March 27, 2025
SINGAPORE – Japanese paper and packaging giant Oji Holdings and New Forests, a global investment manager focused on nature-based assets, announced on March 26 a US$300 million (S$401 million) fund to buy forestry estates, with the majority of the investment set to be in South-east Asia.
The open-ended fund will be a Singapore-registered Variable Capital Company (VCC) with the majority of the initial US$300 million investment to come from Oji Holdings, said Mr Geoffrey Seeto, New Forests’ head of emerging markets, who oversees the firm’s forestry investments in South-east Asia and Africa.
The fund is a reflection of increasing investor interest in forestry not only for stable returns from timber revenues but also for the climate, and increasingly biodiversity, benefits. Large timber concessions that have tracts of natural forest can also earn revenue from carbon credits by keeping the forests standing. Doing so can also help the host nation meet emissions reduction goals.
Sydney-based New Forests will manage the fund and help Oji Holdings identify the forestry assets, which can be existing plantations or sites to develop new ones.
Mr Seeto said that although the fund was global in focus, more than half the investment would be in South-east Asia. Indonesia, Vietnam, Thailand and Laos would be the focus countries in the region.
New Forests had nearly 912,000ha of certified forests under management globally in the 2024 financial year (July-June), with an additional 200,196ha of conservation areas, according to its latest sustainability report.
Mr Seeto said a major focus of the fund was identifying existing concessions or new ones that provided for a mix of timber plantations, conservation forests and the ability to benefit local communities, with climate, biodiversity and social improvement goals crucial to any investment decision.
A goal of the fund is to help Oji meet its environmental targets and to acquire an additional 70,000ha of forestry assets, building on the more than 600,000ha it has already invested in globally.
“This fund is to help Oji meet their 2030 net-zero requirement,” Mr Seeto said. An additional target is to help the company sequester a net additional 1.5 million tonnes of greenhouse gases by 2030 from the new forestry assets it acquires through the fund.
Mr Seeto said the US$300 million was just the starting point for the fund, which has no sunset date. Other investors could join and become shareholders in the venture, which could help fund larger regional investments in forestry and conservation.
Forests are major stores of carbon dioxide (CO2), the main greenhouse gas heating up the planet. This makes forests an increasingly important tool to curb the pace of climate change and also to slow the alarming loss of nature.
Forest protection and conservation are becoming increasingly urgent because of large-scale annual forest loss, especially in the tropics. In 2021, more than 140 world leaders pledged to halt and reverse forest loss and land degradation by 2030. But that goal is far from being realised.
In 2023, a total of 6.37 million ha of forest was cleared, releasing 3.8 billion tonnes of greenhouse gases, according to a global assessment of progress towards the 2030 zero forest loss goal.
Forests are increasingly in focus ahead of the COP30 United Nations climate talks at the end of the year. Talks host Brazil is hoping to formally launch a US$125 billion fund to protect tropical forests, in which nations are paid a fee for every hectare of forest they maintain.
Some countries have already expressed interest in joining as anchor contributors, including Germany, France, the United Arab Emirates and Singapore, Bloomberg recently reported, quoting Dr Rafael Dubeux, executive secretary at Brazil’s Finance Ministry.
While public money is crucial to saving forests, private capital will also be key, said Mr Seeto, adding that finding ways to monetise the land within forestry concessions will be vital for preserving large tracts of high-conservation forest to save them from being chopped down for palm oil or other cash crops.
Carbon revenues from protecting and conserving natural forests within concessions is one important source of revenue that New Forests is generating, with more than 3.6 million credits issued to the firm in the 2024 financial year. Each credit represents a tonne of CO2 locked away.
And already the company is looking at generating income from the nascent area of biodiversity credits by protecting an area or species, for instance.
In short, land concessions have multiple ways of earning an income for investors and for the local community, not just from timber.
“The more we can monetise – whether it’s biodiversity value, whether it’s carbon value, water value or even just a timber value – the more likely that landscape stays as is and does not get converted to other types of land use practices like palm oil,” he added.
Getting buy-in from local communities is key.
“Having a social licence to operate with the communities is the single biggest success factor of any land-based investment in Asia,” he said.
- David Fogarty is deputy foreign editor at The Straits Times and senior climate writer. He also covers the environment, in areas ranging from biodiversity to plastic pollution.