December 5, 2022
Foresight Sustainable Forestry is the first fund to use London Stock Exchange’s Voluntary Carbon Market (VCM) Framework
- The London Stock Exchange is the first exchange to use a public market framework to facilitate funding in climate mitigation projects that generate carbon credits
- Foresight Sustainable Forestry (FSF) is the first fund to be eligible based on its forestry and afforestation portfolio that will follow the UK Woodland Carbon Code certification
The London Stock Exchange has issued its first Voluntary Carbon Market (VCM) designation to Foresight Sustainable Forestry (FSF), a London-listed investment trust that invests in UK forestry and afforestation assets.
The London Stock Exchange is the first exchange in the world to apply a public equity market framework to facilitate financing in climate change mitigation projects that generate carbon credits. It also provides access for investors and corporates seeking exposure to carbon credits which may be issued in the form of a dividend in specie.
FSF provides direct and liquid access to the attractive investment characteristics of UK forestry and afforestation projects, with future exposure to voluntary carbon markets. Proceeds from FSF’s IPO in 2021 are being invested in planting new woodlands that will result in the removal of more than four million tonnes of carbon from the atmosphere.
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").
Open to funds and operating companies, the VCM designation leverages London Stock Exchange’s existing market infrastructure together with the regulatory oversight and the transparency inherent in public markets. The Exchange requires that the climate change mitigation projects are managed by expert project developers and accredited by recognised industry bodies.
90% of respondents to Refinitiv’s 2022 Carbon Markets Survey thought that the global voluntary carbon market will help reach the goals of the Paris Agreement. Over 70% are expecting higher trading volumes in 2022/23.*
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.”
Richard Davidson, Chairman of Foresight Sustainable Forestry Company, said
“To be the first ever company to receive LSE's 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.”
Notes to Editors
McKinsey estimates that demand for carbon credits could increase by a factor of 15 or more by 2030 and by a factor of up to 100 by 2050. The global consultancy firm also estimate the size of the market could reach $50 billion by 2030, up from $2 billion today. Carbon credits: Scaling voluntary markets | McKinsey
London Stock Exchange has a strong track record in sustainable finance. Over £146 billion has been raised on its Sustainable Bond Market, while over 100 issuers with a combined market capitalisation of over £150 billion have received the Green Economy Mark. Green Economy Mark Report 2022 | London Stock Exchange
The London Stock Exchange published the rules governing the VCM designation on 10 October, 2022. Read in full here: n1922.pdf (londonstockexchange.com)
* Refinitiv Carbon Markets Survey 2022, Emissions trading continues to be seen as important driver of GHG reduction. Refinitiv Carbon Research | Refinitiv
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