BNP Paribas AM launches a fund to respond to the demand for sustainable investment in timberland
20 NOV, 2024
By Jose Luis Palmer from RankiaPro Europe
BNP Paribas AM has announced today the launch of the BNP Paribas Future Forest Fund, registered for sale at the CNMV in Spain. The fund is classified as Article 9 according to the European SFDR Regulation and will invest in sustainable forestry in order to generate returns and combine sustainable investment practices to combat climate change, improve asset resilience and enhance biodiversity.
Collaboration with IWC
This is the first fund launched by BNP Paribas Asset Management in collaboration with the natural capital expert IWC, a company in which the manager has a majority stake and whose headquarters are in Copenhagen. IWC has over 30 years of experience managing investments and advisory services in sustainable forestry activities, agriculture and ecosystem restoration.
Sustainable forestry investments offer investors the opportunity to combine financial objectives with social and environmental benefits. In fact, forestry investments can play an important role in investment portfolios, as they can offer attractive long-term risk-adjusted returns, a stable flow of annual income, diversification benefits due to low correlation with other asset classes and hedging characteristics against inflation. In addition, sustainable forestry is crucial to combat climate change, as trees allow for the removal and storage of carbon and can preserve and enhance terrestrial biodiversity while offering protection against deforestation.
Based on a controlled risk approach, with investments in timberland from developed markets (United States, Oceania, Europe), the BNP Paribas Future Forest Fund has a strong ESG framework that governs the production of sustainable timber. The fund will only invest in forest areas that have FSC forest management certification or meet the requirements to obtain such certification and will provide its investors with data on their greenhouse gas measurement objectives and on the requirements for information communication of the European Union or other regulations.
The fund's goal is to reach a volume of 500 million dollars, with a maximum limit of 750 million. It has already achieved a first closing of 130 million dollars in November. The target portfolio will be composed of between eight and twelve assets from the United States (south, northeast and Pacific northwest), Australia, New Zealand and Europe.
Growing demand for sustainable timber
The fund responds to certain macroeconomic trends that point to a growing demand for wood. In the last sixty years, the global demand for wood products has doubled, and the United Nations Food and Agriculture Organization (FAO) indicates that the demand for wood could increase between 37% and 60% more between 2020 and 2050. The constant increase in the demand for wood products is derived from several megatrends, such as population growth, urbanization, the increase in per capita income, and the green transition.
At BNP Paribas Asset Management, we are committed to pioneering investment solutions that address challenges posed by climate change and biodiversity loss. The BNP Paribas Future Forest Fund is an excellent example of how investors can combine financial objectives with environmental benefits.
Sol Hurtado de Mendoza, General Manager of BNP Paribas AM for Spain and Portugal
The BNP Paribas Future Forest Fund represents a significant step forward in promoting sustainable forest investment and highlights the attractiveness of investing in timberland. This fund allows us to balance our approach to commercial viability with a strong commitment to protect and enhance biodiversity and climate resilience. We are proud to collaborate with BNP Paribas Asset Management in creating a fund that combines financial objectives with the urgent need for responsible management from an environmental perspective.
Otto Reventlow, CEO of IWC
Collaborating with IWC allows us to leverage their extensive experience in natural capital and make a significant impact in the field of sustainable forestry. The BNP Paribas Future Forest Fund is a reflection of the common vision we have with IWC to contribute to a sustainable transition. This new fund will allow us to respond to the growing interest of our clients in this new asset class while we expand our range of natural capital solutions.
David Vaillant, Global Financial Director, Strategy and Agreements of BNP Paribas AM and Chairman of IWC
