Microsoft has signed a deal with sustainable forest management firm EFM to purchase three million carbon removal credits.

The deal includes an offtake agreement for 700,000 credits through 2035, generated from a 68,000-acre project in Washington State’s Olympic Peninsula that EFM is transitioning to climate-smart forest management. The company acquired the plot in November 2024.

In addition, Microsoft's Climate Innovation Fund has made a direct investment in EFM’s Fund IV. The fund aims to mobilize $300 million of investment for forestry projects across the US, which will generate the remaining 2.3 million credits set to be delivered to Microsoft.

“Microsoft’s support marks a pivotal step in accelerating support for high-quality improved forest management projects,” said Bettina von Hagen, CEO of EFM. “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 US. With their support, we see Fund IV growing and producing significant climate benefits alongside financial value for its investors.

EFM Fund IV will initially focus on securing forest properties in the Western US, while also exploring other domestic markets. EFM associated funds have so far acquired 21 properties in the Pacific Northwest of the US, totaling 151,139 acres. In total, the company has acquired more than 200,000 across several countries.

The Microsoft agreement will also support the development of carbon market methodology, Improved Forest Management (IFM). According to EFM, the IFM methodology encompasses a suite of sustainable forestry practices aimed at increasing or maintaining forest carbon stocks and improving forest health.

“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,” said Brian Marrs, senior director of energy & carbon removal at Microsoft.

EFM was founded by non-profit Ecotrust in 2004 and launched its first forestland fund in 2005. In March of this year, it signed a long-term offtake agreement with Meta for the delivery of 676,000 carbon removal credits through 2035. The credits will also be generated from EFM’s Olympic Peninsula project, with a broader goal of removing more than one million tons of carbon over the next decade.

Microsoft has signed multiple carbon removal agreements with reforestation and afforestation firms over the past 12 months, and five in 2025 alone.

Last month, the company signed an agreement with Living Carbon to purchase 1.4 million tons of removal credits generated from Living Carbon's large-scale reforestation project in the US Appalachian region.

Before this, it signed three deals, including an agreement to remove 1.5 million tons of CO2 in India, a 25-year agreement with Chestnut Carbon to purchase seven million carbon credits, and another 25-year deal in Brazil with Re.green to purchase 3.5 million credits.

Reforestation involves the replanting of trees in locations where forests have been cleared or damaged, aiming to restore forest cover and inhibit the natural process of carbon removal. While seen as beneficial, reforestation programs have been criticized due to their potential for limited permanence and the length of time it takes to scale effective programs.