The future of responsible forestry investing depends on how successfully the asset class can feature in the mainstream debates that are likely to shape the responsible investment universe in the coming years. Important questions to consider include:

  • Do certification requirements need to evolve, such as in relation to carbon footprints or generating positive impact?
  • Can an appropriate price be placed on carbon or the concept of natural capital so that different types of forestry investment for conservation appeal more to institutional investors?
  • Can forestry managers respond to emission trading schemes by developing products that are attractive to investors and meet scientific standards that demonstrate their carbon impact? 
  • What is the right balance to strike between seeking more land for afforestation and reforestation purposes, and the need to meet broader social and economic development goals (such as agricultural land use to meet food supply requirements, or general business activities)?
  • How can forestry investors measure and report on the impact of their investments in relation to the SDGs, thereby becoming an integral part of the mainstream impact investing conversation?

sun through trees

Addressing these issues will require input from a range of stakeholders, particularly forestry investors and managers themselves, governments and policy makers, and potentially groups such as non-governmental organisations and other forestry industry players. This could include:

Forestry investors and managersPolicy makers Other stakeholders
  • Further incorporation of ESG factors into investment decision making, such as deepening existing governance practices, and sharing best practice.

  • Further refinement of strategies and investment products that can create positive impacts and generate market returns, particularly on climate change and the SDGs.

  • Transparent and consistent approach to ESG disclosure, particularly regarding the carbon impact of projects and investments.

  • Active ownership and engagement with managers and third-party operators to improve practices and understanding of key issues.

  • For asset owners: work with managers to develop focused reporting requirements that encourage positive action on key issues by managers and third-party operators.
  • Stronger action on climate change by creating or deepening carbon markets and emission trading schemes in which forestry investment products can play a substantive role.

  • Consider the concept of natural capital in, for example, accounting standards and land valuations to capture nonfinancial benefits of forestry versus other types of land use, particularly agriculture.

  • Implementation or continuation of renewable energy mandates to support non-fossil fuel sources of power generation, including biomass.

  • Regulatory requirements, or strong enforcement of existing regulations on, for example, illegal logging and deforestation, and land rights and usage.
  • Continued research and investor and public education on the role of forestry in relation to issues such as climate change and the SDGs.

  • Creation and dissemination of standardised impact metrics to support consistent measurement and performance reporting.

  • Continued improvements in science-based verification techniques to ensure the carbon impact of forestry investing is recorded appropriately.