ADB supports sustainable forestry development in Southeast Asia

Illustrative image (Photo: vneconomy.vn)

Hanoi (VNA) - The Asian Development Bank(ADB) has signed a 15 million USD equity investment in New Forest’s TropicalAsia Forest Fund 2 (TAFF2) L.P. to support sustainable forestry practices inSoutheast Asia and reduce logging in natural tropical forests by helpingsustainably managed plantation companies to scale up their operations.

The investment comprises 5 million USD from ADB’sordinary capital resources and 10 million USD from the Australian ClimateFinance Partnership (ACFP) trust fund. TAFF2 investments will target climateadaptation as well as climate mitigation. Opportunities will be sought inCambodia, Indonesia, Laos, Malaysia, Thailand, and Vietnam.  

“Investment in sustainable forestry is limited indeveloping countries due to market, political, and natural resource risks,”said ADB Private Sector Investment Funds and Special Initiatives DirectorJanette Hall.

“ADB’s investment will enable best practice forestrycompanies that currently lack access to growth capital to engage in commercial,sustainable forestry. It will help to improve the livelihoods of forestryworkers and communities, enhance biodiversity, and deliver climate outcomesthrough reduced logging of natural forests.”

With a target size of 300 million USD, the fundintends to invest in forestry and related companies that can demonstrate ForestStewardship Council certification of their assets. It will invest insustainably managed commercial forest plantation companies and acquire forestryassets, including established and brownfield plantations, greenfielddevelopments, and processing facilities.

Illustrative image (Source: VNA)

The fund will be managed by New Forests Asia(Singapore) Pte. Ltd., an established and leading forestry fund manager in Asiaand the Pacific. ADB will work with New Forests Asia’s social and environmentalmanagement system and capacities, such as investment screening, impactassessment, and monitoring. ADB will provide guidance on best practices toadvance gender equality, including upskilling of female plantation workers. Itwill also help TAFF2 to apply a gender lens to investing through a scorecard tohighlight areas where action is needed to improve gender equality.

“Asia iscentral to the economic and sustainability transformations happening in the21st century. Asia has an important role to play in aligning its growth withclimate-positive, nature-positive, and sustainable development outcomes,” saidNew Forests Chief Executive Officer David Brand. “The TAFF2 investment strategyhas been developed to invest capital in these transformations, using theblended finance structure to mobilise more capital towards high social andenvironmental impact outcomes.”

New Forests is a global investment manager ofnature-based real assets and natural capital strategies, with 5.9 billion USDin assets under management across 1.1 million hectares of investments. NewForests is a signatory of the United Nations Principles for ResponsibleInvestment and a founding member of the Net Zero Asset Managers Initiative.

ACFP is a concessional blended financing facilitymanaged by ADB and funded by the Government of Australia. ACFP seeks to catalysefinancing for private sector climate adaptation and mitigation investments inthe Pacific and Southeast Asia, and address market gaps and demand by deriskinghigh development impact projects and bringing them to market.

ADB is committed to achieving a prosperous, inclusive,resilient, and sustainable Asia and the Pacific, while sustaining its effortsto eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 of them from the region./.

VNA