New Forests Fund

Making sustainable plantation forestry investible in South East Asia.

The challenge

The forestry sector in South East Asia is at the nexus of some of the greatest challenges facing the world today: climate change, biodiversity loss, resource scarcity and the need to create a sustainable development model founded on social inclusion and equality. For the sector to be able address these challenges, it needs urgent investment.

An emerging market for sustainable plantation forestry investment does offer a compelling opportunity for investors to support the industry in becoming more sustainable and responsible. However, institutional investment has so far been limited, with potential investors dissuaded by the uncertainty in key environmental and social risk factors.

The project

In 2013, sustainable investment manager New Forests made history when it launched the Tropical Asia Forest Fund (TAFF): the first forestry fund for institutional investors in South East Asia. TAFF focuses on high-quality sustainably managed timber plantations with a strong focus on industry-leading environmental and social policies.

New Forests will use its Sustainable Landscape Investment framework to ensure TAFF investments can address pressing social and environmental challenges. The framework promotes six core themes to enhance investment performance:

  1. appropriate land-use planning;
  2. improving the biological and economic productivity of assets;
  3. supporting ecosystem services;
  4. implementing good governance;
  5. managing risk and emphasising long-term outcomes rather than short-term gains; and
  6. promoting shared prosperity for businesses, workers and communities.

Partnerships for Forests is supporting TAFF to create a sustainable landscapes technical facility to operate alongside the fund. The facility will address the barriers to investment, aiming to make projects more environmentally rewarding and catalyse further private investment into the fund.

To do this, the facility will run assessments to ensure investments have strong the social and environmental impact, as well as designing forest protection and restoration mechanisms for supported projects – using the High Carbon Stock toolkit to identify natural forest for protection in and around plantations. Such assurances will tighten each business case and position projects to reach commercial scale-up.

Current impact

New Forests is currently developing a proposal for the first project to come through the approval process. By 2020 it aims to have invested in a diversified portfolio of managed forestry areas totalling 150,000 hectares, containing a combination of commercial plantations and conservation areas.

With strong social and environmental assurances, these investments have the potential to increase stakeholder engagement, improve access to workers’ rights, health and safety operations and support for rural livelihood opportunities.

And crucially, by demonstrating the commercial investment opportunities and feasible investment methods in South East Asia, New Forests hopes its lead will catalyse further interest from institutional investors. Such moves would accelerate the forestry sector’s shift towards becoming credibly investible and truly sustainable.

 

Header image

© New Forests 

 

Location
Kalimantan, Indonesia
Organisations
New Forests Asst Management Pty Ltd; Sampoerna Agro and other concession holders; Finnish Fund for Industrial Cooperation Ltd; Danish Investment Cooperation
Commodity focus
Timber
Hectares under sustainable land use
100,000 ha (by 2020)
Private investment mobilised
£ 150,000,000 (by 2020)