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Green forest from above.

Evli Impact Forest Fund II

Forestry is a defensive asset class with good return potential, which withstands market cycles. Evli Impact Forest Fund II invests in the leading forest funds globally, targeting a well diversified portfolio. The fund will build on the success of its predecessor, Evli Impact Forest Fund I and employ a similar investment strategy. 

Overview
Responsibility

Positive carbon impact to mitigate climate change

Forestry is an effective and low-cost way to remove and store atmospheric CO2. Carbon sequestered by the fund will be measured and reported annually.

Higher long-term return potential

A global forestry fund of funds has a higher expected return than Scandinavian forestry because trees grow faster in target geographies.

Defensive investment that provides inflation hedge

Forest investments withstand economic fluctuations well and have a  low correlation to other asset classes.

Access to the world´s leading forestry funds

Through the fund, you can invest in carefully selected and difficult to access global forest funds.

Wood price development positive in the long run

Population growth, urbanization and growth of ecological construction increases wood demand, which is growing faster than supply.

Very experienced investment team

The team has an excellent knowledge of forest funds and their selection, as well as good results in implementing the investment process. The team leader has been investing globally in forestry since 2004.

NB! This product is intended for professional investors and a limited number of non-professional clients who make an investment of at least € 100,000 and who are considered to have an adequate understanding of the fund and its investment activities.

The scenarios presented herein are estimates based on historical data on the performance of similar investments, as well as current market conditions, and they are not exact indicators. Actual results will vary, depending on the market development during the fund term.

Suitable for investors:

  • who wish to reduce the carbon footprint of their investment activities through an impact investment
  • who are seeking to easily construct a well-diversified portfolio in non-listed forestry
  • who seek the diversification benefits of adding an asset class that has low correlation to equities and bonds, but can act as an inflation hedge
  • who seek good risk-adjusted returns and cash flow in the long run
  • who seek capital preservation in an asset class that has withstood economic cycles well
  • who accept the low liquidity of forestry investments and the long term of the fund
  • who accept that the fund unit cannot be redeemed prematurely and that there is no organized secondary market for it
  • For professional investors and a limited number of non-professional clients who are considered to have an adequate understanding of the fund and its investment activities

This page provides general product information and is marketing communication. Historical returns are no guarantee of future returns. The value of an investment may rise and fall and the investor may lose some or all of the capital invested. The contents of this website should not be considered as investment advice and should not be relied upon in making an investment decision. Before making an investment decision, please consult the fund's legal documents, such as the key investor document. The information is available to those considering an investment from Evli.

Sustainability-related disclosures

Financial product’s sustainability information in accordance with EU Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 (sustainability‐related disclosures in the financial services sector). This is a financial product in accordance with Article 8 of the SFDR.

Publication date: August 8, 2023
Legal Entity Identifier: 3315350-5 (business identity code)

The Fund promotes environmental characteristics by sequestering atmospheric carbon dioxide via forest investments. Sequestered carbon is stored in growing forests and sustainable wood products to mitigate climate change. The Fund will also commit to invest a minimum of 50 % to activities that are considered environmentally sustainable to achieve the fund’s partial sustainable investment objective of climate change mitigation.

The Fund invests in forest funds managed by Timberland Investment Management Organizations (TIMOs). The Fund will use metrics reported by investee managers to measure the attainment of its sustainable investment objective. Figures will be reported to investors on a regular basis.

The Fund’s goal is to remove at least 21,000 tonnes of atmospheric carbon dioxide per one million euros invested over the 14-year fund term, a rate equivalent to 1,500 tCO2e per annum. The Fund’s performance fee is dependent upon achieving this carbon impact goal.

The Fund requires that mangers achieve independent sustainability certification for their assets. Evli recognizes the Forest Stewardship Council (FSC) and Programme for the Endorsement of Forest Certification (PEFC) forest certification schemes. Forest certification is an independent audit carried out by accredited certification bodies that assess the environmental, social and economic sustainability of forest management against defined criteria. Achieving certification ensures that forests are managed in a way that preserves biodiversity, benefits local communities and workers, and is economically viable.

Target managers are also required to comply with the OECD Principles for Multinational Enterprises, the UN Global Compact and the UN Guiding Principles on Business and Human Rights.

The fund considers principal adverse impacts on sustainability factors and when making environmentally sustainable investments, the Fund ensures it does no significant harm to other environmental or social objectives.

Through its engagement with managers, Evli advocates for continuous improvement in the measurement and reporting of ESG metrics. Evli’s Responsible Investment Policy sets the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

The Fund does not commit to make Taxonomy-aligned investments. At this point, there is no sufficiently precise information about the compliance of the fund's investments with EU Taxonomy which would support the commitment to environmentally sustainable investments according to the EU taxonomy.

No benchmark index has been designated for the Fund to measure the promotion of environmental characteristics. The achievement of the promotion of environmental characteristics is measured by the sustainability indicators described above.

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

In addition to promoting environmental characteristics, the Fund will commit to invest a minimum of 50 % to activities that are considered environmentally sustainable to achieve the fund’s partial sustainable investment objective of climate change mitigation.

To ensure that while meeting its environmental objective of climate change mitigation it does no significant harm to the other environmental or social objectives, the Fund identifies and considers target funds’ alignment with obligatory and voluntary Principle Adverse Indicators (PAIs) as set out in Annex 1 of the SFDR Regulatory Technical Standard. Evaluation of PAIs is dependent upon the data availability from these managers.

All the mandatory PAI indicators listed in SFDR are considered, plus relevant voluntary indicators. However, because the Fund invests primarily in real assets rather than companies and given the narrow scope of the Fund’s investment activities (forestry and related activities), not all indicators are relevant.

Prior to investment, each target manager is evaluated on their ESG capabilities and ability to report on PAIs. In addition, Evli Group’s Principles for Responsible Investment exclude activities considered to be at higher risk of causing adverse impacts, such as of companies operating in the fossil fuels industry. The excluded activities are incorporated into agreements with target managers to ensure they do not make investments that violate Evli’s exclusion principles. The agreements may also include obligations that managers use their best efforts to provide Evli with sufficient information to fulfil its obligations under the SFDR, and report on the carbon impact in accordance with the sustainable investment objective.  

Forest certification is a further tool used in the “do no significant harm” assessment. The Fund will invest with managers pursuing forest certification as described earlier.

The investment targets are required to comply with the OECD Principles for Multinational Enterprises, the UN Global Compact and the UN Guiding Principles on Business and Human Rights, which address social factors.

The Fund promotes environmental characteristics by sequestering atmospheric carbon dioxide via forest investments, whilst generating the target financial return for investors. Sequestered carbon is stored in growing forests and sustainable wood products to mitigate climate change. The Fund will also commit to invest a minimum of 50 % to activities that are considered environmentally sustainable to achieve the fund’s partial sustainable investment objective of climate change mitigation. The Fund’s goal is to remove at least 21,000 tonnes of atmospheric carbon dioxide per one million euros invested over the 14-year fund term, a rate equivalent to 1,500 tCO2e per annum. The Fund’s performance fee is dependent upon achieving this carbon impact goal.

The Fund has a direct impact on the UN's Sustainable Development Goal 13: Climate Action. It is expected that the Fund will also support Sustainable Development Goal 15: Life on Land by protecting terrestrial ecosystems, and on Goal 12: Responsible Consumption and Production by producing sustainable timber products that can replace non-renewable materials. Other impacts support Goal 6: Clean Water and Sanitation, and Goal 8: Decent Work and Economic Growth, especially in rural areas.

The Fund is a fund of funds investing through third-party managers (Timberland Investment Management Organizations) in unlisted commercial forestry funds, which in turn invest in, and manage sustainable forestry assets. Eligible strategies aligned with the carbon impact goal include: 

  • Sustainable forest management to increase production of sustainable certified timber
  • Afforestation – planting bare land (often degraded pastureland) with trees to increase the area of forest cover
  • Possible participation in carbon markets through the sale of registered forest carbon credits.

The Fund will use metrics reported by investee managers to measure promotion of environmental characteristics. Figures will be reported to investors on a regular basis.

Good governance of the target funds will be assessed prior to investment through discussions with the managers and their responses to an ESG due diligence questionnaire.

The fund commits to make 50 % environmentally sustainable investments that do no significant harm for other environmental or social objectives. Other investments that are not considered environmentally sustainable promote environmental characteristics. Social safeguards are applied to both type of investments. The fund may also hold cash for short term liquidity purposes and social safeguards are not applicable. The Fund does not commit to make Taxonomy-aligned investments. At this point, there is no sufficiently precise information about the compliance of the fund's investments with EU Taxonomy which would support the commitment to environmentally sustainable investments according to the EU taxonomy.

To track the achievement of the Fund’s promotion of environmental characteristics, investee managers will report the amount of carbon dioxide (tCO2e) sequestered by the Fund’s investments in quarterly, annual or other ad hoc reports. The figures will be amalgamated and reported to investors.

Prior to making an investment, the Fund endeavours to ascertain that the methodology of the target funds for calculating carbon sequestration conform to good practice and accepted international standards.

Whether or not the carbon target has been met shall be determined by the Fund based on the figures reported by the target funds.

The environmental characteristics of the financial product are monitored and reported using the sustainability indicator mentioned above i.e. sequestered carbon measured in tCO2e.

Data is collected from investee managers. Progress towards achieving promotion of environmental characteristics is monitored by measuring the amount of carbon dioxide sequestered annually (tCO2e) in the underlying assets. Models for assessing carbon stocks are maturing. Prior to investment, Evli evaluates managers’ carbon calculation methods, ensuring they comply with recognized carbon accounting standards, such as the Greenhouse Gas (GHG) protocol.

The Fund relies upon data reported by investee managers. The achievement of the Fund’s promotion of environmental characteristics is reported annually using the sustainability indicators mentioned above. The completeness of the data from the investments is also reported. All Fund investments will comply with Evli’s Principles for Responsible Investment. The completeness of the data does not affect compliance with the above principles.

Environmental, social and corporate governance issues are analyzed prior to investment and are integrated into the investment decision. Investment recommendations submitted to the Fund’s Investment Committee include an assessment of the managers’ ESG capabilities. Monitoring of ESG performance is made at regular intervals post investment.

Through its engagement with managers, Evli advocates for continuous improvement in the measurement and reporting of ESG metrics. Evli’s Responsible Investment Policy sets the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

No benchmark index has been designated for the fund to measure the promotion of environmental characteristics. The achievement of the promotion of environmental characteristics is measured by the sustainability indicators described above.

Information on environmental and social characteristics of the fund in accordance with article 8 of Sustainable Disclosure Regulation

Fund (AIF) Evli Impact Forest Fund II Ky
Legal structure Finnish limited partnership (kommandiittiyhtiö)
Fund manager (AIFM) Evli Fund Management Company Ltd
Geographic focus Global (focus: US, South America, Australia and New Zealand)
Investment focus Private commercial forestry funds (primary, secondary, co-invest), selected for positive carbon impact alongside attractive returns
Strategy Fund-of-funds
Fund term 14 years (plus 1 x 3 year extension)
Investment period 3 years
Target return IRR* 6–8% net (including average annual cash yield of 2–3% once fully invested). The target return and cash flow target return are based on an estimate of the development of the investment’s value and market conditions. The realized return is influenced by the success of the investment activity and the realized market development. The set return target may not be achieved. The value of the investment may rise and fall and the investor may lose all or part of the invested capital.
Minimum investment EUR 100,000
Target size (maximum size) EUR 100 million (EUR 250 million)

* internal rate of return

Fund's expenses and other supplementary information are available in the Key Investor Information Document.