Name International Woodland Company A/S (‘IWC’) and IWC Investment Partners A/S (‘IWCIP’), collectively ‘the IWC Group’.
Signatory type  Investment manager and service provider
Region of operation Global; headquarters in Denmark, regional representation in USA and Australia
Assets under management USD$280m
Name of fund IWC Timberland Partners II K/S (‘ITP II’)1
Asset class Sustainable forestry
Sector Forestry and logging
Geography Brazil, Chile, USA
Environmental objective Mitigation
Economic activity Afforestation and existing forest management

The IWC Group is an investment advisor and manager with nearly 30 years of global experience in responsible investing in natural capital landscapes. For regulatory reasons, the IWC Group carries out its activities through IWC providing investment management and advisory services, regarding natural capital investment strategies and the implementation thereof, and IWCIP providing timberland investment management and advice regarding financial instruments to professional investors. Sustainability and ESG integration have always been core to our values and approach to investment management. We believe that the taxonomy is an essential benchmark and an additional stamp of authenticity for green investments, providing investors with a helpful tool for capital allocation.

Other aspect you would like to mention?

We are currently testing the taxonomy on just one of our sustainable forestry portfolios. However, we plan in due course to include all portfolios under our discretionary management and, going forward, mandates under advice. The IWC Group’s services encompass natural capital investment solutions (forestry, agriculture, ecosystems restoration) making the taxonomy particularly useful as measurement tool (particularly if and when it eventually addresses restoration activities).  

Taxonomy implementation

Principles, criteria, thresholds

To determine whether the portfolio was eligible for disclosure, we ensured that its economic activities were recognised by the taxonomy as substantially contributing to the EU’s first environmental objective – climate change mitigation. We used the Technical Expert Group’s (TEG) March 2020 report and technical annex, and the underlying forest investments’ growth-yield model, to measure each investment’s above-ground carbon baseline at entry and stock permanence/change over time, utilising the 2019/2006 IPCC Guidelines for National GHG Inventories - and corresponding third-party forest certification audit reports. 

Do no significant harm assessment

We ensured our economic activities “do no significant harm” (DNSH) against the other five EU environmental objectives – climate change adaption, sustainable use and protection of water, transition to a circular economy (not yet applicable to forestry), pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

We leveraged our standard process of ESG analysis and integration to ensure we complied – including due diligence (pre-investing), monitoring (post-investing) and ongoing engagement with investees (at least annually and additionally for this case study, as relevant) – in alignment with the taxonomy-recognised OECD Guidelines for Multinational Enterprises and UN Guiding Principles.

We did not identify breaches to the DNSH criteria in the documents and databases we reviewed; these comprised thirty party sources, forest certification public audits, forest management plans, sustainability and financial reports, credible databases, and investees’ Q&As. In the context of sustainable forestry, the review demonstrated no conversion of natural habitat, good stewardship of conservation areas, limited use and proper handling of pesticides/chemicals (no use of highly hazardous substances listed in the Stockholm and Rotterdam Conventions, the Montreal Protocol on Substances that Deplete the Ozone Layer and the WHO Classification of Pesticides by Hazard), streams and ground water protection, and climate change risk prevention and adaption consistent with sectoral/regional/national efforts and the interests of local communities.

Social safeguards assessment

Following the ESG integration process we analysed both country/region and investee social safeguards aligned with taxonomy-approved human rights frameworks: ILOs Core Conventions, OECD MNEs, UN Guiding Principles and the International Bill of Human Rights. Underlying investees demonstrated appropriate policies and procedures to confirm their adherence – ESG/sustainability policy, code of ethics, anti-corruption policy, compliance manual, etc.  Investees are also members of industry associations, some also including to the Principles for Responsible Investment (PRI), and verified that norms were not breached (public online platforms, communication with and reporting of investees, etc.).

Turnover/capex/opex alignment

We only considered taxonomy-aligned revenues (2019 and 1Q20) derived from certified assets and, of these, only the share that could be linked to sustainable activities – income from sustainable timber sales, recreational and conservation income, etc. Land sales revenues that may not remain as forestry were not considered taxonomy-aligned. As one of the underlying investments is in the process of becoming FSC-certified, we only accepted as taxonomy-aligned the share of the cost related to this process (payroll and software expenses).

Further, we weighted taxonomy-aligned revenues for each underlying investment relative to the investment’s share of the total capital deployed (as of 1Q20 Net Asset Value).

Additional comments

As this is a taxonomy application pilot project, it may be somewhat flawed or incomplete. Assessing this process over time, alongside other investments’ taxonomy compliance, should improve data accuracy and disclosure. 

Alignment results

We estimate that, as of the first quarter of 2020, at least 50% of ITP II’s portfolio is taxonomy-aligned. The certification of another investment next year should see the fund achieve around 70%alignment. Though this will depend on the source of revenue in each underlying investment, it is our view that, after full capital deployment (2021) and throughout its lifetime (by 2040), most of the portfolio will be taxonomy-aligned ( ≥ 70%). 

EU taxonomy - process application

EU taxonomy - process application

EU taxonomy - ITP II’s portfolio alignment

EU taxonomy - ITP II’s portfolio alignment

Challenges and solutions


Aggregate distinct (qualitative & quantitative), operationally (economic activities) and globally variable data, to a uniform set of criteria and metrics.

We trialled the taxonomy on a small portion of our investment portfolio to better understand premises and possible outcomes, while establishing a process for further implementation. We involved investees to ensure data was correctly interpreted.  

Comparing global legal frameworks and EU norms.

We listed main requirements for DNSH and Minimum Safeguards using approved public records (audit reports of certification schemes compliance provide some certainty and uniformity of local requirements, practices and data disclosure), ESG-related databases (OECD, World Bank, ILO, UN affiliates, etc.) and investee reports to fill in any gaps (i.e. missing certifications) and draw appropriate conclusions.  

Resources required in terms of time, people and technology. 

By limiting our scope and utilising existing processes and resources we were able to understand the complexity of the process, identifying gaps and making adjustments in preparation for a comprehensive roll out. 


We suggest trialing the taxonomy on a small portion of the portfolio, perhaps focusing on one product/sector/region, to gain a better understanding of the framework before scaling up. Firms should reach out to peers (PRI, investees, investors, data providers, etc.) to enhance their knowledge and obtain useful guidance/feedback. It would be useful to map the current ESG framework against the taxonomy’s key principles and criteria, especially in terms of ensuring minimum safeguards and DNSH. We recommend enhancing the overall data set by aggregating open-source or proprietary information such as public records, company and third-party reports, country and industry papers, scientific articles and case studies (carbon, GHG), and regional business and sectoral frameworks.