January 3, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

BNP Paribas Asset Management (BNPP AM), the investment arm of leading European banking group BNP Paribas, announced the acquisition of a majority stake in natural resource investment specialist International Woodland Company (IWC).

Established in 1991 and headquartered in Copenhagen, Denmark, IWC Group is a leader in natural resource investment and advisory with widespread experience in global timberland, agriculture, and ecosystem services including carbon credits and conservation.

“We welcome BNP Paribas Asset Management’s investment in IWC and look forward to partnering with them to grow the nature-based solutions universe together,” said Otto Reventlow, CEO, IWC.

“Both companies share a vision of combining fiduciary duty and active contribution to the transition to a sustainable world.  We believe that wood is the preferred material in a carbon-neutral world, and agricultural production is on an important path to deliver sustainable proteins to the global citizen,” he continued. “This partnership will enable IWC to expand its distribution reach and further its resources on sustainability and the EU taxonomy to the benefit of both our current and future clients.”

After three decades in business, IWC now oversees nearly US$5 billion of institutional mandates dedicated to timberland investment programs on a global scale. And this acquisition is the most recent step taken by BNPP AM in alignment with its sustainable investment offering and the broadening of its private markets investment platform.

This acquisition also follows BNPP AM’s announced launch in June 2021 of its BNP Paribas Ecosystem Restoration, a thematic fund designed to give investors greater exposure to companies restoring and preserving natural capital and global ecosystems. 

Thematic investing has historically had more of an environmental focus as opposed to natural capital, according to BNPP AM, which noted that despite this fact, natural capital is globally recognized as a key element of addressing climate change.

“We are seeing growing interest from our clients for investing in forestry as an asset class, and via IWC we are very pleased to be able to offer them an enhanced range of sustainable solutions that complement our existing private markets capabilities and contribute to reducing the net zero financing gap while enabling a just transition for nature,” said David Vaillant, executive committee member, BNPP AM.

As an allocation class, natural capital remains relatively small, with institutional timberland estimated to be less than US$100 billion, or 0.1 percent of global GDP – as opposed to estimated global government expenditures of approximately US$500 billion per year on activities that are potentially harmful to biodiversity, according to data from the UK government. 

However, the natural capital investment sphere is rapidly evolving and maturing, driven by initiatives by the UN and other interconnected bodies, growing awareness on the part of clients, and associated capital commitments.

Forestry, agriculture, and related natural capital strategies carry attractive risk-reverse profiles, according to the group, which noted that forestry offers appealing investment returns and inflation protection, along with the ability to capture carbon and be the foundation for key conservation projects.

BNPP AM explained that nearly all climate scenarios rely on Negative Emission Technologies (NETs) – particularly forestry and other land use shifts – in order to achieve net zero emissions and to mitigate emissions from other hard-to-abate sectors.

In addition to this usefulness, forestry also serves to preserve biodiversity and improve water management, as was noted by the World Resource Institute in its recent report Not Just Carbon, where it stated that the global climate system would not be able to function without healthy forests. 

Vaillant concluded, “Our investment in IWC is fully aligned with our commitment to be a leading sustainable asset manager, be forward looking on sustainability-related topics with our clients and increase our focus on sustainable investment strategies, especially within private markets. It is a key component of our Net Zero and Biodiversity roadmaps, as well as being aligned with broader BNP Paribas Group initiatives to protect and restore forests and biodiversity, such as Zero Net Deforestation or Act4nature.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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