Forest Invest

In today's episode we dig into all things technical site evaluation with Dr. Colin Smith of Paperbark Consulting. Colin is an expert soil scientist, and today he shares his vast experience in plantation forestry, giving insights that will support investors (and forest managers for that matter) with what considerations should be made and questions should be asked when evaluating several technical plantation management factors. We talk about where certain tree species do best and get into specifics on soil, water, climate, the importance of research, ecological deserts and more.Quotes:4:16"The most dangerous thing in a forestry investment plan is a spreadsheet"43:37"Make sure they get a good independent opinion about what they're up to. In some cases, consultants try to make projects look good to attract investment, and I think there is a big danger in that; not to be seen as a wet blanket, but I think people need a realistic appraisal."Show notes:Host: Shauna Matkovich - The Forest LinkProducer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Important links:Dr. Colin Smith's email: cs.paperbark@gmail.comLinkedin: linkedin.com/in/colin-smith-900b051aFavourite trees: Acacia Sieberiana and Eucalyptus degluptaThe Center for International Forestry Research and World Agroforestry (CIFOR-ICRAF): CIFORTheory of Change Webinar: Theory of Change WebinarDetails:00:44Professional background and focus of work (Paperbark Consultancy)04:09The complicated process of forest management05:54Interesting assignments (real stories)09:05Macro-level technical considerations when investing in forestry13:08Micro-level technical considerations15:41Issues with native species17:56Dispell myths around Eucalyptus, specifically water usage23:30Irrigation of plantations30:59Climate change & species matching36:25Invest in research and technical expertise39:03Info on sustainability studies - eucalyptus & PH levels of soil (CIFOR)43:36Actionable advice for forestry investors44:46Contact detailsSound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

As there are no widely accepted definitions in the lexicon that makes up responsible investing, semantics are important. This is because how you define terms like ESG, sustainable and impact investing as they relate to forest investments will have different implications - it could be in the types of forests you invest, the geographies of your investment, the end markets, return expectations and so on. In this episode, I take you through the definitions of these terms that I apply in my work and provide you some examples to make sense of it. I argue that its not the definition per se that matters, only that everyone in your organization shares the same definition and that you apply it credibly and consistently. I explain why an integrated approach to ESG, sustainable and impact investing will put your forest investments in the best position to succeed."Integrating these three features is the best way to future-proof your forest investments for financial performance and long-term social and environmental benefit."Show notes:Host: Shauna Matkovich - The Forest LinkProducer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Important links:Webinar: Theory of Change Webinar (subscribepage.io)Favourite tree: Arbutus menziesii - WikipediaDetails:02:47 ESG investing05:01 Sustainable investing07:02 Impact investing11:09 Integrated approach14:12 How to apply an integrated approach15:15 Webinar15:37 Actionable advice for forest investors Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today in the second of a two-part series, as I speak with Anne Valto, Senior Development Impact Advisor at Finnfund - the Finnish Development Finance Institution. In our conversation, Anne describes how Finnfund evaluates impact in deal due diligence. She explains how often their investees are not initially well capacitated to manage for impact, and how they are supporting to resolve this. We talk about why Finnfund normally does not invest into 3rd party managed, forest asset only models, finding the balance between impact and financial objectives and impact permanence at exit. If you haven’t listened to the first episode, please go back and listen to my conversation with Peter Chappell on breaking down risks in emerging markets. “In forestry and in biodiversity, as in most impact indicators, the high risk usually means that there are more opportunities to gain as well.”Show notes:Host: Shauna Matkovich - The Forest Link Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Details 03:39Impact evaluation in deal due diligence and the 5 dimensions of impact05:00Development Effectiveness Assessment Tool06:21How Finnfund goes beyond IFS PS to evaluate net biodiversity gain07:51How Finnfund supports traditional timberland managers to integrate impact11:38Biodiversity trainings for investees11:52Biodiversity pilot with MLR in Nicaragua13:20Sustainability capacity within Finnfund investee companies14:29Why Finnfund normally does not invest into 3rd party managed, forest asset only models16:50Finding the balance between impact and financial objectives19:19Does targeting impact mean forgoing returns?23:40Low hanging fruit for impact creation in forest investments26:01Impact permanence at exit30:11Actionable advice for investors new to the asset classSignificant quotes:[5:50]              In forestry and in biodiversity, as in most impact indicators, the high risk usually means that there are more opportunities to gain as well.[17:42]            So that's our role, taking more risks than, than a commercial investor would be willing to, to take.[25:02]           It's often that you actually don't need to do that much to give a little bit of push for regeneration and restoration. In the environments where we operate, the more challenging part is then to also keep people out.[28:01]           So if we would totally lose the impact for big money as an impact investor, I think that would be quite a red flag for us.Links mentioned:Finnfund: https://www.finnfund.fi/en/MLR Forestal: https://mlr.com.ni/ Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today in the first of a two-part series, as I speak with Peter Chappell, Investment Manager at Finnfund - the Finnish Development Finance Institution which, like the country, has a long history of investing in forests. In our conversation, Peter explains why Finnfund’s mandate is for greenfield investments, and why financial viability is one of their primary impact criteria. We discuss the risks in the emerging markets where Finnfund invests, compared to those in timberland core markets. We discuss how to evaluate risk and the merits of forest investment in emerging markets, and talk about why its important to go in with an experienced partner. Next week, be sure to tune in, where we discuss the impact-side of Finnfund’s forest investment approach with Anne Valto.    “But actually, our thesis is quite strong that ultimately the realisation of these positive impacts can only be sustained through financially viable, financially sustainable, you know, long term, successful businesses.”Show notes:Host: Shauna Matkovich - The Forest Link Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Details 01:36Introduction to Finnfund and their approach to forest investment04:54Financial instruments used by Finnfund in forest investment07:02Timberland in core versus emerging markets11:03Real vs perceived risk13:33Greenfield vs brownfield16:27Tips for investors considering emerging markets for the first time19:51Red flags to look out for in emerging market deal evaluation22:16Impact in emerging markets vs core markets27:53Challenges leading to emerging market track record30:46Other benefits of emerging market forest investmentSignificant quotes:[14:48]            "One of the issues we have as a DFI is that actually a pure brown field operation doesn't actually fit our mandate because we need to ensure we're making impact."[21:10]           "Generally speaking, execution risks are the big risks."[25:32]          "But actually, our thesis is quite strong that ultimately the realisation of these positive impacts can only be sustained through financially viable, financially sustainable, you know, long term, successful businesses."Links mentioned:Finnfund: https://www.finnfund.fi/en/ Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today as I speak with Aleksandra Holmlund, CEO of Qarlbo Biodiversity for a glimpse into the biodiversity crediting mechanism she has championed in Sweden. In this conversation we explore the biodiversity finance mechanism developed in cooperation with the Swedish University of Agriculture that focuses on production forest landscapes. In a nutshell, the mechanism works from a baseline of business as usual forestry and attributes any net gains in biodiversity to come from conservation, restoration or diversification of forest management activities. In addition to the mechanics, we discuss the sentiments of key participants in making this biodiversity credit transaction work – the forest owner and the credit buyer. Tune in to learn more about this very pragmatic approach to biodiversity finance in production forests and see if you can learn a thing or two to apply in your own forest investments.  Show notes:Host: Shauna Matkovich - The Forest Link Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/ 01:26 Introduction to Alexandra and her background 03:06 Mechanism for biodiversity credit system in production forestry in Sweden 06:20 Example of integration of timber management and biodiversity management 08:50 Proportion of land dedicated to each (specific property owner) 10:12 Carbon credits in Sweden 11:51 Effect of policy changes and legislation on biodiversity offsets and markets 14:16 Buyer’s motivation of obtaining biodiversity credits (specific example) 17:05 Local or global market opportunities? 19:04 MRV process for conservation, restoration and diversification & target setting 22:24 Market price for biodiversity & loss of harvesting income 23:22 Interest from forest owners in biodiversity pilot project 24:15 Funding? 25:06 Duration of commitment by forestry owner (20+ years) 25:48 Mitigate risk of forestry owner quitting project 26:52 Development of biodiversity certification – Swedish Biodiversity Alliance 29:10 Methodology applicable in another jurisdiction 31:30 Data collection methods & fine-tuning metrics 34:26 Actionable advice for investorsSignificant quotes:[10:49]  At this early stage, where we are in the development of the biodiversity credit market, I’d say it is better to keep carbon and biodiversity apart just to be on the safe side, not to trigger any unwanted consequences such as greenwashing critique.[15:44]  A transparent market will allow private funding of biodiversity and enable forest owners to engage in more nature conservation and restoration than we would have had if only taxpayers’ money was paying for everything. Links mentioned:Qarlbo Biodiversity: https://www.qarlbonac.com/Portfolio: https://www.aleksandraholmlund.com/LinkedIn: https://www.linkedin.com/in/aleksandra-holmlund-5b04101/ Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today as I speak with Asger Strange Olesen and Herbert Yancey of the International Woodland Company, Asset Management + for an informative discussion on the EU Taxonomy. In this conversation we dig into the differences between the SFDR and the EU Taxonomy and how investors are looking at these sustainability regulations and tools. Though largely a concern for European investors, we talk about why it matters in forest investments the world over and how IWC AM+ is applying the EU Taxonomy in its approach to sustainable forest investment. We talk about the potentially affronting aspects, such as costs, management burden and how compliance will be monitored by the regulatory authorities, and spoiler alert – it’s not a drag on returns and will support the management of resilient forests.“If you are not considering climate change with your forest assets, you’re doing a disservice to your investors”Show notes:Host: Shauna Matkovich - The Forest Link Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Details01:50Asger gives an overview re. EU taxonomy, SFDR (Sustainable Finance Disclosure Regulation), impact on investments05:50Asger give more details about SFDR to avoid large-scale green washing06:40Asger explains how the disclosures moves from asset level to financial regulatory authorities08:15Looking at forest funds from different perspectives10:39Herbert explains American sentiment in investment regulations13:23Asger explains how IWC view EU taxonomy in the assets they manage16:10Asger explains about the learning curve translating financial regulation into investment strategy18:30Asger explains specific metrics (broad & context specific)20:47Herbert gives the American perspective – enhance forest resiliency22:53Asger adds to Herbert’s point – explains how SDFR works – making your methods transparent and comparable (it’s njot compulsory)24:50Asger gives a summary, touches on exploitation of the asset, if not sustainable, investors will move away26:17Asger explains the operational cost differences expected in an EU taxonomy aligned asset vs a non-taxonomy aligned asset28:49Asger elaborates on how aligning the EU taxonomy with one’s investment strategy build value in asset management (including point of exit opportunities)31:03Asger talks about how SFDR and EU taxonomy compliance will be monitored37:47Actionable advice to investors from Asger and then Herbert34.58IWC contact detailsSignificant quotes:[22:47]            Herbert: If you are not considering climate change with your forest assets, you’re doing a disservice to your investorsLinks mentioned:International Woodland Company (IWC): https://www.iwc.dk/LinkedIn: https://www.linkedin.com/company/the-international-woodland-company/Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today as I speak with Gabriela Leslie, Senior Manager, Food, Agriculture and Natural Capital at the Creo Syndicate - a membership organization that supports its family office members to better understand the latest developments in climate investing. It creates a platform for private family investors to come together, learn from each other and collaborate on investment opportunities to solve the climate crisis. In this illuminating conversation, we dig deep on how family offices are different than institutional investors and how this shapes why they consider forest investment, how they evaluate opportunities and what is challenging the attractiveness of forest investments currently (but the outlook is positive).“So, we find that there’s a decision-making process that comes in around, not only is this a good investment and can this scale, but you know, is the impact really meaningful?”Host: Shauna Matkovich - The Forest Link Producer: Magdalena Laas - https://www.linkedin.com/in/laasmagdalena/Details01:25An overview of the Creo Syndicate02:49The profile of family office investors compared to institutional investors06:21Family office capacity to evaluate forest investments08:29Change in family office sentiment around investing in nature and why it is attractive12:25Sentiments on forests versus other natural climate investment strategies16:15The role of carbon markets16:58What makes forest investment strategies challenging at the moment19:35Exploratory and catalytic capital into forestry21:47Need for more transparency in forest investment23:52Emerging emphasis on biodiversity26:18Family office approach to catalytic finance31:42Investment vehicles suitable for family offices35:55Actionable advice for forest investment managers to attract more family office capital37:27Links (see below)Significant quotes:[04:41] the lack of firepower means there’s a greater premium on capital efficiency and impact.[05:12] So we find that there’s a decision-making process that comes in around, not only is this a good investment and can this scale, but you know, is the impact really meaningful?[08:21] Our members come to the nature space with a lot of enthusiasm. I’d say this is a market shift over the last few years. We previously had folks come to us interested in nature but not really ready to engage [...] there’s more literacy around financial markets intersecting with nature now that there ever has been.[22:23] I think some transparency around that counterfactual piece (Improved Forest Management) would be really important in helping uplift the reputation o the sector as an impact strategy.[27:52] So catalytic in our mind doesn’t need to be philanthropic. It just needs to be risk on, it needs to be impact first. And we see some really great examples of folks coming in and they’ll either cut the first cheque or they be the last.Links mentioned:Creo Syndicate: https://www.creosyndicate.org/Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud

Join me today as I speak with Thorsten Arndt, Head of Advocacy at the Programme for the Endorsement of Forest Certification (PEFC), where we discuss PEFC and how in addition to facilitating sustainable forest management, it can help those with forest products in their supply chains align to various voluntary and mandatory sustainability disclosure requirements. We dig deep into the EU Regulation on Deforestation Free Products, or EUDR, and about how PEFC is thinking about carbon certification. Show notes:Host: Shauna Matkovich - The Forest Link Details01:37Thorsten introduces PEFC05:08Sustainability reporting under various voluntary and regulatory standards10:10Regulatory sustainability disclosures and the EUDR14:16How PEFC can support in meeting the EUDR20:20General public interpretations of the EUDR and what this could mean for sustainable forest management21:31Carbon certification and PEFC25:13How should investors be thinking about forest asset evaluation in light of forest management certification and EUDR27:01PEFC and its multistakeholder process28:07Actionable piece of advice for new investors29:05Contact detailsSignificant quotes:11:15 “Under the scope of this regulation [EUDR] are essentially any kinds of products that enters the European market for several commodities including soy, palm oil, beef, rubber, cocoa, coffee and timber”.20:20 “What we fear may happen [with the EUDR] is that an unintended consequence is that European consumers do not care about sustainability that much anymore because they will know that the products they buy are deforestation free.”24:16 “The other option we are exploring is to collaborate and coordinate with existing carbon standards to see PEFC and carbon standards can be implemented in a more coordinated manner to reduce the burden on smallholders and the forest.”Links mentioned:PEFC: https://pefc.org/Sound Library:Nature by MaxKoMusic/SoundcloudSopwell Woodlands and Scohaboy Bog SAC, Cloughjordan, Co Tipperary, IRELAND by wild_rumpus/Soundcloud