Wall Street shows interest in voluntary carbon markets
Several new funds and investments announced in late 2022
A major presence by Wall Street institutions is coming to voluntary carbon markets based on a series of late 2022 announcements of new funds and investments. The plans for these transactions involve investment and ownership of major forest land parcels in contrast with purchase of sequestration carbon credits from other landowners.
One of these announcements comes from Manulife Financial, which announced a $500 million fund to purchase forest land for carbon retention. Manulife is the successor to Hancock Natural Resources Group, a pioneer in the Timber investment Management Organization (TIMO) world dating back to the 1980s. With six million acres already under management, Manulife is believed to be the world’s largest TIMO.
Forest land purchased by the new fund will experience a slower harvest rotation to increase the amount of carbon retained in the forests, according to the company’s announcement.
Manulife also envisions offering investors in its funds to pay a return on their forestland investment in either cash or carbon credits. The credits earned by investors would allow them to use credits earned in this way to assert that they are fulfilling announced carbon reduction goals.
Manulife acquired the Hancock forest management business in 2004 but had not changed its name from Hancock Natural Resource Group to Manulife Financial - Forests until late 2021.
Last year J.P. Morgan Asset Management purchased The Campbell Group, which has been a major competitor with Hancock (now Manulife).
Meanwhile a new player in the timberland financial world, Oak Hill Advisors, L.P. is a subsidiary of T. Rowe Price, a major player in the financial world whose major products are mutual funds.
Working with Anew Climate, LLC, Oak Hill acquired 1.7 million acres with a carbon sequestration goal for $1.8 billion. Anew Climate is a veteran in the carbon markets, having previously been known as Blue Source. Blue Source has verified large carbon projects as part of the process of marketing them to major U.S. companies and investors.