New report from Imperial College and Terraformation shows novel ways to reduce risk and increase returns in forest carbon credit investments. We invite you to an exclusive luncheon on 8 March for an informative question-and-answer session with the authors.
Forests are one of the greatest carbon sinks available to us, and crucial for Earth’s biodiversity and climate equity. As companies and investors seek to go nature positive and invest in forest restoration projects around the world, a key issue is how to de-risk these carbon investments. Wildfire and climate risk in particular raise questions of reforestation permanence, often hindering corporate sustainability and institutional investment.
A new study from Imperial College and Terraformation, “Forestry-Backed Assets Design”, finds that applying portfolio diversification principles to forestry – namely, bundling forest assets across geographies, vintages and biodiversity potential – can greatly reduce investment risk. The paper considers a variety of risks, including wildfires, while also taking into account biodiversity and carbon sequestration potential.
While risk pooling is common in a variety of asset-backed securities, including mortgages and credit cards, this is the first study of its kind proposing such a framework for forests. Such pooling ultimately allows investors to tranche forestry assets based on risk-return investor profiles. As the carbon market takes off, this security design could help make forests a more predictable asset class with a wide range of investors.
This de-risking approach of bundled forests is the backbone of Terraformation’s new Seed to Carbon Forest Accelerator. Terraformation offers companies and investors the opportunity to fund a geographically diverse portfolio of 10 early-stage, native forestry projects in exchange for a share of the carbon credits these projects generate. Projects are located in tropical regions across Southeast Asia, Africa and South America and are carefully selected for carbon and resilience potential.
We invite you to an exclusive luncheon with Imperial College and Terraformation to discuss the findings of this research and practical applications today.
8 March, 12–2 p.m.
City of London, England
(exact location to be announced)
Join us for:
- A question-and-answer session with co-author Enrico Biffis, Associate Professor at Imperial College London, on the applications of risk pooling to carbon-based forest assets
- A discussion of Terraformation’s novel approach to bundling forest assets in its new Seed to Carbon Forest Accelerator
- Networking with other industry leaders in nature-based solutions
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