Regenerative forestry can sequester 20% more carbon than conventional management
SLM Partners’ white paper casts doubt on business-as-usual rotational forestry in favour of ‘quadruple win’ regenerative approach with social, financial, climate and biodiversity benefits.
EU and UK forests are declining as carbon sinks due to lack of tree planting and outdated forestry management approaches
SLM Partners’ regeneratively managed forests could store 121 tCO2 (20%) more carbon per hectare over 20 years than those managed using the prevailing clearfell-replant system
Carbon credits generated across the 1,763 hectares modelled would be worth €8 million in today’s carbon price*
Regenerative agriculture has made headlines in recent years, but the mainstream adoption of regenerative forestry is now more urgent than ever” Paul McMahon, SLM Partners
(London, 27/02/2025) SLM Partners, the $750m natural real assets manager with 100% of land under or in transition to regenerative management, has today published a white paper revealing the potential of regenerative forestry to help solve the European climate and biodiversity crises while delivering significant upside to investors.
Carbon modelling on SLM Partners’ Irish forestry portfolio, supported by the European Investment Bank and the LIFE programme, revealed that regenerative continuous cover forestry (CCF) could sequester 20% more carbon (an additional 121 tCO2 per hectare) than industry-standard clear-fell forestry over 20 years.
Across the 1,763 hectares of forest surveyed, CCF would sequester 214,871 tonnes of CO2 more than clear-fell forestry over the period. Following Verra’s voluntary carbon market methodology, this could generate carbon credits worth €8 million in today’s carbon price.*
SLM Partners is raising capital for a new fund to emulate and scale this successful and impactful strategy across the UK and Europe, aiming to transition 19,000 hectares of forest to regenerative management – more than 10 times the size of its Irish portfolio.**
Unlike prevalent clear-fell based, or rotational, forestry – often on display in monoculture conifer plantations where trees are planted, cut down and replanted en masse – regenerative CCF harvests only a selection of trees from within forest stands at any one time.
It maintains canopy cover and promotes natural regeneration, leading to the development of permanent, biodiverse and more natural forests – which is the type of woodland the public wants to see. One study in the UK showed species richness was 1.5 times higher in CCF stands than in unmanaged areas, and bird abundance 30% higher.
Currently, the EU’s land use, land use change and forestry (LULUCF) sector absorbs more greenhouse gases than it emits, with the forests covering 45% of its land acting as a net carbon sink. However, over the last few years, declining afforestation rates and large areas of underutilised or neglected forests have led to a sharp reduction in net carbon removals.
The reliance on rotational forestry compounds this problem. When forests are clear-felled, large amounts of carbon are released from trees and soils. Artificially replanted forests then take decades to grow back. In countries such as Ireland, where forests tend to be around the same age because of a wave of afforestation in the 1990s and early 2000s, the use of clear-felling will cause the forest sector to shift from being a carbon sink to a net emitter by 2035. Ireland is facing a ’carbon cliff’.
Further, research across the EU and UK has found CCF to be more profitable than rotational forestry in most scenarios – with SLM Partners’ own study in Ireland indicating that CCF produces a net real internal return rate of 6.0%, compared to 5.5% for conventional clear-fell management.
The addition of revenue from carbon markets – both existing voluntary markets and regulated markets under discussion in the EU – could further tip the balance away from the outdated practice of rotational forestry.
European forests are facing new threats from storms, pests and diseases magnified by climate change. Storm Éowyn is just the latest extreme weather event to cause havoc in the British Isles, and the spruce bark beetle cost Germany 2% of its total forest area between 2018 and 2020. Mixed forests managed under CCF are more resilient to these risks than monoculture plantations. The EU and the UK, recognising the risks and opportunities in forestry, have set a supportive policy environment for CCF with the EU’s Nature Restoration Law, the Forest Strategy for 2030 and the UK’s Net Biodiversity Gain regulations.
By investing in regenerative forestry strategies, investors can not only contribute to their own environmental goals but tap into a relatively untapped market as part of a diversified portfolio. As carbon markets evolve and regulatory support increases, investing in sustainable forestry in Europe is becoming an attractive option for capital deployment in natural assets with a significant potential upside.
SLM Partners is launching the new SLM Silva Fund II, a €200m fund to invest in sustainable forestry and carbon in Europe2. Building on the success of its earlier Irish forestry fund, this new fund will continue to invest in Ireland, while broadening its scope to the UK and selected EU countries. The fund will aggregate fragmented forest properties and implement CCF management to optimise financial returns and environmental outcomes. While most returns will come from timber, the fund will also seek to monetise the carbon and biodiversity benefits of this approach.
Paul McMahon, Managing Partner, SLM Partners and author of Island of Woods: How Ireland lost its forests and how to get them back, said:
“Monoculture plantations are not just ugly to look at, but they are bad for business and biodiversity, and they are exposed to all sorts of risks. Continuous cover forestry is a compelling alternative – delivering a quadruple win for local people, forest owners, climate and nature.
“As governments and investors scramble to unearth new carbon capture technologies, we must ensure we take better care of the carbon sinks we know work. Regenerative agriculture has made headlines in recent years, but the mainstream adoption of regenerative forestry is now more urgent than ever.”
Darius Sarshar, Principal, SLM Partners, said:
“Conventional forestry continues to increase carbon emissions, reduce biodiversity, degrade soils and water and leave our commercial forests ill-equipped to cope with climate change. It is now well documented that continuous cover forestry offers a way to reverse the decline and is likely to increase profitability at the same time. CCF can deliver the multi-functional forests we need to face the challenges of the 21st century.”
*Verra’s voluntary carbon methodology applies a discount of approx. 25% for uncertainty and buffer reserves in case of reversals, so this area of forest could generate 164,614 carbon credits (tCO2e). Euro figure calculated according to Ecobase’s indicative carbon price on 29 November 2024.
**SLM Partners’ Silva Europe Fund II is not open to retail investors.