As a carbon tax looms, Temasek invests in a forest fund

As a carbon tax looms, Temasek invests in a forest fund

Temasek Holdings, Singapore’s state-owned investment company, announced its support for a new forestry fund as the city-state looks to increase its carbon tax.

Singapore plans to ratchet up the tax it charges on greenhouse gas pollution to S$25 a ton by 2024 from S$5 at the time it was first implemented.

According to the David Brand, Sydney-based New Forests chief executive, Temasek is among investors including Sumitomo Mitsui Trust Bank. They are investing US$120 million in the New Forest Tropical Asia Forest Fund 2. He further anticipates 14 to 18 percent annualized return over its 10-year life.

He said in an interview that the funds will hunt higher value hardwood timber assets like teak which can be used for furniture and flooring, wood and latex production for rubber trees, and eucalyptus for composite building material or veneer.

New Forests, founded in 2005, is a nature-based real assets manager with nearly S$7.6 billion in assets including conservation areas that restore ecosystems and timber plantations.

Amid rising temperatures and calls from shareholders to address their involvement in funding climate change, investors throughout the world are focusing more on environmental considerations.