FairForest Voluntary Rating
Measuring the performance of sustainable forestry projects
We are happy to introduce the FairForest Voluntary Rating, developed by OpenForests. The goal of the rating is to measure the performance of sustainable forestry projects. Investors can obtain an easy and understandable tool to pre-select potential investment opportunities in high quality and sustainable forestry projects.
Forestry ecosystems as investment subjects show heterogeneous characteristics, for example in relation to their regional context, available infrastructure, tree species, management objectives, etc. The set of factors which influencing the success of a project are broad and interdependencies between these factors are often strong. This makes it difficult for investment analysts to evaluate a potential deal. Although forest investments show competitive returns in comparison to other investment classes, large investment portfolios (> USD 1 billion) only have allocated around one percent of the total portfolio into the forestry sector. With the FairForest Voluntary Rating we want to capture the heterogeneity of forestry investments and make them assessable for investors.
Current certificates and standards predominantly focus on environmental and social impact. The financial performance is not evaluated. However we think that the financial sustainability is the prerequisite to guarantee social and environmental sustainability. The FairForest Voluntary Rating especially asks for the business performance.
FairForest provides a voluntary self-rating system for forestry landscape projects. With a broad spectrum of questions, the rating system is designed to be applicable to a wide range of different forestry projects. The following sections are rated to evaluate the overall project performance:
- social impact
- environmental impact
- financial performance
- business environment
- management performance
- production risks
Each section consists of about 20 questions that can achieve a performance between 0 to 100 percent. All questions are weighted in accordance to their importance in comparison to the other questions. In addition, the FairForest Voluntary Rating describes characteristics which are important for internal analysis. Background analysis and research by OpenForests complements the voluntary rating.
By measuring indicators and grouping them in sections, complex investment subjects like sustainable forestry investments can be compared more easily. Comparing measured indicators with internal benchmarks enables responsible investors to select projects which fit best in their investment portfolio. The rating assists systematic deal sourcing to find high quality projects. Through this, high due-diligence costs can be saved.
The goal of the FairForest Voluntary Rating is to increase transparency and security for ethically responsible investing in sustainable forestry. Please contact us for more information.