December 12, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Recognizing that clients’ needs are evolving beyond net neutral strategies, Manulife Investment Management (MIM) announced the launch of the Manulife Forest Climate Fund (FCF) – a closed-end vehicle designed to give investors access to climate change action through sustainable forest management and the sequestration of carbon as a priority over timber production. 

This mission harkens back to August 2021, when MIM (then Hancock Natural Resources Group HNRG) announced an impact-first investment when it acquired 89,000 acres of timberland in the U.S. state of Maine for the primary purpose of sequestering carbon. 

The acquired asset located in Somerset County, Maine, is a contiguous block of timberlands bordering the province of Quebec, Canada, with a diverse mix of naturally regenerated spruce-fir and northern hardwood tree species. It also encompasses Penobscot Lake, a 1,020-acre lake at the headwaters of the West Branch of the Penobscot River.

Given the moniker Blueback for its sought-after subspecies of Arctic char native to the local lakes there, a portion of the land is being handled as a working forest using sustainable stewardship practices.

“We are well-positioned to seek positive climate impact and to invest in assets to create carbon sequestration and other conservation opportunities derived from forests for the benefit of our clients,” Tom Sarno, global head of timberland investments, Manulife Investment Management, noted at the time.

“We believe impact-first investments can meet the needs of those who are interested in offsetting carbon emissions and who may value other positive environmental or social impacts as well as generating financial returns.”

MIM’s current portfolio of sustainable managed forestry assets is diversified across the U.S., Canada, Australia, New Zealand, and South America. This newest fund, along with its affiliated offshore vehicles, is targeting $500 million in committed capital which will be invested in a globally diversified portfolio of sustainably managed timberlands.

However, MIM stated that through its FCF it may seek to provide opportunities for professional investors in certain other jurisdictions, including within the EU. In line with this intention, MIM is seeking to ensure that if the strategy is offered outside of the U.S. through an offshore feeder fund that it will comply with the requirements of Article 9 of the EU Sustainable Finance Disclosure Regulation.

“Manulife Forest Climate Fund’s ability to align with the climate goals of our investors and key stakeholders is enhanced by our experience, size, global scale, and reputation in the market for developing and managing global timberland portfolios and carbon markets,” said Sarno.

To achieve these goals, Manulife FCF will focus on forests with strong carbon potential and high conservation value, which will then be subject to sustainable management plans. It will then use carbon credits, conservation easements, value-added strategies, and limited timber harvests to generate high-integrity climate benefits along with financial returns. 

“We are excited to bring a product to investors that we have developed by capitalizing on our decades of experience in sustainable timberland management and on our carbon market expertise,” commented Eric Cooperström, managing director, impact investment and natural capital solutions, MIM.

Under its strategy, Manulife FCF will pursue carbon insets through sequestration embedded within the investment portfolio to provide investors with long-term supplies of high-quality carbon credits aligned with MI’s carbon principles and lower exposure to market volatility.

And as stewards of the fund, MIM will bring to bear its sustainable investing practices and nature-positive outcomes integral to its business, to generate outcomes that are not only financially beneficial, but help halt and reverse the loss of biodiversity and nature’s integrity through long-term protection and restoration of sensitive habitats.

Sarno noted, “We believe high-integrity, verified carbon credits will continue to be viewed as premier decarbonization instruments and that, in time, such carbon markets will eventually come to resemble that of more traditional commodities.”

Manulife FCF will join MIMs integrated timberland management operation, which comprises 12 close-end timber funds and another open-end timber and ag fund that combined have nearly 6 million acres under management across more than 100 individually managed properties, as of June 30, 2022.

“We are excited to bring a product to investors that we have developed by capitalizing on our decades of experience in sustainable timberland management and on our carbon market expertise,” concluded Cooperström.

 ~ 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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