Foresight Sustain. - FSF the 1st company to receive LSE VCM designation

Foresight Sustainable Forestry

05/12/2022 08:30

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RNS Number : 5112I  Foresight Sustain. Forestry Co PLC  05 December 2022

5 December 2022

 

Foresight Sustainable Forestry Company Plc

("the Company")

 

FSF becomes the first company to receive LSE Voluntary Carbon Market
designation

 

 

Foresight Sustainable Forestry Company Plc, an investment company that invests
in UK forestry and afforestation assets, is pleased to announce that the
Company has today become the first company to officially receive the London
Stock Exchange's Voluntary Carbon Market ("VCM") designation.

 

The VCM was launched by the London Stock Exchange on 10 October 2022 and has
been created to facilitate financing at scale into projects that mitigate
climate change. The VCM designation will be applied to funds or operating
companies that are admitted to the London Stock Exchange’s Main Market or
AIM and which are intent on investing into climate change mitigation projects
that are expected to yield voluntary carbon credits. The VCM aims to leverage
the power of capital markets to channel capital from corporates and
institutions with net zero pledges, into listed companies that are creating
high integrity voluntary carbon credits. A video explaining the VCM can be
found here:

 

Richard Davidson, Chairman of Foresight Sustainable Forestry Company,
commented:

"To be the first ever company to receive LSE Voluntary Carbon Market
designation is a hugely proud and significant moment for Foresight Sustainable
Forestry. By connecting investors with net zero ambitions to entities such as
FSF that generate voluntary carbon credits, the launch of the VCM is a major
milestone in the UK's fight against climate change. VCM designation means that
the ever-growing number of climate-minded investors can easily and confidently
identify sustainable solutions - investors know that, through FSF, they are
investing in climate mitigation projects that make a real difference. We have
a strong UK afforestation pipeline and the potential of our current capital
base alone is expected to create up to 5 million carbon credits by 2050,
equivalent to offsetting the entire annual carbon footprint of Glasgow."

Julia Hoggett, CEO, the London Stock Exchange plc, said:

 

"We congratulate Foresight Sustainable Forestry on becoming the first
London-listed issuer to obtain our new Voluntary Carbon Market designation.
The public markets are uniquely positioned to help scale the voluntary carbon
market, whilst driving greater transparency and providing access to a wider
range of investors. We continue to see a strong pipeline and hope to see more
new issuers receiving the VCM designation and raising new capital for
investment in climate mitigation projects in 2023."

 

Eligible issuers, such as the Company, will be seeking to finance projects
directly or indirectly and may issue carbon credits as a distribution "in
kind", retire or sell the carbon credits. This will provide a new solution for
corporate investors seeking access to a long-term supply of carbon credits to
augment their decarbonisation strategies.

 

The overall objective of the Company in obtaining VCM designation is to
attract new investment from a large and growing pool of companies which have
made net zero pledges. For these companies, the Company's "in-kind" carbon
credit distribution investment proposition will enable them to:

 * secure a supply of voluntary carbon credits for their net zero commitments (to
 be used for their unabatable emissions) and/or trading purposes;
 * hedge against rapidly rising voluntary carbon credit prices; and
 * generate an attractive risk adjusted return from otherwise uninvested balance
 sheet cash, with flexibility to adjust carbon credit yield requirements in a
 daily traded manner.

 

The Company's current portfolio consists of approximately 9,700 hectares of UK
standing forestry and afforestation assets. The carbon sequestered by the
Company's 27 afforestation sites is expected to equate to approximately
800,000 voluntary carbon credits accredited by the Woodland Carbon Code. Once
FSF's current total available capital is deployed, it is anticipated that the
Company will create approximately 1,000,000 voluntary carbon credits in its
first wave of afforestation deployment. The Company's strategy with
afforestation assets is to successfully develop afforestation assets, exit
these young established forests and recycle the capital into new waves of
afforestation development. By 2050, the Company and Foresight Group LLP (as
the Company's investment manager) estimate that the current capital base will
have been recycled five times with the anticipation that this will yield, in
aggregate, 5,000,000 voluntary carbon credits, and they acknowledge that this
is a long-term ambition and is subject to ongoing market conditions and
factors outside of the Company's control.

 

Carbon credits created in relation to the Company's afforestation projects
will mature over time, turning from Pending Issuance Units ("PIUs") into
verified Woodland Carbon Units ("WCUs") that can be retired for offsetting
purposes. The majority of the 1,000,000 PIUs that are expected to be created
from the Company's first wave of afforestation deployment, are expected to
mature into WCUs between 2030 and 2050, enabling shareholders to pursue their
net zero ambitions. It is not currently the intention to commence the sale or
distribution of any voluntary carbon credits in advance of 2030. It is
expected that all voluntary carbon credits created from FSF's first wave of
afforestation deployment will be sold or distributed "in kind" by 2050.

 

Save where the sale of carbon credits is required to meet the working capital
needs of the group, the Company intends to realise the value of carbon credits
for the direct benefit of shareholders. Generally, the Company intends, when
appropriate, to sell carbon credits and make aperiodic distributions to
shareholders of the net proceeds of such sales. As an alternative to receiving
a cash distribution, the Company intends, where practicable, to offer
shareholders the option to elect to receive distributions "in kind" of carbon
credits. The method and process for the distribution of any carbon credits "in
kind" will be determined by the Board from time to time.

 

The VCM designation requires issuers to produce additional disclosures
relating to the projects they are directly or indirectly financing, including
but not limited to; the qualifying bodies whose standards will be applied to
the projects, project types, expected carbon credit yield and the extent to
which they are expecting to meet the United Nations Sustainable Development
Goals ("UN SDGs"). The Designation Circular produced by the Company, which
sets out these additional mandatory disclosures in compliance with the VCM
requirements is available for inspection on the Company's website at
(http://www.fsfc.foresightgroup.eu) fsfc.foresightgroup.eu
(https://fsfc.foresightgroup.eu/) .

 

To ensure that funds or operating companies are having a net positive impact
on the environment, the VCM eligibility requirements require that all other
activity and investments must be mapped to FTSE Russell's Green Revenues
Classification System (Tier 1 and Tier 2 sectors), which recognises the
sectors contributing to the green economy.

 

The London Stock Exchange has granted the VCM designation to the Company on
the basis that it will make changes to its existing investment policy to
ensure the Company complies with the eligibility requirements of the VCM,
specifically; to confirm (i) that the group will operate with a view to
generating carbon credits where commercially available; (ii) what will be done
with carbon credits generated by the Company's assets in particular clarifying
that there will be an ability to receive distributions "in kind" of carbon
credits; and, (iii) that the Company will invest its cash and cash equivalents
in a manner that is compatible with the principle of climate change
mitigation.

 

The Company announces that it will today publish and post (or otherwise make
available) to shareholders a Notice of General Meeting with related
explanatory circular (together the "GM Notice and Circular") and form of
proxy. The GM Notice and Circular contains resolutions to: (i) amend the
Company's existing investment policy to implement the changes required for the
purposes of the VCM designation (as summarised above), and (ii) make certain
technical amendments to the Company's existing articles of association to
facilitate the process for the future distribution of carbon credits "in kind"
to electing shareholders.

 

Copies of the proposed new articles of association and the proposed amended
investment policy (the "Amended Investment Policy") are available on the
Company's website, www.fsfc.foresightgroup.eu, and will be made available for
inspection at the Company's registered office, The Shard, 32 London Bridge
Street, London SE1 9SG during normal business hours until the conclusion of
the General Meeting.

 

The General Meeting will be held at the offices of Foresight Group, The Shard,
32 London Bridge Street, London, SE1 9SG at 12.30 p.m. on 21 December 2022.
Please refer to the GM Notice and Circular for details on how to vote by
proxy.

 

The Directors consider the resolutions to be proposed at the General Meeting
to be in the best interests of the Company and the shareholders as a whole.
Consequently, the Directors unanimously recommend that shareholders vote in
favour of the resolutions, as they intend to do in respect of their own
beneficial interests amounting, in aggregate, to 168,000 Ordinary Shares
representing 0.10 per cent. of the Ordinary Shares.

 

In accordance with Listing Rule 9.6.1, a copy of the GM Notice and Circular
has been submitted to the National Storage Mechanism and will shortly be
available to view at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
and on the Company's website at (http://www.fsfc.foresightgroup.eu)
fsfc.foresightgroup.eu (https://fsfc.foresightgroup.eu/) .

 

In the event that the Amended Investment Policy is not approved by
shareholders, the Company's continued eligibility for the VCM designation will
be subject to review by the London Stock Exchange and, in such circumstance,
there can be no assurance that such designation will not be revoked.

 

About the Company

Foresight Sustainable Forestry Company Plc ("the Company") is an externally
managed investment company investing in a diversified portfolio of UK forestry
and afforestation assets. Targeting a net total return of more than CPI +5%,
the Company provides investors with the opportunity for real returns and
capital appreciation driven by the prevailing global imbalance between supply
and demand for timber; the inflation-protection qualities of UK land
freeholds; and biological tree growth of 3% to 4% not correlated to financial
markets. It also offers outstanding sustainability and ESG attributes and
access to carbon units related to carbon sequestration from new afforestation
planting. The Company targets value creation as the afforestation projects
successfully achieve development milestones in the process of converting open
ground into established commercial forest and woodland areas. The Company is
seeking to make a direct contribution in the fight against climate change
through forestry and afforestation carbon sequestration initiatives and to
preserve and proactively enhance natural capital and biodiversity across its
portfolio. It is managed by Foresight Group LLP, the leading listed
infrastructure and private equity investment manager listed on the Main Market
of the London Stock Exchange (www.fsg-investors.com)

 

For further information, please contact:

 Foresight Sustainable Forestry Company Plc               +44 20 3667 8100

 Robert Guest

 Richard Kelly

 Email: fsfc@foresightgroup.eu

 Website: https://fsfc.foresightgroup.eu/

                                                          +44 20 7029 8000

 Jefferies International Limited

 Neil Winward

 Will Soutar

 Citigate Dewe Rogerson                                   +44 7768 981763

 Toby Moore (toby.moore@citigatedewerogerson.com
 (mailto:toby.moore@citigatedewerogerson.com) )

 Michael Mpofu (michael.mpofu@citigatedewerogerson.com)

 

Important Information

 

This announcement does not constitute or form part of, and should not be
construed as, any offer or invitation or inducement for sale, transfer or
subscription of, or any solicitation of any offer or invitation to buy or
subscribe for any share in the Company or to engage in investment activity (as
defined by the Financial Services and Markets Act 2000) in any jurisdiction
nor shall it, or any part of it, or the fact of its distribution form the
basis of, or be relied on in connection with, any contract or investment
decision whatsoever, in any jurisdiction.  This announcement does not
constitute a recommendation regarding any securities.

 

The information and opinions contained in this announcement are provided as at
the date of this announcement and are subject to change and no representation
or warranty, express or implied, is or will be made in relation to the
accuracy or completeness of the information contained herein and no
responsibility, obligation or liability or duty (whether direct or indirect,
in contract, tort or otherwise) is or will be accepted by the Company,
Foresight Group LLP or any of their affiliates or by any of their respective
officers, employees or agents in relation to it. No reliance may be placed for
any purpose whatsoever on the information or opinions contained in this
announcement or on its completeness, accuracy or fairness.

 

The information in this announcement may include forward-looking statements,
which are based on the current expectations and projections about future
events and in certain cases can be identified by the use of terms such as
"may", "will", "should", "expect", "anticipate", "project", "estimate",
"intend", "continue", "target", "believe" (or the negatives thereon) or other
variations thereon or comparable terminology. These forward-looking
statements, as well as those included in any related materials, are subject to
risks, uncertainties and assumptions about the Company, including, among other
things, the development of its business, trends in its operating industry, and
future capital expenditures and acquisitions.  In light of these risks,
uncertainties and assumptions, the events in the forward-looking statements
may not occur.

 

No representation or warranty is given to the achievement or reasonableness of
future projections, management targets, estimates, prospects or returns, if
any.  Any views contained herein are based on financial, economic, market and
other conditions prevailing as at the date of this announcement.  The
information contained in this announcement will not be updated.

 

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