January 6, 2022

photo credit: Mitsui

By Lynda Kiernan-Stone, Global AgInvesting Media

Japan’s Mitsui & Co. announced it has invested in an Australia-based carbon offset fund jointly developed with New Forests, which will manage the fund. 

This New Forests and Mitsui initiative is where investment has arrived,” said Dayne Johnson, partner with HWL Ebsworth, advisor to New Forests for the endeavor. “…sustainability and carbon neutrality are core. As business transitions to a low carbon future, it is exciting to be advisors of clients with the vision and ESG commitment of New Forests.”

Mitsui has been investing in Australian forestry since the 1990s to supply wood chips to the Asian pulp and paper industries, but it wasn’t until 2016 that Mitsui first became a shareholder in New Forests, when it agreed to acquire a 22.5 percent stake in the forestry and land investment manager. 

Headquartered in Sydney since its inception in 2005, New Forests is a certified B corporation with operations in Australia, New Zealand, Southeast Asia, and the U.S. offering high-impact strategies in sustainable forestry and its related sectors. Today, it is the second largest forestry investment manager in the world and the largest in the timber and plantation sectors in Asia-Pacific with A$7.7 billion in AUM across more than 1 million hectares of investments consisting of sustainable forest plantations, areas of natural forest conservation, carbon projects, row cropping, and timber processing.

In July 2021, the company completed the acquisition of 156,000 acres of forest land in the Hilt-Siskiyou Forest – a mixed conifer forest along the border of California and Oregon from Fruit Growers Supply Company (FGS), alongside an institutional investor client. 

In September of last year, New Forests partnered with Canadian institutional investor AIMCo for the acquisition of Lawson Grains from Macquarie Asset Management for $600 million. Lawson Grains, which is headquartered in Albury, New South Wales, represents one of the single largest cropping assets to ever be offered in Australia. The enterprise spans 90,500 hectares of arable agricultural land across New South Wales and Western Australia producing more than 200,000 tons of wheat, barley, canola, and pulses per year.

In early October, New Forests was involved in a deal with two pension funds – the UK Pension Protection Fund (PFF), and APG Asset Management (working on behalf of Dutch pension fund ABP) – to manage control of New Zealand-based Wenita Forest Products, which has more than 30,000 hectares of radiata pine, Douglas fir, larch, Corsican pine, and eucalyptus. 

And in November 2021 New Forests partnered with CDC Group, the UK’s development finance institution; Finnfund, the Finnish Fund for Industrial Cooperation; and Norfund, the investment fund of the Norwegian government for developing nations, to raise $500 million over the next three to five years to scale and transform the sustainable forestry sector in sub-Saharan Africa. 

Plans Down Under

Investments in forestry have ticked up with climate change awareness, driving a rise in market demand for carbon credits from forestry assets – one of the most popular channels by which to offset greenhouse gas (GHG) emissions.

By leveraging its forestry business expertise, Mitsui stated it is aiming to create environmental values as additional advantages of forestry assets through industrial approaches and contributions to solving global climate issues in collaboration with business partners interested in ESG investing and low carbon businesses.

During Global AgInvesting’s 10th annual Global AgInvesting Asia conference in 2020, Greg Mellinger, CEO for HighQuest Group, GAI’s parent company, sat down with Ken Hori, representative director, president and CEO of Mitsui & Co., for an executive interview during which Mr. Hori explained Mitsui’s approach to direct investment as opposed to investing in funds. 

“…some GP groups may have strong access in certain geographical areas where we may like to augment our own existing network through such an additional relationship with these funds,” said Hori. “As you know, there are very good funds out there so when we have built trust and relationships, we like to work with them.”

Under this strategy, Mitsui plans to develop a forestry business in Australia alongside other parties for the purpose of generating Australian Carbon Credit Units (ACCUs) used as a domestic carbon offset mechanism in association with the Emissions Reduction Fund created by Australia to reach a net zero emissions target by 2050. 

In the future, Mitsui stated that it plans to leverage its global business network and partnership to establish carbon projects in other countries that will contribute to global GHG reduction and the strengthening of sustainable societies.

– Lynda Kiernan-Stone is editor 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 Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com. 

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