BNP Paribas Asset Management today announced the acquisition of a majority stake in International Woodland Company (“IWC”), a leading Danish natural resources investment firm. IWC is headquartered in Copenhagen and has more than 30 years of experience in providing management services and consultancy in the field of investments in forests for biodynamic timber production, agriculture and ecosystem services, including carbon credits and conservation projects.
In detail, IWC oversees 5.5 billion euros of investment programs in sustainable forests on a global scale. The transaction is expected to close in the first half of 2023 and is subject to regulatory approval from the Danish Financial Supervisory Authority.
The acquisition is part of the expansion of BNPP AM’s sustainable investment offering, as well as the expansion of its private markets investment platform, with the aim of meeting the needs of investors oriented towards expanding the sustainable investment component on private markets.
The forestry, agriculture and related natural capital strategies have attractive risk-return profiles and are important elements in climate change mitigation and the path to net zero emissions. Forestry, for example, offers attractive returns and can serve as a hedge against inflation, as well as the opportunities associated with carbon conservation and sequestration projects. Nearly all climate scenarios rely on Negative Emission Technologies (or “NETS”), particularly affecting forests and land-use changes, to achieve net zero emissions and limit global warming at 1.5-2°C.
The aim is to offset biogenic emissions and those generated by sectors with high structural emissions that cannot be eliminated. In addition to this, forestry offers many benefits, including biodiversity conservation and water cycle management. As the World Resource Institute noted in its recent Not Just Carbon report, the global climate system cannot function without healthy forests.
The natural capital investment market is still relatively small: institutional assets are estimated to be less than $100 billion, or about 0.1% of global GDP. This compares with an estimated global government expenditure of around $500 billion a year on activities that can be harmful to biodiversity.