And 5 ways to Future-Proof your Forest Investment Strategy
“The Times They Are A Changin…”
Bob Dylan wasn’t singing about the forest sector—but he could’ve been.
More than 20 years ago now, I remember giving the parting words in my university graduation speech that the only thing we could count on in our industry, and our future was change.
It was true then. It is true now.
This last week I was in the woods – in more ways than one. On a client advisory visit, I was taken to the field to see nature restoration initiatives and industrial production, I was also taken on a VR tour of the forest. Though such a tool can never capture the smell of pine or the weight of the earth underfoot – if your only alternative to experiencing a forest investment is through a spreadsheet, then it can be a very powerful tool.
I was encouraged to see my client’s approach to the dynamic geopolitical, economic and forest sector environment we are all facing. Three things stood out about how they are planning to future-proof their business: Embracing new technologies like AI (and I don’t just mean VR forest visits), diversifying their revenue streams, and staying true to their sustainability principles.
Reflecting on this visit, I wanted to share some wider lessons for those of you embarking on a new or revised forest investment strategy to future proof your business.
- Alignment: Ensure your new strategy is consistent with the ethos of your business, your people, your shareholders and stakeholders. If not, consider whether a spin-off or clearly distinct business unit is more appropriate.
- Sustainability: Ensure your new strategy is rooted in timeless sustainability principles. Tactics and targets will change with the times but ensuring investment activities are consistent with a solid and unwavering sustainability foundation will enhance your organization’s credibility and resilience in times of change.
- Diversification: Building diversification into your strategy, whether that be in end markets, investment jurisdictions or investment partners gives you options in times of flux. And this can go beyond status quo diversification, consider new and up-and-coming markets as well.
- Technology: Whether its to bring the forest to investors, improve efficiencies and raise profit margins, or even deliver new investment products – technology is making it easier to capture the full value of the forest. Ensure you are utilizing it to its fullest potential.
- Agility: To the extent possible (and this is more difficult with large institutional Fund Managers or DFIs than for Family Offices or boutique Asset Managers), remain agile in your governance to be able to pivot your strategy in times of need. Being resilient in times of a dynamic global economic situation requires the ability to adapt.
If you’d like to talk strategy, and see how I help set up forest investment firms like your for the future, let’s chat.
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