SLM Partners Spearheading Innovation in Nature-based Carbon Credits

SLM Partners is at the forefront of opening up carbon credit markets to regenerative agriculture and forestry. We are pleased to announce partnerships with specialist carbon project developers in the USA, Europe and Australia, as well as the results of a pilot project in the US Midwest that assessed the carbon benefits of organic farming.  

SLM Partners is uniquely positioned as a real assets investment manager that manages more than 300,000 hectares of land around the world. Through our strategies, we seek to scale up regenerative farming and forestry systems that can deliver better economic returns as well as improvements in soil health, biodiversity and carbon storage. Revenues from carbon credits, which have up until recently been a “cherry-on-top”, are becoming an increasingly important return driver. But tapping into these markets requires strategic partnerships, R&D and innovation.

In the USA, there is growing demand from corporates for voluntary soil carbon credits for insetting and offsetting purposes. SLM Partners partnered with the non-profit organisation Ecosystem Service Market Consortium (ESMC) to create the first largescale pilot to assess the carbon benefits of transitioning conventional cropland to organic certification in the US Midwest.

We worked with project developer Carbon Yield to apply ESMC’s Eco Harvest scheme across 2,477 acres operated by 8 of our tenant farmers. These farmers introduced cover crops, organic fertility and changed tillage practices as part of the first year of transitioning to organic certification. Results published in January 2024 show that organic conversion leads to a reduction in emissions and an increase in soil carbon sequestration, with an impact of over 1 tCO2eq per hectare (or 0.41 tCO2eq per acre) in the first year.

Impacts measured by ESMC Eco Harvest

In Europe, demand for carbon credits is strong, with European-based projects pricing at a 265% premium vs. the global average.[1] SLM Partners is currently partnering with two European carbon project developers to spearhead the development of new carbon credit methodologies within agriculture and forestry.

SLM Partners has entered into a partnership with Climate Farmers, a community-based leader in carbon development, headquartered in Germany helping farmers across Europe leverage carbon credit markets as a financial catalyst for transitioning to regenerative agricultural practices. SLM Partners and Climate Farmers have agreed to co-fund the development of the first carbon credit accounting methodology for Mediterranean orchards, specifically tree nuts and olives in Iberia. Our goal is to build a robust and verified carbon accounting methodology for our assets in the region (owned through SLM Silva Europe Fund) while also tapping into a new revenue stream. The first credits are expected to be issued in early 2025.

For its forestry assets, SLM Partners is working with Ecobase, a carbon developer focused on European forestry, currently operating across 163,000 hectares in 19 countries. The SLM Silva Fund has included its afforestation areas under the Ecobase Pan-European VCS Afforestation project and is working with Ecobase to develop a VCS Improved Forest Management (IFM) project to cover its commercial conifer plantations undergoing transformation to Continuous Cover Forestry (CCF). IFM methodologies are well established in the United States but have not yet been adapted for the European context.

In Australia, carbon credit markets for agriculture and forestry are much more developed, thanks to government-regulated methodologies and demand. Over the last 5 years, our local subsidiary SLM Partners Australia Pty Ltd has already successfully generated and sold over 1.7 million Australia Carbon Credit Units (ACCU) through regeneration of native woodland.

Now, new opportunities are opening up for soil carbon credits. In 2023, SLM Partners established a joint venture with a leading Australian farm operator and natural capital project developer,  Impact Ag Partners, one of the most experienced players in soil carbon credits in Australia. Through this joint venture, we are now investing in cropping and livestock properties with the goal of applying regenerative agriculture and establishing carbon projects on all properties. We believe that carbon can add 1-2% to an Australian farmland investment IRR in the right context and with the right management.

For more information on how SLM Partners is working with carbon leaders to support the development of new methodologies and implementations, please reach out to info@slmpartners.com

[1] Forest Trends’ Ecosystem Marketplace 2023. State of Voluntary Carbon Markets 2023. Washington DC: Forest Trends Association. Based on 2023 YTD values, average on average prices from January 1-November 21 2023, which were reported to EM as of November 20, 2023.