Natural Capital & Sustainable Forestry Fund

Natural Capital & Sustainable Forestry Fund: Returns Rooted in Real Assets

Sustainable commercial forestry occupies a unique position in the alternative investment landscape: it is a genuine productive real asset that generates returns through biological growth — trees grow whether financial markets are calm or chaotic. A portfolio of certified commercial forest generates value as timber volumes increase each year, as carbon sequestration credits accumulate from the forest's CO₂ absorption, and as the underlying land appreciates over the holding period.

This fund invests in certified sustainable forestry and natural capital projects across the UK, New Zealand, and Latin America, targeting a net IRR of 8–11% over a twelve-year fund life.

Natural Capital as an Asset Class

Natural capital — the world's stock of natural assets including forests, freshwater systems, soil, and biodiversity — has historically been treated as a freely available input to economic activity rather than a quantified investment asset. This is changing. Regulatory frameworks mandating biodiversity net gain, carbon markets monetising CO₂ sequestration, and ESG mandates requiring demonstrable environmental impact are collectively driving institutional capital into natural capital assets.

The result is a rapidly professionalising asset class with genuine return drivers, not just sustainability intent. The fund targets assets where both financial returns and measurable environmental outcomes are central to the investment thesis — not one at the expense of the other.

Geographic Allocation and Strategy

UK Commercial Forestry (approximately 35–40%): Productive conifer and broadleaf forestry in Scotland, Wales, and Northern England. UK forestry has a strong institutional investment heritage, a liquid land market, and regulatory support through the Woodland Carbon Code (providing independently verified carbon credits). UK forestry also benefits from the Biodiversity Net Gain requirements of the Environment Act 2021 — forests provide high biodiversity unit values that can be sold to developers needing to offset habitat loss.

New Zealand Carbon and Production Forestry (approximately 30–35%): New Zealand's Emissions Trading Scheme (NZ ETS) is among the world's most established forest carbon markets. Production forests (Pinus radiata) grow rapidly in New Zealand's climate and generate both commercial timber and NZ ETS carbon units. NZ ETS carbon prices are linked to government emissions policy, with long-term structural support from New Zealand's net-zero 2050 commitments.

Latin American Reforestation (approximately 25–30%): High-growth plantation forestry in Colombia, Uruguay, and Chile, where fast-growing eucalyptus and pine species reach commercial harvest in 8–12 years versus 30–40 years in UK or northern European conditions. This geographic exposure provides diversification and accelerated biological growth rates, supplemented by VERRA-certified voluntary carbon credits.

Dual Revenue Streams

Timber revenue: Commercial harvesting of mature trees generates revenue from the sale of timber for construction, paper, and biomass energy. Timber prices are influenced by construction activity and energy costs, but the fund's long duration and staged harvest schedule provides smoothing across cycles.

Carbon credit revenue: Trees absorb CO₂ throughout their growing cycle. Under both compliance markets (UK Woodland Carbon Code, NZ ETS) and voluntary standards (VERRA VCS), verified carbon sequestration generates carbon credits that can be sold to corporate and institutional buyers with net-zero commitments. Carbon credit revenues add a structurally growing income stream as the forests mature and carbon prices rise over the holding period.

Biological Growth as Return Driver

The fundamental difference between forestry and most other asset classes is that biological growth drives returns independent of market conditions. A 500-hectare forest growing at 8–12 cubic metres of timber per hectare per year generates a predictable, measurable annual increment in timber volume — regardless of interest rates, inflation, or equity market performance. This biological return is the bedrock of the fund's return target, with carbon revenues and land appreciation providing additional upside.

ESG and Impact Framework

The fund operates exclusively within internationally certified forestry frameworks:

• FSC (Forest Stewardship Council) and PEFC certification for all commercial forestry holdings
• Third-party verified carbon accounting under Woodland Carbon Code, NZ ETS, and VERRA
• Biodiversity monitoring at all UK sites under the Biodiversity Net Gain framework
• No conversion of primary or high conservation value forest — all investments in existing plantations or degraded land restoration

Annual impact report provided to investors, including CO₂ sequestered, hectares certified, biodiversity unit generation, and habitat connectivity metrics.

Risk Considerations

Biological risk: Forestry is subject to natural risks including disease (e.g. Phytophthora, bark beetle), fire, storm damage, and drought. Insurance and geographic diversification mitigate but cannot eliminate these risks.

Carbon market risk: Carbon credit values depend on policy support and market demand. A weakening of carbon pricing policy could reduce carbon revenues. The fund does not rely entirely on carbon revenues — timber revenues provide a base return even in a zero carbon price scenario.

Commodity price risk: Timber prices fluctuate with construction demand, interest rates, and energy costs. A prolonged construction downturn could reduce harvest revenues.

Liquidity: Twelve-year closed-end fund with no early redemption mechanism. Investors commit for the full term.

Currency risk: GBP-denominated fund with NZ dollar and Latin American currency exposures. Movements in these currencies affect GBP-translated returns.

Regulatory risk: Changes to forestry subsidies, biodiversity net gain legislation, or carbon market rules in any of the three target regions could affect returns.

Suitability

Sustainable forestry suits investors with long investment horizons seeking genuine real asset exposure, inflation protection through timber and land values, and verifiable ESG impact. It is particularly appropriate for family offices, high-net-worth individuals with sustainability mandates, and trust structures with multi-generational investment horizons. Minimum investment £100,000.

How to Invest

Contact our investment team to receive the fund's KIID, prospectus, and current portfolio documentation including FSC certificates and carbon verification reports. Full suitability assessment required before subscription. Minimum investment £100,000.

Important: Capital is at risk. Past performance is not a guarantee of future returns. This is for information purposes only and does not constitute a personal recommendation. Seek independent financial advice before investing. This fund illustrates the type of natural capital opportunity Global Investments advises on — it is not a live investment offer.