Introduction to Timberland Investing

Environment

Social and environmental sustainability underlie all our timberland investments. We see timberland investment as an ethically and socially responsible activity in itself contributing to sustainable development while generating profits to investors. We are committed to an investment philosophy that integrates rigorous timberland investment analysis with creation of innovative ways to enhance returns also from forest-based environmental services, such as carbon, biodiversity and landscape conservation. We put great emphasis on SRI/ESG issues.

We have adopted a comprehensive Forest Investment Policy, which incorporates ESG-related principles as well as forest-specific environmental and social policies and guidelines. All investments are made in accordance with the Equator Principles and the EC’s and IFC’s environmental and social safeguard principles. Dasos Team has long experience in social and environmental aspects of forest management in various environments in addition to a broad technical know-how crucial in ensuring highly productive forestry combined with enhancement of societal development objectives.

Certification

We have a policy of investing only in forests that are certified or are certifiable to demonstrate that the forest management in the invested asset is economically viable, socially acceptable and ecologically sound. The certification of forest assets adds value to the timberland asset, improves market access, demonstrates sustainability through independent annual audits, and mitigates social, environmental and governance related risks. Certification also provides the platform and framework for planning, implementing and monitoring sustainable forest management at a portfolio company (investment) level.​

We are open to all accredited certification systems, including Forest Stewardship Council (FSC®) and Programme for the Endorsement of Forest Certification (PEFC®). ​

The key principles of the internationally endorsed forest certification schemes are integrated into our environmental policy and implementation guidelines.​

Sustainable Development Goals (SDGs) / Environmental, Social and Governance (ESG)

We put great emphasis on SDG/ESG issues. We have adopted a comprehensive Forest Investment Policy, which incorporates ESG-related principles and forest-sector specific environmental and social policies and guidelines. All our investments are made in accordance with the Equator Principles and we have also adopted key EC’s and IFC’s environmental and social safeguard principles. SDG reporting is an integral part of our sustainability strategy. Our SDG reporting framework focuses on certain economic and environmental indicators, based on materiality assessment. Our policy is to communicate openly about the environmental and social impacts of our operations.

Forest Product Demand

Several macrotrends, such as population and GDP growth and bio economy, will drive demand for forest products, and thus for fibre and logs; the global demand for wood is increasing steadily. Based on long-term historical data, real wood prices have increased by about 1.0% annually. Forest product demand and price trends are positive for timberland investment as whole, with considerable regional and country variations. We will aim at utilising investment opportunities derived from regional and country demand-supply imbalances and identify countries that have comparative advantages in supplying wood fibre to deficit areas.

Climate and Bioenergy

Climate change and environmental policies are creating the demand to have more land under sustainable forest management. Carbon and other non-timber forest products can provide diversification benefits and an upside to investment returns.

Bioenergy related wood revenue has increased in significance over the past years.  This trend is driven especially by EU’s renewable energy policies and higher energy prices. The use of wood biomass for energy will provide additional revenue from timberland investments; in some areas competition for wood fibre will drive up wood prices.

Higher and Better Use (HBU)

In addition to value creation via intensive, sustainable forest management, we identify opportunities for HBU (Higher and Better Use) through sale or rent of selected timberland lots e.g. for recreation or wind power production, especially when it can simultaneously contribute to rationalising the forest resource base.

Diversification

We aim at a well-diversified global timberland portfolio which combines the aspects of geographical, age and wood assortment as well end-use diversification. A relatively broad species/end-use mix offers diversification in terms of price exposure, changes in market conditions, natural risks, timing of harvests and rotation cycle. Investment into mature harvestable forests generates immediate, more secure cash flows while investment into younger assets provides potential for increasing yields and appreciation. Country diversification helps with addressing regional market variations, environmental and economic policy and related regulatory risks, and natural disaster risks as well as with providing exposure to climate zones with unique growing conditions and return potential.

Biological Growth

Biological growth has unique features for investors because trees grow all the time regardless of economic events or market fluctuations resulting in a predictable and positive yield and providing a natural inflation hedge. Dasos focuses on what it sees as the primary driver of revenue generation, i.e. growing and harvesting trees sustainably and profitably with the objective of maximizing benefits from biological growth. Value is enhanced mainly by improving forest management, reducing inefficiencies in harvesting and marketing as well as improving the strategic positioning of the asset, e.g. through expansion or certification. Additional revenue is created through various value creation activities, including payment for ecosystem services.

Sustainable Development Goals (SDGs) / Environmental, Social and Governance (ESG)

We put great emphasis on SDG/ESG issues. We have adopted a comprehensive Forest Investment Policy, which incorporates ESG-related principles and forest-sector specific environmental and social policies and guidelines. All our investments are made in accordance with the Equator Principles and we have also adopted key EC’s and IFC’s environmental and social safeguard principles. SDG reporting is an integral part of our sustainability strategy. Our SDG reporting framework focuses on certain economic and environmental indicators, based on materiality assessment. Our policy is to communicate openly about the environmental and social impacts of our operations.