Impact Series

Microsoft lower carbon emissions 6% final yr, predicts local weather investments will repay in long term

A quiet Microsoft campus during the COVID-19 pandemic. (GeekWire Photo / Todd Bishop)

In the first year since it set the goal of becoming carbon negative by 2030, Microsoft announced Thursday that it has reduced its carbon emissions by 6%, dropping from 11.6 million metric tons to 10.9 million metric tons. It also paid for the removal of an additional 1.3 million metric tons of carbon from the atmosphere.

If the Redmond, Wash-based company maintains and possibly improves on the progress made in these first 12 months, it’s on track to reach its target — which is among the most aggressive corporate climate goals. The company said a “small part” of the reduction in its greenhouse gas emissions was due to COVID-19.

To curb its emissions, Microsoft is investing in electric vehicles, battery systems to replace diesel generators used to back up its data centers, and renewable power. Since July, the company has levied an internal carbon tax on emissions created by its suppliers and by its customers’ use of its products, dubbed “scope 3 emissions” by those who tally carbon footprints. Microsoft was already charging itself for scope 1 and 2 emissions associated with its own business operations, including travel and electricity. The taxes help pay for its sustainability programs.

And starting this year, the software and cloud-computing company will take its executives’ progress on sustainability goals into consideration when calculating their compensation. Microsoft also ties executive pay to gains in workforce diversity.

How does the company defend spending on climate measures to its shareholders?

“We very much believe that what’s good for the climate will be good for business, and good for companies that are at the cutting edge in addressing carbon issues,” said Microsoft President Brad Smith in a GeekWire interview.

Customers, particularly younger consumers of Surface devices and Xbox games, are concerned about the company’s actions in this area, as are other businesses and governments, Smith said. Investors themselves are increasingly considering environmental records when making stock market selections.

“I think this is probably something that will turn out to be good for shareholders,” said Smith.

On Tuesday, Microsoft reported that its revenue grew 17% to more than $43 billion for the December quarter, and profits rose 33% to $15.5 billion. The growth reflects continued demand for the company’s cloud services as the pandemic has turned digital more aspects of work, play, education and health.

Microsoft also released its annual sustainability report on Thursday. Smith, who posted a blog on the update, calls the Microsoft climate initiative a “moonshot” given its bold goals, significant hurdles and many years of work ahead.

Microsoft President Brad Smith at a January 2020 announcement of the company’s climate change goals. (GeekWire / Todd Bishop)

“We’re trying to get to the moon,” he said, “but we’re just really working on the version of the Mercury spacecraft to send the first astronaut into orbit.”

An important milestone reached over the last year was setting up infrastructure for curbing and tracking the company’s emissions — including creating internal economic incentives for reductions, establishing objective and measurable standards, and creating technology-based measurement systems for marking progress. Smith said they’re eager to share this work with others interested in making similar cuts.

One of the big challenges ahead is finding solutions for carbon removal, which is key to Microsoft’s 2050 goal of erasing all of its emissions since it was founded in 1975.

The company has invested in 26 carbon removal projects internationally, with a focus on nature-based efforts such as farming and reforestation projects in South and Central America and U.S. forest conservation efforts in Washington state and elsewhere.

Longer term, the company is seeking technologically driven, direct-air capture sorts of projects for removing atmospheric carbon. But they don’t currently exist at the scale that’s needed, and in fact the whole sector is just getting started.

“We are working to build a new market and help spur the creation of a new industry — the industry to remove carbon from the environment and deposit it in the earth,” Smith said. “We are at the very cutting edge of that.”

In the last 18 months, Microsoft as well as Amazon have undertaken significant environmental initiatives:

  • As part of its climate rollout in January 2020, Microsoft started a $1 billion Climate Innovation Fund.
  • The company launched sustainability initiatives addressing water, biodiversity of plants and animals, and waste.
  • In February, Amazon CEO Jeff Bezos created a $10 billion Bezos Earth Fund to address carbon pollution.
  • Four months later, Amazon announced its $2 billion Climate Pledge Fund.
  • Amazon promised to become net carbon neutral by 2040, and in fall 2019 started the Climate Pledge, an effort to get corporations to join it in committing to climate goals.
  • In December Microsoft, Unilever, Brooks and others were named as signatories to the pledge, bringing the total to 31.

But there is still room for improvement, say climate advocates. Microsoft and Amazon have been criticized for making campaign donations through their PACs to political candidates who have opposed climate-protecting policies. And the tech behemoths have taken fire for assisting oil and gas companies in producing fossil fuels thanks to their cloud computing services.

On both fronts, Smith said it’s better to keep channels of communication open and work to change minds and encourage people and operations to pursue less planet-harming practices.

“There are some prominent members of Congress that we don’t agree with today, but we talk a lot about this issue. I talk with them a lot about this issue, and that gives me not just hope, but cause for optimism for the future,” he said. “So I very much want to continue those kinds of conversations.”

On Wednesday, President Biden signed numerous executive orders that aid in the fight against climate change. Smith said that he supported national and global climate action, but could not at this time comment on Biden’s specific orders or policy proposals.

He’s hopeful for the future and pleased with what Microsoft has accomplished so far.

“I’m more optimistic now than I was even a year ago about our ability to achieve these goals. I’m more optimistic about where the world is going to address these problems,” he said. “You can just sense this extraordinary energy and spirit of innovation being brought to the problem of climate change around the world.”

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