The index focuses on the CO2benefits of Mass Timber and tracks the 30-leading listed equities from the forest and timber industry, across Europe and North America. Timber is the “hidden champion” of sustainable finance. TFI plans to launch index-based structured products in the near future and is offering banking and product partnerships.
Since 2020, the forest and timber industry is at the beginning of a significant growth cycle. After years of low investment and lumber prices, the industry is now undergoing transformative changes: European and North American governments are supporting timber construction through major regulatory changes – institutional investors have rediscovered the timber value chain and industry innovation has produced Timber Skyscrapers and highway bridges. Timber is gaining appreciation as a building material, timber construction is booming, and with it the entire industry.
Additionally, the Paris Climate Agreement and the net-zero commitments of companies are increasing the relevance of the forestry and timber industry and creating attractive investment opportunities for investors. There is an increasing global demand for readily available CO2 storage options. The Timber Finance Initiative is convinced that in the future, CO2-absorbing wood installed in houses in the long term will be internationally recognised as the cheapest, rapidly scalable negative emission technology (carbon dioxide removal technology).
Focus on CO2Storage Capacity
«Since existing Timber Indices have predominately focused on forests or the paper and packaging industry, Timber Finance has developed an index of its own. Our index tracks the entire value chain of the Mass Timber movement and focuses on companies that contribute to the production of durable wood products» said Erik Reichmuth, Managing Partner at the Timber Finance Initiative..
«There is a knowledge and investment gap between the financial market and the modern forest and timber industry. The Timber Finance Initiative closes this gap with new timber-based financial products. After all, Timber is the hidden champion of sustainable finance and belongs in every climate-conscious investor’s portfolio», explains Thomas Fedrizzi, Timber Finance Initiative Board Member.
The TFI Index shows a clear outperformance since March 2020 compared to the MSCI World and the S&P Timber and Forest Index.
Structured Products
The «Timber Finance Carbon Capture and Storage Index» will serve as the underlying for various index-based structured products. TFI plans to launch index-based products for climate-conscious investors in the coming months. We currently offer bank and product partnerships for these products. Further investment products, such as a Timber theme fund, are being planned.
- Thematic Focus
The index focuses on the positive climate impact produced by the deployment of engineered timber in the construction sector. It covers the entire Mass Timber value chain, from forest to frame, and highlights the CO2 impact generated by Timber construction.
- Index Universe and Industry Sectors
The index universe consists of 1,600 companies and includes forestry, forest management, primary and secondary products, as well as the construction sector.
- Focus on Innovation and “Game Changers”
Innovative companies from the bioeconomy and engineered timber producers were integrated. Additionally, leading global construction companies with a dedicated timber construction strategy were included.
- Exclusion
Pure play companies from the pulp, paper, packaging sectors, and other short-term Timber product producers were excluded.
- Sustainable Development Goals
The companies in the Timber Finance Index make a positive contribution to the following SDGs (11, 12, 13, 15).
More information about the index is available on the dedicated index section here: www.timberfinance.ch/index