Danish pension provider PFA has acquired two US forest farms in Alabama and Arkansas.

The investment is expected to deliver stable long-term returns and carbon capture, as wood from the forests will mainly be used for the furniture and construction industries. The American forest manager Forest Investment Associates (FIA) manages the forests on behalf of PFA through a forest fund.

With PFA’s two forest acquisitions made in 2023, these new acquisitions bring its total ownership of forest areas to 28,000 hectares. PFA has paid approximately USD 120m for all four farms. The investments are part of PFA’s strategic focus on long-term returns and climate considerations.

"These are well-managed forestry operations that we expect to deliver stable annual returns of around 5-7 per cent to our customers. These are long-term investments, and we have spent a lot of time finding the right forestry companies that can live up to our high demands for returns, climate and responsible forestry," PFA investment director, Kasper A. Lorenzen, said.

PFA's four forestry operations comply with one of the two recognised certification standards for responsible forestry: the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC). Both standards have ESG requirements that support the UN Sustainable Development Goals.

As part of its strategy, PFA focuses on ensuring that forestry companies primarily supply wood to the furniture and construction industries, which will bind CO2 in the wood for many years to come. At the same time, felled areas are replanted and will provide a net CO2 gain.

In addition, approximately 5,000 hectares of forest have also been reserved for the protection of biodiversity, which PFA also focuses on through its support for various biodiversity initiatives, including the declaration ‘Moving on Nature Together’ following the UN COP15 in Canada.

"We are in the process of verifying the carbon footprint of forestry, but our initial calculations show an annual carbon capture of at least 200,000 tonnes from 2025 and 20 years ahead, because the wood is used for furniture and construction, and new trees are planted continuously. Many people are developing new technologies that can extract CO2 from the atmosphere, but in reality, forestry is a known and effective method of CO2 capture if the wood is not burned," Lorenzen said.

PFA will measure CO2 absorption according to the Intergovernmental Panel on Climate Change (IPCC) guidelines. IPCC guidelines are used by the Danish Ministry of Climate, Energy and Utilities for reporting Denmark's official CO2 accounts to the EU and the UN.

---