Why sustainability pays for US timberland manager RMS

Back in the 1990s, US forestry had one of the worst reputations of any industry for environmental destruction. Today, it is on a surer footing thanks in part to the role of long-term investors demanding their timber managers support sustainability and biodiversity as much as financial returns.

Investors seek real assets like forestry for its steady income, inflation hedge, low volatility and lack of correlation to public equity and debt. More recently, investors also want exposure to forestry’s expanded revenue opportunities linked to carbon capture and offset programs and emerging biodiversity credits. For ESG investors the sector’s role in providing job opportunities in rural communities is another tick.

According to Timberlink and the Timberland Markets Report, the estimated value of global institutional timberland investments under management reached $63.5 billion in 2025, up from $54 billion in 2022. Asset managers put typical returns at around 9 per cent annually.

One forestry manager seeking to carve out a reputation as a thought-leader in sustainable forestry is Birmingham, Alabama-based, Resource Management Service, LLC. RMS manages around 2.2 million acres globally on behalf of European, Canadian and US pension funds, much of which is located in the southern US.

The forests are managed in accordance with multiple sustainable certifications including from the Sustainable Forestry Initiative and Forest Stewardship Council. RMS publishes its client and sustainability reports in line with SASB and TCFD.

“Investors’ expectations of their managers have changed and they expect more than a glossy report. They want rigorous reporting and a demonstrated measurement of value on what their managers can bring, and that’s not always easy,” reflects Charlie Pringle, executive vice president of investments at RMS in conversation with Top1000funds.com from the firm’s Pensacola base in Florida.

Speaking alongside Pringle, Jimmy Bullock, who is senior vice president of forestry sustainability, observes that many investors’ biodiversity priorities now surpass climate.

“In the last five years, we have seen a three-fold increase from potential investors asking biodiversity questions. Currently, we get more enquiries about biodiversity than we do about carbon projects,” says Bullock.

Active forestry management reduces chemical use, improves soil and water management and reduces disease, improving the quality of the wood that arrives at the timber yard. It has opened the door to pricing premiums, sustainability-focused markets, and conservation easements from state governments which in a win-win, further support biodiversity.

As demand for the asset class has grown, RMS’s investor-offering has also expanded. It includes separately managed accounts with customised governance structures while co-mingled funds include open-ended and closed-ended funds. It also offers an Evergreen US Forestland Fund that includes a suite of conservation specifications in the first open-ended fund with semi-annual liquidity windows, a milestone in an asset class famed for its long lock-up periods.

Evergreen fund investors can also participate in a large-scale carbon storage pool – its current carbon stock is equivalent to the average annual energy use of 5.3 million homes.

Carbon markets and biodiversity credits

Pringle says that carbon markets have evolved to provide investors with a pathway to value realisation. They can generate credits for carbon sequestration that is “additional and credible” and monetise those credits so that forests can now be managed for wood and paper outputs, or as a carbon store. All the while, third-party audits are getting better at delivering standardised reporting on carbon.

Earning returns from biodiversity is more challenging however. Credits supporting ecological health could achieve the same in the future but as yet there is no generally accepted way to report on biodiversity impacts from manager activities – although he is encouraged by evolution in the space.

“As managers, we need to develop frameworks that provide that level of trust. If we can do this, it will develop over time.”

With this in mind, RMS has developed an Ecosystem Integrity Index, an open-source science-based framework for measuring ecosystems which presents results to investors as a single metric. The team hope that the index will contribute to the flow of new tools and help standardise biodiversity reporting that is rigorous, repeatable and credible.

“The RMS Ecosystem Integrity Index helps us quantify numerically and objectively the biodiversity value of our managed forests,” says Bullock who suggests that biodiversity is possible without planting a wide variety of tree species. Loblolly is the dominant species in US south actively managed forests, that are also rich in biodiversity because of what happens under the canopy.

A managed forest that moves between open and closed canopy provides a range of habitats throughout its life cycle: a patchwork of different forest ages at different rates, creating multiple habitat types.

“The data shows that actively managing planted pine forests can be more biodiverse than natural forests with no management.”

RMS’ sustainability credentials have also opened the door to conservation easements where the state government (or other third parties) purchase development rights off underlying investors.

Through these arrangements, RMS continues commercial logging, but the land will never be used for non-forest use such as real estate development or housing. It has allowed RMS to nurture special sites for a variety of species (and carbon sequestration and storage) in perpetuity.

“Landscapes change, and economic forces change, but through a working forest conservation easement, investors can support permanent outcomes that relate directly to the forest and get compensated for the rights they are giving up,” says Bullock.

Although RMS typically only sells a “tiny portion” of its forests (0-1.5 per cent of its total acreage in any given year), giving up the ability to sell when land prices spike has implications for investors. Demand for land, Pringle notes, is driven by everything from data centre sites and solar farms to industrial development.

Integrating sustainability is only one seam to active management at RMS which must also navigate challenges buffeting the sector.

regulatory risk

Tariffs, designed to support the domestic US industry (RMS doesn’t export any production) have also created uncertainty and increased costs in the supply chain. For example, demand linked to the housing market and residential construction has suffered because of the prospect of higher interest rates and affordability concerns.

Elsewhere, Pringle reflects that encouraging robust ways of verifying the sustainability of forest management is in RMS’s interest, but if sustainability regulation is introduced without practical or realistic frameworks it could add to complexity and costs. Particularly any policy that requires the traceability of single logs. Tracing a log from a stump to the sawmill would add a lot of cost to the system. Although he says the ability to trace a truckload of logs is more doable.

“Regulation often comes with unintended consequences,” he says.

Timber is also subject to price volatility caused by labour shortages in the sawmills and logging crews; fuel prices kicking up freight expenses, not to mention hurricanes and rain flooding the roads and halting production and investor income given forestry provides income only when the trees are harvested. The war in Ukraine and crisis in the Gulf has also raised the price of inputs like fertiliser and chemicals.

Positively, Pringle and Bullock note that higher gas prices at the sawmills because of the conflict in the Gulf has triggered change.

It has hastened the switch to green energy from wood residuals. 

Sarah Rundell travelled to Pensacola, Florida on a media trip courtesy of RMS