June 25, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

BTG Pactual Timberland Investment Group (TIG) has announced a groundbreaking carbon offset credit transaction through which it will provide up to 8 million nature-based carbon removal credits to Microsoft through 2043. 

Recognized as the largest known carbon dioxide removal credit deal to-date by MSCI Carbon Markets, the credits will be delivered from the BTG Pactual Timberland Investment Group’s $1 billion reforestation and restoration strategy in Latin America.

“Institutional investors have a critical role to play in delivering nature-based solutions at a scale that matters for climate and biodiversity,” said Gerrity Lansing, head of TIG. “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.”

Advised by Conservation International as Impact Advisor to help TIG achieve its positive environmental, climate and social impact goals, the strategy focuses on the conservation, restoration, and planting of deforested and degraded properties in select regions, including the Cerrado biome in Brazil – one of the most biodiverse seasonally dry ecosystems in the world, of which approximately half has already been converted to other uses. 

With the support of Conservation International, the aim is to restore about 135,000 hectares (330,000+ acres) of natural forests and deforested landscapes. The strategy also plans to plant millions of trees in sustainably managed commercial tree farms independently certified to Forestry Stewardship Council (FSC) standards on another 135,000 hectares of previously deforested and degraded land.

Toward this goal, TIG has invested in 37,000 hectares and has planted more than 7 million seedlings while also initiating the restoration of approximately 2,600 hectares of natural forests. 

These tree farms will be managed on long rotations to store more carbon and produce large-diameter logs that can be used for long-lived products, and the carbon projects, which have not yet been registered, will seek to meet or exceed leading carbon accounting standards.

The transaction between TIG and Microsoft has been structured so that 60 percent of the total carbon removal credits are expected to be attributable to carbon sequestration in newly restored native forests, and 40 percent of carbon removal credits to carbon sequestration in newly established and sustainably managed commercial tree farms. 

“From its inception, we have aimed to break new ground with this strategy, both in terms of scale and impact,” said Mark Wishnie, chief sustainability officer, TIG, and head of the firm’s reforestation strategy.

“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.”

For Microsoft, this purchase is part of its bold commitment to be carbon negative by 2030, and to remove all historical operational emissions since the company was founded in 1975 from the environment by 2050. 

“This commitment from Microsoft is proof positive that we don’t have to compromise our future for our balance sheets,” said Dr. M. Sanjayan, CEO, Conservation International. “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.”

Dr. Sanjayan continued, “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.”

Together, TIG and Conservation International are also working to ensure the strategy enhances biodiversity and supports inclusive and equitable community development through various initiatives. 

To-date, more than 297 species have been identified on the strategy’s first property, where a new 400-meter-side riparian buffer is expected to create a five-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 restoration techniques in the Cerrado, through which TIG has installed an 81-hectare field experiment to examine the efficacy of different restoration methods including assisted natural regeneration, direct seeding, and native seeding planting. 

The firm is also conducting training within local communities on seed collection to support these efforts, and in September 2023, collaborated with the Mato Grosso do Sul Native Seed Network to provide native tree seed collection training for nearby communities, providing a new source of income by supplying the growing restoration market.

“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,” said Wishnie. “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.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and Agtech Intel News. She can be reached at lkiernan-stone@globalaginvesting.com.

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