There is a global shortage of sustainably sourced timber. Current World Bank data shows that there is a base of billion cubic metres of global timber supply deficit; the numbers are expected to triple by 2050.
Due to its inflation-beating properties, forestry has long been an attractive investment encompassing strong ESG characteristics. Forestry investment can also provide appealing tax incentives.
However, the supply/demand dynamics for timber are now increasingly underscoring the economic opportunity in forestry investments.
The forestry situation in the UK is dire. Given the high percentage of rural territories, the country is lagging behind the rest of Europe, where the average afforested areas account for 45–48% of each country’s territory. Only 13% of the UK is forested.
The UK has so much untapped sustainable forestry potential, yet we import 80% of all our timber. Indeed, importing so much timber is highly supportive of the UK’s 2050 sustainability goals.
The Foresight Sustainable Forestry Investment Trust is tackling the global long-term structural supply imbalance of timber, as well as bolstering the UK’s timber supply, through expansive afforestation projects and sustainable timber production.
Foresight Sustainable Forestry Investment Trust
Managed by the Foresight Group since its IPO, the fund has consistently delivered returns in forestry and natural capital. Utilising a proprietary pipeline of acquisition opportunities, Foresight has meticulously mapped the entire UK forest area, identifying 4,500 properties with high potential and approaching landowners as part of a direct origination campaign.
The cornerstone of Foresight Forestry’s returns lies in afforestation, which can constitute up to 50% of the fund’s investments at any given time.
Since its initial public offering (IPO) on the London Stock Exchange two years ago, Foresight Forestry Fund has invested in over 1.5 million trees at six new forests, which adds up to around 289,500 tonnes of sustainable timber for sale.
Between 2023-2025, Foresight plans on planting circa 9 million trees.
All managed forests adhere to the Forest Stewardship Council (FSC), which is the most renowned Sustainable Forestry Certification, and Programme for the Endorsement of Forest Certification (PEFC) standards.
In addition to contributing to the UN’s fight against climate change and deforestation, Foresight Forestry Investment Fund actively creates meaningful impact for local communities. In Wales, it has provided local communities with a three-week skills training programme. The participants were able to go on working on Foresight’s new afforestation schemes.
Foresight delivered a weighted average return uplift of 98.4% across their first six afforestation projects.
Currently, Foresight Forestry Sustainable Investment Trust is the only forestry and natural resource fund on the London Stock Exchange.
Like every single other asset class, forestry has its downsides. One of them being that the investment takes a long time to yield, as forests can take up to 30 years to mature.
The attractiveness of forestry, however, partly lies in the fact that the supervisors have the ability to leave mature timber on the stump for a long period of time. In the meantime, the fund diligently monitors the market, calculating the optimal time for selling timber.
Voluntary Carbon Credit
In addition to timber, Foresight Sustainable Forestry is on track to produce 1 million carbon credits.
The extraordinary innate value of trees lies in the well-known fact that forests capture carbon. Companies across the globe can buy carbon credits, which are produced when trees are planted, removing carbon from the atmosphere. One metric tonne of carbon removed from the air at Foresight’s afforestation properties equals one carbon credit.
According to Richard Kelly, Managing Director at Foresight Sustainable Forestry, there is now a global rise in high-integrity corporate pledges, meaning that many organisations promise to go carbon-neutral (or mostly carbon-neutral) by 2050.
Demand for carbon credits is predicted to increase a hundredfold by 2050.