The latest in Tony's series of interviews Watch video 6min
Why we created our Forest Charter - November 2022
We aim to meet our clients’ investment objectives through the planting and sustainable long-term management of forests that produce a key natural resource: timber.
We primarily invest in softwood forests in the United Kingdom, Ireland, Australia, and New Zealand, but we are increasingly expanding our activities to other geographies and focusing on planting a greater diversity of species.
Our forestry strategy is committed to sustainable investment and forest management. To underline this commitment, we launched the Gresham House Forest Charter in 2022.
The Charter is a policy document that provides a clear and comprehensive summary of our commitments and targets regarding sustainable forest management.
Our approach to sustainable forest management is to manage forests to meet our clients’ financial and wider investment objectives while also managing the social and environmental impact and dependencies of the assets.
Our Charter commitments are aligned – and in some instances we believe go beyond – national and international standards, whose criteria and principles underpin these commitments, such as the Forest Stewardship Council or Programme for the Endorsement of Forest Certification.
Our Charter includes details about how we will invest in and manage forests in relation to a range of environmental, social and governance (ESG) factors that we have identified as most material to forest ecosystems and services.
These include climate change, forest protection, biodiversity and ecology, communities and people, income and employment as well as forest products. It also includes metrics that we will measure to monitor the performance of our forestry investments against these commitments over time. We apply the charter to all forests managed in our discretionary portfolios.
The Charter’s structure is based on the UK Forestry Standard’s concept of balanced objectives.
This recognises that forests have environmental, social and economic functions and that these must all be considered and managed in tandem to ensure sustainable forest management.
By doing so, we believe that the many forest benefits can be maintained over the long term.
Being unable to meet these commitments would prevent us from investing in a forest, as illustrated in the example below.
For this Charter to be effective, we have to be able to gather meaningful data and monitor progress against key performance indicators. We do this through our:
The collation of certain ESG data points is new for us and for the industry.
For example, we recently issued a questionnaire to woodland managers requesting data and information relating to many of the core commitments in our Charter to enhance the data we have available to monitor the performance of our forestry assets.
Aspects that we will measure and report on include carbon stock, carbon sequestration and biodiversity, where we are trialling technologies such as environmental DNA and satellite data to improve the accuracy of our reporting. This will be complemented by on-the-ground work such as surveys of flora and fauna by woodland managers.
Our clients will receive at least annual updates in fund reporting, and we will provide a broader divisional Forestry update for other stakeholders in our Sustainable Investment Report.
One-third of the property consisted of low-quality agricultural land; the remainder consisted of unimproved deep peatland.
Our investment managers were considering the investment on the basis that we could have planted the agricultural land with conifers for timber production, to ultimately generate income through the sale of the wood harvested. This would have realised additional potential environmental, social and economic benefits, such as carbon sequestration, new habitat creation and public access.
We did not consider the deep peatland for planting as part of the potential investment case because this would have contravened our commitment to carbon stocks.
The ecologist’s review found that planting the agricultural land posed two key risks:
1. Planting could negatively affect the hydrology of the adjacent peat area and consequently impact our commitment to water management, which sets out to “maintain and/or enhance the long-term hydrological functions”
2. Planting could result in trees “seeding” onto to the peatland and colonising it. This could result in disturbing the peatland – particularly significant, given the negative climate change impact this can have through the disturbance of carbon in the soil – and would contravene our commitment regarding high carbon stock land, highlighted above.
The site’s deep peatland was deemed to be in good condition, as well as adjoining two Sites of Special Scientific Interest (SSSI). As such, if seeding of the peatland was to occur, this would have been a breach of a further commitment made in our charter: to protect priority habitats (including SSSI) and species.
Although this investment opportunity would have created several environmental, social and economic benefits, these would not have outweighed the environmental risks to the peatland posed by planting the agricultural land.
Consequently, we determined that this would not have been a sustainable forest investment and declined to proceed
Head of Institutional Business+44 (0) 7734 768 808
Institutional Business Development Director+44 (0) 7849 086 565
The latest in Tony's series of interviews Watch video 6min
Ken Wotton speaks to Neil Shah at Edison about his private equity mindset to investing in public markets. Read more 3min
Our new CIO newsletter, covers all you need to know about the current environment in global forestry investment. Read more 3min
An introduction to the profile of Ireland as a destination for forestry investment Read more 6min