Investors are increasingly aware of the importance of partnering good returns with environmental responsibility.

Forestry is uniquely positioned to provide both. And a new offering from Forest Enterprises, Blairlogie Pine, gives investors the chance to grow their wealth while contributing to a cleaner world.

The 888ha second rotation forest is based in Wairarapa, and over 80 per cent of the land is registered in the emissions trading scheme, which earns carbon credits.

It is an investment that literally grows. Value is created in two ways – via carbon credits that can be sold as New Zealand Units (NZUs) in the New Zealand Emissions Trading Scheme (ETS), and harvesting of trees when they reach maturity if economic to do so.

As Bert Hughes, CEO of Forest Enterprises explains, Blairlogie Pine is one of a limited number of production forests in New Zealand eligible to earn carbon credits throughout the investment term.

“As the forest grows, it stores carbon and earns carbon credits that can be sold annually to cover the investment costs and generate income for investors,” he explains.

“Initially these carbon credits will contribute to the establishment costs of the investment with surplus income available for distribution to investors annually from 2034.”

He explains that forestry is the only recognised means of sequestering carbon under the ETS and is an important piece of the puzzle in meeting our international climate-change obligations.

Even the minimum Blairlogie Pine investment (200 shares, for $13,538) captures an average of 48 tonnes of CO² annually; that’s more than 10 times the average greenhouse gas emission of a New Zealand household.

While Blairlogie Pine is primarily a carbon investment (the primary source of income is the sale of carbon credits), harvesting the timber is a potential secondary income source for the investment.

“This means the investment value should not fall below the value of the timber crop. The timber production provides a hedge against volatility of carbon markets over the investment term and the forest will be thinned and tended to preserve harvesting options,” says Hughes.

Trusted guardians

Forest Enterprises has been a safe and steady steward of forestry for over 50 years. They have also helped thousands of retail and institutional investors grow their wealth, through direct investment in sustainably managed forests.

Forests have social, economic and environment values and are essential in promoting and protecting biodiversity; they are home to shade-tolerant plants and aquatic organisms, insects, carnivorous snails, other invertebrates, lizards, frogs, birds and bats.

They also naturally mitigate soil erosion, especially on hill-country sites. Tree roots stabilise the soil, reducing slips and sediment run-off into waterways.

Risk mitigation is an essential component of Forest Enterprises’ stewardship; their harvest and environmental management practices are certified to the highest standards.

This includes implementation of natural and man-made slash management systems, and planting alternative species such as poplar, willow and native species along riparian margins, which mitigates slash migration and sedimentation. Use of mechanised harvesting practices, such as remote-controlled tethered systems, also helps reduce risk to the natural environment from harvest operations.

Investment details

Nicola Black is the head of managed investments for Forest Enterprises. She explains that the investment opportunity has a 30-year term through to 2054.

“Over this investment period the investment of under $15,000 is projected to return approximately $115,000 of gross income,” she says.

“Good things take time and annual income distributions to investors are projected from 2034. These will continue through until the investment term ends in 2054, when the land will be sold and proceeds distributed.”

She understands that 30 years is a long commitment and that some investors may need to sell their shares before the investment term ends.

“Forest Enterprises operates a secondary market to facilitate the sale and purchase of our established investments,” she says.

The projected internal rate of return (IRR) is 9.8 per cent, with projected annual distributions starting from 2034.

For more information, visit forestenterprises.co.nz/blairlogie-pine/