Stockholm (NordSIP) – Opportunities to invest in timber as an asset class are few and far between for retail clients. This is a pity as timber can alleviate climate change effects in two complementary ways: by carbon capture, storage and substitution as sustainably managed forests absorb CO2 from the air and sequester it in its biomass, and by replacing fossil-based materials with wood-based alternatives, which help to keep the fossil-resources in the ground and thus avoid emissions in the first place.
Therefore, the announcement by Swedish insurance company Länsförsäkringar (LF) on 25 April that they are launching a new mutual fund on their platform, Pictet Timber sustainability fund, grabbed our attention. Moreover, the fund is classified as dark green under Article 9 of the SFDR, indicating the managers’ ambitious sustainability goals.
“It is a welcome addition to our fund range focusing on the forestry sector,” comments Jim Rotsman, Head of Product and Client Offering, Business Unit Fund Life. “In February, we removed two traditional commodity funds with several controversial holdings from the platform. Including a sustainable fund that invests primarily in forest commodities is fully in line with our long-term philosophy of ensuring that our clients receive the highest and most sustainable pension possible. Pictet Timber has about 50% lower carbon footprint than the previous two commodity funds,” adds Rotsman.
The Pictet Timber sustainability fund invests in companies involved in the entire forestry value chain from raw materials to processed products such as paper and packaging materials, as well as other innovative applications for timber.
“From timber, one can make an extremely wide range of products, from carbon-neutral building materials such as the traditional lumber and wood panels, but also cross-laminated timber, which allows for constructing wooden buildings up to 20 stories high, to sustainable paper-based packaging alternatives, and wood-based textile fibres which consume 90% less water to produce than cotton, and do not shed microplastic in the washing machine, as polyester clothes do,” explains Christoph Butz, Senior Portfolio Manager of Pictet’s Timber strategy. “And, last but not least, our companies will produce an increasing number of innovative bio-based chemicals and wood-based biofuels for the future circular bioeconomy,” he adds.
“Timber is the only scalable renewable raw material on earth, which can wean us from our fatal addiction to fossil resources, and companies that own forests and control the flow of wood will, in our view, be the winners of tomorrow,” concludes Butz.
