Microsoft has signed a carbon removal agreement with Chestnut Carbon, a US-based afforestation firm.
The deal will see Microsoft acquire more than seven million carbon credits over a 25-year period.
"We're excited to be expanding our collaboration with Microsoft given their market leadership in net zero commitments, and the signing of a second agreement within the span of a year reaffirms their view that Chestnut is delivering high-quality removal credits," said Ben Dell, CEO of Chestnut and managing partner of Kimmeridge.
The carbon credits will be delivered through Chestnuts Sustainable Restoration Project, an afforestation program in which Chestnut acquires marginal crop and pasture lands and, in partnership with local stakeholders, develops a forest ecosystem based on native tree species, soil, drainage, and community land use.
According to companies, the agreement will restore roughly 60,000 acres of land by planting more than 35 million native, biodiverse hardwood, and softwood trees.
"We look forward to the prospect of scaling forest restoration within the United States, attracting sophisticated private capital in the process. We are glad to see the Sustainable Restoration Project diversify the ecological impact of our global carbon removal portfolio," said Brian Marrs, senior director of energy & carbon removal at Microsoft.
The agreement adds to a carbon removal deal signed between the two companies in 2023. The initial agreement saw Microsoft sign a 15-year contract to acquire 362,000 tons of carbon removal credits in its initial phase and up to 2.7 million tons across subsequent phases.
Chestnut was founded in 2022 by alternative asset manager Kimmeridge. To date, the company has planted more than ten million trees on 15,000 acres in six states, with the bulk of the land in Arkansas.
The firm aims to restore 500,000 acres of forestry by 2030, which the company says will contribute to removing 100 million tons of carbon from the atmosphere.
Carbon credits and offsets backed by reforestry programs have faced criticism over recent years, with environmentalists arguing that claims to leave trees unfelled do not create additional forests and may even be temporary.
The agreement with Chestnut is Microsoft's second carbon removal deal with a reforestation firm in 2025. Last week, the company signed a 25-year carbon removal agreement with Re.green, a Brazilian reforestation startup. Under the terms of the agreement, Microsoft will purchase 3.5 million carbon credits.
Over the past year, Microsoft signed numerous carbon removal agreements. The tech firm acquired carbon credits from companies offering various carbon sequestration and removal technologies, including direct air capture, biomass, waste concrete, and enhanced rock weathering.
