BNP Paribas Asset Management today (20 November) unveiled the launch of the BNP Paribas Future Forest Fund which is classified Article 9 under SFDR.
The portfolio will invest in sustainable forestry to generate financial returns to investors and combine sustainable investment practices to combat climate change, improve asset resilience, and enhance biodiversity.
The fund is the first launched by BNPP AM in partnership with natural capital expert IWC. IWC is a global natural capital specialist, majority owned by BNPP AM and headquartered in Copenhagen, with over 30 years’ experience in providing investment management and advisory services within sustainable forest investments, agriculture investments, and ecosystems restoration.
The statement said sustainable forestry investments are "an opportunity for investors who are seeking to align environmental and social benefits with financial objectives. Indeed, forestry investments can play a significant role in investment portfolios, as they can deliver attractive long-term risk-adjusted returns, stable annual income, diversification benefits due to low correlation with other asset classes, and inflation-hedging properties".
In addition, sustainable forestry is key in fighting climate change as trees are instrumental in removing and storing carbon and can safeguard and improve terrestrial biodiversity while offering protection against deforestation.
Grounded in a controlled risk investment approach, via core timberland investments in developed geographies (US, Oceania, Europe), the BNP Paribas Future Forest Fund has an ESG framework guiding the production of sustainable timber. The Fund will only invest in FSC (Forest Stewardship Council) certified or certifiable forests and serve its investors with plug-in data for their greenhouse gas accounting targets and EU, or other regulatory, reporting needs.
The fund targets a size of $500m ($750m hard cap) and has had a first closing of $130m in November. The target portfolio will consist of 8 to 12 assets in the US (South, Northeast, and Pacific Northwest), Australia, New Zealand, and Europe.
Over the last 60 years, global demand for wood products has doubled and the United Nations Food and Agriculture Organisation (FAO) forecasts that wood demand will increase by another 37% to 60% between 2020 and 2050. The sustained increase in demand for timber products is arising from several mega-trends, including population growth, urbanisation, increase in per capita income, and a green transition.
Otto Reventlow, CEO of IWC said: “The BNP Paribas Future Forest Fund represents a significant step forward to bring sustainable forestry investment into the mainstream and recognises timberland as a compelling investment proposition.
"With this fund, we ensure that our focus on commercial viability is balanced with a strong commitment to protect and enhance biodiversity and climate resilience. We are proud to collaborate with BNP Paribas Asset Management to create a fund that aligns financial objectives with the urgent need for environmental stewardship.”
David Vaillant, global head of finance, strategy and participations at BNPP AM and Chairman of IWC said: “We are very pleased to partner with IWC and leverage their deep expertise in natural capital, ensuring that we make a meaningful impact in the world of sustainable forestry.
"The Future Forest Fund illustrates the common vision we have with IWC to actively contribute to the environmental transition. This new fund will enable us to answer our clients' growing interest in this new asset class as we widen our breadth of natural capital solutions.”
Maxence Foucault, senior ESG specialist, private markets at BNPP AM said: "At BNP Paribas Asset Management, we are committed to pioneering investment solutions that address the challenges of climate change and biodiversity loss. The BNP Paribas Future Forest Fund is a prime example of how investors can align environmental benefits with financial targets."
