August 16, 2024

By Gerelyn Terzo, Global AgInvesting Media

UK pension giant Nest — in a move to add diversification to its funds — has selected Campbell Global for a high-profile timberland investment mandate. Campbell Global, a J.P. Morgan company, was enlisted to provide the pension scheme with a global portfolio of direct investments focused on core traditional timberland sites in key markets across the United States, Australia, New Zealand and Chile. The Portland, Oregon-based investment firm, which specializes in forestland, was selected out of a dozen fund managers amid a search for sustainably managed timberland that kicked off a year ago.

Nest, the UK’s biggest workplace pension pension, oversees £40.1 billion (US$51.6 billion) in AUM across 13 million members. Timberland is making its debut in Nest pensions amid an idea among fund managers that began percolating back in 2021 to introduce portfolio diversification and stable returns. Additionally, Nest managers were drawn to timberland for its positive environmental impact, owing to the role of forests as a main carbon sink.

Timberland investing took root in the 1950s and has since ballooned to include millions of institutionally owned timberland acres worldwide. Timberland is an attractive asset class for several reasons, not the least its outperformance of traditional categories such as fixed income and equities over the three-decade stretch leading up to 2020. In addition to providing portfolio diversification, timberland also serves as a natural inflationary hedge given its low correlation to most other asset classes.

When managed appropriately, timberland investments support sustainable forestry practices, a virtuous cycle that enables the responsible management of forest resources, preservation of biodiversity and the care of ecosystems. Sustainably run forests inherently offer carbon storage, water filtration and soil preservation, thereby optimizing the natural capital component of the allocation.

As one of the biggest and most experienced timberland fund managers in the world, Campbell Global has been a pioneer of timberland investing, boasting close to four decades of experience in forestland management and value creation. The firm has overseen 5.5 million acres, or 2.2 million hectares, globally for institutional investors including pensions, endowments, foundations and others.

Stephen O’Neill, head of Private Markets at Nest, stated, “Campbell Global is one of the largest and longest established timberland investment advisory organizations, so we expected them to put in a strong bid. We were particularly impressed by the sophistication of their operations, responsible investment philosophies and ability to work at scale to minimize operating costs while maximizing integrated asset management.

O’Neill added: “We believe the importance of preserving natural capital will only increase in the coming years. Many aspects of our ecosystem such as forestry, water and agriculture are closely linked to climate change mitigation and adaptation. Achieving net zero emissions by 2050 will require natural capital preservation.”

John Gilleland, CEO and chairman of Campbell Global, said: “Timberland represents a unique investment that offers Nest’s members the opportunity to combine investment and sustainability goals, which include enhanced portfolio diversification, a hedge against inflation, carbon removal to help mitigate climate change, and the preservation of biodiversity.”

Campbell Global was recently named a “forest champion” amid a partnership with the Pacific Forest Trust (PFT) whose mission is to protect the 7,500-acre Shasta Timberlands Working Forest, the largest National Forest in California, for climate resiliency and watershed health into perpetuity. PFT is a conservation organization dedicated to private forests in the Pacific Northwest.

Campbell Global’s Gilleland said of that relationship, “We are proud to partner with PFT on this working forest conservation easement, which has lasting public benefits for wildlife, water flows for people and fish, and climate change mitigation — all while maintaining jobs in the woods and enhancing recreational opportunities.”

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