The Food and Agriculture Organisation of the UN, FAO, estimates that in Africa alone, over two million hectares of forests are lost every year. Population growth, urbanisation and a growing middle-class add pressure on the remaining natural forests.
Sustainable, responsible forestry is one key way to curb deforestation and climate change. In, for example, Africa, it can already be seen that the timber produced through sustainable plantations is easing the pressure on natural forests. Most of our direct forestry investees are located in Sub-Saharan Africa and Latin America, where the deforestation rate is most alarming. Most of the forests managed by our investee companies have been certified by the international Forestry Stewardship Council (FSC) as socially and environmentally responsible and sustainable.
Sustainable forestry has long been one of Finnfund’s focus areas. At the end of 2021, our investments in forestry (portfolio, commitments and decisions) were worth 174 million euros, representing 15% of the total portfolio and commitments. This is higher than any other development finance institution, making Finnfund a leading global investor in forestry. Finnfund invests in commercial plantations and related industries, such as sawmills and plywood mills.
Why does Finnfund finance sustainable forestry?
The development effects of sustainable forestry have been summarized in the theory of change below.
Impacts are examined at three different levels: direct impacts on business, indirect development impacts, and broad societal impacts.
Examples of investments
Senior Investment Manager, Head of Agriculture and Forestry portfolio
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