Manulife Investment Management, the leading manager of natural capital with nearly $15 billion in assets under management (AUM), has announced a significant milestone with the initial close of its Manulife Forest Climate Fund LP1,2 (FCF).
The FCF, a closed-end fund, presents qualified U.S. investors and select global institutional investors an opportunity to play a substantial role in climate change mitigation efforts. The fund’s approach primarily focuses on the sustainable management of forests, prioritizing carbon sequestration over timber production. To date, the fund has generated commitments of up to $224.5 million, progressing towards its $500 million target.
The core investment strategy of the FCF is to involve investors in sustainable timberlands management, designed to produce high-quality carbon credits through enhanced forest management practices. This includes increasing the carbon stored in forests and creating new forests through afforestation or reforestation. These strategies contribute to the generation of additional carbon credits while fostering long-term sustainable timber value.
The fund’s approach includes the use of carbon credits, conservation easements, non-timber income generation tactics, and limited timber harvests. This multifaceted strategy aims to maximize climate benefits while ensuring competitive financial returns for investors.
Tom Sarno, Global Head of Timberland Investments at Manulife Investment Management, underscored the growing demand for solutions to climate change and the strong investor interest in strategies that contribute to carbon emissions reductions and net-zero commitments. He expressed confidence in the FCF’s capacity to support diverse climate goals and objectives, highlighting the added value of the company’s extensive experience in sustainable forest management and commitment to high-quality carbon sequestration.
The Manulife FCF is committed to generating a long-term supply of top-tier carbon credits, available for direct in-kind transfers for investors’ climate objectives or for monetization in the carbon markets through offset sales. This initiative marks the firm’s first natural capital fund categorised 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, stated, “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.” He emphasized the importance of responsible commitments to reducing and removing emissions, including high-quality forest carbon credits, in helping investors achieve their climate and financial objectives.
