Save on tax and save the planet: put some money in forestry

In turbulent political and economic times, many investors are attracted to physical, tangible assets that promise some sort of protection against inflation, upheaval in the financial system, or political change (or often, all three at once). Gold is one such “real asset”; property is another. But while most of us probably have some exposure to property, and many readers will already own gold, there’s one “real” asset you perhaps haven’t considered forestry. Investing in woodland might sound like a hassle (it can be), or only for those who are aiming to pass their wealth to the next generation (it certainly has its uses on that front). But if you are looking to diversify your portfolio and plan to invest for the long run, it’s an asset class that you shouldn’t ignore.

Woodland covers around 13% of the UK, according to government statistics the best part of 3.2 million hectares. It’s also attracting growing interest from institutional investors. These include the Church Commissioners, which manages the Church of England’s investments, and has on its behalf built a portfolio of forestry worth around £250m. Forestry can provide both long-term income and capital growth. The income is generated by the sale of the timber felled each year the biggest customers come from the construction industry, but the paper and packaging business is a significant source of demand too. Growth, meanwhile, is driven by the rising capital value of the asset over time as timber prices rise, so do the value of the forests producing it. Continue reading “Save on tax and save the planet: put some money in forestry”

Another Robust Year for Forestry

ForestryTHE AVERAGE price of commercial forestry on the market rose 23% over the last year, according to the latest sector statistics.

The 21st edition of the UK Forest Market Report, produced by Tilhill Forestry and John Clegg and Co, outlined a positive outlook for the ‘robust’ market in its annual analysis, and highlighted its ‘powerful attraction as an investment asset’.

That year-on-year rise in average forestry values takes it to £11,478 per stocked hectare, pushing a 21% increase in the total value of the forestry market.

Commercial forestry transactions worth £126.5m were completed in the past year, with14,235 ha of forestry traded in 2019, encompassing 81 forests, at an average cost £1.56m.

Continue reading “Another Robust Year for Forestry”

Finland fights to keep control of forests away from EU

(Photo: Greenpeace Finland)

Finland, which currently holds the EU’s presidency until the end of the year, is lobbying to keep forestry a national competency – undermining a key part of the EU’s climate efforts to reduce emissions.

The EU considers land use and forestry two of the most important sectors for the bloc’s climate policy – as they include the use of soils, trees, plants, biomass, and timber.

Bearing in mind the climate targets for 2030 and 2050, the European Union designed a regulation for land use and forestry (known as LULUCF), adopted in 2018, to ensure that the accounted total emissions in the sector do not exceed the ‘accounted sinks’ – also known as “no-debit” rule. Continue reading “Finland fights to keep control of forests away from EU”

Bioenergy, forestry sectors jump on EU’s green finance bandwagon

Bioenergies, including wood, biofuels and forest-based industries, should be recognised under the EU’s draft sustainable finance taxonomy, in line with the recently-updated renewable energy directive, an industry coalition has claimed.

The EU’s draft taxonomy for green finance is “undermined by significant divergences” with the EU’s renewable energy directive, according to a joint statement by ten industry associations involved in the forestry and bioenergy sectors.

“This lack of coherence casts a shadow over the likelihood of achieving long-term EU climate and energy goals,” the coalition warns. Continue reading “Bioenergy, forestry sectors jump on EU’s green finance bandwagon”

Tree planting ‘has mind-blowing potential’ to tackle climate crisis

Research shows a trillion trees could be planted to capture huge amount of carbon dioxide.

Planting billions of trees across the world is by far the biggest and cheapest way to tackle the climate crisis, according to scientists, who have made the first calculation of how many more trees could be planted without encroaching on crop land or urban areas.

As trees grow, they absorb and store the carbon dioxide emissions that are driving global heating. New research estimates that a worldwide planting programme could remove two-thirds of all the emissions that have been pumped into the atmosphere by human activities, a figure the scientists describe as “mind-blowing”.

The analysis found there are 1.7bn hectares of treeless land on which 1.2tn native tree saplings would naturally grow. That area is about 11% of all land and equivalent to the size of the US and China combined. Tropical areas could have 100% tree cover, while others would be more sparsely covered, meaning that on average about half the area would be under tree canopy. Continue reading “Tree planting ‘has mind-blowing potential’ to tackle climate crisis”

Scottish Woodland turns over £92 million after rising demand for timber

Employee owned forestry business logs near-£1m profit growth

Employee-owned forestry business Scottish Woodlands Ltd has boosted its pre-tax profits to £3.26million from £2.29 million.

The performance, which follows another year of strong growth in the forestry sector, was achieved on a boost in annual turnover to £92.3 million in financial year 2017-18 from £76.8 million.

The increase for the business, which is 80 employee owned, was predominantly attributable to wood user demand timber, the company said.

Managing director Ralland Browne attributed the rise to “greater focus on core operations” within the business in a robust forestry market. Continue reading “Scottish Woodland turns over £92 million after rising demand for timber”

Opportunities in sustainable timberland

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on May 13, 2019 – May 19, 2019.

Interest in sustainable and impact forestry investing has been growing steadily over the past two decades, according to a new report by The Global Impact Investing Network (GIIN) titled “Scaling impact investing in forestry”.

This presents an opportunity for impact investors to push for social and environmental change in the forestry asset class. Continue reading “Opportunities in sustainable timberland”

Rooting for a sustainable future: how forest resources can help tackle climate change and air pollution

Wild mushroom picking in Eastern Europe is more than a tradition. It is a social event. Every year, in late summer and early fall, thousands of people roam the woods for the biggest, most perfect specimens. They take their children along to teach them which mushrooms are edible and which are poisonous, which are ripe and which should be left for another week or so, passing on generations-old teachings and care for the woods. In the evenings, families share their harvest around a plateful of tasty, butter-fried delicacies. Together, they celebrate their love for the forests, sharing the best spots they found and recalling the animals or birds they sighted along the way.

Forests are among the most valuable treasures on earth: they supply energy from timber, help with water regulation, soil protection and biodiversity conservation. Yet in traditional forest management, trees are still primarily viewed as a source of wood. All other products derived from wooded lands—such as honey, mushrooms, lichens, berries, medicinal and aromatic plants, as well as any other products extracted from forests for human use—are considered of secondary importance.

Non-timber forest resources, however, have far-reaching benefits for millions of households, both in terms of subsistence and income. These by-products go into food and everyday items like cosmetics or medicines. The protection of their environment is therefore a vital need. Continue reading “Rooting for a sustainable future: how forest resources can help tackle climate change and air pollution”

Impact forestry funds eye 8% returns, says GIIN report

Sustainable and impact forestry sector presents strong opportunity for impact investors, with annualized gross returns ranging from 7 to 18%, according to report from GIIN

The forestry sector presents a strong opportunity for impact investors, driven by the potential of higher valuations and further ESG integration. Annualized gross returns expectations range from 7-18% per annum, according to a forestry impact investment report put out recently by Global Impact Investing Network (GIIN), signifying the strong potential of investing in the sector. While sustainable and impact forestry investing has grown steadily in the past two decades, some gaps between asset managers and owners remain, according to the “Scaling Impact Investment in Forestry” report.

Sustainable forestry focuses on long-term stewardship of forestry resources, while impact forestry seeks to create an additional impact on the environment and communities.

The report looked at 37 funds in the sustainable and impact forestry sector, which manage over US$9.4 billion in forestry and related assets. All of the funds with one exception target risk-adjusted, market-rate returns. Annualized, gross returns expectations ranged from 7% per annum to 18% per annum, with a median target of 8% per annum. Emerging-market-focused funds target annualized returns of 15% while developed-market-focused funds target 10%. Continue reading “Impact forestry funds eye 8% returns, says GIIN report”

Shell unveils $300m nature investment plan

Image: Shell

Shell has unveiled the latest part of its new emission reduction strategy, announcing plans to invest $300m over the next three years in natural ecosystem-based projects.

The oil giant said the new programme, which will initially focus on reforestation partnerships in Spain and the Netherlands, is designed to support its recently announced target to reduce its Net Carbon Footprint by two to three per cent over the next three years. It added that the emissions savings that should result from the work to restore and protect natural ecosystems would also serve to address carbon emissions generated by the customers who use Shell’s products.

Ben van Beurden, chief executive at Royal Dutch Shell, said the latest investments are part of the company’s wider emission reduction strategy, which has seen the oil giant step up investment in electric vehicle charging infrastructure, renewables, and other clean technologies in recent years. Continue reading “Shell unveils $300m nature investment plan”