The PPF currently invests in soft and hardwood forestry assets globally, with investments in Australia, New Zealand, the US, the UK, Ireland, the Baltics and the Nordics. Outside its sustainable investments through pooled funds, it now also invests approximately 30 per cent of its forestry allocation through five direct and co-investments including a recent direct investment in the New Zealand plantation Wenita, the largest producer of timber in Otago with 30,000 hectares of sustainably managed forests.
Forestry is a key element of the PPF’s responsible investment strategy as it can help mitigate CO2 emissions by storing carbon. This makes sustainable forestry assets one of the few viable nature-based investment solutions in the journey towards a net zero carbon world. Well-managed forests can also increase biodiversity and are more resilient to the effects of climate change.
As part of its ongoing commitment to actively encouraging responsible investment, the PPF only invests alongside asset managers who have fully demonstrated their responsible practices around acquiring and managing forestry. All funds and fund managers are subject to a rigorous investment due diligence process which includes their ESG credentials before engagement.
The PPF has, over a number of years, also focused on increasing the quality of their forestry investments, continually reviewing the proportion of timberland that is FSC or PEFC certified. They are committed to achieving globally recognised independent certification of all their forestry assets as this plays a critical role in the preservation of high conservation value forests and combatting deforestation, as well being an expected minimum standard within most supply chains now.
“It’s fantastic to be continuing to grow our investments in forestry” commented Lea Dubourg-Hrachovec, the PPF’s Portfolio Manager who leads on the fund’s Timberland, Farmland and Infrastructure investments. She continued: “A well-constructed portfolio gives future optionality for us to play a bigger role in reducing carbon emissions and fighting climate change while delivering strong returns for our members and making our portfolio greener. The emergence of carbon credit trading backed by real assets, like forests, will see more investments being made into afforestation, encouraged by the Government.”
Last year the PPF seeded a new Scottish afforestation strategy that allows them to generate UK carbon credits directly, becoming one of the first UK pension funds to do so. Their sector leading approach has now attracted other pension fund investors who are looking to generate returns that make a difference.
As the organisation prepares to launch its new Strategic Plan for the next three years, 2022 – 2025, working sustainability in all parts of its operation and making a difference, while protecting the financial futures of those who rely on the PPF, will be a key priority.
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