How can a green loan help to rebuild North America’s forests?

PRT Growing Services grows trees. Lots of trees. Over its 30-year history, the company has delivered 4.5 billion seedlings to help governments and timber producers replant forested areas. It has branched out from its home on Vancouver Island to become the largest producer of container-grown forest seedlings in North America, operating a network of 21 growing and cold storage facilities in the US and Canada.

At a time when the world is ramping up reforestation efforts, companies like PRT are an essential link in the sustainability chain, serving on the front line in the fight against climate change.

They can also be attractive investment opportunities.

Enter Instar Asset Management, a Toronto-based private capital firm specialising in infrastructure investments that deliver essential services across North America. Instar spotted the value in PRT, acquiring the company earlier this year and investing in its future with enhanced operations and a plan for growth.

“Improving the resilience of our forests has never been more important,” said Gregory J. Smith, President and Chief Executive Officer, Instar Asset Management. “We are excited to partner with PRT as we expand the company’s reach and bring a positive environmental impact to more communities.”

Sustainable forestry is a core component of the global push to reduce carbon emissions and combat the effects of climate change. If deforestation continues at its current rate, the impact on the environment will soon become irreversible as temperatures rise and more forest land is degraded. Even the Amazon basin now emits more CO2 than it absorbs, a group of Brazilian scientists found this year.

Reforestation, on the other hand, can reverse some of the damage and improve the outlook for the forestry industry, by creating more opportunities for sustainable cultivation and safeguarding jobs.

Canada committed in 2020 to plant 2 billion trees over 10 years to lower emissions by up to 12 megatonnes a year by 2050, part of its scaled-up climate plan to reach net zero. This year the government allocated C$3.2 billion towards the programme, to be spent over the next decade.

Globally, the World Economic Forum is promoting a campaign to conserve, restore and grow 1 trillion trees by 2030 by emphasising the need to protect the world’s natural ecosystems and the power of nature-based solutions in the fight against climate change.

Initiatives like these are raising awareness in the private sector of the need to invest in biodiversity, and the potential of nature-based investments.

“Protecting our ecosystems is not just a job for governments and the public sector. Companies like PRT prove that private stakeholders can also benefit from the transition to a more sustainable future,” said Angie Hall, Head of Sustainable Finance, Commercial Banking, at HSBC Bank Canada.

HSBC stepped forward as Green Loan Coordinator on a C$90 million Green Loan to support Instar’s acquisition and PRT’s future growth, taking responsibility for ensuring that operations complied with global market standards.

“Green financing allows innovative companies to expand their decarbonization initiatives and help mitigate the effects of climate change,” said Hall.

HSBC has committed to mobilize at least US$750 billion by 2030 to support businesses in the transition to a more climate-friendly, low-carbon future. Green loans, which fund projects with clear environmental benefits, are a key part of this target.