An interview with Niks Šauva, Compliance Manager at Ingka Investments in Latvia
Ingka Investments is part of the Ingka Group, which invests in renewable resources, start-ups, financial markets, and more. A portion of these investments is in forest properties to support the Ingka Group's sustainability strategy. We are often associated with the well-known IKEA retail chain, but IKEA is a brand that brings together many companies. We are currently connected by a franchise agreement and united by shared values and a vision. In reality, the IKEA store network is just one branch of the Ingka Group.
The investment company buys forest land and forests in Latvia – it invests in these types of properties. Are you also interested in agricultural land?
Our company is involved in forest management, so our current focus is on forest land.
Is Ingka Investments a Scandinavian company?
The roots of the IKEA retail chain are in Sweden, but the headquarters of Ingka Investments is in the Netherlands. And the so-called 'forestry portfolio' includes the Baltic states, Romania, and the USA.
The Netherlands is associated with being a small, seaside kingdom, quite densely populated – we have even gifted them otters – but forests and the Netherlands certainly do not go together! Flat land, sea...
In this case, we are talking about the headquarters of Ingka Investments, which oversees many different investment projects, not just forest management. A head office does not necessarily have to be in a forest-rich country. The management of the entire 'forestry portfolio' is based in the Netherlands, setting strategic goals and analysing overall portfolio development. In turn, forest management expertise is located in each individual country, as it requires specific knowledge of each nation’s or region's forestry traditions and legislation. Therefore, forest management companies have been established in each of the aforementioned countries, employing local specialists.
How did Latvia come to be within the investment company's scope of interest? Because it is a country of forests, an EU member state, a country with long-standing forestry traditions, or some other reason?
I think it is Latvia's developed forestry traditions and investment opportunities. But the most important thing is the Ingka Group's development vision and how the Baltic states fit into that context. There could certainly be opportunities to invest in many other countries, but elsewhere there may be different limitations. Investments are based on precise calculations, and many diverse risk factors that may affect business operations in both the near and distant future are analysed.
The forest property market in Latvia is quite active. Of course, there is very high competition in the market for properties dominated by maturing and middle-aged stands. Usually, we acquire properties that require significant investment in forest regeneration and tending, but the work invested will only pay off after many years. Therefore, young growth stands predominate in our forest properties in Latvia, where we increase the value of the forest for the future through purposeful work. Our main concentration of properties is in Vidzeme and Latgale, whereas there are significantly fewer forest areas in Zemgale and Kurzeme.
A true long-term plan!
Yes! Before purchasing properties, we carry out a valuation of the present value, planning for long-term forest management, – the foundations of forest economics. We often encounter the consequences of short-term management, simple ignorance, or a lack of time. We, in turn, invest significant funds and efforts to tidy up such properties and ensure that beautiful and stable forest stands grow there in the future. Currently, we are planting more than 3 million tree seedlings a year, which are purposefully tended so that a beautiful forest will grow in the future. Situations, of course, vary. And there are also many forest owners who invest time, work, and resources in managing their forest, thus investing in themselves and future generations. I will add that good, well-maintained, properly managed forest properties reach the market much less frequently because a diligent owner does not want to get rid of the forest they have nurtured themselves!
It has been heard that your company has very strict conditions regarding the need for certification!
Yes, the company's vision and conviction is: forests must be managed sustainably, observing not only economic but also environmental and social interests! Forest certification is an opportunity to prove to ourselves that the forest is indeed being managed sustainably and in accordance with the highest standards. We have certified the forest areas we own in Latvia according to the FSC forest management standard. Given our own forest management system and understanding of it, we do not perceive forest certification as a burden, but rather as an opportunity for growth.
If we speak from a market position: can we obtain better market opportunities for timber with an FSC certificate? A little, yes.
Sustainability. A beautiful, refined word. For foresters – a word with deep meaning.
The word is used a lot in everyday language. Recently, it has been used more and more often; it is part of daily life. As I mentioned, our company's plans are long-term, and therefore sustainable!
Sustainability is not just the preservation of biodiversity, as it is often translated, but also sustainable business. Long-term thinking! If today, simply put, 'things are good', one must ensure that it is just as 'good' and even better in the future! This means that biodiversity is preserved and increased, business is successful, and social interests are respected both now and in the future. Colleagues in the company visit one another to exchange experience and evaluate forest management principles in other countries, which gives us the opportunity to adapt positive aspects to our work, as well as to see potential development opportunities in the future. In the Baltic states, forestry practices are comparable, of course with various nuances, yet in Romania and the USA, forest management is very different. Especially when getting to know Romanian forest management, where selection felling is carried out in very pronounced relief conditions, where forest stands often secure mountain slopes against landslides – very difficult conditions. This diversity allows for a broader understanding of sustainable forest management. It has also strengthened my view that clear-felling in Latvia is an appropriate and sustainable method of management, because forestry practices must be adequately adapted to the specific conditions of the relevant region – then it is sustainable. Even when talking about pine regeneration – clear-felling or sufficiently large openings are necessary to ensure the necessary sunlight for the young trees so that they can successfully grow big. I also see potential for the development of regulatory acts for selection felling in places where clear-felling is prohibited. Currently, sustainable forest management is difficult in such places.
Restrictions, which are often confused with nature conservation. Do you encounter them?
We have many properties, and we also receive notifications about micro-reserves for the lesser spotted eagle or other protected habitats. We certainly do not oppose the preservation of natural values. Even in the FSC forest certification system, one of the basic rules for forest managers is that at least 10% of forest areas should have the primary goal of preserving and increasing biodiversity. Therefore, we observe it if an expert finds something rare or protected in our forests. It is better to protect what is worth protecting rather than making something up. The question remains: what happens if this rare bird or plant has left the area? Because in nature, everything flows and changes even without human intervention. An area that is considered of high value today may lose these characteristics in 10 years. What to do then? There are many species, both plants and animals, that require or are accustomed to certain conditions, and if something suddenly changes (for example, a reserve is created in the forest and economic activities are stopped)... Overgrowth and shading appear... The environment and familiar conditions change, and the new conditions are no longer suitable for the protected natural value in this area. After evaluating specific circumstances, there should be an opportunity to resume economic activity in such areas. Overall, there are no objections to nature conservation regulations and activities in Latvia, but there are things that could be improved.