Danish pension company PFA has entered into an agreement with an American forestry manager to invest USD 130m (DKK 968m) in forests.

The investment represents PFA’s first investment into forestry and the amount stated is the initial amount to be invested.

PFA’s investment takes place as part of its strategic focus on long-term returns and climate-friendly investments.

The pension company stated that it was opening a new investment chapter and will build a portfolio of selected and certified forestry in the coming years.

Its investment will be in partnership with American forest manager, Forest Investment Associates (FIA), which will buy and operate the forests through a forest fund on behalf of PFA.

The forest investment is placed with 75 per cent in PFA Klima Plus and with 25 per cent in PFA Plus and, together with CO2 reductions from PFA's other investments, must contribute to PFA Klima Plus becoming CO2 neutral in 2025.

"We want to invest in certified forestry that is run with respect for the forest's natural life cycle, where felled areas will be replanted,” said PFA group investment director, Kasper Lorenzen.

"Forest investments in the USA have in recent decades produced solid and long-term returns and have been less affected by inflation and economic ups and downs.

“Forests also play an important role in solving the climate challenges we face right now and in the future. They can absorb and store CO2, and wood is increasingly being used as a substitute for metals and plastics in, for example, construction and furniture production.

"It has been important for PFA to enter into an agreement with an experienced and competent administrator. We chose FIA on the basis of their experience in managing tailored investment mandates, their history of returns on previous investments and clear focus on ESG.”

FIA senior VP and director of investment management, Mike Cerchiaro: "We are proud of the agreement with PFA and now look forward to the work of finding forest investments that can meet the high ESG requirements and that can deliver on the objectives of the forest fund.

“PFA comes with a long-term commitment and a clear objective to get returns and responsible forest management into a higher unity, which is in line with Forest Investment Associates' approach and agreement with PFA."

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