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.
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.
[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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Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
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