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nature-based solutions—especially timber and forestry—are Performance has been impressive, with IRRs often rising
increasingly commanding investor attention. into the double-digit percentages and ‘select vintages’ topping
Morningstar data from Q1 2025 showed that more than 50 16 percent on the high side of the spectrum, per the EY report.
percent of all new fund launches and assets under management Several tailwinds are helping to buoy the timber and

(AUM) in Europe are now in Article 8 and 9 funds, as per the forestry asset class, including rising demand for renewable
EU’s Sustainable Finance Disclosure Regulation. construction materials, forests’ carbon-capture potential and
ESG-aligned strategies have been catapulted from the EU-backed afforestation guardrails.
outskirts to the mainstream, with fund managers now treating As a result, the EU is taking its place as a strategic hub
sustainability as both an investment theme and a competitive for timberland investment. Unlike traditional asset classes,
advantage. timberland offers low correlation to public markets, inherent
Nowhere is this momentum more apparent than the rise inflation protection and strong climate resilience.
in the number of timber and forestry funds. These investment In a market increasingly focused on risk, return and
vehicles, which target sustainably managed forests, brought impact, timber and forestry funds are no longer an alternative;

in $8.4 billion last year—down slightly from 2023, but well instead, they’re becoming a lighthouse of where capital is
ahead of the five-year average. likely headed next.

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ENQUIRY NO. 802