Ethical Forestry Voice

Helping the local Plantation community

2010-06-24T13:19:00.000+01:00

Written by Stephen Greenaway - Director of Ethical Forestry.

During my last trip to Costa Rica, I had the pleasure of visiting one of the many Schools within our plantations. This particular school was built specifically for the children of the workers who reside on one of the plantations. Because the area is so remote, it is too difficult for the children to get to the larger school’s, especially during the rainy season.

The school was a small brick building with 3 small rooms, a classroom, a Kitchen and a bathroom. Upon arrival, I counted 7 children playing football in the 40 degree heat and one little girl reading in the classroom.

The first thing I noticed, other than the searing heat and huge bugs, was that this was not a school as I know them, it was as if I had stepped back in time to the early 1900s.

The school was very run down, the books were very old and tatty, the chairs and desks were providing one of the recommended five a day for the resident woodworm community and the kitchen consisted of a tap and a small gas stove. I noticed an infestation of bugs eating the window frame, my interest caught the children’s attention, which in turn led to mass insect fatalities, as they promptly developed a new insect squashing game!

The whole school is in dire need of a makeover. One of the parents told me that her son sits at the very same desk on the very same chair as she had sat on over 25 years ago. The head teacher informed us that they have applied for a government grant but have been unsuccessful as the larger schools are always at the top of the list.

After a short tour, I realised that it would cost very little to bring this school up to date. The three top priorities of the head teacher were, a drinking water system that consistently worked, new chairs and desks and a concrete play area.

The last thing I saw as I pulled away from the school, was a group of children running to the water tap, one little boy turned the tap on but no water came out, the children shrugged and ran back to the play area, it was sad to see that this is the norm for them.

We left Costa Rica knowing that our plantation manager Finca Leola had a work shop full of new tables and chairs ready to deliver to the school and we, Ethical Forestry, have started to put a plan together to donate funds directly to this school and the other small schools on our plantations.

Watch this space for updates on our sponsorship program!

Rob: Our Research & Development Man out in Costa Rica

2010-06-17T11:03:00.001+01:00

What is like trying to adapt to life in Costa Rica!

Moving to Costa Rica from a developed country requires major adjustments to the culture in addition to the everyday little things. For me, one of my everyday little things was giving up my Audi A4 for a ’79 Toyota Land Cruiser. It doesn’t exactly have the same elegant lines and certainly leaves something to be desired in terms of comfort. However, it should be known that it has many advantages in this setting and for that it should be respected. A case in point came one Sunday on a trip to our farm – about 45 minutes on a rocky, uneven road that weaves in and out of pineapple farms, forests, and small towns. Being the nature freaks my wife and I are, we are always on the lookout for animals, flowers, or whatever catches our eye. On this particular day, I overlooked the purple blooms of an Almendro tree. Quickly my wife, Geri, tells me to stop the car. “You just have to see have to see these flowers.” So, I put the jeep in reverse and began moving backwards to take a look at some flowers I had seen about a 1,000 times before. Being that the Land Cruiser doesn’t exactly have the same field of vision as the Audi, what was out of sight was out of mind. I looked as far up and out of the passenger window I could as we made our way back. Before I knew what was happening, Geri started to scream and I felt the eerie sensation that I was tipping toward her. What I hadn’t noticed was the all-too-common abrupt hole by the side of road where a 36” culvert had been planted to aid in drainage for the pineapple plantation to my left. Our car was now completely on its side – our dog was standing on the rear window and leaving us no option but to exit from the driver window. The upside to the story is that we have very resourceful neighbors who weren’t far away. It took about 30 minutes for one to come down the road on his motorcycle to our rescue with a satchel over his shoulder containing a tow chain. How was this going to help? Well, just behind him was the 12 o’clock bus from La Gloria. About a dozen happy volunteers dismounted and pushed the car back to what was close to an upright position while at the same time the bus pulled the car from the ditch. So, what is so great about our car? It barely had a scratch and started right back up as if it had somewhere to be. To us, this is what makes living in Costa Rica so great.

Are IFA’s still green on ethical investments?

2010-02-27T10:17:00.000Z

We found an interesting article on green investments posted on the Financial Times’s ftadvisor.com, which outlines a recent survey by Co-Operative Investments that records a growth of interest in green investments and laments the general lack of knowledge required by UK IFA’s on the subject. The article interested us for a couple of reasons: most obviously it highlights the knowledge gaps that exist in green investments, for example the current study text for the Financial Planning Certificate exams not covering ethical investments, but perhaps also reveals how these kinds of survey perhaps don’t give the full picture about investment intentions.

In terms of IFA awareness on green investments, this is certainly improving, but there is probably still a lack of in-depth information available for IFAs to make informed decisions with. The majority of IFAs we have spoken to reasonably clued up on green investments, supported by various organisations and resources that categorise investments and provide green profiles. Green investments started on a rocky road to begin with because the returns were initially so awful, but now there are companies out there that are getting more enterprising and looking at different ways of investing money. It’s opened up a much bigger market, and certainly with the massive growth in environmental awareness over the last ten years there has come a massive range of new thinking about how to invest in green products or practices.

In terms of our own activities, Ethical Forestry runs weekly training sessions for IFAs that are not just about us, but green products in general. We have to explain how investment in trees can sit in a portfolio, how it works, how the returns are generated and where the returns come from. What’s surprised us is the extremely positive feedback we’ve had to this, because IFA’s have found it an interesting topic to talk about. When we’ve started talking to IFAs at seminars, we’ve found genuine interest – not primarily because of the opportunity, as they are likely to have already endured six presentations that day on the latest, greatest investments - but because they feel our investment is interesting and something they feel is tangible and exciting to talk to clients about.

But without doubt, green investments are still a learning exercise for everybody: for financial advisors, for investors and for SIPP trustees. It’s a fairly new concept, certainly in the SIPP arena, but it’s a huge learning exercise. As we all know, the terminology of being ‘green’ or ‘ethical’ is one that has a vast range of definitions and as a result can be skewed according to individual criteria. Nowhere for us is that more evident than in the big oil and gas energy companies, who make the most of using green practises, but the fact of the matter is that for all the latest and greatest techniques for extracting fossil fuels, it fundamentally isn’t green: the end product, a finite source, gets burned into the atmosphere. That’s not ‘green’ by our definition, but might be perfectly acceptable within these companies definition of responsible practice.

It’s this tendency for fluid definition of ‘green investments’ for us to in part question the validity of the survey. From an investor’s point of view, we agree that most investors are certainly more ‘green-aware’ to as what they’re investing in. The problem with statistics and surveys on green investments is that if people are asked if they’d support them, there could be the tendency for people to feel compelled to feel “there’s a bit of a buzz around them at the moment, I’d better say yes”.

We maintain investors are there to make money first and foremost, and that fact that it’s green is an afterthought, albeit probably a desirable one. If it’s a completely level playing field and all the returns and the risks are the same, which one would you invest in? However, if you go to an investor and said you’ve got Investment A which gives a return of 20%, and then show green investment B that has a return of 10%, we’re certain that in most cases the investment action will be possibly quite different to their preferred intention.

That’s why a fundamental driver for any investment must be to gain a maximum return that is competitive with any other part of the investment market. Our concern is not why investors invest in us – our decision to build an ethically-run, ethically-driven business is based on our beliefs – but it is our concern that what we offer addresses this principle concern of the investor. And by meeting the aspirational preference of a genuinely green, ethical investment and the realistic expectation of good returns, it is a business model that addresses genuine investor needs.

A new climate for growth?

2010-02-27T10:03:00.002Z

An interesting scientific study, recently highlighted in New Scientist, has put forward evidence that the maximum climate benefit from planting trees comes from planting at higher latitudes - an approach which favours northern terriories such as Russia, Canada and Europe over equatorial regions such as India, Brazil and China.

Efficiently offsetting (Image: Image Source/Rex Features)

It has potentially fascinating consequences for how global forest management might be tackled in the future, so it is well worth a read. If there’s a mechanism by which several million trees can get planted and maintained responsibly, then as that’s only good news for the environment, and the more trees that are planted the better.

From the point of view of arboreal management, we’d like to see more research on growth rates for the proposed regions – for while these areas are capable of sustaining huge forests, many are very old as well. There’s a lot of difference in growth between forests from one place that gets a nine-month covering of snow over the winter to another gets a fairly harsh winter but a wet summer, so timescales for growth could be an issue.

Rates of growth are of interest to us as our forest management model for replanting is only sustainable based on using the profits from initial growth and harvesting to buy the land, replant it and gift it into trust, ensuring that it is safe and protected in the long term. The faster growth rates for the tropics provide much quicker results and returns to allow us to do this, so it makes sense to us to use highly fertile ground where the growth rates might be three times those of inhospitable climates.

The study is of course a scientific report rather than the pragmatic solution that would be required to make a planting programme happen. Although many of these areas suggested are remote and sparsely populated, it would be an act of remarkable generosity if any of these countries surrender vast tracts of land and plant them at their own cost. The mechanisms and costs to co-ordinate and manage such vast and frequently challenging areas of land may simply not be affordable – firstly the costs of planting and management could be extremely high, and that’s before taking into account the need to acquire the land so the trees are protected against the same threats of deforestation that affect the rest of the world.

These schemes must therefore be sustainable if they are to survive. If you make it sustainable, not just from an environmental point of view but from a financially sustainable point of view for those who live there and manage the land, a winning solution is in place.

Traditionally, if you gave somebody a forest and say “live off it”, the likelihood would be that they cut the trees down, place cattle on the land to get a yearly return from that. However devise a model that means more money can be made by managing trees rather than harvesting them, that’s going to benefit everybody: the people living in the region, the owners of the lands, any potential investors and by the preservation of the trees, the planet as a whole. The model we have devised at Ethical Forestry has been designed to work within Costa Rica, so by no means is there a ‘one-size-fits-all’ model - the regional differences are too great for this – but we’d hope that there are elements of good practise that could be transplanted anywhere in the world. By the growing urgency of having to control and absorb excess CO₂, it may need to be.

Introducing our man in Costa Rica!

2010-01-31T19:15:00.002Z

Hi - I’m Robert Brown, Agricultural Consultant for Ethical Forestry.

I’m originally from Michigan, where I grew up and attended Michigan State University, studying Horticulture at the (BS) College of Natural Science, before working for 10 years in the retail greenhouse industry. I then spent 6 years in Phoenix, AZ where I was a state manager for a national armored transportation company before moving to Costa Rica.

Why Costa Rica?

After starting my research on reforestation in Costa Rica in 2006, my wife and I decided we had to live and work in some way to help the beautiful rainforests. We moved to Costa Rica from the US in September 2007 and started a company called Árboles Caminando (Walking Trees) and began collecting seeds from around the country. Since our farm was in the migratory corridor of the Great Green Macaw, we focused on Almendro, the prime nesting tree of this bird. Our primary focus was in trees with dual purpose, i.e. a valuable lumber species that are important for animal species.

I became involved with Ethical Forestry as a consultant for research and development in the field. My main focus has been to integrate the principles of Agroforestry and Permaculture as a viable part of the forestry system from the perspectives of diversity of environment and investment. It provides natural protection to the trees by avoiding monoculture and providing species diversity, in addition to alternate sources of income while working with natural systems, not against them. Our family has also made the decision to purchase plantation trees as an investment for the future, so that commitment shows we absolutely believe in what we do – we have put our money where our mouths are!

I’m therefore heavily involved with all aspects of Ethical Forestry’s activities, especially evaluating the best ways for us to maximize the land and investment without compromising the long-term good of the land.

For instance, January has been spent educating myself about animal nutrition – so I can determine what might be feasible to grow onsite if we were to let cattle and sheep graze the land. The existing nutrition literature is detailed for the mainstream ingredients like corn and soy, but is somewhat patchy for materials like rice straw left over from mushroom production and Acacia leaves.

My goal is to compile a sort of ‘list of ingredients’ that will be available at the farm (vetiver, Acacia mangium, some leafy greens, stevia, dried mushrooms, and possibly soy and sorghum) for a spreadsheet that will contain information on content of protein, fiber, carbohydrates, vitamins and minerals, amino acids and also certain component ratios and digestibility. From there, anyone can simply key in what ingredients are available so that a relevant feed analysis can be created or adjusted.

The advantage of creating our own feeds lies in having custom ingredients and the knowledge earned by the process of creation. In the end, we should be able to produce something very close to what is being used by milk producers at a lower cost. Judging also from much of the literature, alternative feeds will soon be needed as we look away from non-renewable resources and agricultural practices that depend on them. This might seem a little strange to the casual reader. Aren’t we supposed to be growing trees? Of course we are, but we’re also all about maximising return on investment - and there is so much potential in these fertile lands to do so much more that it would be blinkered not to look for more ways of optimising the use of the land. Best of all, we are able to do this in ways that sustain and nurture the environment. It’s progressive, it’s exciting and great to be part of.

I look forward to updating you regularly on what’s happening over here.

Robert

Listening and Learning in 2010

2010-01-31T19:06:00.001Z

The last three years have been a massive learning curve for us as a company, and 2010 is shaping up to be no different. We are constantly reappraising our approach to our business, not solely in how we improve the physical management of our forests, but also in how our model of ethical investment – that the long-term growth and protection of the world’s forests can only be achieved through professionally managed investment that delivers investors a profitable return – positions itself between the demands of a ethical, socially responsible philosophy and the realities of engaging with free market capitalism. The two have never been easy bedfellows, but our view is that the two are going have to learn to live with, if not love, each other if genuine progress is going to be made.

Nowhere is this arena more apparent than on the web. Since we dipped our toe into social media, we have been making connections and having conversations with people and organisations from radically different backgrounds: everyone from ethical watchdogs to financial commentators.

The conversations we’re having continue to surprise and challenge us: it’s clear we have many more avenues to explore and plenty of new questions to consider and answer. We certainly don’t think we’ve always got the perfect answer to everything we do, so we are always willing to open our minds to new ideas and viewpoints. Furthermore, we are keener than ever to discuss questions and ideas openly and honestly. There’s serious debate to be had amongst us all and a long way to go in finding agreement, but we want to be part of the discussion.

In addition to using our own blogs to bounce our (and other people’s) ideas around, this year we’re delighted to introduce you to Robert Brown, our forestry manager who’s based right inside our plantations. Very much our ‘man in Havana’ – or rather ‘man in Costa Rica’ – Robert is an Agroforestry expert and part of our expert team, constantly evaluating and reevaluating the very best ways for us to get the best from the land.

While some of this as you would expect covers the constant assessment of the best kinds of trees to plant, it is much more than this: we are evaluating every means by which we can use the land ethically, sustainably and profitably. Whether this is by letting cattle graze on the land, growing livestock feed or looking at growing other species of tree or plant that can co-exist without impeding tree growth, we’re looking into it. It’s fascinating stuff and we hope you’ll enjoy hearing about what’s happening on the ground out there.

In the meantime we wish everyone a peaceful and profitable 2010, and if you haven’t done so already, come and join our conversations on Twitter. We’re looking forward to meeting you.

10 reasons why we love Costa Rica

2009-12-18T13:43:00.001Z

One of the very best things about Ethical Forestry managing forestry investments in Costa Rica is Costa Rica. We love it there. Every time we visit the plantations we discover or see something new that he haven’t see before or couldn’t imagine back in the UK. And what strikes us above all is what an intelligent, progressive nation it is, one which rest of the world could learn a thing or two. For instance...

It’s the happiest place on that planet – and that’s official. Costa Rica topped the list of countries in the 2009 report of the Happy Planet Index (HPI), an index of human well-being and environmental impact that was introduced by the New Economics Foundation and challenges traditional indices of countries’ development, such as GDP. According to the report, “Costa Ricans report the highest life satisfaction in the world, have the second-highest average life expectancy of the Americas (second only to Canada) and have an ecological footprint that means that the country only narrowly fails to achieve the goal of ‘one-planet living’: consuming its fair share of the Earth’s natural resources’. The UK came 83rd.

Costa Rica aims to be to be completely carbon neutral by 2021. It is one of the few countries that is making genuine strides in embracing green technologies, tackling global warming and is gearing up to cut emissions along with the Maldives and Norway. Costa Rica has maintained a public, not-for-profit electricity system and the country gets 94% of its electricity from renewable sources. In comparison, the proportion of neighbouring Nicaragua’s electricity coming from oil has increased from 5% to over 70%, while electricity from renewables has fallen.

Part of Ethical Forestry’s research centres on producing biofuels, which the Costa Rican government will be interested in because they want to get the country’s transport fuelled by it in the medium-to-long term. If we can produce it on the doorstep then it will be of great benefit all round.

The USA isn’t the only country with a Nobel Peace Prize winning president. Long before it became possible to win a Nobel Peace prize by simply winning a US election, the current President of Costa Rica, Oscar Arias, received the Nobel Peace Prize in 1987 for his efforts to end civil wars then raging in several other Central American countries. On top of that he is also a recipient of the Albert Schweitzer Prize for Humanitarianism, a trustee of the Economists for Peace and Security and in 2003 was elected to the Board of Directors of the International Criminal Court's Trust Fund for Victims. In short, he’s a truly inspirational world leader in at time when there aren’t too many – and certainly the only one to have studied at Essex University.

Mind you, he wouldn’t have got there if Costa Rica didn’t have a progressive-thinking, stable, democratic system of government. While there’s still some way to go, Costa Rica is making great strides socially and economically and has one of the healthiest economies in Central America, according to the Latin American Chronicle.

Costa Rica has no army. That might seem remarkable in this day and age, but Costa Rica’s progressive, democratic stance both within the local region and globally means it’s about as aggressive on the world stage as Switzerland. Mind you, it probably helps that it has number of close bilateral trade agreements with the United States as well as being a favourite holiday destination for US citizens: potential aggressors, of which there are none, would think twice when the US army is less than an hour-and-a-half flight away. That means the country can get on with showing the rest of the globe the way to world peace as they did by hosting last month’s UN disarmament conference.

It’s spent all the savings on the army on public spending and welfare. Exactly how incredible is that? Try proposing that anywhere else in the supposedly civilised western world. What’s more, the size and scale of the health programmes has even won plaudits from the United Nations' Economic Commission for Latin America and the Caribbean.

It’s one of the world’s leading technology centres. If you think Costa Rica is all rainforests and American real estate, you couldn’t be more wrong. Bolstered by adopting free trade policies, the likes of Microsoft, Intel and Acer have major facilities there; at one point the country was producing three-quarters of the world’s processing chips. The upshot of this of course is that the country’s physical and technological infrastructure is transforming fast, with the country soon to go 3G.

It grows the best pineapples we’ve ever tasted. Seriously. With conditions being hot and humid, it’s important to keep hydrated. Imagine our delight, then, after a day inspecting our plantations two of the staff brought a pineapple and sliced it into chunks – using 2 foot machetes. The pineapple was so sweet, with so much juice, that we bought another one on the way back to our lodgings.

No wonder the Costa Ricans don’t understand the concept of going hungry: fruit simply grows all over the place and you just pick it from the tree when you need it.

Costa Rica can bring the dead back to life. Well, that’s not strictly true, but it is one of the few countries where fence posts actually grow and take. The deep red soils are so fertile that a fence post hammered in the ground for two years will begin sprouting roots. It’s incredible to see and just illustrates what a cradle for life South America is.

It’s a fantastic place to go for a holiday. If we haven’t persuaded you already, we can’t recommend Costa Rica enough. Aside from the natural beauty of the wildlife and geography, ranging from the mountains down to the coastline, the people are fantastic. So go on, treat yourself – it is Christmas, after all.

Within this blog post we have referenced articles (see links) and send thanks to the Latin Business Chronicle, The China View website, Tico Times Staff and to Treehugger (whom you can find on twitter, discussing the latest in modern green here @treehugger). And to "creative holiday gift ideas blog" who gave us the idea for the Christmas Pineapple image, as this post is our way of bringing you some festive fun.

The summit of ambitions

2009-12-11T18:51:00.001Z

We could hardly let this week pass without mentioning the climate conference at Copenhagen. For once the superlatives don’t seem to do it justice: it really is the most important meeting of nations to take place since the Second World War. That’s in part not so much because of what action is decided, but also the price of failure. The consequences of not being able to agree could see countries walking away for years, if not decades, by which time it really could be too late to avoid catastrophe.

While we share the hopes of everyone for the summit, we’re tempering our expectations with realism. We don’t expect to see a ‘Eureka’ moment between the assembled nations, and to be honest many may come away disappointed – but just as there’s enough agreement to sustain dialogue on all issues, then progress will continue.

The scope of issue at Copenhagen is vast – just check out the COP15 calendar of events to see how much is going on – but we are following the discussions over deforestation with particular interest. Our current view on much deforestation practice remains unchanged: that the policies of grow-and-harvest are completely unsatisfactory and unsustainable in the long run. There is simply no benefit to growing and harvesting trees on existing forestry land; in many ways it’s a counterproductive distraction to sustainable solutions to maintaining forestry.

The only way to counter deforestation is to plant trees that won’t be harvested. There’s no other solution. But while the initial reaction to this is to urge countries to plant new forests and leave them standing, we don’t believe that’s realistic: these huge tracts of forest need management and nurturing so their potential can be maximised. The only way there can be the investment and protection required for the forests is by making then a profitable proposition for investors – one which generates the revenue needed to responsibly replenish and ringfence forests for the long-term and benefits the investor financially.

That’s why we have approached the problem from a rational, realistic perspective – by making forestry profitable enough to fund the change. We unashamedly plant trees on a "for profit" basis on our plantations in Costa Rica because it’s good for the investor and it’s better for the environment – and we’re making this approach work in practise, right now. We have only taken over old cattle grazing land or land that’s previously been used for slash-and-burn, not existing fertile forests. Once prepared, the land is planted, managed and cared for on behalf of the investor, choosing from a variety of species, which nurtures and develops the fertility of the land. At the moment, for instance, we are doing research into planting or nurturing other species within the existing plantations. We’re trying everything from growing Jatropha for its beneficial oils to keeping sheep in them to maximise the yield from the land as an attractive, sustainable proposition.

And when investor trees are harvested for profit, we are able buy the land, replant it and then hand it over to a forestry easement for permanent protection: the land will be managed effectively by a responsible, independent board rather than be threatened by future conflicting government or commercial interests. We are currently looking at working with a range of organisations to develop this – so if you represent a relevant, independent organisation and are interested in what we are doing, we would like to hear from you.

So while we absolutely support all organisations that are working sustain the forests, we maintain that real progress in protecting and enlarging can only be made by making them profitable. This explicit linking of capitalism and ecological interests will be acceptable to some, and rejected outright by many, but we believe it is the only realistic option to protecting the forests in the long-term. As with Copenhagen, good ideas and intentions are one thing, but we have to be realistic and practical if we are to make them happen for the good of us all.

Trees May Go Down As Well As Up

2009-12-02T15:19:00.003Z

We were intrigued by this recent article in the American Chronicle, a sober reflection on the sometimes puzzling fluctuations in timber investments seen on the FTSE: namely, why do funds temporarily dip in value against the strength of the investment?

There are two fundamentals every investor needs to understand when investing in timber, especially with funds. The first is to understand what the underlying asset is: is the fund investing purely in the forestry services, or does the land have an intrinsic value as well? If the latter is the case, the land gets valued as part of the investment and therefore fluctuates depending on any country’s economic conditions.

Secondly, timber doesn’t care what’s happening in the stock market: it just carries on growing regardless. So to have commodities price go up or down on the investment market is perfectly acceptable, because investors are looking at commodity futures; they’re speculating at where a price is likely to go.

Further to that there a number of further variables that can affect forestry investment funds. It depends exactly what's in the fund, what country it’s in, or where the fund gets its valuations as well. Nonetheless the article is absolutely right in that there’s no logic as to why the fund value should decrease slightly: we are (naturally) confident that it will demonstrably rise over the medium- and long-term. But as the article (in which spurred this blog post) rightly states, if you’ve got timber and the market drops slightly, you simply don’t give in and sell the timber. You just hold on to it. It doesn’t matter whether it’s still growing as a tree or whether you’ve chopped it down and turned it into a board for timber, you can keep or store it. It’s not a perishable commodity, so you just keep it and sell it the next year. And if you don’t chop your investment down, it continues to grow in size and hence eventual value.

What’s also important is the flexibility of what you choose. A managed fund gives you complete control of your investment, unlike fixed term investments that mature on a fixed date – potentially leaving you at the mercy of price fluctuations. We believe that of course the investor is entitled to complete title and cropping rights so, during times where the price is on a downward swing, the investor always has the choice to leave trees as they are or can harvest them and not market them until the price has recovered.

The key message to understand is that is that forestry is a medium to long-term investment, so there is little useful point at looking at timber prices on a daily or even weekly basis. To find any kind of trend you have to examine on a very least month-by-month basis, from which a picture will gradually emerge.
The closest parallel is that if you’re on a diet you shouldn’t weigh yourself twice a day every day: partly as your weight fluctuates throughout the day, and because you’ll get very frustrated very quickly.

The piece also correctly identifies that the market still requires a degree of education – it’s a fairly new industry for a lot of investors to get into. The funds are attractive in that they can be quite liquidable, but they have an intrinsic value so the net asset value isn’t always reflected in the share price. So these dips are somewhat of an anomaly: there are a multitude of individual reasons to each small peak and dip, but in part this is down to investor knowledge in how timber investment actually works.

As investors understand more knowledge about these kinds of funds, we think these fluctuations will level out – but it does require investor education to understand what’s involved, so that’s an area we’ll be working to improve understanding about. Watch this space!

Feel free to send in your comments here, we could then add answers as another blog posts or if applicable add more information to our website Ethical Forestry. Many thanks for your interest.

Caring for our forests: Plantation management

2009-11-13T12:01:00.001Z

As our investors know, we go out on a regular basis to visit all our plantations in Costa Rica - for as much as we understand the investment, seeing with your own eyes is the only way to appreciate how quickly our managed forests grow (see above recent photo Oct 09: Ethical Forestry 1yr old plantation).

But on our most recent visit earlier this month, we were as much shocked to see the poor state of other plantations as we were pleased to see the good progress on ours. We weren’t really expecting to see poorly managed trees - we wouldn’t want to see them on our plantation, that’s for sure. But it underlined for us that poor plantation management is by far the biggest risk to successful forestry investments. At the base of this neglect and mismanagement is the basic lack of understanding or education how trees grow, which can yields catastrophically poor outcomes for both the investor and the environment.

The greatest misperception about forestry management is that you can buy a plot of land and plant pretty much any species you want to on it, based on a rose-tinted notion that you simply plant trees and leave them. That’s naive at best, and grossly irresponsible at worst. If you were to go and buy a fairly expensive six foot conifer tree from your local garden centre, you wouldn’t go and plant it then just walk away and ignore it. You’d probably be going out there every evening a watering it, particularly throughout the summer. How do you do that when you’re four-and-a-half thousand miles away? You need someone you can trust, you need someone who knows what they’re doing and you need someone who’s done it before.

The fact of the matter is that good management relies on the strength of good knowledge and science, delivered by experts. When Ethical Forestry buys land, we get our registered forestry consultants from Finca Leola to take bore samples. They dig pits 2-3ft deep, analyse what the acidity levels of the soil are, take account of the altitude and what grows naturally round the plantations before making decisions on what to grow. These experts understand the greatest influences on growing trees are soil and altitude, dependent on what tree species you wish to plant. For instance you can be fortunate with acacia – you can pretty much plant it anywhere and it’s a very hardy timber. The trees produce a lot of seeds and all the seeds currently used are taken off existing trees, so we know those trees and that particular strain grows well those soil conditions.

On the other hand teak isn’t a native species to Costa Rica, and although it will quite happily grow there it is very fussy about where you plant it. If you’ve got teak seeds, you’ve got to boil them for three minutes in water before they’ll even germinate, which gives some idea of the conditions they need to grow, because without that sustained heat they’re not going to germinate, which is why cooler altitudes are a problem. For example, on the way to Ethical Forestry’s managed plantations we drove past ten-year-old teak plantations which been planted at a relatively high altitude so were very growing poorly: in comparison, we have two-year old trees on our plantations which are already twice the size. And if the vagaries of altitude and soil quality aren't enough, it's important that you don't grow teak too fast (it’ll end up like balsa wood) and it’s pointless to cut it down too early (the oil content which give it its distinct weatherproof qualities takes at least 10 years of growth to appear).

This is basic stuff. But a little knowledge goes a long way - and if just some of it had been applied to some of the plantations we saw, it would have made a massive difference. For the new or even experienced timber investor, it means taking the short time to ask the right questions: not so much "where am I investing", but "what am I investing in and who's looking after it?". It could mean avoiding an awful lot of heartbreak later.

Don't forget if you have any further questions on what equates to good plantation management, send in your comments and we will address them here or over at our Ethical Forestry website, or simply give a member of our Timber Invest team a call.

Support National Ethical Investment Week!

2009-11-10T10:33:00.005Z

This week it’s National Ethical Investment Week 2009, which takes place from the 8th November until November 14. A cooperative campaign involving advisers, charities and trusts, financial organisations, faith groups, NGOS and community groups, National Ethical Investment Week (NEIW) 2009 aims to ensure everyone knows that they have green and ethical options when it comes to their investments.

As part of the week a number of meetings, presentations and events have been scheduled around the UK to support ethical investment - so if you’re interested in the ins-and-outs of credible, professional and trustworthy ethical investment, see whether there’s an event near you at http://www.neiw.org/neiw2009/events

Ethical Forestry is excited by NEIW 2009 for the most part because it’s not a talking shop – it’s a dynamic organisation with a wide range of stakeholders who hold a wide range of views. It’s not a ‘mouthpiece for the industry’, so we believe if offers an honest forum for debate and discussion, as well as a healthy focus for promoting the possibilities and rewards of ethical investment.

Behind NEIW 2009 is the UK Social Investment Forum (UKSIF), a sustainable investment and finance association which promotes responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment. Ethical Forestry views UKSIF as a credible, ‘front-line’ operator in responsible, ethical investment and we are currently in negotiations to become a member.

For more information go check out the National Investment Week home page

Welcome to the Ethical Forestry blog

2009-10-29T10:38:00.000Z

This is our first chance to cast our eye more informally over the worlds that we operate in: reflecting on the challenges that surround any foreign venture, skewering some of the more spurious ideas that people seem to attach to being ‘ethical’, considering the overall prospects and forecasts for global forestry and timber.

In starting this blog, it’s given us chance to take stock of how we got here. Yet the most enlightening part of Ethical Forestry’s growth is not what you might imagine: while you might have imagined us endlessly walking the hinterlands of Costa Rica to find the perfect glade, we simply didn’t need to. We work with one of the country’s finest forestry management experienced, brilliant and experienced at what they do.

The most interesting element of our journey has been much closer to home, in confronting the concepts – or rather misconceptions - of ethical investing head-on. Many investors still feel challenged by the concept ethical investments mostly, we feel, because the highly subjective adjectives of ‘green’ and ‘ethical’ have been cast around for so long they barely make any objective sense any more.

In our view, the problem with many investments is that many supposedly ‘green’ investments (and there are many out there, in all shapes and sizes) may have the correct green credentials that appeal to a conscientious investor, but frequently do this - deliberately or accidentally - at the cost of a coherent, clearly articulated investment opportunity.

So let’s break no bones about it now and say that our business is, and always has been, based squarely on the principles of good investment. While the idea of investing ethically introduces the personal-moral element into a realm classically requiring impassive, hard analysis, we’ve always said that the head should govern the heart: A good investment that’s morally sounds benefits everyone in the long term, but a bad investment, even for the right reasons, damages everyone. So while we say it’s good to be green, don’t be naive.

Our investment strategy, although motivated and enthused by an exciting opportunity, is therefore based on fact, trend and forecasting. The absolutely prevalent worldview that as the world’s population grows and Asia Pacific, African and South American countries begin to industrialise, that there will be a corresponding increase in demand for natural resources. The demands for high quality woods for export will continue to growth. It’s been happening for the past two decades and even in the couple of years that Ethical Forestry has operated we’ve seen continued substantiation of these trends .

Our opportunity is to meet this demand by investing in the planting of the highest quality natural woods within renewable plantations, which over a 25 year life growth cycle provides innumerable environmental benefits into the bargain. We don't simply plant and cut down - that would be of no help at all; instead we work with the country's leading forestry experts to plant a range of indigenous species that ensure the maximum environmental gain. And, at the end of the cycle, we replant again.

Sounds simple? Maybe it does, but that’s because we’ve made all those difficult, informed decisions on a good investment that happens also to have excellent environmental benefits. We long ago knocked out the riskier ventures and spurious opportunities because they weren’t up to scratch for serious investors. And would we be investing in timber it if those environmental benefits were there but the investment opportunity was poor? Certainly not. We’re realists, not idealists – and, regardless of whether you’re looking maximum returns or wanting to help the environment, it’s realists that tend to make things happen.

Agree or disagree with us, we want to know what you think – so come and join the debate.

We’re setting accounts up with twitter come and find us @ethicalforestry or visit www.twitter.com/ethicalforestry we also have an Ethical Forestry presentation running over at Slideshare and would love your comments.

We look forward to meeting you.