Risk factors
This is an English rendering of the Dutch original published by Clearworld BV, adapted for GrowGreen. It has not been reviewed by a lawyer. Where the two differ, the Dutch original prevails, except where a note says how a GrowGreen order works; those notes apply to GrowGreen orders.
GrowGreen is operated for Clearworld BV (BE 1005.600.483), which sells the trees, pays the yearly amount and holds your contract. Buying trees lets you contribute directly to a climate solution, but it is a financial transaction with real risks. Base your purchase on the right motives, and read the factors below before you decide. You can lose part or all of what you invest.
01Natural risk, and the limits of the reserve plantations
As owner of the trees you bear the full risk of stunted growth or death from natural factors such as extreme drought, storm, fire, disease or pests. Although Clearworld BV undertakes to replace damaged trees with healthy trees from its reserve plantations, this is limited to what those reserves hold. If the reserves are exhausted, or replanting is impossible because of environmental factors, you may lose the whole of your invested capital.
02Risk that the promised payments are not made
The promised yearly return (€6 to €9 a tree a year, depending on the steps your trees reach) is a promise by Clearworld BV, not a guarantee. In the longer term it depends on the successful sale of CO₂ certificates on the voluntary market, where prices fluctuate strongly.
In the period between planting and the actual generation of certificates, payments are made from the company's reserves and from a part of the purchase price set aside for this purpose. If those reserves run out before there is sufficient income from certificates, the yearly payments will not be made.
03Risk of no buyback (loss of capital)
It is Clearworld BV's intention to buy back your tree at the end of the cycle (7 to 9 years) with the proceeds of the timber sale. However, Clearworld BV has a right to buy back, not a contractual obligation. If the timber market is unfavourable, or the company lacks sufficient liquid funds, the buyback may not happen. In that case you remain the owner of the trees, without a guaranteed buyer or a secondary market on which to recover your money.
04Counterparty risk and insolvency
Clearworld BV is highly leveraged and its land is mortgaged in favour of credit institutions. Should the company go bankrupt, those creditors are repaid first from the sale of the land. Although you are the legal owner of the trees, this offers no guarantee that your capital or return will be repaid, as the practical settlement and access to the land in an insolvency are highly uncertain.
05Liquidity risk
There is no secondary market for the trees you buy. The investment is long term (7 to 9 years). You cannot sell or cash in your trees whenever you like. Although transferring them to a third party is legally possible, there is no guarantee that you will find a buyer or recover the initial purchase price.
06Tax and legal risk
The tax treatment of the income from the payments, and of any gain on buyback, depends on your individual situation and may change in future through new legislation. Changes in the legal framework around CO₂ certificates or forestry may negatively affect the expected proceeds.
07Concentration risk
Buying trees is an investment in one specific sector and one specific counterparty. It is advisable to invest only a limited part of your available capital in this project, as part of a broadly diversified portfolio.
Every amount is promised by Clearworld, not guaranteed; you can lose all or part of what you paid.