Manulife Investment Management, the largest manager of natural capital with nearly $15 billion in AUM, has announced a significant milestone.
The initial close of Manulife Forest Climate Fund LP1,2 (FCF or the fund) marks a notable advancement in the company’s efforts. The fund, uniquely positioned as a closed-end fund, offers qualified U.S. investors and select global institutional investors a chance to contribute to climate change mitigation.
This initiative is primarily achieved through the sustainable management of forests, emphasising carbon sequestration over timber production. Complementing its affiliated offshore vehicles, the fund has garnered commitments of up to $224.5 million, working towards a $500 million target.
The core investment strategy of the fund is to engage investors in timberlands management. This approach is tailored to generate high-quality carbon credits via enhanced sustainable forest management practices, intentionally increasing the carbon stored in forests. An integral component of this strategy involves creating new forests through afforestation or reforestation, further contributing to the generation of high-quality carbon credits and fostering long-term sustainable timber value.
The fund’s strategy encompasses using carbon credits, conservation easements, non-timber income generation strategies, and limited timber harvests. This diverse approach aims to maximise climate benefits and ensure competitive financial returns for investors.
Tom Sarno, the global head of timberland investments at Manulife Investment Management, highlighted the increasing demand for climate change mitigation solutions and strong investor interest in strategies aiding carbon emissions reductions and net zero commitments. He expressed confidence in the Manulife Forest Climate Fund’s ability to support investors’ varied climate goals and objectives. Sarno emphasised the added value brought by the company’s extensive experience in sustainable forest management and commitment to high-quality carbon sequestration.
Manulife FCF is dedicated to generating a long-term supply of high-quality carbon credits, available through direct in-kind transfers for investors’ climate objectives or for monetising in the carbon markets through offset sales. This strategy marks the firm’s first natural capital fund categorised as a product under Article 9 of the European Commission’s Sustainable Finance Disclosure Regulation (SFDR).
Eric Cooperstrom, managing director of impact investing and natural climate solutions at Manulife Investment Management, added, “The Manulife Forest Climate Fund builds on our decades of experience in sustainable timberland management. It’s a vital part of our natural climate solutions portfolio, aiming to intensify carbon sequestration and drive broader impact.” Cooperstrom stressed the importance of responsible commitments to reducing and removing emissions, including high-quality forest carbon credits, to help investors achieve their climate and financial objectives.
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