The European Union’s Sustainable Finance Disclosure Regulation (SFDR) has come into force requiring, amongst other things, asset managers to make certain sustainability-related disclosures on their websites with respect to in-scope products. Below are links to the website disclosures of all in-scope products under the management of Gresham House Asset Management Limited. Note that the website disclosures of one in-scope product will differ from those of another in-scope product.
The website disclosures (the “Disclosures”) are being made pursuant to Articles 4(1) and 10(1) of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (as amended) (“SFDR”) in respect of Gresham House Forestry Fund I (Ireland) LP (the “Partnership”).
The Disclosures do not constitute (a) an offer of securities or interests, (b) an offer or invitation to the public, or (c) an invitation to apply for securities or interests. The Disclosures are being made to enable Gresham House Asset Management Limited, in its capacity as portfolio manager of the Partnership (the “Portfolio Manager”) to comply with its obligations under applicable law.
As a signatory to the UN-supported Principles for Responsible Investment, the Portfolio Manager has a clear commitment to investing sustainably as an integral part of its business strategy. Sustainability including Environmental, Social and Governance (ESG) considerations, are integrated into the selection, evaluation, governance and management processes across the lifecycle of each investment of the Partnership.
Forestry investments sourced and managed by the Portfolio Manager for the Partnership are very long-term and the Portfolio Manager sets out to proactively improve the lifespan and value of such assets of the Partnership through sustainable forest management.
Environmental and social characteristics
All land and forests acquired by the Partnership will be managed in line with the commitments and targets made in the Portfolio Manager’s Forest Charter (the “Charter“) (see “1. The Gresham House Forest Charter” below).
All land and forests acquired by the Partnership will be managed by Coillte, and all will be certified under the FSC® ¹ (Forest Stewardship Council®), and PEFC™ (Programme for the Endorsement of Forest Certification) and will continue to be independently certified as 100% sustainable pursuant to the relevant certification during the period that the Partnership owns them (with the exception of newly acquired land, which may not yet be certified at the time of purchase but in respect of which the Portfolio Manager will aim to ensure that 100% of forests thereon will be certified within a reasonable timeframe).
The table below sets out the key sustainability-related commitments of the Partnership and how these will be measured and monitored over time (many of which are also set out in the Charter).
Sustainable investment process and commitments
The integration of sustainability considerations, including ESG factors, into the investment decision-making process followed in respect of the Partnership is underlined by the following:
1. The Gresham House Forest Charter
All forestry assets of the Partnership will be assessed at pre-investment stage and managed in line with the Charter unless any legal, regulatory, or natural obstacles outside the control of the Portfolio Manager prevent this. The Charter sets out the Portfolio Manager’s commitments and targets in relation to sustainable forest management, based on international forestry standards, and the key performance indicators against which performance can be measured.
The Charter includes commitments and targets relating to the following categories. All commitments are at least aligned with forest certification standards:
- Forest Products & Services
- Climate Change
- Biodiversity & Woodland Ecology
- Forest Protection
- Income & Employment
- Communities & People
- Forest Certification & Standards
The Charter also reflects the Portfolio Manager’s commitment to apply the International Finance Corporation (IFC) exclusion policy as relevant to forestry assets (the “Exclusion Policy“) to all forestry investments of the Partnership. This means that the Partnership will not be invested in:
- production or activities involving harmful or exploitative forms of forced labour/harmful child labour;
- commercial logging operations for use in primary tropical moist forest;
- production or trade in wood or other forestry products other than from sustainably managed forests; or
- production or activities that impinge on the lands owned, or claimed under adjudication, by Indigenous Peoples (as defined by the IFC for the purposes of its exclusion policy), without full documented consent of such people.
These exclusions are explicitly built into the ESG Decision Tool (see next section) and require the Portfolio Manager to ensure that no new acquisition of the Partnership is in breach of the exclusions at due diligence stage.
2. The Portfolio Manager’s ESG Decision Tool
All investments are screened using the Portfolio Manager’s Forestry ESG Decision Tool (the “ESG Tool“) to ensure that ESG risks and opportunities are considered and the Exclusion Policy is applied, as part of sourcing, due diligence, acquisition, and ongoing management of assets.
The Porftolio Manager’s resources, tools and practices are proprietary given the complexity and nature of the asset class and are informed by its experience over the last 40 years. The ESG Tool and KPIs set out in the Charter, as developed by the Portfolio Manager, will assist it to identify potential sustainability risks and opportunities pertaining to the Partnership’s investments in a consistent manner, in line with the Portfolio Manager’s sustainability-related commitments.
The ESG Tool is based on the ten themes in the Portfolio Manager’s Sustainable Investment Framework and several sub-factors are considered under each broader ESG theme (see table below entitled “Sustainable Investment Framework Application”). The purpose of the ESG Tool is to support the Portfolio Manager in identifying potential, material ESG risks that need to be managed and mitigated, and to help shape the due diligence process prior to investment by the Partnership. The ESG Tool will highlight if an investment is considered to be in breach of the Exclusion Policy (in which case no investment will be made in that asset) and otherwise aims to provide a rational and replicable assessment of key ESG risks which should be considered prior to investment, and to assist with ranking the significance of each risk.
The data sources relied on for the consideration of ESG risks and opportunities pre-investment and as part of the ongoing management of assets include information provided by the Portfolio Manager’s own specialist investment team (see point 5 further below), the Woodland Manager and any other woodland managers appointed by the Partnership and/or third-party experts such as ecologists and carbon consultants (particularly in relation to biodiversity and carbon-related data).
Sustainable Investment Framework Application
3. Forest Certification and Standards
As committed to in the Charter, all forestry assets of the Partnership will adhere to relevant forestry standards and will be certified to appropriate sustainable forest certification standards. These standards provide detailed guidance on the principles that the Portfolio Manager adheres to in planning, management, felling and restocking cycles as well as the wider way in which forest enterprises are managed.
In Ireland, forests are certified under the PEFC (Program of the Endorsement of Forest Certification), or the FSC (Forest Stewardship Council) standards. The Portfolio Manager commits to ensuring that all forestry assets of the Partnership are ultimately certified under one of these methodologies and aims to seek dual certification across the entire portfolio of such assets.
Irish forestry assets will be managed in accordance with the Forestry Standards Manual in conjunction with the Irish National Forest Standard, the code of Best Forest Practice – Ireland and the suite of mandatory environmental guidelines and requirements published by the Department of Agriculture, Food and the Marine.
4. Management plans
Management plans are drawn up for each asset of the Partnership, setting out clear management objectives spanning both commercial and sustainability outcomes and how the asset will be managed to meet these within its given prevailing conditions. Performance measurements are integrated into the plans, which are subsequently reviewed on an annual basis.
The management plans will include plans to meet the Partnership’s sustainability commitments and to address any sustainability-related risks or opportunities identified from the ESG Tool analysis and will align to relevant standards or certification requirements.
5. Expertise and oversight
The Portfolio Manager has significant specialist expertise, including professional qualifications from the Institute of Chartered Foresters, spanning both sustainable forestry practices and sustainable investment. The team undertakes regular relevant continuing professional development to keep its knowledge and outlook up to date and will continue to invest in developing its expertise and good practice in relation to sustainable forestry asset management. External experts (e.g. ecologists and academics) may also be consulted by the Portfolio Manager in this regard.
All forests and new planting sites acquired by the Partnership will be managed by qualified, experienced forest managers, known to and selected by the Portfolio Manager. All forests are inspected on a regular basis to ensure the highest quality of woodland and environmental management. Forests will also be independently audited by the relevant certification bodies.
The Portfolio Manager has a dedicated Sustainable Investment Team. This team provides support in relation to the evolution of processes around sustainable investing applied by the Partnership. The Sustainable Investment Team will also carry out regular auditing of ESG processes to ensure they meet the sustainability-related commitments of the Partnership.
Mandatory SFDR disclosures
Assessment of Principal Adverse Impacts of Investment Decisions on Sustainability Factors
The Portfolio Manager has elected to exercise its discretion under Article 4(1)(b) of SFDR not to commit to considering the adverse impacts of investment decisions of the Partnership on sustainability factors in the manner specifically contemplated by Article 4(1)(a) of the SFDR but will continue to consider and manage these impacts in line with the Charter and its Sustainable Investment Policy.
The investments underlying the Partnership do not take into account the EU criteria for environmentally sustainable economic activities, as set out in the Taxonomy Regulation. Accordingly, 0% of the Partnership’s investments are in economic activities that qualify as environmentally sustainable under the Taxonomy Regulation. Based on a high-level assessment, it is expected that, in pursuing their environmental characteristics or objectives, the Partnership’s investments will contribute to the following environmental objectives as set out in the Taxonomy Regulation: climate change mitigation and climate change adaptation. The “do no significant harm” principle applies only to those investments underlying the Partnership that take into account the EU criteria for environmentally sustainable economic activities. As set out above, the Partnership’s investments do not currently take into account the EU criteria for environmentally sustainable investments.