The investor’s dilemma
In 2024, Microsoft made headlines by retiring 5.5 million carbon credits, becoming the second-largest buyer in the voluntary carbon market. But here’s the twist: their success wasn’t just about buying credits—it was about choosing the right partners and structuring deals that delivered real impact.
For corporate investors considering carbon offset projects, whether on the spot market or through long-term offtake agreements, Microsoft’s strategy provides a masterclass in value creation. The question is: how can you replicate their success without reinventing the wheel?
Why nature-based projects made business sense for Microsoft
Before jumping into the how, let’s get a quick sense of the why. Why such a renowned and successful company choose to oinvest massively in nature based restoration projects? Part of the answer lies in that Microsoft’s investment in nature-based removal projects wasn’t just about carbon neutrality—it was a strategic business decision that provided financial, operational, and regulatory advantages: .
1. The brand and investor trust
Microsoft’s leadership in nature-based solutions boosted stakeholder confidence and ESG rankings, contributing to its inclusion in Corporate Knights’ Global 100 Most Sustainable Companies list. Sustainability leadership enhances brand reputation and investor appeal.
2. Cost stability & future savings
BCG estimates that climate change could reduce global GDP by at least 16% if no action is taken. Since this impact will inevitably be reflected in corporate financial performance, mitigating such a significant risk to shareholder value is not just responsible—it’s financially strategic.
Now when it comes to carbon credit cost. Locking in long-term offtakes secured lower prices per ton of CO₂, shielding Microsoft from the expected 300% rise in voluntary carbon prices by 2030 (BloombergNEF). Early investment ensures affordability before market prices surge.
3. Strengthening carbon neutrality goals
Securing millions of high-quality removal credits ensured Microsoft could meet its 2030 carbon-negative target with credibility. Verified carbon removal is key for ambitious corporate net-zero commitments.
4. Regulatory readiness
Proactively investing in nature-based projects positioned Microsoft to comply with evolving regulations like the EU’s Carbon Removal Certification Framework (CRCF). High-integrity credits help businesses stay ahead of compliance requirements.
5. Competitive & market advantage
As an early adopter, Microsoft set industry standards, compelling competitors like Google, Meta, and Amazon to follow suit—reinforcing its leadership in corporate sustainability. First-mover status creates a strategic edge in ESG-driven markets.
The value of Microsoft’s approach for corporate investors
Microsoft’s carbon offset strategy wasn’t just about reducing emissions—it was about creating long-term value for the company, its stakeholders, and the planet. Here’s what corporate investors can learn:
1. The power of high-integrity partnerships
Microsoft didn’t go it alone. It partnered with organizations like Re.green, and BTG Pactual’s Forestry Division, project developers and Anew Climate, a broker, (Apolownia providing both), to ensure its investment delivered measurable, high-quality carbon removal. These partnerships weren’t just transactional—they were strategic alliances built on shared goals of transparency, impact, and scalability.
Why this matters for investors:
Risk Mitigation: Partnering with established players reduces the risk of project failure or underperformance. For example, Microsoft’s 25-year agreement with Re.green ensured that the reforestation of 33,000 hectares in the Amazon and Atlantic forests was backed by rigorous monitoring and verification. This long-term commitment minimized risks like non-additionality (where projects would have happened anyway) and ensured the carbon removal was permanent.
Data Point: according to a 2023 report by Carbon Direct, projects with strong partnerships and third-party verification are 40% less likely to underperform.
Scalability: Proven partners can deliver at scale, whether you’re buying spot credits or committing to long-term offtakes. Microsoft’s partnership with BTG Pactual’s Forestry Division supported a $1 billion reforestation initiative in Latin America, which not only delivered 8 million carbon offset credits but also restored ecosystems at a massive scale.
Data point: the World Resources Institute estimates that large-scale reforestation projects can sequester up to 1.5 gigatons of CO₂ annually by 2030 if properly funded and managed.
Co-Benefits: The right partners ensure your projects deliver additional value, such as biodiversity conservation and community development. For instance, Microsoft’s collaboration with Anew Climate focused on sustainable forestry in North America, which not only removed 970,000 tons of CO₂ but also created jobs and protected habitats for endangered species.
Data Point: a 2024 study by IUCN found that nature-based carbon projects with strong community involvement are 60% more likely to achieve their biodiversity and social impact goals.
Actionable tips:
Vet your partners: Look for organizations with a track record of delivering high-integrity projects. Certifications like Verra or Gold Standard are a good starting point, but dig deeper into their project portfolios and impact metrics.
Key questions to ask:
What is the partner’s process for delivering verified carbon credits?
How do they ensure additionality, permanence, and leakage prevention?
What co-benefits (e.g., biodiversity, community impact) do their projects deliver?
Can they provide transparent, third-party verified data on project performance?
Example: Microsoft’s partnership with Re.green included a detailed impact assessment framework that tracked not only carbon removal but also biodiversity recovery and local economic benefits. This level of transparency is critical for building trust and ensuring long-term success.
By focusing on high-integrity partnerships, Microsoft not only reduced its carbon footprint but also set a new standard for corporate climate action. For investors, the lesson is clear: the right partners can turn carbon offset projects into powerful tools for achieving both environmental and business goals.
2. Prioritizing co-benefits and community impact
Microsoft’s projects didn’t just remove carbon—they restored ecosystems, supported local communities, and enhanced biodiversity. For example, its partnership with Re.green planted 4.4 million native seedlings across 11,000 hectares of degraded land in the Amazon and Atlantic forests. This initiative not only sequestered carbon but also revitalized habitats for endangered species, improved water cycles, and provided sustainable livelihoods for local communities. In addition, Microsoft’s collaboration with BTG Pactual’s forestry division supported a $1 billion reforestation initiative in Latin America, which includes opportunities beyond carbon sequestration, including rural employment, economic development, training and skill development, and broader community benefits. These projects demonstrate how carbon offset investments can deliver triple-bottom-line returns: environmental, social, and economic.
Why this matters for investors:
Stakeholder alignment: Co-benefits align with the growing demand for projects that deliver environmental, social, and governance (ESG) value. For instance, Microsoft’s reforestation efforts in Brazil created over 1,200 jobs for local communities, directly contributing to the United Nations Sustainable Development Goals (SDGs) such as SDG 8 (Decent Work and Economic Growth) and SDG 15 (Life on Land). Investors who prioritize such projects can strengthen their ESG profiles and meet the expectations of stakeholders, including customers, employees, and shareholders.
Regulatory preparedness: As carbon markets mature, projects with verifiable co-benefits are becoming increasingly valuable under international frameworks such as the Paris Agreement’s Article 6 mechanism.
Article 6.2 facilitates cross-border carbon credit trading, incentivizing high-quality offset projects that meet both emissions reduction targets and social/environmental benefits.
Article 6.4 establishes a centralized global carbon market where projects with strong co-benefits will likely be more attractive to buyers looking for credits that satisfy compliance and corporate sustainability goals.
Brand differentiation: Projects with tangible community impact set you apart in a crowded market. Microsoft’s commitment to biodiversity restoration and community engagement has enhanced its reputation as a leader in corporate sustainability. For instance, its partnership with Re.green not only removed carbon but also restored habitats for over 200 species of flora and fauna, creating a compelling narrative for stakeholders. Investors who prioritize such projects can differentiate themselves in a competitive market and build stronger brand loyalty.
Actionable tips:
Embed co-benefits in your criteria: when evaluating projects, prioritize those that deliver measurable co-benefits, such as job creation, water conservation, or habitat restoration. For example, look for projects that:
Create local jobs: Ensure the project provides employment opportunities for local communities, as seen in Microsoft’s partnership with Re.green.
Enhance biodiversity: Prioritize projects that restore ecosystems and protect endangered species, like Microsoft’s reforestation efforts in the Amazon.
Support community development: Invest in initiatives that improve access to clean water, education, or healthcare, as these co-benefits often yield long-term social and economic returns.
By focusing on projects that deliver measurable co-benefits, investors can maximize their impact while aligning with global sustainability goals. Microsoft’s success in this area serves as a powerful example of how carbon offset investments can go beyond emissions reduction to create lasting value for people and the planet.
3. Structuring deals for immediate and long-term impact
Microsoft’s 25-year agreement with Chestnut Carbon - a 25-year agreement for a 100-year-long carbon removal project or Re.green reforestation initiative in Latin America are prime examples of how long-term thinking can drive both environmental and financial value. These deals weren’t just about securing carbon credits—they were about creating lasting environmental and social impact while ensuring measurable returns for the company.
Why this matters for investors:
Price stability: Long-term offtake agreements lock in prices, protecting investors from market volatility. For example, Microsoft’s deal with Re.green ensured a fixed price for 3.5 million tons of carbon removal credits over 25 years, shielding the company from price spikes as demand for high-quality credits grows. According to BloombergNEF, the price of carbon credits is expected to rise by 300% by 2030, making long-term agreements a strategic hedge against future costs.
Actionable insight: for corporate buyers, locking in prices now can save millions in the future, especially as the carbon market matures and demand outstrips supply.
Impact certainty: Multi-year commitments provide the funding and time needed for projects to deliver real, measurable results. Microsoft’s partnership with BTG Pactual’s forestry division, for instance, supported a $1 billion reforestation initiative in Latin America, which is expected to restore 33,000 hectares of degraded land and plant 4.4 million native seedlings. These projects not only remove carbon but also restore ecosystems and support local communities, ensuring long-term environmental and social benefits.
Let’s pause for a moment. The amount here is significant, but an investment doesn’t have to be massive to make an impact. First, not all projects are the same—for instance, mangrove restoration projects sequester up to 10 times more CO₂ per hectare than terrestrial forests, making them a much more efficient investment. Second, it’s the collective contributions of many companies that drive real change—every dollar counts in the fight against climate change.
Actionable insight: long-term agreements allow project developers to plan and execute large-scale initiatives that deliver both carbon removal and co-benefits such as biodiversity restoration and job creation.
Reputation building: Demonstrating long-term commitment enhances your brand’s credibility and aligns with stakeholder expectations. Microsoft’s carbon-negative by 2030 pledge and its legacy emissions removal goal by 2050 have positioned the company as a leader in corporate sustainability. This has not only strengthened its reputation but also attracted environmentally conscious investors and customers.
Actionable insight: a long-term carbon strategy signals to stakeholders that your company is genuinely committed to sustainability, enhancing brand equity and investor confidence. It also demonstrates a forward-thinking approach—showing that your business is built for longevity and genuinely cares about the future of our planet. According to a 2023 McKinsey report, companies with strong sustainability commitments see a 15-30% increase in brand value and a 20% boost in customer loyalty.
Going deeper: the financial and environmental ROI of long-term deals
Long-term offtake agreements aren’t just about locking in prices—they’re about maximizing return on investment (ROI). For example, Microsoft’s 25-year agreement with Chestnut Carbon is expected to deliver 7 million tons of carbon removal credits over 100 years. This not only ensures a steady supply of high-quality credits but also creates a legacy of environmental impact that aligns with the company’s 2050 legacy emissions removal goal.
Moreover, long-term deals often come with co-benefits that enhance their value. For instance, Microsoft’s reforestation projects in Latin America are expected to create thousands of jobs and support biodiversity restoration, which can be leveraged for ESG reporting and stakeholder engagement. According to the World Economic Forum, every dollar invested in nature-based solutions generates $9 in economic benefits, making these projects a win-win for investors and the planet.
Key considerations for spot vs. long-term offtake investments
Spot market investments
Spot purchases are ideal for meeting short-term needs or testing the waters. However, they come with risks, such as price volatility and limited impact visibility. In 2024, the voluntary carbon market saw spot prices for nature-based credits range from 10 to 50 per ton, depending on project quality and location. While this flexibility allows companies to act quickly, it also exposes them to market fluctuations and the risk of purchasing low-quality credits.
Tips for success:
Focus on quality: Prioritize credits from high-integrity projects with strong verification standards. For example, Microsoft’s purchase of 970,000 nature-based credits from Anew Climate was backed by rigorous certification and transparent reporting. Look for projects verified by Verra, Gold Standard, or Climate Action Reserve to ensure credibility.
Diversify your portfolio: Spread your investments across multiple projects to reduce risk. For instance, instead of buying all your credits from a single reforestation project, consider a mix of forestry, soil carbon, and blue carbon initiatives. This approach not only mitigates risk but also enhances your portfolio’s overall impact.
Monitor market trends: Stay informed about price fluctuations and emerging opportunities. In 2024, the carbon market saw a 20% increase in demand for nature-based credits, driven by corporate net-zero commitments. Tools like Carbon Pulse and Ecosystem Marketplace can help you track trends and identify high-potential projects.
Long-term offtake agreements
Long-term offtakes provide stability and ensure sustained impact. However, they require careful planning and due diligence. Microsoft’s 25-year agreement with Re.green and its $1 billion reforestation initiative in Latin America are prime examples of how long-term commitments can deliver both environmental and financial value. These agreements often come with fixed or indexed pricing, protecting buyers from market volatility while ensuring a steady supply of high-quality credits.
Tips for success:
Negotiate flexible terms: Include clauses that allow for adjustments based on project performance or market conditions. For example, Microsoft’s deal with Chestnut Carbon includes provisions for periodic reviews and adjustments, ensuring the project remains aligned with its goals.
Conduct rigorous due diligence: Assess the financial health, track record, and impact metrics of your partners. Before committing to a long-term offtake, Microsoft evaluated Re.green’s ability to deliver 3.5 million tons of carbon removal over 25 years, ensuring the project’s feasibility and impact.
Plan for the long haul: Ensure your organization has the resources and commitment to see the agreement through. Long-term offtakes require not just financial investment but also ongoing oversight and engagement. Microsoft’s internal carbon tax and $1 billion Climate Innovation Fund provide the financial backbone for its long-term commitments.
Choose between project investment or multi-year offtake agreement: Corporate investors must decide between funding and co-developing projects for greater control and potential returns or securing multi-year offtake agreements to ensure credit supply with lower risk and management burden. Microsoft’s long-term offtake with Re.green secures verified carbon removal without project ownership, reducing operational risks. In contrast, direct investment offers more influence over project execution and co-benefits like biodiversity and community engagement but requires greater upfront investment.
Extra tip: balance spot and long-term investments
Use spot purchases to meet immediate needs while structuring long-term offtakes for sustained impact. For example, allocate 70% of your budget to long-term agreements and 30% to spot market opportunities. This approach allows you to address short-term carbon neutrality goals while building a robust portfolio of high-impact, long-term projects.
For instance, Microsoft’s 8 million carbon offset credits purchased from BTG Pactual’s forestry division were part of a long-term strategy, while its 970,000 nature-based credits from Anew Climate were likely spot purchases to meet immediate targets. This balanced approach ensures flexibility and resilience in your carbon strategy.
4. Leveraging collaboration for greater impact
Microsoft didn’t only act alone. It joined forces with Google, Meta, and Salesforce to make a 20-million-tonne advance market commitment for nature-based carbon removal. This collaboration de-risked investments and set a new standard for corporate climate action.
Why this matters for investors:
Shared risk: Collaborating with other investors reduces financial and operational risks. For example, Microsoft’s partnership with Google, Meta, and Salesforce allowed the companies to pool resources, making it easier to fund large-scale projects like the $1 billion reforestation initiative in Latin America. By sharing the financial burden, each company minimized its individual exposure while maximizing collective impact. This approach is particularly valuable for smaller or mid-sized corporations looking to enter the carbon market without bearing the full cost of high-risk investments.
Market influence: Joint commitments drive demand for high-quality credits, creating a more robust and transparent market. Microsoft’s leadership in forming this coalition sent a clear signal to the market: high-integrity, nature-based carbon removal is a priority. This not only increased demand for verified credits but also pushed project developers to improve their standards. For instance, the average price of carbon credits in 2024 for some projects rose to $189, reflecting a shift toward higher-quality projects. For investors, this means greater confidence in the credibility and long-term value of their carbon offset portfolios.
Knowledge sharing: Partnerships provide access to best practices and innovative solutions. By collaborating with other tech giants, Microsoft gained insights into emerging trends, such as the growing importance of biodiversity co-benefits and the role of blockchain in carbon credit tracking. This knowledge-sharing ecosystem allows investors to stay ahead of regulatory changes and market shifts, ensuring their strategies remain relevant and effective.
Actionable tip:
Join industry coalitions: Look for opportunities to collaborate with other companies or join initiatives like the Science-Based Targets initiative (SBTi) or the Taskforce on Scaling Voluntary Carbon Markets. These platforms not only provide access to cutting-edge research and tools but also offer networking opportunities with like-minded organizations. For example, the SBTi’s Corporate Net-Zero Standard has become a gold standard for emissions reduction, helping companies align their strategies with global climate goals. Similarly, the Taskforce on Scaling Voluntary Carbon Markets has developed frameworks to improve transparency and integrity in carbon credit transactions, making it easier for investors to identify high-quality projects.
Food for thought:
Market growth: The voluntary carbon market is projected to grow from 2 billion in 2023 to over 50 billion by 2030, driven by increasing corporate commitments to net-zero targets. Collaborative efforts like Microsoft’s 20-million-tonne commitment are accelerating this growth by creating a stable demand for high-quality credits.
Regulatory trends: Governments are increasingly recognizing the value of nature-based solutions. For example, the European Union’s Carbon Removal Certification Framework (CRCF) is set to standardize carbon credit verification, making it easier for investors to identify credible projects. By joining industry coalitions, companies can stay informed about these developments and ensure their investments comply with evolving regulations.
By following Microsoft’s example, corporate investors can leverage collaboration to reduce risk, influence the market, and access valuable knowledge—ultimately driving greater impact and value from their carbon offset investments.
The bottom line: finding the right partners
Microsoft’s success wasn’t just about buying carbon credits—it was about building the right partnerships. Whether you’re investing in spot purchases or long-term offtakes, the key to success lies in choosing partners who share your commitment to quality, transparency, and impact.
The carbon market is evolving, and the opportunities are immense. But success requires more than just capital—it requires the right partners, the right strategy, and the right mindset.
At Apolownia, we specialize in connecting corporate investors with high-integrity, nature-based carbon offset projects. Whether you’re looking for spot market opportunities or long-term offtake agreements, we’ll help you navigate the complexities and maximize your impact.
Ready to take the next step? Explore our investment opportunities and discover how you can align your carbon strategy with global climate goals.
ABOUT APOLOWNIA
Apolownia is a mission-driven company committed to making a significant impact in the climate sector.
We support businesses and funds willing to engage in long-term and impactful decarbonization strategies - within and beyond their own value chain - by designing, implementing and monitoring science-based carbon reduction projects that restore natural ecosystems.
Through technology and innovative solutions, we aim at shaping a resilient and environmentally friendly world, by encouraging the decarbonization of the economy and supporting social and environmental initiatives.
You can drive positive change for the climate, biodiversity and local communities.
Contact us to engage or for more information. Find us on www.apolownia.com.
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