The Asian Development Bank (ADB) has signed a $15 million equity investment in New Forest’s Tropical Asia Forest Fund 2 (TAFF2) L.P. to support sustainable forestry practices in Southeast Asia and reduce logging in natural tropical forests by helping sustainably managed plantation companies to scale up their operations.
The investment comprises $5 million from ADB’s ordinary capital resources and $10 million from the Australian Climate Finance Partnership (ACFP) trust fund.
TAFF2 investments will target climate adaptation as well as climate mitigation. Opportunities will be sought in Cambodia, Indonesia, the Lao People’s Democratic Republic, Malaysia, Thailand, and Viet Nam.
“Investment in sustainable forestry is limited in developing countries due to market, political, and natural resource risks,” said ADB Private Sector Investment Funds and Special Initiatives Director Janette Hall. “ADB’s investment will enable best practice forestry companies that currently lack access to growth capital to engage in commercial, sustainable forestry. It will help to improve the livelihoods of forestry workers and communities, enhance biodiversity, and deliver climate outcomes through reduced logging of natural forests.”
With a target size of $300 million, the fund intends to invest in forestry and related companies that can demonstrate Forest Stewardship Council certification of their assets. It will invest in sustainably managed commercial forest plantation companies and acquire forestry assets, including established and brownfield plantations, greenfield developments, and processing facilities.
The fund will be managed by New Forests Asia (Singapore) Pte. Ltd., an established and leading forestry fund manager in Asia and the Pacific. ADB will work with New Forests Asia’s social and environmental management system and capacities, such as investment screening, impact assessment, and monitoring. ADB will provide guidance on best practices to advance gender equality, including upskilling of female plantation workers.
It will also help TAFF2 to apply a gender lens to investing through a scorecard to highlight areas where action is needed to improve gender equality.
“Asia is central to the economic and sustainability transformations happening in the 21st century. Asia has an important role to play in aligning its growth with climate-positive, nature-positive, and sustainable development outcomes,” said New Forests Chief Executive Officer David Brand. “The TAFF2 investment strategy has been developed to invest capital in these transformations, using the blended finance structure to mobilize more capital towards high social and environmental impact outcomes.”
New Forests is a global investment manager of nature-based real assets and natural capital strategies, with $5.9 billion in assets under management across 1.1 million hectares of investments.
New Forests is a signatory of the United Nations Principles for Responsible Investment and a founding member of the Net Zero Asset Managers Initiative.
ACFP is a concessional blended financing facility managed by ADB and funded by the Government of Australia. ACFP seeks to catalyze financing for private sector climate adaptation and mitigation investments in the Pacific and Southeast Asia, and address market gaps and demand by derisking high development impact projects and bringing them to market.
