Scottish National Investment Bank backs forestry fund
Forestry offers returns and sustainable credentials
The Scottish National Investment Bank has committed £50 million over five years to new woodland and forestry management in Scotland.
As a cornerstone investor of the Gresham House Forest Growth & Sustainability Fund, the bank will use its capital to support wide-scale planting and is predicted to capture 1.2 million tonnes of CO2 over 20 years.
The fund will target stable returns through the sale of timber and the capital growth of land and trees.
Any trees harvested will be replanted and the timber products generated will enable the provision of raw materials for more sustainable packaging and building materials.
The fund will aim to generate carbon credits in the form of Woodland Carbon Units (WCU) which will create additional value or be used to offset carbon emissions on a voluntary basis.
Gresham House is the UK’s largest commercial forestry manager, managing roughly 140,000 hectares of forestry worth more than £1.8 billion.
The business manages a forestry mandate in Ireland and expects to complete on a further international forestry mandate in Australia, subject to regulatory approval.
Eilidh Mactaggart, CEO of the Scottish National Investment Bank, said: “The new planting element and ability to generate carbon credits represents a novel investment proposition which mainstream investors have yet to fully embrace.
Eilidh Mactaggart: cornerstone investment
“The bank’s cornerstone investment is designed to encourage other investors to follow us into this new type of forestry fund. We therefore believe this opportunity to be an excellent fit for the bank’s ambition to lead the way on innovative mission aligned investments.”
In addition to the environmental benefits tree planting brings for biodiversity, flood defence, improved air quality, reduced soil erosion and outdoor recreation, the investment will also support existing and new jobs in rural Scotland.
Olly Hughes, managing director, Forestry, Gresham House, said: “This impressive first close is a testament to Gresham House’s long-standing track record in the forestry space and the Bank’s cornerstone investment will help to catalyse further investment in this asset class from institutional and private client investors.
“This flexible strategy allows investors to choose to use the carbon credits generated for offsetting purposes or sell the units to create an income.
As investors increasingly focus on sustainable investments, forestry is emerging as one of the most impactful solutions, which combats climate change and enhances biodiversity, while also serving as an excellent investment diversifier and producing meaningful uncorrelated returns.”
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