David Brand puts New Forests timberland impact funds on the map

BONN, Germany (Landscape News) — When it comes to forestry investments, taking shortcuts with conservation and community wellbeing just doesn’t add up, says David Brand.

He’s the chief executive of New Forests, one of the world’s largest forestry investment businesses, and a speaker at the Global Landscape Forum’s Investment Case Symposium on May 30 in Washington.

Brand says a lot of forestry investments, particularly in Asia, have been made in ways that can be antagonistic to local communities.

“And it’s led to a lot of conflict, and communities trying to burn the forestry plantations down. And the result of that, inevitably, is higher risk and poorer performance.”

Similarly, many companies that clear natural forests or peatlands are finding their products under increasing public scrutiny, and may be forced to restore some areas, which can be extremely expensive.

“Better to do things right the first time, and you’ll have a sustainable, profitable investment. At least, that’s our attitude,” Brand says.

Alongside financial metrics, New Forests has six other environmental and social criteria for success that it reports on to investors: productivity, ecosystem service provision, land use planning, risk management, good governance and shared prosperity, “where we see the returns to our clients being as important as providing benefits to the local communities where we operate,” he says.

The company’s unconventional approach is perhaps unsurprising given Brand’s background. He didn’t start his career as a businessman, but as a forestry scientist. He worked for the Canadian government on a forestry framework for the 1992 Earth Summit, and carried out numerous negotiations around environment and trade issues.

Then, while on an intergovernmental exchange to Australia in 1995, Brand came to the view that “if you’re going to make change in the forestry sector, you have to be engaged with the capital markets, because it’s where the money flows.”

So he learned the investment business, and formed New Forests in 2005, “with the aspiration to become an Asia-Pacific leading forestry investor with the highest sustainability credentials, working across not only forestry and forest production but also conservation finance.”

The company now manages almost a million hectares of land, across Australia, New Zealand, Indonesia, Malaysia, Laos and the United States, and is worth around $3.5 billion.

Learning how to manage the land sustainably has not been without its challenges. In some of the contexts New Forests works in, land rights are uncertain, and shared-use concepts need to be developed “to try and ensure that our operations are successful and supported by communities,” Brand explains.

There are also complex ecosystems to be managed and restored, as well as different legal and commercial considerations in the various countries in which the company operates.

But New Forests’ success so far – across all its criteria, including making solid financial returns for its investors – suggests this holistic approach to forestry investment may well become more of a norm in the future. “I think there has been really a shift in thinking on forests, towards the idea that we can reach a point where we can balance both conservation and production,” says Brand.

And that’s fortunate, he says, because forestry will be a central part of global action to mitigate climate change.

“Not only are forests a huge part of the global carbon cycle, but almost anything that’s made from petroleum or fossil fuel energy can be made from wood.”

“We can substitute rayon cellulosic fabrics for polyester, and biofuels for petroleum, and we can make bioenergy, and build multi-storey buildings out of wood instead of concrete and steel,” he explains.

“So there are some very exciting opportunities for the forestry sector today, and I think that’s all part of the story of this symposium as well.”

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