The South Yorkshire Pensions Authority has invested £50m into the Gresham House Forest Fund VI LP, an asset-backed forestry fund that aims to deliver diversified returns for investors while contributing to lowering emissions and supporting biodiversity.

The commitment from South Yorkshire Pensions Authority aims to build on existing backing for the strategy from Worcestershire Pension Fund and individuals, bringing the fund to over £150m in size.

Further closes are also planned for the strategy, as Gresham House noted that institutional investors are increasingly recognising the ability of forestry investments to provide financial returns while also delivering a positive impact in terms of emissions, biodiversity and job creation in rural communities.

The fund, which was launched in March 2022, aims to provide investors with a diversified portfolio of forestry assets around the UK, generating returns through the harvesting and sale of sustainable timber.

This is increasingly being used as a lower-carbon alternative to traditional building materials, alongside the capital growth of the underlying land.

In addition to the target core financial forestry returns, the fund is expected to sequester 4.7mn tCO2e over the next 25 years, and investors in the fund also have the option to receive distributions in the form of carbon credits.

Commenting on the commitment, South Yorkshire Pensions Authority director, George Graham, said: “Forestry has an important role to play in our portfolio as we build out our natural capital allocation. Importantly, it offers a resilient, diversified source of returns while supporting our net zero journey and efforts to combat climate change and support biodiversity.

"Gresham House’s experience and track record in managing forestry assets makes this strategy a natural choice for South Yorkshire Pensions Authority.”

Adding to this, Gresham House managing director, forestry, Olly Hughes, said: "We continue to see strong appetite from institutional investors for forestry investments, and it is testament to Gresham House’s expertise in this area that South Yorkshire Pension Authority has chosen to make this significant commitment to Forest Fund VI.

"As global timber demand continues to rise, we anticipate interest in our forestry strategies will remain strong for the foreseeable future and we look forward to welcoming further investors in due course.”

---