Why “boring accounting standards” excites CEO Andrew Morgan
“If you ask two scientists about the carbon footprint of forestry in Tasmania, you’ll get four different answers. And that’s a real issue.” - Andrew Morgan, co-founder SFM
Based in Tasmania, Andrew Morgan is one of the founders of SFM, a plantation and natural asset management company. As asset managers, they are the custodians of Lenah Estate, a 27,000 hectares (270km2) of softwood plantation estate located in Southern Tasmania, and a slightly smaller holding called Limestone Estate comprising hardwood plantations located in the Green Triangle region of Victoria and South Australia and south west Western Australia. These estates are all managed for solid wood, fibre, carbon and biodiversity and a commitment has been made that all native vegetation located across the estates are excluded from production activities and instead managed for conservation purposes..
Both Lenah and Limestone Estates, are owned by funds managed by New Forests Pty Ltd, a very future-focused nature-based fund manager. Morgan explains that New Forests has raised over US$7.7 Billion in funds with investors focused on measurable outcomes like FSC (Forest Stewardship Council) certification and strong ESG. “These are non-negotiables for us at SFM to be considered as an asset manager for the likes of New Forests.”
Morgan saw what Forico, a similar player in the space who also manages landholdings on behalf of New Forests, was doing on the reporting side of things. In 2022, Forico released a world-leading natural capital report. Morgan was impressed enough to explore who they were doing carbon accounting with, and the answer was Sumday.
“The thing I like about Sumday,” Morgan explains, “is they are applying the standard of natural accounting and so are their accountants.” Morgan laughs as he continues,
“Accounting standards are really boring, but you can’t argue with a standard. If you use accounting principles, and apply the right method to see how much fuel your contractor uses, and work backwards from there, you know how much CO2 was emitted. You’re calling a spade a spade and you can’t argue with that.”
At present, there’s a huge compliance burden in the industry and that’s before any of the carbon accounting has even been mandated. SFM are already doing “an inordinate amount of reporting,” going above and beyond what’s currently required of them. The drive for Morgan is that by having measurable metrics and accurate reportings to share, the assessments can be confidently provided to impact investors looking to get on board.
Leanne Chappell, who oversees Sustainability and Compliance at SFM explains, “We would like to think the work we are undertaking today will put us on track to meet both government and societal expectations in the future.”
“We are increasingly questioned about carbon, decarbonisation, what we’re doing about it, and how we get our baseline measures,” Morgan explains that until now, the process of reporting has been pretty arbitrary, even for those seeking best practice.
Morgan continues, “Sumday’s approach provides a framework to hang our hat on. The beauty of Sumday is it will provide what we’re being asked. I really love the product’s dashboard. Prior to this my team has been pulling their hair out, but Sumday helps us from a reporting point of view.”
“We’ve got a spreadsheet full of tabs that now we have to answer questions to. Sumday makes it simpler for the team, and the more uniform we can get the measurement, the better we can use it going forward.”
The move towards accurate reporting in the space is already delivering positive change in the industry, with the first electric log truck rolled into a landholding in Mt Gambier in February 2023. For Morgan, SFM can apply Sumday’s reporting to see at what point they should start considering EVs for their own fleet, as well as a host of other positive changes. “If we are at the leading edge of impact investing, and can demonstrate what it means to be a good forest manager and a good asset manager then we get more work .”
For Morgan’s auditors, it’s not all business as usual. About six months ago he took them to an asset they manage in Pelham, about 50km from Hobart, “There’s a beautiful corridor of remnant vegetation, and a large sandstone escarpment there, with all these caves. In them is a really healthy population of Tassie Devils. One of the auditors, an ecologist, said, “You guys are managing a globally significant species, really well in the context of having a productive forest right next door. This is amazing.”
Morgan remarks there are a lot of positive stories in the forestry space that don’t get told, but he’s planning to change that. What excites Morgan is that by applying the “boring” standards that Sumday is working hard to put rigour and transparency around, then “We will be able to talk - with really clear purpose - about what our impact this year was, and then compare it to next year, to show we’ve improved”.
