UB Nordic Forest Fund

a) Summary

SFDR classification*: Article 9, sustainable investment objective. The fund makes EU taxonomy aligned sustainable investments.

The fund invests in timberland and aims to mitigate climate change through its forest investments. Forests remove carbon from the atmosphere by binding it into tree growth and forest soil. When the forest fellings fall short of the forest growth, forests function as so-called carbon sinks. The use of timber from the fund's forests can also replace fossil fuels and fossil-intensive materials, thus enabling the transition to a circular economy.

Sustainable forestry is an effective solution for the removal of already released carbon from the atmosphere and a vital means of attaining the goals set in the Paris Agreement. The fund adheres to FSC® (FSC C109750) ja PEFC™ certifications and other industry best practices in sustainable forest management. The goal is to ensure the wellbeing of forests and profitable forest management also in long term. All forest properties owned by the fund in Finland are certified to FSC and PEFC standards. Foreign forests are certified either to FSC or PEFC, or both. Additionally, the fund's forest management meets the criteria of the EU taxonomy for forest management and climate change mitigation, thereby promoting climate change mitigation and aligning with the goals of the Paris Agreement. The achievement of the fund's EU taxonomy-aligned sustainability objectives and carbon sequestration is regularly monitored with carbon balance calculations. The results are reported in the fund's reporting.

Since the fund primarily invests in unlisted assets, the fund's ESG analysis and reporting are mainly based on information collected from the investment targets. The fund's responsibility analyses, and the production and monitoring of sustainability indicators utilize, among other things, forest resource data specific to the investment target and portfolio, and investigations based on them, as well as global ESG databases where possible. The fund adheres to United Bankers' principles of responsible investment.

The fund's responsibility, sustainability factors, sustainability risks, and the proportion of sustainable investments according to the EU taxonomy are reported in fund-specific reports. The fund has no benchmark index, nor an EU benchmark for climate transition or an EU benchmark for the Paris Agreement as defined in Regulation (EU) 2016/1011.

*Pursuant to EU’s Sustainable Finance Disclosure Regulation 2019/2088 (SFDR), United Bankers’ funds have been classified into three categories in terms of sustainability factors: mainstream Article 6 funds consider sustainability risks in their activities, Article 8 funds promote environmental and social characteristics alongside other characteristics. Furthermore, some of these funds are committed to having a portion of their investments in sustainable investments. The investment objective of Article 9 funds is sustainable investments.

b) No significant harm to the sustainable investment objective

This financial product makes sustainable investments. The fund's forest management considers the "Do No Significant Harm" principle. The goal is to design forest management in a way that does not cause significant harm to biodiversity, pollution prevention, transition to a circular economy, sustainable use of water and marine resources, and climate change adaptation. The fund complies with applicable environmental and forestry laws and regulations. Additionally, the fund is committed to the principles and practices of sustainable forest management according to international standards, and all of the fund's forests are certified with FSC and/or PEFC sustainable forest management certificates. The objective of the certifications is to ensure the environmental, social, and economic responsibility of forest management practices, including securing biodiversity. FSC certification, for example, requires that part of the forests be excluded from economic use to protect biodiversity. 

• Indicators Describing Principal Adverse Sustainability Impacts on Sustainability Factors: The principal adverse impacts on sustainability factors are analyzed in connection with sustainability risk analysis as part of the due diligence process before making an investment decision, monitored during the investment period, and reported regularly in the fund's reporting. The indicators for principal adverse impacts are designed for investments in companies, so their application to direct forest investments is challenging. A more detailed list of which PAI indicators are intended to be applied to direct forest investments can be found in the form provided before the agreement in accordance with the SFDR regulation (Form for information on financial products referred to in Article 9, paragraphs 1-4a of Regulation (EU) 2019/2088 and the first paragraph of Article 5 of Regulation (EU) 2020/852). United Bankers' approach to principal adverse impacts is risk-based, and for forest funds, the indicators are monitored and analyzed to the extent that they are applicable to the asset class in question. The analysis, monitoring, and reporting are primarily based on information collected from the investment targets in unlisted investment targets. In listed investment targets, data from Sustainalytics and Morningstar's sustainability databases is also utilized. The following indicators are considered in this fund, as far as data is available and the indicators are applicable to the asset class in question:

Table 1 Indicators applicable to investments in investee companies1. GHG emissions 2. Carbon footprint3. GHG intensity of investee companies4. Exposure to companies active in the fossil fuel sector 5. Share of non-renewable energy consumption and production6. Energy consumption intensity per high impact climate sector 7. Activities negatively affecting biodiversity-sensitive areas8. Emissions to water9. Hazardous waste and radioactive waste ratio10. Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises 11. Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises12. Unadjusted gender pay gap13. Board gender diversity14. Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)

Table 2 Indicators applicable to investments in investee companies14.Natural species and protected areas 

Table 3 Indicators applicable to investments in investee companies9. Lack of human rights policy

• Good governance is assessed in investment targets by examining compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights as part of the due diligence process before making an investment decision. Compliance with these norms is monitored during the investment period and reported in the fund's regular reporting. The analysis, monitoring, and reporting are based on data from Sustainalytics and Morningstar's sustainability databases (Global Standards Screening) for listed investment targets, and on information collected during the due diligence processes for unlisted investment targets. The fund does not invest in targets that violate the aforementioned norms and conventions. If a norm violation occurs during the investment period, the fund seeks to remedy the situation within a reasonable timeframe. If it is not possible to remedy the situation within a reasonable timeframe, the investment is exited.

c) Sustainable investment objective of the financial product

The fund aims to make sustainable investments. The goal is to promote climate change mitigation through sustainable forest investments that meet the criteria of the EU taxonomy. Additionally, the timber produced in the fund's forests can facilitate the transition to a circular economy.

The fund invests in timberland and aims to sequester carbon dioxide from the atmosphere into growing trees, forest soil, and sustainable wood products. Furthermore, the use of timber grown in the fund's forests can partially replace fossil fuels and fossil-intensive materials. The fund's forests are managed to function as carbon sinks over the long term. Sustainable forestry is an effective solution for removing already emitted carbon from the atmosphere and an important means of achieving the goals of the Paris Agreement. The fund's forest management is designed using 30-year carbon balance models to ensure that the forests sequester more carbon than usual.

The fund's strategy supports climate change mitigation and promotes several UN Sustainable Development Goals, particularly Goal 13: Climate Action, Goal 15: Life on Land, and Goal 9: Industry, Innovation, and Infrastructure.

d) Investment strategy

The assets of the UB Nordic Forest Fund III are invested directly or indirectly primarily in forest properties located in the Baltic region. A maximum of 10% of the funds can be invested in other European countries. The primary means for generating returns is the sales of timber from the forest properties being invested in. For this reason, the investment activities focus on properties with potential for value appreciation as a result of tree growth and positive climate impact, as well as steady cash flow from the felling income. The Fund may also invest in units of jointly owned forests, other timberland funds as well as securities of forest companies, or otherwise indirectly in forest properties. Revenue may additionally be generated through developing and zoning forest properties as well as by utilizing the soil materials and potential recreational values. 

In selecting the fund's investment targets, it is ensured that the targets promote climate change mitigation in accordance with the fund's sustainable investment objective. The fund aims to sequester carbon dioxide from the atmosphere into growing trees, forest soil, and sustainable wood products through its forest investments. Additionally, the use of timber grown in the fund's forests can partially replace fossil fuels and fossil-intensive materials. The fund's goal is to manage forests so that they function as long-term carbon sinks and qualify as sustainable investments under the EU taxonomy, or to invest in forests whose management meets the criteria set in the EU taxonomy for significant advancement in forest management and climate change mitigation. When the fund's forest fellings are less than the forest growth, the forests act as so-called carbon sinks. Furthermore, the fund aims to maintain the biodiversity of its forests and to increase the natural values of the forest portfolio in the long term alongside the climate perspective, thereby enhancing the portfolio's potential for natural values and climate resilience.

The Fund does not invest in targets that are on United Bankers' exclusion list. The exclusion list is available at Responsible investing.

Good governance in investment targets is assessed by examining compliance with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the conventions and declarations under both, as part of the due diligence process before making an investment decision. Compliance with these norms is monitored during the investment period and reported in the fund's regular reporting. The analysis, monitoring, and reporting are based on data from Sustainalytics and Morningstar's sustainability databases for listed investment targets, and on information collected from the investment targets during the due diligence processes for unlisted targets. The fund does not invest in targets that violate the aforementioned norms and conventions. If a norm violation occurs during the investment period, the fund seeks to influence the company to rectify the situation within a reasonable timeframe. If it is not possible to rectify the situation within a reasonable timeframe, the investment is exited.

More information about the investment strategy: UB Nordic Forest Fund 

e) Proportion of investments

In the planned allocation of assets, at least 95% of the fund's investments are made in sustainable economic activities that have an environmental objective in accordance with the EU taxonomy and are aligned with the goals of the Paris Agreement. In practice, the fund makes sustainable forest investments that meet the criteria of the EU taxonomy.

Additionally, revenue can be generated through activities such as developing and zoning forest properties, as well as utilizing their soil materials and potential recreational values. These activities account for less than 5% of the fund's investments under normal market conditions and may not necessarily meet the criteria for sustainable investment or the EU taxonomy sustainability criteria. Furthermore, the fund's investments that are classified as non-sustainable include the fund's cash holdings or equivalents.

f) Monitoring of sustainable investment objective

The attainment of the fund's sustainable investment objective is measured using sustainability indicators that describe the achievement of the fund's sustainability objective. The achievement of the fund's sustainability objectives is monitored by tracking the development of the fund's forest carbon sink through regular carbon balance calculations. The results of these calculations are reported in the fund's reporting. The fund's forest management is designed using 30-year carbon balance models to ensure that the fund's forests sequester more carbon than usual. Annual carbon balance calculations, as well as long-term carbon balance modeling and reporting, are conducted according to the best international practices, which are continuously evolving. The fund reports several sustainability indicators annually, including the forest carbon sink, the area of FSC and PEFC-certified forests, the area of forests excluded from economic use, various types of protected areas, and biodiversity-related indicators, as well as the proportion of sustainable investments according to the EU taxonomy. In addition, the fund may report other indicators that describe the impacts of the fund's investment targets.

United Bankers monitors the fund's sustainability indicators. The fund's portfolio management and ESG experts, as well as United Bankers' Sustainability Steering Group, regularly monitor the development of the fund's sustainability indicators. Additionally, the fund's sustainability risks, and their development and changes are monitored in accordance with United Bankers' guidelines for managing sustainability risks. United Bankers reports on the achievement of the fund's sustainable investment objective, as well as the development of sustainability indicators and sustainability risks, annually in fund-specific reports.

g) Methodologies

The attainment of the fund's sustainable investment objective is measured using sustainability indicators that describe the achievement of the fund's sustainability objective. The selection of sustainability indicators for the investment targets and the fund's portfolio is based on the best international practices in impact investing, as defined in the Operating Principles for Impact Management (OPIM) and the IRIS+ recommendations and methods for measuring investment impact. Additionally, the proportion of sustainable investments and investments aligned with the EU taxonomy in the portfolio is monitored and reported according to the criteria and indicators set out in the EU SFDR regulation.

The achievement of the fund's sustainable investment objective is monitored by examining the development of the fund's forest carbon sink and the sustainability indicators describing sustainable forest management practices. The indicators used for monitoring include forest carbon sinks (annual carbon sink (t/CO2/ha/y), forest carbon stock (tCO2)), the area and proportion of FSC and PEFC certified forests, and the area of protected forests. Additionally, biodiversity-related indicators and other indicators describing the impacts of investments may be reported. The fund's carbon balance modeling ensures that the fund's forest management sequesters more carbon in the long term compared to conventional forest management. Forest certifications ensure that forest management is environmentally, socially, and economically responsible.

The fund's forest carbon accounting methods follow general good practices for estimating forest carbon emissions and removals, which currently rely heavily on the IPCC Guidelines for National GHG Inventories. The modeling of biomass and soil carbon stock growth generally meets the highest level of accuracy requirements. Similarly, supply chain emissions are generally estimated according to the IPCC practice of combining activity data with relevant emission factors. The calculations utilize published peer-reviewed modeling methods, the fund's forest resource data, and the latest available national forest inventory data and statistics.

For unlisted investment targets, the sustainability indicator data is based on information collected from the investment targets. In direct forest investments, the sustainability indicator data is based on the forest resource data of the investment targets and the portfolio, and the calculations made based on it. The data is collected from the investment targets during the due diligence assessment of each investment before the investment, and the development of the data is monitored annually during the investment period. For listed investment targets, the fund's ESG analysis and reporting use investment target-specific ESG data from global ESG databases (Sustainalytics and Morningstar). The sustainability indicator data is calculated and reported for all investment targets according to the fund's ownership share.

The methods and practices related to the fund's sustainability indicators are continuously developed, and the calculation principles used, and the data coverage of the reporting are described in the fund's reports for each reported indicator.

h) Data sources and processing

The analysis, monitoring, and reporting of environmental and social characteristics rely primarily on forest resource data and data collected from the sites. The forest carbon accounting methodology follows the good practices in estimating forest carbon sequestration and emissions, which currently rely heavily on the IPCC Guidelines for National GHG Accounting (2006, 2019). The modeling of biomass and soil carbon stock growth generally meets the highest level of accuracy requirements (Tier 3) according to the IPCC guidelines. Similarly, the calculation of fossil emissions generally follows the IPCC practice, where emissions are determined by emission factors. The models used for describing the standing stock and its development are based on articles published in scientific journals and the results of the National Forest Inventory (NFI). More information about the methods is available from the fund's portfolio managers.

Additionally, the fund utilizes, where possible, data from Sustainalytics and Morningstar's sustainability databases, as well as information published by the Carbon Disclosure Project initiative on carbon emissions and climate targets. Other sources of information deemed of good quality by United Bankers may also be used to support portfolio management.

To ensure data quality, global reputable sustainability databases and analysis methods, as well as reputable high-skilled energy sector experts or expert organizations, are used. United Bankers aims to ensure that the data providers it uses have accurate and standardized processes in place to ensure data quality and correct erroneous data. When selecting new data packages and service providers, United Bankers conducts a thorough comparison and analysis of the data quality, coverage, methodology, and reliability of different providers. Typically, many different entities collect and produce ESG data on the fund's real estate targets, and United Bankers aims to ensure data quality by requiring uniform international methods from different service providers. If necessary, United Bankers may also seek to ensure data quality and accuracy by cross-checking data between different sources.

The data is processed carefully in the information systems of United Bankers and the ESG service providers. In data processing, it is ensured that the data used is accurately reflected in the fund's reporting by cross-checking the reported data and the data contained in the sources. The proportion of data evaluated depends on the sustainability indicator and the sustainability factor being examined, and it is not possible to unambiguously define the proportion of evaluated data of all sustainability data as a whole. In cases where reported data is available, reported data is primarily used. If reported data is not available, data produced by the ESG service provider or based on estimates made according to international good practices may be used. The reporting aims to transparently present the data coverage and data sources on which the reporting, monitoring, and analyses are based.

i) Limitations to methodologies and data

The methods and data sources for carbon balance modeling of forests are constantly evolving. The fund seeks to follow the best international practices. It is possible to evaluate the attainment of environmental and social objectives only based on available information and using currently available methodologies. The updates of baseline information and development of analysis methods can both affect the analysis and reporting.

The promotion of environmental and social characteristics of the investment can only be assessed based on available information or by utilizing estimates based on international best practices for similar targets. Since the data collected from the sites is primarily based on the forest resource data of the investment targets and the models based on them, they may not necessarily reflect the future ESG performance or future ESG risks of the investments. Both the coverage and timeliness of the data, as well as the accuracy and reliability of the modeling methods used, can affect the analysis and reporting.

The fund's reporting aims to present time series of relevant indicators, allowing the development of sustainability indicators and the promotion of sustainability factors to be monitored over time, thus tracking the attainment of the desired characteristics also in the long term. The reporting aims to transparently present the data coverage, data sources, and methodologies on which the reporting and monitoring are based. To mitigate the limitations of data sources, we ensure that due diligence measures are applied to data providers and data collection, and the quality of the data is monitored, and the data sources used are selected and developed by United Bankers.

j) Due diligence

For the fund's investment targets, appropriate due diligence is followed, and each investment target is carefully evaluated before making an investment decision. In this context, the risks and opportunities related to the potential investment target are carefully examined, including from the perspective of sustainability factors and sustainability risks. During due diligence, the suitability of the investment for United Bankers' principles for responsible investment, as well as the fund's investment strategy and objectives, sustainability risks, principal adverse impacts, the investment's characteristics from a climate perspective, compliance with the EU taxonomy, adherence to good governance practices, and compliance with international norms are typically assessed. The investigation and its documentation follow United Bankers' internal guidelines for conducting due diligence.

k) Engagement policies

The fund engages with its investments as an active owner, for example, by planning the forest management activities at the forest properties. The fund adheres to United Bankers' stewardship principles, which take into account responsibility aspects. These principles and the related reporting are published on United Bankers' website: Sustainability.

The fund participates in United Bankers' general engagement activities, provided that the fund's investment targets fit the target groups of the engagement activities. These include, among others, the Carbon Disclosure Project (CDP) campaign, through which United Bankers encourages companies to increase transparency in climate and environmental reporting and to set science-based climate targets in line with the SBTi initiative.

Engagement activities are reported annually as part of the fund's regular sustainability reporting. Additionally, engagement activities are reported annually as part of United Bankers' reporting on the implementation of stewardship principles.

Further information on stewardship and engagement activities: Responsible Investing

l) Attainment of the sustainable investment objective

The objective of the fund is to mitigate climate change by binding carbon dioxide from the atmosphere into the forests of the fund. In other words, the fund focuses on enhancing greenhouse gas removals. For this reason, the fund has no benchmark index, and no EU Climate Transition Benchmark or EU Paris-aligned Benchmark as defined in Article 3, points (23a) and (23b), of Regulation (EU) 2016/1011. The alignment of the fund with the goals of the Paris Agreement is ensured by making sustainable investments that meet the EU taxonomy criteria for forest management and climate change mitigation. 

a) Summary

SFDR classification*: Article 9, sustainable investment objective. The fund makes EU taxonomy aligned sustainable investments.

The fund invests in timberland and aims to mitigate climate change through its forest investments. Forests remove carbon from the atmosphere by binding it into tree growth and forest soil. When the forest fellings fall short of the forest growth, forests function as so-called carbon sinks. The use of timber from the fund's forests can also replace fossil fuels and fossil-intensive materials, thus enabling the transition to a circular economy.

Sustainable forestry is an effective solution for the removal of already released carbon from the atmosphere and a vital means of attaining the goals set in the Paris Agreement. The fund adheres to FSC® (FSC C109750) ja PEFC™ certifications and other industry best practices in sustainable forest management. The goal is to ensure the wellbeing of forests and profitable forest management also in long term. All forest properties owned by the fund in Finland are certified to FSC and PEFC standards. Foreign forests are certified either to FSC or PEFC, or both. Additionally, the fund's forest management meets the criteria of the EU taxonomy for forest management and climate change mitigation, thereby promoting climate change mitigation and aligning with the goals of the Paris Agreement. The achievement of the fund's EU taxonomy-aligned sustainability objectives and carbon sequestration is regularly monitored with carbon balance calculations. The results are reported in the fund's reporting.

Since the fund primarily invests in unlisted assets, the fund's ESG analysis and reporting are mainly based on information collected from the investment targets. The fund's responsibility analyses, and the production and monitoring of sustainability indicators utilize, among other things, forest resource data specific to the investment target and portfolio, and investigations based on them, as well as global ESG databases where possible. The fund adheres to United Bankers' principles of responsible investment.

The fund's responsibility, sustainability factors, sustainability risks, and the proportion of sustainable investments according to the EU taxonomy are reported in fund-specific reports. The fund has no benchmark index, nor an EU benchmark for climate transition or an EU benchmark for the Paris Agreement as defined in Regulation (EU) 2016/1011.

*Pursuant to EU’s Sustainable Finance Disclosure Regulation 2019/2088 (SFDR), United Bankers’ funds have been classified into three categories in terms of sustainability factors: mainstream Article 6 funds consider sustainability risks in their activities, Article 8 funds promote environmental and social characteristics alongside other characteristics. Furthermore, some of these funds are committed to having a portion of their investments in sustainable investments. The investment objective of Article 9 funds is sustainable investments.

b) No significant harm to the sustainable investment objective

This financial product makes sustainable investments. The fund's forest management considers the "Do No Significant Harm" principle. The goal is to design forest management in a way that does not cause significant harm to biodiversity, pollution prevention, transition to a circular economy, sustainable use of water and marine resources, and climate change adaptation. The fund complies with applicable environmental and forestry laws and regulations. Additionally, the fund is committed to the principles and practices of sustainable forest management according to international standards, and all of the fund's forests are certified with FSC and/or PEFC sustainable forest management certificates. The objective of the certifications is to ensure the environmental, social, and economic responsibility of forest management practices, including securing biodiversity. FSC certification, for example, requires that part of the forests be excluded from economic use to protect biodiversity. 

• Indicators Describing Principal Adverse Sustainability Impacts on Sustainability Factors: The principal adverse impacts on sustainability factors are analyzed in connection with sustainability risk analysis as part of the due diligence process before making an investment decision, monitored during the investment period, and reported regularly in the fund's reporting. The indicators for principal adverse impacts are designed for investments in companies, so their application to direct forest investments is challenging. A more detailed list of which PAI indicators are intended to be applied to direct forest investments can be found in the form provided before the agreement in accordance with the SFDR regulation (Form for information on financial products referred to in Article 9, paragraphs 1-4a of Regulation (EU) 2019/2088 and the first paragraph of Article 5 of Regulation (EU) 2020/852). United Bankers' approach to principal adverse impacts is risk-based, and for forest funds, the indicators are monitored and analyzed to the extent that they are applicable to the asset class in question. The analysis, monitoring, and reporting are primarily based on information collected from the investment targets in unlisted investment targets. In listed investment targets, data from Sustainalytics and Morningstar's sustainability databases is also utilized. The following indicators are considered in this fund, as far as data is available and the indicators are applicable to the asset class in question:

Table 1 Indicators applicable to investments in investee companies1. GHG emissions 2. Carbon footprint3. GHG intensity of investee companies4. Exposure to companies active in the fossil fuel sector 5. Share of non-renewable energy consumption and production6. Energy consumption intensity per high impact climate sector 7. Activities negatively affecting biodiversity-sensitive areas8. Emissions to water9. Hazardous waste and radioactive waste ratio10. Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises 11. Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises12. Unadjusted gender pay gap13. Board gender diversity14. Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)

Table 2 Indicators applicable to investments in investee companies14.Natural species and protected areas 

Table 3 Indicators applicable to investments in investee companies9. Lack of human rights policy

• Good governance is assessed in investment targets by examining compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights as part of the due diligence process before making an investment decision. Compliance with these norms is monitored during the investment period and reported in the fund's regular reporting. The analysis, monitoring, and reporting are based on data from Sustainalytics and Morningstar's sustainability databases (Global Standards Screening) for listed investment targets, and on information collected during the due diligence processes for unlisted investment targets. The fund does not invest in targets that violate the aforementioned norms and conventions. If a norm violation occurs during the investment period, the fund seeks to remedy the situation within a reasonable timeframe. If it is not possible to remedy the situation within a reasonable timeframe, the investment is exited.

c) Sustainable investment objective of the financial product

The fund aims to make sustainable investments. The goal is to promote climate change mitigation through sustainable forest investments that meet the criteria of the EU taxonomy. Additionally, the timber produced in the fund's forests can facilitate the transition to a circular economy.

The fund invests in timberland and aims to sequester carbon dioxide from the atmosphere into growing trees, forest soil, and sustainable wood products. Furthermore, the use of timber grown in the fund's forests can partially replace fossil fuels and fossil-intensive materials. The fund's forests are managed to function as carbon sinks over the long term. Sustainable forestry is an effective solution for removing already emitted carbon from the atmosphere and an important means of achieving the goals of the Paris Agreement. The fund's forest management is designed using 30-year carbon balance models to ensure that the forests sequester more carbon than usual.

The fund's strategy supports climate change mitigation and promotes several UN Sustainable Development Goals, particularly Goal 13: Climate Action, Goal 15: Life on Land, and Goal 9: Industry, Innovation, and Infrastructure.

d) Investment strategy

The assets of the UB Nordic Forest Fund IV are invested directly or indirectly primarily in forest properties located in the Baltic Rim region. The fund can invest also in other European countries. A maximum of 20% of the forest holdings of the fund can be outside Europe. The primary means for generating returns is sustainable forestry and the sales of timber from the forest properties being invested in. For this reason, the investment activities focus on properties with potential for value appreciation as a result of tree growth and positive climate impact, as well as steady cash flow from the felling income. The Fund may also invest in forest indirectly by investing for example in other timberland funds as well as securities of forest companies. Revenue may additionally be generated through developing and zoning forest properties as well as by utilising the soil materials and potential recreational values.

In selecting the fund's investment targets, it is ensured that the targets promote climate change mitigation in accordance with the fund's sustainable investment objective. The fund aims to sequester carbon dioxide from the atmosphere into growing trees, forest soil, and sustainable wood products through its forest investments. Additionally, the use of timber grown in the fund's forests can partially replace fossil fuels and fossil-intensive materials. The fund's goal is to manage forests so that they function as long-term carbon sinks and qualify as sustainable investments under the EU taxonomy, or to invest in forests whose management meets the criteria set in the EU taxonomy for significant advancement in forest management and climate change mitigation. When the fund's forest fellings are less than the forest growth, the forests act as so-called carbon sinks. Furthermore, the fund aims to maintain the biodiversity of its forests and to increase the natural values of the forest portfolio in the long term alongside the climate perspective, thereby enhancing the portfolio's potential for natural values and climate resilience.

The Fund does not invest in targets that are on United Bankers' exclusion list. The exclusion list is available at Responsible investing.

Good governance in investment targets is assessed by examining compliance with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the conventions and declarations under both, as part of the due diligence process before making an investment decision. Compliance with these norms is monitored during the investment period and reported in the fund's regular reporting. The analysis, monitoring, and reporting are based on data from Sustainalytics and Morningstar's sustainability databases for listed investment targets, and on information collected from the investment targets during the due diligence processes for unlisted targets. The fund does not invest in targets that violate the aforementioned norms and conventions. If a norm violation occurs during the investment period, the fund seeks to influence the company to rectify the situation within a reasonable timeframe. If it is not possible to rectify the situation within a reasonable timeframe, the investment is exited.

More information about the investment strategy: UB Nordic Forest Fund

e) Proportion of investments

In the planned allocation of assets, at least 95% of the fund's investments are made in sustainable economic activities that have an environmental objective in accordance with the EU taxonomy and are aligned with the goals of the Paris Agreement. In practice, the fund makes sustainable forest investments that meet the criteria of the EU taxonomy.

Additionally, revenue can be generated through activities such as developing and zoning forest properties, as well as utilizing their soil materials and potential recreational values. These activities account for less than 5% of the fund's investments under normal market conditions and may not necessarily meet the criteria for sustainable investment or the EU taxonomy sustainability criteria. Furthermore, the fund's investments that are classified as non-sustainable include the fund's cash holdings or equivalents.

f) Monitoring of sustainable investment objective

The attainment of the fund's sustainable investment objective is measured using sustainability indicators that describe the achievement of the fund's sustainability objective. The achievement of the fund's sustainability objectives is monitored by tracking the development of the fund's forest carbon sink through regular carbon balance calculations. The results of these calculations are reported in the fund's reporting. The fund's forest management is designed using 30-year carbon balance models to ensure that the fund's forests sequester more carbon than usual. Annual carbon balance calculations, as well as long-term carbon balance modeling and reporting, are conducted according to the best international practices, which are continuously evolving. The fund reports several sustainability indicators annually, including the forest carbon sink, the area of FSC and PEFC-certified forests, the area of forests excluded from economic use, various types of protected areas, and biodiversity-related indicators, as well as the proportion of sustainable investments according to the EU taxonomy. In addition, the fund may report other indicators that describe the impacts of the fund's investment targets.

United Bankers monitors the fund's sustainability indicators. The fund's portfolio management and ESG experts, as well as United Bankers' Sustainability Steering Group, regularly monitor the development of the fund's sustainability indicators. Additionally, the fund's sustainability risks, and their development and changes are monitored in accordance with United Bankers' guidelines for managing sustainability risks. United Bankers reports on the achievement of the fund's sustainable investment objective, as well as the development of sustainability indicators and sustainability risks, annually in fund-specific reports.

g) Methodologies

The attainment of the fund's sustainable investment objective is measured using sustainability indicators that describe the achievement of the fund's sustainability objective. The selection of sustainability indicators for the investment targets and the fund's portfolio is based on the best international practices in impact investing, as defined in the Operating Principles for Impact Management (OPIM) and the IRIS+ recommendations and methods for measuring investment impact. Additionally, the proportion of sustainable investments and investments aligned with the EU taxonomy in the portfolio is monitored and reported according to the criteria and indicators set out in the EU SFDR regulation.

The achievement of the fund's sustainable investment objective is monitored by examining the development of the fund's forest carbon sink and the sustainability indicators describing sustainable forest management practices. The indicators used for monitoring include forest carbon sinks (annual carbon sink (t/CO2/ha/y), forest carbon stock (tCO2)), the area and proportion of FSC and PEFC certified forests, and the area of protected forests. Additionally, biodiversity-related indicators and other indicators describing the impacts of investments may be reported. The fund's carbon balance modeling ensures that the fund's forest management sequesters more carbon in the long term compared to conventional forest management. Forest certifications ensure that forest management is environmentally, socially, and economically responsible.

The fund's forest carbon accounting methods follow general good practices for estimating forest carbon emissions and removals, which currently rely heavily on the IPCC Guidelines for National GHG Inventories. The modeling of biomass and soil carbon stock growth generally meets the highest level of accuracy requirements. Similarly, supply chain emissions are generally estimated according to the IPCC practice of combining activity data with relevant emission factors. The calculations utilize published peer-reviewed modeling methods, the fund's forest resource data, and the latest available national forest inventory data and statistics.

For unlisted investment targets, the sustainability indicator data is based on information collected from the investment targets. In direct forest investments, the sustainability indicator data is based on the forest resource data of the investment targets and the portfolio, and the calculations made based on it. The data is collected from the investment targets during the due diligence assessment of each investment before the investment, and the development of the data is monitored annually during the investment period. For listed investment targets, the fund's ESG analysis and reporting use investment target-specific ESG data from global ESG databases (Sustainalytics and Morningstar). The sustainability indicator data is calculated and reported for all investment targets according to the fund's ownership share.

The methods and practices related to the fund's sustainability indicators are continuously developed, and the calculation principles used, and the data coverage of the reporting are described in the fund's reports for each reported indicator.

h) Data sources and processing

The analysis, monitoring, and reporting of environmental and social characteristics rely primarily on forest resource data and data collected from the sites. The forest carbon accounting methodology follows the good practices in estimating forest carbon sequestration and emissions, which currently rely heavily on the IPCC Guidelines for National GHG Accounting (2006, 2019). The modeling of biomass and soil carbon stock growth generally meets the highest level of accuracy requirements (Tier 3) according to the IPCC guidelines. Similarly, the calculation of fossil emissions generally follows the IPCC practice, where emissions are determined by emission factors. The models used for describing the standing stock and its development are based on articles published in scientific journals and the results of the National Forest Inventory (NFI). More information about the methods is available from the fund's portfolio managers.

Additionally, the fund utilizes, where possible, data from Sustainalytics and Morningstar's sustainability databases, as well as information published by the Carbon Disclosure Project initiative on carbon emissions and climate targets. Other sources of information deemed of good quality by United Bankers may also be used to support portfolio management.

To ensure data quality, global reputable sustainability databases and analysis methods, as well as reputable high-skilled energy sector experts or expert organizations, are used. United Bankers aims to ensure that the data providers it uses have accurate and standardized processes in place to ensure data quality and correct erroneous data. When selecting new data packages and service providers, United Bankers conducts a thorough comparison and analysis of the data quality, coverage, methodology, and reliability of different providers. Typically, many different entities collect and produce ESG data on the fund's real estate targets, and United Bankers aims to ensure data quality by requiring uniform international methods from different service providers. If necessary, United Bankers may also seek to ensure data quality and accuracy by cross-checking data between different sources.

The data is processed carefully in the information systems of United Bankers and the ESG service providers. In data processing, it is ensured that the data used is accurately reflected in the fund's reporting by cross-checking the reported data and the data contained in the sources. The proportion of data evaluated depends on the sustainability indicator and the sustainability factor being examined, and it is not possible to unambiguously define the proportion of evaluated data of all sustainability data as a whole. In cases where reported data is available, reported data is primarily used. If reported data is not available, data produced by the ESG service provider or based on estimates made according to international good practices may be used. The reporting aims to transparently present the data coverage and data sources on which the reporting, monitoring, and analyses are based.

i) Limitations to methodologies and data

The methods and data sources for carbon balance modeling of forests are constantly evolving. The fund seeks to follow the best international practices. It is possible to evaluate the attainment of environmental and social objectives only based on available information and using currently available methodologies. The updates of baseline information and development of analysis methods can both affect the analysis and reporting.

The promotion of environmental and social characteristics of the investment can only be assessed based on available information or by utilizing estimates based on international best practices for similar targets. Since the data collected from the sites is primarily based on the forest resource data of the investment targets and the models based on them, they may not necessarily reflect the future ESG performance or future ESG risks of the investments. Both the coverage and timeliness of the data, as well as the accuracy and reliability of the modeling methods used, can affect the analysis and reporting.

The fund's reporting aims to present time series of relevant indicators, allowing the development of sustainability indicators and the promotion of sustainability factors to be monitored over time, thus tracking the attainment of the desired characteristics also in the long term. The reporting aims to transparently present the data coverage, data sources, and methodologies on which the reporting and monitoring are based. To mitigate the limitations of data sources, we ensure that due diligence measures are applied to data providers and data collection, and the quality of the data is monitored, and the data sources used are selected and developed by United Bankers.

j) Due diligence

For the fund's investment targets, appropriate due diligence is followed, and each investment target is carefully evaluated before making an investment decision. In this context, the risks and opportunities related to the potential investment target are carefully examined, including from the perspective of sustainability factors and sustainability risks. During due diligence, the suitability of the investment for United Bankers' principles for responsible investment, as well as the fund's investment strategy and objectives, sustainability risks, principal adverse impacts, the investment's characteristics from a climate perspective, compliance with the EU taxonomy, adherence to good governance practices, and compliance with international norms are typically assessed. The investigation and its documentation follow United Bankers' internal guidelines for conducting due diligence.

k) Engagement policies

The fund engages with its investments as an active owner, for example, by planning the forest management activities at the forest properties. The fund adheres to United Bankers' stewardship principles, which take into account responsibility aspects. These principles and the related reporting are published on United Bankers' website: Sustainability.

The fund participates in United Bankers' general engagement activities, provided that the fund's investment targets fit the target groups of the engagement activities. These include, among others, the Carbon Disclosure Project (CDP) campaign, through which United Bankers encourages companies to increase transparency in climate and environmental reporting and to set science-based climate targets in line with the SBTi initiative.

Engagement activities are reported annually as part of the fund's regular sustainability reporting. Additionally, engagement activities are reported annually as part of United Bankers' reporting on the implementation of stewardship principles.

Further information on stewardship and engagement activities: Responsible Investing

l) Attainment of the sustainable investment objective

The objective of the fund is to mitigate climate change by binding carbon dioxide from the atmosphere into the forests of the fund. In other words, the fund focuses on enhancing greenhouse gas removals. For this reason, the fund has no benchmark index, and no EU Climate Transition Benchmark or EU Paris-aligned Benchmark as defined in Article 3, points (23a) and (23b), of Regulation (EU) 2016/1011. The alignment of the fund with the goals of the Paris Agreement is ensured by making sustainable investments that meet the EU taxonomy criteria for forest management and climate change mitigation.