Sustainable Forestry Strategy
Global demand for wood products is expected to significantly increase over the next few decades, driven by population growth, urbanisation and rising per capita income.1 Policy developments and changes in consumer preferences should also positively affect demand. For example, wood is central to the green transition, and is now being used for construction, sustainable packaging, and as an alternative to plastics. Investing in commercial forests may, therefore, offer both attractive financial and environmental characteristics.
Strategy features
Attractive risk-adjusted return potential
Core forest investments can offer attractive risk-adjusted return potential, with both annual income and capital appreciation components.
Portfolio diversification
Investments in forests generally exhibit low correlation to other asset classes due to a distinct return driver: biological growth.
ESG credentials
Investments in sustainably managed forests typically exhibit robust ESG2 credentials. Forests store and sequester carbon and can help to safeguard and restore biodiversity.
Investment philosophy
The strategy is based on a fundamental core timberland approach, offering investors a direct way to gain exposure to this growing asset class and, in turn, align their financial targets with environmental and social benefits.
Furthermore, the strategy is designed to shape the commercial forests of tomorrow by utilising signature actions to help combat climate change and improve asset resilience and biodiversity. A strong ESG3 framework is in place for sustainable production of timber, climate resilience and biodiversity, as well as regular reporting for greenhouse gas emissions targets. The team will only invest in FSC4 certified or certifiable forests.
Investment process
The strategy follows a proven and structured investment process to identify, acquire, and manage forest assets to deliver attractive risk-adjusted returns and more biodiverse and resilient forests.
- Origination and due diligence: deal sourcing and analysis (including forest resources, markets, climate change, and sustainability)
- Portfolio construction: validation for investment and execution
- Operations and continuous monitoring: asset management, including implementation of signature actions, portfolio monitoring, and risk management.
Team and expertise
The strategy is actively managed by International Woodland Company Asset Management+ (IWC AM+), a leading natural capital specialist in which BNP Paribas Asset Management holds a majority stake.
IWC AM+ is a team of 15 experienced timberland investment professionals holding on average two decades of investment and forest industry experience.5 Team members’ cumulative careers amount to investments of over USD 10 billion.
IWC AM+ operates with a local presence in the United States, Australia, New Zealand and Europe, and – as part of BNP Paribas Asset Management’s wider Private Assets investment platform – benefits from the support of dedicated structuring, legal, back and middle office teams, as well as our Macro Research team and dedicated Sustainability Centre.
Investment risks
Private assets are investment opportunities that are unavailable through public markets such as stock exchanges. They enable investors to directly profit from long-term investment themes and can provide access to specialist sectors or industries, such as infrastructure, real estate, private equity and other alternatives that are difficult to access through traditional means. Therefore, any investment in private assets does require careful consideration, as they tend to have high minimum investment levels and may be complex and illiquid, as well as may be exposed to specific risks, including:
- ILLIQUIDITY OF THE SUB-FUND’S SHARES
- ILLIQUIDITY OF THE SUB-FUND’S INVESTMENTS
- CREDIT QUALITY
- LIQUIDITY RISK
- LONG-DATED NATURE OF MOST INVESTMENTS
- CONCENTRATION
- MARKET RISK
- INTEREST RATES
- FOREIGN EXCHANGE RATES AND HEDGING
For a complete description and definition of the strategy’s generic and specific risks, please refer to the Prospectus and KID.
[1] Food and Agriculture Organisation of the United Nations, The State of the World’s Forests, 2024
[2,3] ESG: Environmental, Social and Governance. ESG assessments are based on BNP Paribas Asset Management‘s proprietary methodology which integrates all three aspects of E, S & G.
[4] FSC: Forest Stewardship Council. FSC-certified forests are managed to strict environmental, social, and economic standards
[5] BNP Paribas Asset Management and IWC, July 2024
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