The latest Sustainability Report from New Forests marks a major milestone for the company, and represents a seismic shift for how the global economy accounts for natural capital.
In 2023 New Forests has grown to become one of the world’s largest forestry management companies; it has $10.7 billion in assets under management, which represents 1.27 million hectares of land.
The nature-based asset manager has been a pioneer in developing sustainable forestry practices. After 18 years, David Brand, the founding CEO of New Forests, is passing on the baton to Mark Rogers.
As the global movements of ESG and impact investing have evolved, New Forests has led the way in demonstrating that sustainable management of land, biodiversity and raw materials can be a competitive advantage, rather than a burden.
This latest report was presented by Jo Saleeba, who took on the role of Head of Sustainability in 2022. More recently, Carly Hammond also joined the team as senior analyst, sustainability.
It highlights the emerging focus that financial markets are placing on the risks of biodiversity loss and the value of natural capital. New Forests is at the vanguard of this shift, and while the report explores the core impacts of the organisation and its fund management activities, it also highlights the leading measurement and disclosure systems that have the potential to help us measure, manage and conserve the most valuable asset of all, nature.
Sustainable Production = Impact
With assets covering an area of over 1.27 million hectares, New Forests has a huge footprint, and every part of their management and harvesting processes have an impact on the land and the communities that live there.
“We continue to look to new growth and new business developments, particularly our move into Africa last year, very exciting for us to be expanding globally. And we’ve also expanded across the landscape with the launch of our new agricultural business. It’s very exciting to extend our reach across the landscape, we really do genuinely believe that’s where our impact will come from.” explained incoming CEO Mark Rogers at the launch of the report.
In the 2022 financial year it harvested over 7 million cubic metres of timber, with 97% of it being certified either by FSC, or PEFC. Nearly 20 million seedlings were planted to support the regeneration and the reuse of the land. At the same time, New Forests portfolio companies harvested over 214,000 tonnes of agricultural products.
To shift that output into impact metrics; the firm estimates that its natural capital assets store 202,000,000+ tCO2e of carbon, while it has set aside 157,700+ hectares of conservation land.
As a member of the Net Zero Asset Managers Initiative, New Forests is committed to achieving net zero by 2050.
Plus, it’s a B Corp, which is a huge achievement for such a large organisation. Their latest score was 102, which I’m led to believe is pretty good.
“I really like the way that our sustainability report has evolved over the last couple of years, and will continue to do so. But what it does is give us a baseline, and a set of information that we can share with all the people that are interacting with New Forests and with the assets that we’re lucky enough to manage.” Mark says.
“It creates a sense of community around what we’re trying to achieve here, which is developing markets around biodiversity around salinity around environmental values around carbon, all based in that fundamental food and fibre core investments space.”
The New Forests ‘Value Creation Story’
Not all sustainability reports are created equal. While financial reporting is heavily regulated, reports that present a manager’s sustainability or impact practices are not standardised, and norms are only just beginning to emerge.
New Forests has taken it upon themselves to adopt the ‘Value Creation Story’ methodology, which is part of the Integrated Reporting principles.
“The value creation story depicts how New Forests takes six forms of capital, financial, human, intellectual, social, natural and manufactured, and produces outcomes that either increase or decrease the stocks of these capitals, thereby creating or eroding value for our business or our stakeholders including society and the environment.” Jo Saleeba, explained.
It’s a powerful model that bridges the gap between the financial reports and the sustainability report. It expresses the unavoidable interactions between production processes and the long term risk and return performance of the organisation.
“We continue to evolve our approach to sustainability to ensure that we stay ahead of emerging government regulations and industry standards, to continue to meet and hopefully exceed stakeholder expectations, and to demonstrate leadership.” Jo says.
“This year, we undertook a review of the market to better understand the characteristics of sustainability leadership. This review considered the sustainability criteria used by industry collaborations such as the principles for responsible investment, the Responsible Investment Association of Australasia, the UN Global Compact, and B Corp, as well as the sustainability practices of peers in both the investment sector and the land use sector.”
Conservation, Restoration and Biodiversity Management
Eco-systems are far more complex than our financial systems, and so any attempts to integrate one with the other are going to have to be done with care and humility.
New Forests has a broader focus that simply investing in land and maximising the output of timber or grain. It recognises they operate in a much bigger system, and that long term success comes from caring for the land today.
Conservation and restoration have a big role in their operations. New Forests has more than 33,400 hectares of permanently protected area, which is 3.2% of the land they manage. As well as more than 157,700 hectares of conservation zone, or voluntarily protected area. This figure for 2022 was actually a decrease on the previous year, due to land sales, but it highlights the place that conservation has in driving the productivity of a region.
The same goes for restoration. In 2022 New Forests actively reforested 440 hectares of restoration land. Mainly in Australia, New Zealand and Indonesia. In total, New Forests managed more than 2,700 hectares of land set aside for restoration at the end of FY22.
But if preserving biodiversity is the goal, then you need to go further. New Forests supports biodiversity enhancement through active monitoring and research programs.
“New Forests’ assets under management conducts species-focused monitoring to better understand the flora and fauna biodiversity present at our assets under management. Based on the findings, we can adapt our management practices to better support these species. We can also better understand how biodiversity is changing.” The report explains.
A Growing Business
New Forests is a unique company. Born and bred in Australia, it has proved itself on the global stage, and has extended its leadership through sustainable innovation that has always been executed with speed and conviction.
Now, with ownership from Japanese pension funds, the company is embarking on a new phase of growth and expansion, expanding its sustainable forestry models to more regions.
“As wood supplies shift from natural forests to intensive forest plantations, we can move towards a more sustainable supply of fibre. As demand for timber and wood fibre rises in Asia, we can support the development of regional processing and international supply of raw materials to those markets. As the market increasingly recognises the importance of the circular bioeconomy, climate change mitigation and biodiversity, we can create innovative financing structures to support solutions to these global problems.”