Briefing: Gresham House launches in-house ‘Forest Charter’

British asset manager Gresham House has launched an in-house Forest Charter, which it hopes will set out a measurable sustainability framework for its forestry investments.

The big idea

The Forest Charter makes a series of commitments in areas including carbon emissions, biodiversity, deforestation, and use of chemicals and pesticides, among others.

The firm’s performance against its commitments will be verified by third parties and reported on an ongoing basis.

On carbon, for example, Gresham House commits to measuring the operational carbon footprint of all forests under management and reducing “operational emissions overtime where possible.”

And on biodiversity, the firm commits to maintaining, conserving and enhancing the biodiversity of all its forests.

All forests managed in the UK, for example, will broadly target:

• A maximum of 75 percent allocated to a single species.
• A minimum of 10 percent open ground or ground managed for the conservation and/or enhancement of biodiversity.
• A minimum of 5 percent native broadleaved trees or shrubs.

Why it matters

LPs are demanding more and more information in relation to the ESG claims and commitments made by GPs, given there are no legally binding frameworks for reporting this information.

Something to that effect could be in the offing in the US as Securities and Exchange Commission chair Gary Gensler said in a Twitter video posted March 1, that he has instructed staff to consider “recommendations about whether fund managers should disclose the criteria and underlying data they use in so-called ESG investing.”

He drew a comparison between funds and fat-free milk, where he said: “What does fat-free mean? Well, in that case you can see objective figures like grams of fats, which are detailed on a nutrition label.

“[Investors are] the people to whom they’re marketing their funds as sustainable and green and I think investors should be able to drill down and see the ingredients underlying these funds,” said the SEC chairman.

While Gresham House’s Forest Charter is not a playbook for how a specific vehicle will invest, it does set out a set of “verifiable commitments and targets relating to sustainable forest management” that should guide its behaviors at the fund level.

In response to Agri Investor’s question about whether there are any self-imposed penalties if the firm should fall short on any of the commitments it has made, a spokesperson said: “While there are currently no express penalties attached to the current Charter, what Gresham House is committing to is ensuring that we publish this data and the relevant KPIs on a regular and audited basis.

“This will ensure that investors are fully informed and can make decisions around our management accordingly. As outlined in the Charter, this document will evolve and we will listen carefully to feedback and update it accordingly.”