UK Pension Protection Fund invests £1bn in forestry

The UK’s Pension Protection Fund (PPF) announced that its investments in forestry have grown 20% over the last year to reach £1 billion.

Last year the PPF seeded a new Scottish afforestation strategy that allows it to generate UK carbon credits directly, becoming one of the first UK pension funds to do so.

The PPF protects about 10 million people in the UK with defined benefit (DB) pension schemes.

It manages more than £36 billion of assets on behalf of more than 275,000 pension fund members.

The PPF currently invests in soft and hardwood forestry assets globally, with investments in Australia, New Zealand, the US, the UK, Ireland, the Baltics and the Nordics.

“Forestry is a key element of the PPF’s responsible investment strategy as it can help mitigate CO2 emissions by storing carbon,” said the PPF.

“This makes sustainable forestry assets one of the few viable nature-based investment solutions in the journey towards a net zero carbon world.

“Well-managed forests can also increase biodiversity and are more resilient to the effects of climate change.

“As part of its ongoing commitment to actively encouraging responsible investment, the PPF only invests alongside asset managers who have fully demonstrated their responsible practices around acquiring and managing forestry.

“All funds and fund managers are subject to a rigorous investment due diligence process which includes their ESG credentials before engagement.

“The PPF has, over a number of years, also focused on increasing the quality of their forestry investments, continually reviewing the proportion of timberland that is FSC or PEFC certified.

“They are committed to achieving globally recognised independent certification of all their forestry assets as this plays a critical role in the preservation of high conservation value forests and combatting deforestation, as well being an expected minimum standard within most supply chains now.”

Lea Dubourg-Hrachovec, the PPF portfolio manager who leads on the fund’s timberland, farmland and infrastructure investments, said: “It’s fantastic to be continuing to grow our investments in forestry.

“A well-constructed portfolio gives future optionality for us to play a bigger role in reducing carbon emissions and fighting climate change while delivering strong returns for our members and making our portfolio greener.

“The emergence of carbon credit trading backed by real assets, like forests, will see more investments being made into afforestation, encouraged by the Government.”