Foresight Sustainable Forestry First Fund to use London Stock Exchange VCM Framework
London Stock Exchange welcomes Foresight Sustainable Forestry Company Plc, the first fund to use the Exchange’s Voluntary Carbon Market (VCM) Framework. The London Stock Exchange has today issued its first Voluntary Carbon Market (VCM) designation to Foresight Sustainable Forestry Company Plc (the Company), an investment company offering direct and liquid access to the attractive investment characteristics of UK forestry and afforestation projects.
The London Stock Exchange is the first exchange to use a public market framework to facilitate funding into climate mitigation projects that generate carbon credits. It provides market access for investors and corporates seeking exposure to carbon credits which may be issued in the form of a dividend in specie.
“To be the first ever company to receive London Stock Exchange’s Voluntary Carbon Market designation is a hugely proud and significant moment for Foresight Sustainable Forestry (“FSF”). By connecting investors with net zero ambitions to entities such as FSF that generate voluntary carbon credits, the launch of the VCM is a major milestone in the UK’s fight against climate change. The VCM designation means that the ever-growing number of climate-minded investors can easily and confidently identify sustainable solutions - investors know that, through FSF, they are investing in climate change mitigation projects that make a real difference. We have a strong UK afforestation pipeline and the potential of our current capital base alone is expected to create up to 5 million carbon credits by 2050, equivalent to offsetting the entire annual carbon footprint of Glasgow.”
Richard Davidson
Chairman of Foresight Sustainable Forestry Company
The Company's current portfolio consists of approximately 9,700 hectares of UK standing forestry and afforestation assets. The carbon sequestered by the Company’s 27 afforestation sites is expected to equate to approximately 800,000 voluntary carbon credits accredited by the Woodland Carbon Code. Once the current total available capital is deployed, it is anticipated that the Company will create approximately 1,000,000 voluntary carbon credits in its first wave of afforestation deployment. The Company's strategy with afforestation assets is to successfully develop afforestation assets, exit these young established forests and recycle the capital into new waves of afforestation development. By 2050, the Company and Foresight Group LLP (the Company's investment manager) estimate that the current capital base will have been recycled five times with the anticipation that this will yield, in aggregate, 5,000,000 voluntary carbon credits, and they acknowledge that this is a long-term ambition and is subject to ongoing market conditions and factors outside of the Company’s control.
The VCM designation requires issuers to produce additional disclosures relating to the projects they are directly or indirectly financing, including but not limited to; the qualifying bodies whose standards will be applied to the projects, project types, expected carbon credit yield and the extent to which they are expecting to meet the United Nations Sustainable Development Goals ("UN SDGs").
The overall objective of the Company obtaining the VCM designation is to attract new investment from a large and growing pool of companies which have made net zero pledges. For these companies, the Company's potential "in-kind" carbon credit distribution investment proposition could enable them to:
- secure a supply of voluntary carbon credits for their net zero commitments (to be used for their unabatable emissions) and/or trading purposes;
- hedge against rapidly rising voluntary carbon credit prices; and to
- adjust carbon credit yield requirements in a daily traded manner.
Carbon credits created in relation to the Company's afforestation projects will mature over time, turning from Pending Issuance Units ("PIUs") into verified Woodland Carbon Units ("WCUs") that can be retired for offsetting purposes. The majority of the 1,000,000 PIUs that are expected to be created from the Company's first wave of afforestation deployment, are expected to mature into WCUs between 2030 and 2050, supporting shareholders’ net zero ambitions. It is not currently the intention to commence the sale or distribution of any voluntary carbon credits in advance of 2030. It is expected that all voluntary carbon credits created from FSF’s first wave of afforestation deployment will be sold or distributed "in kind" by 2050.
