contribution to a rising bio-economy.
With more than 400,000 hectares of plantation forests, and 6.3 million tonnes of certified timber products produced and/or processed by New Forests’ investments, the company is articulating the case for how investment opportunities in the forest sector can help mitigate climate change.
They recently held a day-long investment symposium with more than 100 institutional investors, impact investors, businesses, and NGOs gathered in San Francisco. The New Forests’ symposium also “explored the experience of Native American communities who have enrolled their forests to provide carbon offsets for California’s emissions trading scheme,” New Forests said. Through its Forest Carbon Partners program, New Forests is currently working with several tribes in California, Alaska, and New Mexico as part of its forest-carbon investments on more than 445,000 acres of forests in the United States.
“As a company, we’ve always had a strong interest in the whole linkage between the forestry sector and action on climate change,” said CEO David Brand. “From the very start, we’ve looked at ways that our investment programs could link either with a carbon price signal or the aspirations of our clients to actively decarbonise their portfolios. So as a business, we have active investment in forest carbon investment projects, and we also have carbon accounting that we do for our clients.”
The company’s 2016 sustainability report says they’re pursuing restoration/conservation projects and seeks to leverage timber products as a contributor to the growing bio-economy, including replacements, a shift in resource use and production that includes “replacement of fossil-based energy, fuels, and chemicals with more sustainable inputs from bioenergy, biofuels, bio-plastics, and bio-materials,”
“Restoration/conservation is important, and we are looking at ways to invest in that, both in our carbon offset program in the California market, and also in how we do business in Asia,” Brand said. “Secondly, we believe that there is going to be a rising demand for biobased materials, whether that be building materials, or biofuels that can replace petrochemicals. There are ways that the land can be used for forestry production, and we can keep up with that potential transition. Those are the themes that are coming out.”
In the symposium, the Native American communities that work with New Forests also spoke about how their activities have allowed them to generate revenue from traditional activities, Brand added.
The theme of impact investing is being integrated in the strategy for New Forests as well, Brand said.
“Being a long term investor, rather than focusing on short term returns, that appeals to not only impact investors who want measurable, positive social and enviro outcomes, but mainstream, large institutional investors who increasingly are being pushed out of traditional asset classes like fixed income and equities and things like direct forestry, agriculture and infrastructure,” Brand said. “They want to feel confident that the mangers they’re selecting will deliver the positive outcomes so that there’s no negative outcomes, or feedback.
“To some degree, that’s what we’re learning as we get larger, that we can have this positive impact by how we do business. Look at Asia – we are working with large numbers of communities that are trying to create win/win outcomes around creating local employment, facilitating outgrower schemes where communities can have their own timber plantations, employment, nursery systems and so on, it all links together in terms of having a business that has a certain set of basic philosophies about how we operate.”
New Forests operates across a diverse set of regulatory regimes, Brand noted.
“In the United States, we have developed a heat map tool which can assess which forests have a higher carbon value, and then we can target investing into those and manage into those forests,” Brand said. “Carbon storage fits in well with the California carbon regulations. New Zealand has different rules, and we do carbon reporting for both timber production as well as the sale of carbon offsets. In Asia, a lot of what we’d be working on is linking conservation within our investment programs with some of the international grant funders and pay for performance schemes, and in Australia, the policy has been back and forth about a carbon trading regime or not. Our view is that we’d respond to the price signals that countries put in place. In Australia and New Zealand, we’re aiming to operate sustainably. We maintain over 300,000 acres of forest under conservation management and we do that as part of how we want to manage our assets.”
New Forests operates in six markets and is “continuing to expand,” Brand said. The investment strategies straddle the six markets, and New Forests responds to policy changes and regulations as they happen – including the possibility for new carbon pricing schemes across markets.
They have AU$3.6 billion in investments that include more than 843,000 hectares of plantation forestry and land, Timberlink wood processing, sales, and distribution business, the forest management business Forico, and the international timber marketing business New Forests Timber Products.