Nuveen launches ‘evergreen’ global timberland strategy

Nuveen, the $1trn (€1trn) investment manager of US financial services group TIAA, has launched a global timberland strategy to invest in the US, Chile, Uruguay, Canada, New Zealand and Australia over the long term.

The creation of the new “evergreen structure” comes a year after Nuveen merged its timberland and agriculture subsidiaries – GreenWood Resources and Westchester, respectively – into a single “natural capital” platform, forming part of a consolidated real assets arm.

The new vehicle targets a net total return of 5-7% pa through the sale of timber, land sales, carbon offsets, conservation easements and natural appreciation of assets, with a targeted cash yield of 2-3% pa.

Nuveen said timberland can play a significant role in investors’ attempts to transition portfolios to net zero by 2050. The strategy will look to reduce carbon emissions by producing more timber on less land, reducing emissions through efficient operating practices and sequestering and storing carbon in soil and trees.

Martin Davies, head of Nuveen Natural Capital, said: “This strategy will offer clients access to quality timberland assets with compelling growth and sustainability central to the investment thesis.

“In the current economic environment, real asset characteristics make timberland an attractive inflation hedge, with downside protection against different economic cycles and stable income. This launch is our latest step in bolstering our first-class real assets offering for clients, at a time when global investor demand is growing rapidly.

“Timberland is an intrinsic investment in natural capital assets. With trees storing carbon, it is a proven and low-cost technology to remove greenhouse gas emissions from the atmosphere. As economies transition to low carbon, sustainable timber is a crucial material in replacing carbon intensive steel and concrete in building construction. This is one of the many factors that position timberland to deliver both attractive returns and climate solutions for clients.”

Nuveen’s carbon reporting is based on the GHG Protocol and aligned with the IPCC Guidelines and will provide quantitative data on carbon emissions and removals on an absolute and intensity basis.

The firm said this would help investors in their efforts to decarbonise portfolios and to advance their own climate targets.