Over the past decade, responsible forestry has become a mainstay of the Church Commissioners for England’s investment portfolio.
Investment in forestry both in the UK and abroad shares many of the same qualities as investment in conventional real assets; it is an inflation hedge and tends to follow a different pathway to wider markets. Forestry investment returns are underpinned by the biological growth of trees and timber prices. For an organisation like ours, with investment time horizons as long as a century, it is a stable and long-term holding.
While the investment returns over the last few years have exceeded our expectations, our holdings in over 100,000 acres of independently certified, sustainably managed forests offer much more than purely financial value. As we’ve come to discover, responsible investing in environmentally critical assets shapes the very heart of how an organisation defines and evaluates itself.
Responsible forestry which focuses on environmental and social outcomes, such as biodiversity and local employment, alongside sustainable economic returns, has clear advantages to people as well as the planet. Forestry spanning 10m hectares is lost each year globally because it is not deemed valuable enough to retain. Sustainable forest management, which provides local employment and economic benefits, helps prevent land use conversion.
The Commissioners have produced 1.56m tonnes of sustainable, renewable timber in the UK alone over the past decade. This certified timber production takes place alongside important work to promote biodiversity, including restoring plantations on ancient woodland sites to native woodland and participating in scientific trials to improve forest resilience and diversity of tree species and to reduce the use of pesticides.
Over the past five years we have planted more than 10m trees, while doubling the area of native woodland across our forests in the UK – an area equal to 330 football pitches planted primarily to benefit biodiversity.
Forests provide considerable positive externalities – a 2021 baseline assessment of natural capital by third-party consultants found that our forests in the UK provided carbon sequestration, air quality regulation and flood prevention benefits worth over £15m (€17.9m). This calls for a need to assign a value for ecosystem services such as biodiversity in order to protect valuable natural capital globally.
There is also a significant global momentum toward a transition to more sustainable materials and timber is uniquely placed in this transition. Sustainably harvested timber is a renewable resource that can be used as a substitute for significant quantities of non-renewable, carbon-intensive materials such as concrete, steel and plastics.
The use of mass timber in construction can substantially reduce embodied carbon emissions, and carbon is locked up for decades while the sustainably managed forests are replanted to continue carbon sequestration.
The benefit of the carbon harvested from the Commissioners’ forests in 2019 and stored in wood products was calculated to be a discounted 89,000 tonnes of carbon dioxide equivalent emissions. The Church Commissioners for England is committed to a 25% reduction in its carbon intensity by 2025, ahead of net-zero legislation.
As we continue the sustainable management of our forests, we expect the wider benefits to society to increase over time. Forestry offers an opportunity to strike partnerships with local communities that can result in long-term and stable employment, while sequestering large quantities carbon, and they prompt investors to seek out other ‘win-win’ projects and shape their investment strategies to maximise value in a financial sense as well as for society and the environment.
Forestry will continue to be a significant investment for the Church Commissioners. It is essential that a profitable portfolio is also representative of the values that drive our organisation – respect for people and respect for the planet. In turn, as an active owner we will continue to use our voice to encourage our partners to make progress towards international agreements such as the Paris Agreement target of net zero by 2050, and prioritise mutually beneficial opportunities as they become increasingly apparent.
