Forest investment and management firm EFM announced a multi-year offtake agreement with Microsoft and a fund investment that secures Microsoft’s access to up to 3 million nature-based carbon removal credits from EFM’s investment platform.
Offtake agreement: This deal includes an offtake agreement for delivering up to 700,000 credits through 2035, from a recently acquired property in Washington State’s Olympic Peninsula that EFM is transitioning to climate-smart forest management.
EFM Fund IV investment: Microsoft’s Climate Innovation Fund (CIF) invested in EFM Fund IV, which aims to mobilize $300 million for climate-smart forestry across the U.S. And this is CIF’s first forestry investment in the United States and helps Microsoft secure future streams of up to 2.3 million additional high-quality credits with significant ecosystem and community benefits.
EFM Fund IV’s first investment—68,000 acres in Washington State’s Olympic Peninsula—exemplifies the company’s FSC-certified, climate-smart strategy. The prior owner had industrially managed the property for close to a century. EFM’s approach diversifies the revenue streams from forests, including carbon credits, conservation easements, and revenue from conventional forest products.
EFM Fund IV will initially focus on securing forest properties in the Western U.S. while also exploring other domestic markets where climate-smart management can create a competitive advantage for investors and benefit local communities. By enhancing the ability of the country’s working forests to function as robust carbon sinks, this fund will support the long-term forest health and economic sustainability of these natural assets and the communities that rely on them.
Microsoft’s long-term offtake agreement and investment in Fund IV help raise the bar for Improved Forest Management (IFM) carbon projects, signaling their potential as scalable and effective climate solutions. IFM is a carbon market methodology encompassing a suite of sustainable forestry practices aimed at increasing or maintaining forest carbon stocks and improving forest health. These practices include extending trees’ rotation age, reducing the impact of logging operations, and promoting selective harvesting.
Deal rationale: By implementing these strategies, IFM projects can increase the carbon storage of commercial forests, improve biodiversity, enhance water and soil quality, and provide socio-economic benefits to local communities.
With Microsoft’s support, EFM is adopting additional measures to strengthen the integrity of its IFM credits. This is done by implementing a conservative approach that deliberately limits the amount of harvesting predicted in the baseline, or business-as-usual, scenario.
KEY QUOTES:
“Microsoft’s support marks a pivotal step in accelerating support for high-quality improved forest management projects. Their leadership sets a strong precedent for the carbon market and reinforces the importance of natural forests as a scalable natural climate solution in the U.S. With their support, we see Fund IV growing and producing significant climate benefits alongside financial value for its investors.”
Bettina von Hagen, CEO of EFM
“Microsoft recognizes the important role of high-quality, nature-based solutions in meeting our Carbon Negative by 2030 goals. Our collaboration with EFM is a significant step towards unlocking the value of the latest scientific advancements in improved forest management as a carbon removal pathway. We are proud to contribute to climate-smart forest management in Microsoft’s own backyard on the Olympic Peninsula.”
Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft
