ATP seeds €400m sustainable forestry investment programme

Fund to buy FSC certified timberland in North America, Australia, New Zealand and EU.

ATP, the Dkr355bn (€48bn) Danish public pensions giant, is to invest DKr3bn (€400m) in a strategic programme of sustainable forestry purchases as part of its first foray into the asset class and a broader focus on climate change investments. The announcement comes just days after ATP made one of the world’s biggest commitments by an institutional investor to clean tech and renewable energy investment with an €292m ($400m) allocation. The fund has made its first forestry investment by directly buying 38,000 hectares (roughly 95,000 acres) of timberland at Upper Hudson Woodland in New York State for €24m. The forest has been acquired by a new subsidiary of the ATP Group, ATP Timberland Invest K/S, which will handle the remaining €366m of forestry investments. The fund says it will only hold directly owned forests that are certified by the Forest Stewardship Council (FSC), which aims to protect local economic, social and nature interests. As a result, ATP said it will only currently invest in forests in North America, Australia, New Zealand and the EU. Henrik Gade Jepsen, vice chief investment officer at ATO and chief executive of ATP Timberland Invest K/S, said: “ATP will own forests wholly. That way, we ensure that the forestry operation is conducted in a responsible and sustainable manner.” Gade Jepsen said trees were asolid investment and matched ATP’s investment philosophy by offering relatively high returns and valuable risk-diversification opportunities: “As output can be tailored to meet demand, forestry earnings are usually stable. If production (logging) is postponed, the value does not deteriorate. On the contrary, biological forest growth is 4-8% per annum. Forests tend to retain their value in times of high inflation – as opposed to, for example bonds and equities,” he said. Upper Hudson Woodland, which consists mainly of natural forest, will be wholly owned by ATP while RMK Timberland Group will be in charge of the management operation of the ATP forest. RMK is a business unit partner of Regions Morgan Keegan Trust and Morgan Asset Management, the trust and asset management arm of Regions Financial Corporation, based in Atlanta, Georgia, and launched one of the first commingled timberland funds for institutional investors. ATP joins European pension peers including ABP in the Netherlands and PKA, the Danish collective pension scheme for employees in the public social and health sectors, that have made significant recent investments in sustainable forestry.

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