Danish pension fund PFA is investing up to $130m in US forests through Forest Investment Associates (FIA).
PFA is making its debut investment in forests by awarding FIA a mandate to buy and manage the forests via a forest fund on behalf of the pension fund.
PFA said the investment is part of the pension fund’s “strategic focus on long-term returns and climate-friendly investments”.
Kasper A Lorenzen, group CIO at PFA, said: “We will invest in certified forestry projects that are run with a respect for the forest’s natural lifecycle and where logged areas will be replanted.”
Over the past few decades, forestry investments in the US have provided solid and long-term returns and have been less impacted by inflation and the ups and downs of the business cycles, Lorenzen said.
“Forests also play an important role in solving the climate challenges that we are facing now and in the future. They can absorb and store CO2, and wood is increasingly used as a replacement for metals and plastics in, for example, the construction and furniture industries.”
Lorenzen said FIA was selected based on its experience with managing tailored investment mandates, its historical returns from previous investments and its clear focus on ESG.
Mike Cerchiaro, senior VP and director of investment management at FIA, said: “We are proud of this agreement with PFA and now look forward to finding forest investments that meet PFA’s high ESG requirements and deliver on the objectives of the forest fund.
“PFA brings a long-term approach with clear objectives of having returns and responsible forestry come together, which aligns with Forest Investment Associates’ management approach and our partnership with PFA.”
FIA said the PFA fund is the first mandate to be won by the Atlanta-headquartered investment manager’s new climate-smart forestry programme launched in response to rising demand for solutions toward net-zero investment targets.
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