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Forest Investment: A Socially Good Choice

Sponsored by Forest Enterprises

20 October 2021

When it comes to investing, everyone wants good returns.

But an increasing number of people, especially younger people, want to bring investing in line with their social values – interests like helping the environment.

Forestry investment could be one way to invest your money in an environmentally responsible way.

Forest Enterprises chief executive Bert Hughes says he expects increasing interest in the “sustainability from end-to-end of the forest industry”.

“In a world where we really have to accept that climate change is being measured now – we are seeing the impacts – there are environmental risks out there that plantation forestry is mitigating.”

Forestry can bring diversification to your portfolio – it’s a long-term investment in a sustainable real asset with a successful export market.

Forest Enterprises, a leading forestry investment manager, enables investors to play a part in growing New Zealand’s strong forestry economy, by offering direct investment in pine forests – with ownership in both the land and the trees.

A sustainable choice

There are many sustainable aspects to forests, Hughes says.

Trees absorb carbon from the atmosphere, which can help reduce the impact of Co2 emissions.

Forests reduce and help control flooding and water catchment, which can reduce the damage done by storms and large floods.

“Forests act as a filter for water, and improve water quality, and improve the ability of catchments to cope with heavy rain.”

Birds, insects and other flora and fauna benefit too when forests are planted, he says. Large areas of cleared farmland generally do not have many native birds, animals or plants. By establishing planted forests on cleared farmland, the likelihood of forest-dwelling species returning to the area improves, increasing local biodiversity

If the forest is managed well, then you’ll get a good outcome, Hughes says.

Doing good with your investment

“It’s enormously important that people have choices when it comes to investing,” Hughes says.

“There’s got to be a return – you have to get your capital back. We’re putting up a product that has a return, but as well as that, you’re doing good.”

Hughes says companies such as Forest Enterprises are “doing good” when they take marginal land and work hard to improve outcomes from it.

This could mean increasing the biodiversity, improving soil and air quality, having a good water quality and flow – which can lead to returns.

“Not only that, a good chunk in the value is the land, and land’s usually a very stable investment. Land tends not to lose value.”

More millennials focusing on sustainability investing

Hughes says interest in socially responsible investing is growing.

A study of more than 1,000 American investors in 2018 found that almost one in three investors have considered making socially responsible investments.

Most millennials (60 per cent) view investing in socially responsible investments as important, compared to 26 per cent of Baby Boomers.

Millennials surveyed had the highest number considering making socially responsible investments (43 per cent) compared to Gen X (33 per cent), Baby Boomers (25 per cent) and the Silent Generation (18 per cent)

Sixty-seven per cent of investors surveyed favoured social and environmental factors, such as environmental impact and not engaging in polluting activities like fossil fuels, compared to 30 per cent who favoured returns.

Timber for a greener future

Timber is a natural, environmental product because it takes less energy to produce than other products and is a renewable resource. Establishing planted forests helps to generate a future timber resource.

Wood is the most renewable material and the most sustainable of all primary industries.

Timber reduces fossil fuel use. The use of logs for items such as building products, ensures the carbon in the wood remains stabilised for long periods, particularly when the timber is recycled. The manufacturing of products such as steel, aluminium and concrete, releases a large amount of carbon dioxide into the atmosphere, and none of these substances have the ability to store carbon in the manner wood fibre can.

Why Forest Enterprises?

A Forest Enterprises investment is a direct investment in land and trees for one rotation of the forest crop (approximately 26 years). The Kiwi company has a 46-year track record of helping more than 6,600-plus investors grow their wealth through forestry. Forest Enterprises has 20,000-plus hectares under management in the North Island and over NZ$450 million of assets under management.

Managing the risks

No investment is without its risks. In forestry investment, risks can include risk to the crop – for example a fire, pests or disease. The price of logs can go up or down, meaning returns fluctuate, depending on demand overseas. However, time in the market is a positive. There’s extensive insurance over Forest Enterprises’ managed forests, and a team of experts work hard to help mitigate any risks. If you’re considering investment in forestry, a financial adviser can help work out if it’s best for you.

For more information and a copy of their latest Product Disclosure Statement, contact Forest Enterprises – www.forestenterprises.co.nz

First published 2 April, 2019

Forest Enterprises is the business name of Forest Enterprises Growth Limited and its subsidiary Forest Enterprises Limited. Forest Enterprises Limited is licensed under the Financial Markets Conduct Act 2013 to manage Managed Investment Schemes (excluding managed funds) which are primarily invested in forestry assets.

This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


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