Why Socially Responsible Investing?

  • Timberland is relatively new asset class, and emerged as an institutional investment opportunity in the early 1980’s.
  • First recorded private Timberland investment plantations in Latin America date back to 1930’s.
  • Between 1989 – 2012 Capital invested in timberland grew from US$1 Billion to US$75 Billion.
  • World Bank promotes legislation to protect forests world-wide.
  • Since 1987 the average return has been 14.1% and Standard Deviation of 9.4%.
  • Today key institutions support investments in Timberland such as : Harvard Endowment Fund, Yale University and J P Morgan.

Benefits of Ethical Forestry Investment

a) One of the most important benefits of investing in Timber, is its biological growth, it is invariably positive and it will continue to grow regardless of current market conditions. Approximately 60% of the projected returns are generated by the biological growth. 30% Is generated by the market price increase of timber, and a mere 5% is generated by land appreciation value.

Attribute Drivers for Timberland Returns

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b) Timber is also known to have historically outperformed other asset classes in high-inflationary periods. Timber as a commodity offers real returns to investors, thus always having an inflation hedge.

Relative asset class performance during inflation scenarios, defines as the top quintile (“high”), middle three quintiles (“moderate”), and the bottom quintile (“low”) of rolling 1-year consumer price inflation from 1987-2009.

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c) The demand of timber has always mirrored world population trends, as seen in the carts below, as population increases, demand for timber increases, but availability of natural sources becomes scarce. It is understood that every human being uses a product from the forest every single day of their life, the question is who will supply future generations with the precious resource, if it is not plantations forests.

Historic & Forecast Global Population and Roundwood Consumption
(1980 – 2030)

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Global Industrial Roundwood Usage
and Population Growth

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