November 16, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

The world’s largest manager of natural capital – Manulife Investment Management (MIM) – with nearly $15 billion in combined AUM between agriculture and timberland, announced in December 2022 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. 

Manulife Investment Management oversees approximately 5.5 million acres of timberland geographically located across the U.S., Canada, New Zealand, Australia, Brazil, and Chile, with 100 percent of its holdings certified under either the Sustainable Forestry Initiative (SFI) or the Forest Stewardship Council (FSC). It also manages approximately 400,000 acres of prime farmland in key agricultural regions of the U.S., Canada, Chile, and Australia as part of its comprehensive private markets strategies. Moreover, its entire U.S. agricultural platform is certified to the Leading Harvest Farmland Management Standard, reflecting its commitment to sustainable practices, robust management, and continuous asset improvement. 

As a recently launched investment vehicle, the Manulife Forest Climate Fund, along with its affiliated offshore vehicles, has completed its first close with $224.5 million in capital commitments toward its target of $500 million, which will be invested in a globally diversified portfolio of sustainably managed timberlands.

MIM explained that the fund’s strategy is to provide investors with exposure to timberland assets which will be managed using practices that create high-quality carbon credits through enhanced forest management methods that increase the stored carbon in the forest. And in line with its intentions, MIM noted that this is its first natural capital fund to be categorized as a product under Article 9 of the European Commission’s  Sustainable Finance Disclosure Regulation (SFDR).

Additionally, a parallel goal includes establishing new forests through afforestation or reforestation to generate high-quality carbon credits and long-term sustainable timber value. The fund will then use these credits, conservation easements, non-timber income generation strategies, and limited timber harvests to capture potential climate benefits and competitive financial returns for its investors. 

“The broad demand for climate change mitigation solutions can’t be understated and there is strong investor interest in strategies that may help support carbon emissions reductions and net zero commitments,” said Tom Sarno, global head of timberland investments, Manulife Investment Management. 

“We believe that an investment in Manulife Forest Climate Fund can help support investors’ various climate goals and objectives and that the experience we have in sustainable forest management, as well as our commitment to high-quality carbon sequestration, brings additional value to the strategy.”

As stewards of the fund, Manulife Investment Management 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.

Through this work, Manulife FCF will generate a long-term supply of high-quality carbon credits that will be available through direct in-kind transfers for investors’ own climate goals, or for purposes such as monetizing in the carbon markets via offset sales to realize their financial value. 

“The Manulife Forest Climate Fund expands on our decades of sustainable timberland management experience and is one of the natural climate solutions we have developed to sequester carbon more intensively and drive broader impact,” said Eric Cooperstrom, managing director, impact investing and natural climate solutions, Manulife Investment Management. 

“Responsible commitments to reducing and removing emissions, inclusive of high-quality forest carbon credits, are extremely important to help investors meet their climate and financial goals.”

~ 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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