- The transaction is the largest known carbon dioxide removal credit transaction to date, according to MSCI Carbon Markets data
- The credits will be delivered from the BTG Pactual Timberland Investment Group’s $1 billion reforestation and restoration strategy in Latin America, for which Conservation International serves as Impact Adviser
- The transaction highlights the significant potential for restoration in Latin America to deliver climate impact alongside benefits for biodiversity and communities
New York, NY. – JUNE 18, 2024 – Today, the BTG Pactual Timberland Investment Group (TIG) announced the execution of a carbon offset credit transaction with Microsoft. Under the terms of the agreement, TIG will provide Microsoft with up to 8 million nature-based carbon removal credits through 2043.
The transaction is the largest known carbon dioxide removal credit transaction to date, according to MSCI Carbon Markets data. The credits will be delivered from TIG’s $1 billion reforestation and restoration strategy in Latin America, for which Conservation International serves as Impact Adviser to help TIG achieve positive environmental, climate, and social impacts.
The strategy focuses on the conservation, restoration, and planting of deforested and degraded properties in selected regions in Latin America, including the Cerrado biome in Brazil, one of the most biodiverse seasonally dry ecosystems in the world. Approximately half of the Cerrado has already been converted to other uses, and the biome continues to face high rates of commodity-driven deforestation.
With Conservation International’s support, the strategy aims to protect and restore approximately 135,000 hectares (more than 330,000 acres) of natural forests in deforested landscapes. The strategy also seeks to plant millions of trees in sustainably managed commercial tree farms, independently certified to Forest Stewardship Council (FSC)™ standards, on another approximately 135,000 hectares of previously deforested and degraded land. To date, TIG has invested in 37 thousand hectares, and has already planted more than 7 million seedlings and initiated restoration of approximately 2,600 hectares of natural forest.
“From its inception, we have aimed to break new ground with this strategy, both in terms of scale and impact. We are proud to work with industry leaders like Microsoft, who are committed to purchasing high-quality removal credits and retiring them as part of a comprehensive corporate decarbonization strategy. Microsoft’s leadership has helped build the high-integrity carbon offset market. They are blazing a trail that other companies can follow,” said Mark Wishnie, Chief Sustainability Officer of TIG and head of the firm’s reforestation strategy.
“Institutional investors have a critical role to play in delivering nature-based solutions at a scale that matters for climate and biodiversity. The scale of the native forest restoration and sustainable timber production that TIG seeks to deliver with our reforestation strategy is what enables a carbon removal credit transaction of this size,” said Gerrity Lansing, Head of TIG.
“This commitment from Microsoft is proof positive that we don’t have to compromise our future for our balance sheets. We can restore degraded tropical forests and remove carbon at scale; we can mobilize private capital; and we can protect nature without abandoning economic production — enhancing our biodiversity, livelihoods, and climate all at once,” said Dr. M. Sanjayan, CEO of Conservation International. “This is a new era for conservation, and we should applaud both Timberland Investment Group for scaling new ideas and Microsoft for embracing this vision. If we continue to embrace innovation with a clear focus on integrity, our planet, our communities, and our businesses will all benefit.”
This purchase is part of Microsoft’s ambitious commitment to be carbon negative by 2030, and by 2050 to remove from the environment all historical operational emissions since the company was founded in 1975. Microsoft has a portfolio of negative emission technologies including carbon removal credits (see: Microsoft will be carbon negative by 2030 – The Official Microsoft Blog).
“Advancement towards Microsoft’s carbon negative goals necessitates innovative projects that can swiftly and sustainably scale carbon removal. This project exemplifies how reforestation and restoration can deliver carbon removal at scale while supporting local communities and restoring vital ecosystems. This approach will attract investment to the conservation space and help scale carbon removal in line with what climate science demands”, stated Brian Marrs, Senior Director for Energy & Carbon Removal at Microsoft.
“The scale of this undertaking demonstrates the potential that exists in Brazil and other Latin American countries to deliver significant climate benefits, while also supporting vibrant rural economies. With the UN biodiversity summit coming up this year in Colombia, and the UN climate summit taking place next year in Brazil, there is a real opportunity to demonstrate leadership on the global stage. We look forward to continuing to work with both public and private stakeholders to expand the impact of this strategy and to align with emerging jurisdictional programs where applicable,” Wishnie said.
“Companies like Microsoft are showing us what corporate climate leadership looks like. Rather than stepping back from action, they have remained firm in their commitment to not only identify and support projects that can generate high-integrity carbon credits, but to support the growth of the high-integrity carbon market in Brazil and other countries in the region, which can make a big impact for the climate,” Wishnie added.
TIG and Conservation International work together to ensure the strategy enhances biodiversity and supports inclusive and equitable community development.
To date, more than 297 species have been identified on the strategy’s first property, where a new 400-meter-wide riparian buffer is expected to create a nearly 5-kilometer corridor to a large neighboring natural forest, ultimately connecting nearly 10,000 hectares of natural habitat. TIG has also launched a multi-year research program with the University of Viçosa to study Cerrado restoration techniques. Under this agreement, TIG has installed an 81-hectare field experiment to understand the efficacy of different restoration methods, including assisted natural regeneration, direct seeding and native seedling planting. This research should not only inform TIG’s strategy, but also support other restoration efforts in the region.
TIG is also conducting trainings with local communities on seed collection to support the restoration of native species. In September 2023, TIG collaborated with the Mato Grosso do Sul Native Seed Network to provide native tree seed collection training for nearby community members. Seed collection can provide new sources of income by supplying a growing restoration market.
The generation of carbon credits forms part of the strategy’s climate impact, in addition to managing the tree farms on long rotations to store more carbon and produce large diameter logs that can be used for long-lived products. The carbon projects, which have not yet been registered, will seek to meet or exceed leading carbon accounting standards. The transaction has been structured so that 60% of the total carbon removal credits are expected to be attributable to carbon sequestration in newly restored native forests and 40% of carbon removal credits to carbon sequestration in newly established and sustainably managed commercial tree farms.
About BTG Pactual Timberland Investment Group
BTG Pactual (BPAC11) is the largest investment bank in Latin America, with a market capitalization of approximately US$ 25 billion, offering a diverse range of services, including Investment Banking, Corporate Lending, Sales & Trading, Asset Management, Wealth Management, and Banking. BTG Pactual Asset Management is a division of BTG Pactual with an international presence and US$ 176 billion in assets under management and administration (as of Q1, 2024). BTG Pactual Timberland Investment Group (TIG), a division of BTG Pactual Asset Management, is one of the world’s largest timberland managers with US$ 7.1 billion assets and commitments and nearly 3 million acres under management throughout the U.S. and Latin America (as of Q1, 2024). TIG’s team of more than 160 professionals has an on-the-ground presence through 21 offices, bringing local, regional, and global experience to bear on the management of client investments. For more information, please visit www.timberlandinvestmentgroup.com.
About Conservation International
Conservation International protects nature for the benefit of humanity. Through science, policy, fieldwork and finance, we spotlight and secure the most important places in nature for the climate, for biodiversity and for people. With offices in 30 countries and projects in more than 100 countries, Conservation International partners with governments, companies, civil society, Indigenous peoples and local communities to help people and nature thrive together. Go to Conservation.org for more, and follow our work on Conservation News, Facebook, Twitter, TikTok, Instagram and YouTube.