Australia-headquartered asset manager New Forests is preparing to potentially generate biodiversity credits by gathering nature metrics across 37,800 hectares in three African countries, Carbon Pulse has learned.

The Sydney-based sustainable timber investor is working towards collecting the baseline data required for producing biodiversity credits from assets in Tanzania, Uganda, and Mozambique, Sarah Clawson, global head of investor relations at the company, told Carbon Pulse.

“Our goal is to be ready for that biodiversity market to exist, to start actually operating,” said Clawson. The company is preparing by measuring and monitoring nature indicators.

New Forests, which manages A$11.7 billion ($7 bln) over 1.3 million ha globally, is gathering data to “lay the foundation for enrolling areas into the biodiversity credit markets in the future”, a company spokesperson said.

In 2022, with investment partners British International Investment, Norfund, and Finnfund, New Forests launched a forestry strategy focused on Sub-Saharan Africa that has raised $200 mln so far, with impact targets spanning climate, biodiversity, gender, and community.

The baselining of biodiversity credits follows the company aiming to improve habitat quality across its African assets. It has not yet decided how to measure nature uplift, but said baselining must happen within 18 months of acquiring properties.

Last year, New Forests said it was measuring biodiversity baselines across its assets globally for nature markets as it tried to get ahead of the curve.

Over the last two months, two other institutional investors have said they are preparing to potentially generate biodiversity credits, the Scotland-based investors Foresight Group and Gresham House. The participation of large financiers is key to scaling up private finance in the sector.

This week, non-profit NatureFinance released a set of recommendations to bolster Africa’s biodiversity credit markets.

“ONSLAUGHT OF INTEREST”

New Forests is “quite confident” voluntary biodiversity credits will become a viable market in Africa, Clawson said. “We see this onslaught of interest from corporates, other investors, they’re thinking about carbon, they’re thinking about biodiversity.”

“Biodiversity credit markets is not an easy task, neither has carbon been. But we’re one of the largest producers of carbon offsets, especially in California, so these types of markets we understand quite well.”

Although interest has ramped up around biodiversity credits over the last couple of years, with a flurry of standards releases, few actual transactions have taken place.

Clawson was unsure when the first transactions around biodiversity credits from African countries might happen, but stressed “we will be ready for them when they come”.

Corporate buyers see biodiversity markets as a way to green their portfolios, however large they may be, with an increasing number attracted to the strong, stable incomes of nature-based assets, Clawson said.

“I can feel the momentum and the excitement on natural capital developing, not just in Europe. Those who are involved in this sustainable landscape world are well placed to benefit from that.”

This month, the Biodiversity Credits Incubator, an initiative investigating African biodiversity credits opportunities, said there has been poor demand for the market while acknowledging it is still young.

“HUGE OPPORTUNITY”

Earlier this month, New Forests appointed its first managing director of Africa, Yida Kemoli, to oversee its fundraising for forestry assets on the continent from Nairobi.

The African forestry strategy aims to raise up to $500 mln by 2026. Its first acquisition was Tanzania-based forest developer Green Resources, while it is considering more than 30 further deals in Sub-Saharan Africa, Clawson said.

New Forests has targeted improving biodiversity across its whole African portfolio, rather than only on land set aside for nature, including commercial forestry areas.

Biodiversity in forests should be boosted by their proximity to conservation areas, while managers monitor and maintain protected fauna and flora, Clawson said. For example, the investor monitored the Tasmanian devil in Australian assets and spotted owls in the US.

“Africa is really a huge growth opportunity. Our purpose is to drive more value creation on the continent.” New Forests aims to work with Indigenous Peoples and local communities by collaborating with representatives to ensure it improves livelihoods.

“We’ve already been involved in discussions with several different villages, in supporting the development of our assets alongside these local communities, because they’re the eyes and ears on the ground.”

By Thomas Cox – t.cox@carbon-pulse.com

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