2020 Environmental Sustainability Report - A Year of Action
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2020 Environmental Sustainability Report A Year of Action
Overview Carbon Water Waste Ecosystems Appendix 2
Contents
Overview Carbon negative Water positive Zero waste Ecosystems Appendix
Foreword 4 Our approach 14 Our approach 32 Our approach 45 Our approach 58 A – Commitments 70
How we work 5 Getting to carbon negative 17 Getting to water positive 35 Getting to zero waste 48 Taking responsibility for our 60 A – Partnerships 71
land footprint
Our seven principles 5 Reducing Scope 1 and 2 17 Reducing our water 35 Driving innovation: Digital 51 A – How we report 72
emissions footprint tools for circularity Driving innovation: Building 61
Defining focus areas 6 B – Our environmental data 73
the Planetary Computer
Reducing Scope 3 19 Replenishing water 37 Enabling systems change 53
Putting sustainability into 7 C – Materiality 82
emissions Enabling systems change 63
practice Improving access to water 37 Key learnings 55
D – Governance 85
Removing carbon 21 Key learnings 67
2021 Outlook 8 Driving innovation: 38 What’s next? 56
E – Policy 91
Driving innovation: Digital 22 Digitizing water What’s next? 68
2020 Progress 11
tools for carbon reduction F – Assurance 95
Enabling systems change 40
About this report 12
Enabling systems change 24
Key learnings 42
Key learnings 29
What’s next? 43
What’s next? 30
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Find out more elsewhere metric tons of carbon water replenishment metric tons of waste diverted petabytes of environmental
in this document
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more here
Overview Carbon Water Waste Ecosystems Appendix 3
Xxxxxx
Overview Contents
Foreword
How we work
Our seven principles
Defining focus areas
4
5
5
6
Putting sustainability 7
into practice
2021 Outlook 8
2020 Progress 11
About this report 12
Overview Carbon Water Waste Ecosystems Appendix 4
Foreword
Letter from Over the past year, we built on this pledge by
announcing a series of commitments to be water
positive by 2030, zero waste by 2030, and to protect
“We believe that by
focusing on all the ways
Microsoft can’t solve the world’s environmental
challenges alone, but we can play a significant role in
driving a broader societal transformation if we use our
Brad Smith
ecosystems by developing a Planetary Computer. positions of influence and our technologies to effectively
When we set out on our carbon negative journey a
we can drive change, we bring others along with us on our sustainability journey.
year ago, we knew the climate crisis was urgent and can make an outsized 3. What should we do?
In January 2020 we announced
required immediate attention. No one had yet realized
that the world would be facing a global pandemic and
impact on climate change. This is what we focused most on in 2020. It required
building a new sustainability vision and strategy for
a bold commitment and detailed long-term shutdown just a few months later. Over the We, and other organizations Microsoft through a series of industry-leading
past year, we’ve addressed both. COVID-19 is the crisis
plan to be carbon negative of the year, addressing climate change is the crisis of who are serious about commitments to be a carbon negative, water positive,
zero waste company by 2030, and to develop a new
by 2030 and to remove from the decade.
an environmentally Planetary Computer to better monitor, model,
the environment all the carbon We grounded our sustainability strategy and
commitments in the belief that technology can help
sustainable future, and manage the world’s ecosystems. We’re making a
bold bet to address climate change and the world
the company emitted since its solve the world’s biggest challenges. We began by need to pull all levers will need to too. To help do that, we want to
founding by 2050. asking three simple questions:
of influence we have.”
become the world’s leading technology provider
of sustainable solutions.
1. Are we doing enough?
The answer was simple: No. Microsoft has focused Brad Smith, President 2020 Report
on sustainability for more than a decade, and we are In Microsoft’s first annual sustainability report,
proud of our achievements. But those of us who can we look back at how and why we made our
afford to move faster and go further should do so. commitments, details about them,
Using technology, we can do just that, including progress to date, and key lessons we
minimizing the environmental impact of our own have learned. We intend to not only
operations and ensuring the resilience of our share our successes, but also share
infrastructure to climate change. Importantly, we can our challenges. That is why, in each
extend beyond our walls to help build the broader section, we’ve also included
solutions the world requires. additional information and resources
2050
to help others accelerate their
2. Can we make a difference? progress towards a prosperous, just,
We believe that by focusing on all the ways we can drive and environmentally stable future.
change, we can make an outsized impact on climate
change. We, and other organizations that are serious
Microsoft will remove from
about an environmentally sustainable future, need to
the environment all the
pull all levers of influence we have—our operations and
carbon the company has Brad Smith, President
as a customer, supplier, investor, employer, policy
emitted since its founding
advocate, and partner in innovation to customers,
by 2050.
organizations, and institutions around the world.
Overview Carbon Water Waste Ecosystems Appendix 5
How we work
Taking a Our seven principles
principled
approach
Whenever Microsoft takes on a new
and complex societal issue, we strive
first to learn and then to define a
principled approach to guide our 1 3 5 7
efforts. In 2020, we did the same Grounding in science
Investing in
Ensuring effective Enlisting our
new solutions
with environmental sustainability. and math.
and technology.
transparency. employees.
4 6
2 Empowering
Using our voice on
Taking responsibility customers and
climate-related public
for our footprint. partners around
policy issues.
the world.
Overview Carbon Water Waste Ecosystems Appendix 6
How we work (continued)
Defining focus areas
va tion, investments, policy, c
We focus on four areas—carbon, water, waste, o olle
ld : inn ctiv
and ecosystems—where we can scale by minimizing o r ea
e W cti
the negative impacts of our operations and h on
T
maximizing the positive impacts of our technology. nd partners: technology
, en
e rs a ab
m lem
While we start with our operations, our strategy to m m un ities,
us ns, c
o supp
l
e
expands beyond our four walls by ensuring those io y
rat ch
nt
C
e ai
changes also benefit the communities in which p
n,
o
we operate and flow into our product strategy. ms Ca
t:
em
e
of
st rb
plo
ros
Through technology adoption by customers
sy
on
yees
Mic
Eco
4
and partners, we can drive positive impact
across the globe, accelerated by our
investments, engagement in policy, and
commitment to innovation. programs
W
st
at
er
e
a
W
Overview Carbon Water Waste Ecosystems Appendix 7
How we work (continued)
Driving global impact AI for Earth
Putting sustainability into practice We also have programs that extend across all five We believe that there is a massive opportunity for the
technology sector to improve the way we manage the
We support each of our four focus areas with five strategic pillars. They are: pillars to drive global impact, including investment
and climate science. Earth’s natural resources. In 2017, we launched
Microsoft’s AI for Earth program to put cloud and AI
Climate Innovation Fund (CIF)
technology into the hands of the world’s leading
Operations CIF will invest $1 billion over four years to help scale up
ecologists and conservation technologists, and
We will take responsibility for our carbon, existing climate technologies and invest in new
organizations around the world that are working to
water, waste, and land footprints across s Ca technologies that currently don’t exist or are too niche
em r
protect our planet. The program increases access to
the way our products and facilities are
st for broad adoption. This work also supports Microsoft
AI technologies through grants, provides education
sourced, manufactured, operated, and Prod sustainability commitments in carbon, water, waste, and
bo
uc
sy
s on cloud and AI to increase collaboration through
ion ts
Eco
managed at end-of-life, including our ecosystems. As we consider investments, we prioritize
n
supply chain. at those that:
our community, and fuels innovation through research
and strategic partnerships. So far, we’ve empowered
an
er
ds
Op
Products and services • Provide measurable climate impact in our four areas over 700 organizations in more than 100 countries
erv
of focus. around the world working on game-changing
We will develop new technology and
environmental innovations.
ices
services driven by data, AI, and digital • Bring additional capital to underfunded markets
technology to power environmental where the capital need for climate solutions is not Find out
sustainability. Employees being met. more here
• Ensure developing economies and underserved
ers
Customers and partners Sustainability science
communities benefit from climate solutions.
Our sustainability work is guided by science. We believe
rtn
We will help our customers and partners
around the world reduce their carbon, • Align to Microsoft’s core business and that that overcoming society’s biggest sustainability
pa
Po
water, waste, and land footprints through icy of our customers. challenges will require working at the intersection of
an
d
l
technology and the natural and social sciences. We have
ers
our learnings, technology, and services.
Custo m Find out a growing team of sustainability scientists working with
W
st
r
Policy e a
more here
te
researchers, businesses, governments, and non-profit
a
We will use our voice on climate-related W organizations around the world to help Microsoft, its
public policy issues. We will support new customers and partners, and the world to build a more
public policy initiatives to accelerate environmentally sustainable future. This involves creating
carbon, water, waste, and ecosystems new knowledge and tools that enable improved
opportunities. management of environmental resources and mitigation
of risks from local to global scales.
Employees
We recognize that our employees are the
most important asset and resource in
advancing innovation and will create new
opportunities for them to contribute to
our efforts.
Overview Carbon Water Waste Ecosystems Appendix 8
2021 Outlook
A look For Microsoft to do well, we need the world to do well.
This belief is why our mission is to empower every
person on the planet to achieve more, and why our CEO,
“Addressing six enabling
conditions will ultimately
Six enabling conditions
As we worked to set and implement our
commitments to become carbon negative, water
ahead from
Satya Nadella, stated, “the purpose of a corporation is
to find profitable solutions to problems of people and dictate the success or failure positive, and zero waste and to deploy a Planetary
Computer, some of these global challenges came into
the planet.“ of the sustainability agenda sharp focus. There is a suite of enabling conditions
Lucas Joppa Unfortunately, 2020 brought an array of new challenges
to this already complex work. COVID-19 has devastated
human lives in every corner of the globe, while climate
this decade—for Microsoft
and the world.”
that must exist for Microsoft and the world to
effectively and efficiently achieve a more sustainable
and just future.
change caused unprecedented environmental and The enabling conditions that we must address inside
This must be a decade of ambition economic damages. Dr. Lucas Joppa, Chief Environmental Officer Microsoft are clear—broadening and strengthening
paired with action. At Microsoft, While vaccines are becoming available as a solution for our governance and accountability frameworks while
building a culture of sustainability investment and
COVID-19, solutions for climate change will require
we appreciate the urgency, deploying a host of different tools to combat the many innovation. But it will be the creation of six enabling
responsibility, risks, and drivers of climate change. For the survival of people and conditions outside Microsoft that will ultimately
our planet, this is a battle we can’t afford to lose. dictate success or failure of the sustainability agenda.
opportunities ahead. Resolving or improving these conditions will ensure a
This will require the dedication of individuals, organizations, coherent, coordinated, cost-efficient approach to
and governments, all focused on stabilizing Earth’s climate individual and collective action on climate change.
and properly managing its natural resources.
Risk recognition
We have a limited amount of time to accomplish what
Without a holistic assessment of risk, it is
will be the most significant behavioral and technological
difficult for companies to efficiently
societal transformation in modern human history. By
manage their sustainability challenges.
2030, society must be well on its way to mitigating and
Unfortunately, the scale and societal
adapting to rapidly changing climates, ensuring resilient
interdependencies of climate risk make
water supplies, reducing the amount of waste we
a comprehensive assessment difficult.
generate, and reversing the ongoing and catastrophic
While many important efforts are
degradation of ecosystems while halting the extinction
underway, there is not yet an exhaustive
of species.
framework for risk assessment
2030
That is why this must be a decade of ambition paired for businesses.
with action.
By 2030, a widely adopted and
At Microsoft we appreciate the urgency, responsibility, comprehensive risk framework will
risks, and opportunities ahead. That is why a little over need to be in place to ensure every
a year ago we began a process to transform our By 2030, Microsoft will business can fully integrate environmental
company’s work on sustainability to better align with the remove more carbon than it risk at the core of their corporate
scope, scale, and speed of the world’s environmental emits. By 2050, we will remove governance process.
challenges and yet-to-be created solutions. all historical emissions.
Overview Carbon Water Waste Ecosystems Appendix 9
2021 Outlook (continued)
Standards setting
Standards and globally accepted definitions drive More needs to happen
efficiency, clarity, and interoperability. For corporate
sustainability commitments to be meaningful, we must
By 2030, we must progress on the six enabling conditions:
ensure that everyone is working from the same
taxonomy. Without standards we won’t be able to
compare one company’s net-zero commitment to any
other, and more time will be spent trying to assess 1. 2. 3. 4. 5. 6.
whether a commitment is meaningful than will be in Risk Standards Data Innovation Market Policy
making meaningful progress on sustainability. If we can’t
do basic math on carbon numbers from different sources recognition setting digitization investment maturation progression
because they were created using different methods, then
how will we be able to track progress on emissions
reductions and carbon removal, or incentivize suppliers
or customers to improve their impact? Solving this
means that society needs to make rapid advances on
A widely adopted and By well before 2030, we Digitized sustainability Most climate investments Carbon offset and A globally coordinated
agreeable sustainability standards.
comprehensive risk must be operating in a data must become a will need to fit within a removal, water policy regime should be in
Companies are used to coming together within a sector framework will need to world where companies platform that allows well-structured and replenishment, and place that limits emissions
to collectively advance industry standards. By well before be in place to ensure have come together across society to stitch together accepted framework that ecosystem service in line with a 1.5ºC future,
2030, we must be operating in a world where companies every business integrates sectors to agree on the dimensionality of the aligns investment vehicles markets can supply while respecting political
have come together across sectors to agree on common environmental risk at common sustainability sustainability landscape along an appropriate greater and growing sovereignty and the
sustainability units and methods of measurement. the core of their units and methods of from the bottom up, and risk-tolerance spectrum, demand, transparently cross-boundary nature of
Data digitization corporation’s corporate measurement across analyze them from the targeted on the most and with standard the Earth΄s life support
Organizations’ sustainability data systems are often governance process. carbon, water, and waste. top down. impactful areas. insurance guarantees. systems, and does so with
analog, siloed, and one-off—if they exist at all. Digital a focus on the need to
monitoring and recording systems of carbon emissions, equitably share these
water consumption, waste generation, and ecosystem resources across cultures
health at an operational and planetary level will be the and communities.
foundation upon which the private sector will ensure
transparency, meaningfully inform policy advances,
and unleash the creativity of markets to help build
new solutions.
By 2030, we must be operating in a world where digitized
and standardized sustainability data are the platform
that allows society to stitch together the incredible
dimensionality of the sustainability landscape from
the bottom up, and analyze them from the top down.
Overview Carbon Water Waste Ecosystems Appendix 10
2021 Outlook (continued)
Innovation investment
Not all solutions to our sustainability challenges are
By 2030, we must be operating in a world where carbon
offset and removal, water replenishment, and ecosystem
We will act in accordance The coming years of action
As you will see in the pages of this report, we have begun
available today, and those that are available are often service markets can supply demand many orders of with what we think needs work on all six enabling conditions. Sometimes our
early-stage, too expensive, or don’t currently scale. There magnitude greater than today and do so with
is already a large and growing amount of capital starting transactional transparency and standard insurance and to be done today to create actions may seem counterintuitive, and sometimes we
will be wrong. But over the next decade, our mentality
to flow into the climate and sustainability markets to help indemnification guarantees. the world we need to be will stay the same—we will act in accordance with what
with these issues, but little agreement on the framework we think needs to be done today to create the world we
that should guide these investments. This splinters the
Policy progression
Policy action is the ultimate enabling condition to move
operating in by 2030. need to be operating in by 2030.
solutions market, makes it difficult to understand
investment gaps, and disempowers investors to quantify
the world beyond the voluntary action of a few
corporations, and into a world where this work is
We are more convinced When we announced our carbon negative commitment
a year ago, we likened it to a moonshot—a grand goal
both financial and environmental returns on investment. required of all organizations. We’ve seen a tremendous than ever that Microsoft, that will require exceptional organizational focus, an
Attracting the amount of capital required and deploying amount of corporate action in the past several years.
it optimally means that by 2030, most climate Yet still only around 5 percent of the world’s largest and the rest of the world, integration of innovation from multiple sectors, and a
can’t-fail mentality. We know the work is monumental,
investments will need to fit within a well-structured and
accepted climate investment framework that places the
companies represented by the Global Fortune 500 have
pledged to become net zero. We cannot depend on the
is up to the task. for all of the reasons outlined previously.
leaders to bring up the laggards—that is what If the past 12 months of the COVID-19 pandemic and
large constellation of investment vehicles along an
government action must do. vaccine development have taught us anything, it is a
appropriate risk-tolerance spectrum while thoughtfully
reminder that the human species is capable of
targeting the most impactful areas of innovation. By 2030, we need to be operating under a tremendous scientific and technological innovation
Market maturation comprehensive and globally coordinated policy regime when faced with a crisis. Our climate crisis may be
Meeting the world’s sustainability goals will require the that limits emissions in line with a 1.5ºC future, and playing out more slowly than COVID-19 has, but the
procurement of new solutions, particularly in areas like holistically monitors and manages humanity΄s deposits potential impact on the global economy, livelihoods,
carbon reduction and removal, and water replenishment, and withdrawals from the natural systems that support and human health is the same—and so, too, must be
at levels many orders of magnitude greater than they our species. This must be done in a way that respects the the scale and speed of our response.
exist today. If these markets don’t mature rapidly, they political sovereignty of nations around the world but
respects the cross-boundary nature of the Earth΄s life As we enter 2021, we are more convinced than ever that
will be overwhelmed by the demand that will be placed
support systems, and the need to equitably share these Microsoft, and the rest of the world, is up to the task. We
on them in the coming years. Current sustainability
resources across cultures and communities. are committed to playing our part and look forward to
markets, such as those for avoided emissions offsets or
working with all of you to help accelerate the world’s
carbon removal credits, are opaque and poorly
transition to a more economically and environmentally
understood by many current customers and most future
sustainable future for us all.
ones. Standard contracting templates, aggregating
demand through buyers’ alliances, and well
communicated pricing and delivery are all advances that
will mature these markets and ready them for the
onslaught of demand that will occur in the final years of
this decade and beyond.Overview Carbon Water Waste Ecosystems Appendix 11
2020 Progress
In 2020, we announced our four commitments that
$30M
Ecosystems Zero waste Water positive Carbon negative
700+ $10M 500MW
will guide our sustainability work for the next decade.
While we have much to do, we have already begun
to see progress. Grew the AI for Earth Invested $10 million in
PPA with Sol Systems will
advance clean energy and
grantee community the Emerald Technology
environmental justice.
to over 700 grantees in Ventures’ Global Water
Invested $30 million in Impact Fund to support
over 100 countries.
Closed Loop Partners’ innovative technologies
Carbon Build the funds to help build a
Water positive Zero waste for water conservation, Zero waste
60K
negative Planetary circular economy.
by 2030 by 2030 access, and quality.
by 2030 Computer
In FY20, diverted over
60 000 metric tons of
$129M 10PB
Carbon negative Zero waste Carbon, water, and waste Ecosystems Zero waste waste from landfills.
1M 10,500 90% Water positive
Secured one million
metric tons of carbon
removal via projects
from RFP process
Over 10,500 employees
engaged in Ecochallenges
to reduce personal
waste footprints. Invested $129 million across funds On-boarded 10 petabytes of
Circular Centers, piloted
this year, can contribute to
increased reuse of servers
by 90 per cent by 2025.
7X
Increased our
and organizations innovating in environmental and Earth observation replenishment project
for FY21.
carbon reduction, water management, data to Azure that is now freely available portfolio by nearly 700
and circular economy. for the conservation community. percent from FY19.
Carbon negative Carbon negative Zero waste Carbon negative Water positive Carbon negative Water positive
21M First
Top suppliers reduced Delivered first tool to
Zero 586,683
Achieved Zero Waste Reduced emissions across
1.5M 100% 20
Launched water All suppliers must report To date, funded nearly
their collective footprint provide CO2 transparency Certification of datacenters all scopes by 586,683 accessibility work to their GHG emissions 20 replenishment
by 21 million tons CO2e for cloud via the Microsoft in Dublin, Ireland and metric tons CO2e in FY20. provide 1.5 million people through updated Supplier projects in six states
as reported by CDP. Sustainability Calculator. Boydton, Virginia. access to safe drinking Code of Conduct. and two countries.
water and sanitation.Overview Carbon Water Waste Ecosystems Appendix 12
How we report
About this How to read this report
The report structure follows our four areas of commitment, across carbon, water, waste, and ecosystems,
report with each as a chapter. Within each chapter, you will find sub-sections outlining the work we’ve done this
year and where we are headed in the coming years across our pillars:
We believe in transparency
and accountability. This report
is one way we will deliver on
these principles, which is why Enabling Key learnings
Our Getting to Driving
we have shared our progress systems and what’s
approach goal innovation
and challenges, as well as our change next
environmental data, which
was reviewed by a third party. An explanation of Aligned to our Aligned to our customer Aligned to our policy and A candid look at what
why this is a focus area, operational and employee and product pillars. An investment pillars, as well we’ve learned in our first
We intend to have additional what our commitments pillars. An in-depth look in-depth look at the latest as partnerships and year and what is coming
key portions of the report are, and a selection at our operational innovations from research and development. next in each program.
reviewed by a third party by of accomplishments. roadmap and approach
to reduce, replace, or
Microsoft to help our
customers and partners
our next annual report. This is remove our footprint, as reduce their footprints
part of a multi-year effort to well as employee and in carbon, water, waste,
community engagement. and ecosystems.
provide leading transparency,
visibility and reliability in our
non-financial reporting.Overview Carbon Water Waste Ecosystems Appendix 13
“While the world will Contents
need to reach net zero, Our approach 14
those of us who can afford Getting to carbon negative 17
to move faster and go Reducing Scope 1 and 2 17
emissions
further should do so.
Reducing Scope 3 19
That’s why Microsoft is emissions
working to reduce and Removing carbon 21
ultimately remove our Driving innovation: Digital 22
carbon footprint.” tools for carbon reduction
Enabling systems change 24
Brad Smith, President
Key learnings 29
What’s next? 30Overview Carbon Water Waste Ecosystems Appendix 14
Our approach
2030
The context
Overview The science is clear—to avert the worst effects of the
rapidly changing climate, the world needs to transition
to a net zero carbon emissions economy by 2050. By 2030, Microsoft will
Our progress to date
To reach net zero emissions, the world must prioritize remove more carbon
making deep emissions reductions across all sectors, than it emits.
thereby cutting carbon emissions by half over the next
10 years. In addition, to account for hard-to-abate
emissions sources, we must invest in reliable techniques
for permanently removing carbon.
Microsoft has operated carbon neutral since 2012.
Like many companies, our neutrality commitment relied
on investing in offsets that paid others to not emit
Net Zero $50 million
carbon, instead of removing carbon dioxide.
The science, and the social and economic impacts of
climate change, drove our conclusion that carbon
neutral alone is not enough—leading to our carbon Became a founding member Invested $50 million in Energy
negative commitment in 2020. of Transform to Net Zero. Impact Partners.
By 2030, we will be carbon negative, Find out
1 million
more here
Launched the Microsoft Sustainability
and by 2050, we will remove from the Calculator to provide transparency on
atmosphere all the carbon dioxide carbon to customers.
Secured 1 million metric tons of carbon
we have emitted since we were removal for FY21 from projects via RFP.
founded in 1975. Named to the CDP A List for Climate
Change in 2020.
Scope 3
Extended internal carbon fee
to include Scope 3 emissions.
586,683
Reduced emissions across all scopes
by 586,683 metric tons of CO2e in FY20.
Updated our Supplier Code
of Conduct to require a greenhouse
gas emission disclosure.
Microsoft received certification from the Science Based Target
Initiative (SBTi) for our carbon goals and targets in 2019.Overview Carbon Water Waste Ecosystems Appendix 15
Our approach (continued)
We will help our suppliers,
Our carbon Empowering customers
and partners customers, and partners
commitments We will help our suppliers, customers, around the world reduce
and partners around the world reduce
In January 2020, Microsoft
their carbon footprints through our their carbon footprints
CEO Satya Nadella, President
Brad Smith, and Chief
learnings and with the power of data,
AI, and digital technology.
through our learnings and
Financial Officer Amy Hood with the power of data, AI,
announced a new ambitious and digital technology.
goal and plan for Microsoft to
be carbon negative by 2030.
Nearly eliminating direct
emissions
We will reduce our Scope 1 and 2 Using our voice on carbon-
emissions to near zero by the middle related public policy issues
of the decade, through energy We will support new public policy
efficiency work and reaching 100 initiatives to accelerate carbon
percent renewable energy by 2025. reduction and removal opportunities.
Becoming carbon negative Removing carbon
By 2030, Microsoft will be carbon By 2030, Microsoft will remove more
negative, and by 2050, we will remove carbon than it emits. By 2050, we΄ll
from the atmosphere all the carbon remove all our historical emissions.
dioxide our company has emitted either
directly or by our electricity consumption
since we were founded in 1975. Investing in the future
We have created a $1 billion Climate
Innovation Fund to accelerate the
Reducing value chain global development of carbon
emissions reduction and removal technologies,
as well as related climate solutions.
By 2030, we will reduce our Scope 3
emissions by more than half.Overview Carbon Water Waste Ecosystems Appendix 16
Our approach (continued)
Table 1 Microsoft’s definitions
Microsoft´s pathway to carbon negative by 20301 of carbon neutral and
14M
carbon negative:
12M Carbon neutral
10M A company is said to be carbon neutral
by reducing their emissions and/or
8M paying others to not emit an equivalent
Metric tons CO2e
6M to their remaining emissions.
4M Carbon negative
2M A company is carbon negative when
it removes more carbon than it emits
0
each year. Our definition is that carbon
-2M negative must be even bolder than net
-4M
zero—making deep reductions first
and foremost, then using removal only
-6M for the residual footprint, and going
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 beyond that to cover even more.
Net carbon emissions (after carbon removal) Microsoft and its supply chain carbon emissions Microsoft operational carbon emissions Avoided emissions offsets Carbon removal
1 Chart has been updated to reflect latest actual values which incorporate latest methodology and structural change adjustments.
Historic and projected emissions driven by latest actual data have also been updated for consistency. Projected removal values
Table 2 have also been updated consistent with our latest projected emissions and procurement strategy.
Microsoft emissions (Scopes 1, 2, 3)
14M
12M
Metric tons CO2e
10M
8M
6M
4M
2M
0
FY17 FY18 FY19 FY20
Scope 1 Scope 2 Scope 3 Scope 2 and 3 emissions included in this chart are market-based.Overview Carbon Water Waste Ecosystems Appendix 17
Carbon negative
Getting Scopes explained
Reducing Scope 1 and 2 emissions
We are driving down Scope 1 and 2 emissions to near
zero by the middle of this decade, focusing on our direct
and Dublin campuses and sites. ESB, in addition to
energy optimization programs and modern workplace
solutions, has enabled us to reduce our energy
to carbon and indirect emissions from our facilities and datacenters consumption globally by almost 25 percent since 2012,
Scope 1 while growing our building portfolio.
through the following methods:
Direct emissions created
With new campuses, we will pursue LEED Platinum
negative
by your activities Zero carbon power and diesel-free generation
We are working to scale up our consumption of zero certification. These projects demonstrate high
carbon energy in our campuses and datacenters. performance designs through innovations such as all-
This is the exhaust that comes from the electric central plants, thermal energy storage, geothermal
• Our Puget Sound campus has been powered by zero wells, operable windows, mass timber construction, and
vehicles on your campus, natural gas that your
carbon Washington hydropower since 2019, and now,
Our strategy includes reducing buildings directly consume, and the generators
with our Puget Sound Campus Modernization project,
embodied carbon reduction via material selection.
our Scope 1 and 2 emissions to you might run.
we’re going a step further and eliminating the use of Improving energy efficiency in datacenters
We use a familiar industry calculation, power usage
near zero by the middle of this Scope 2 fossil fuels for all daily operations, including the use
of natural gas in our kitchens. effectiveness, to measure and improve efficiency, while
Indirect emissions from
decade, reducing our Scope 3 the production of the • We will eliminate our dependency on diesel fuel at
also evaluating new innovations and initiatives that we
can pilot on our own datacenters.
emissions by more than half by electricity or heat you use our datacenters by 2030. Cloud providers around the
In 2018, a report showed significant energy and carbon
2030, and removing more This type of emission comes from the traditional
world rely on diesel-powered generators for backup
emissions reduction potential from the Microsoft cloud
power to support continuous datacenter operations.
carbon than we emit. energy sources that power your office buildings We will shift to low-carbon standby power systems when compared with on-premises datacenters. These
or your home. including battery storage, and low-carbon fuel such as gains, as much as 93 percent more energy-efficient
hydrogen, building on a successful test in 2020 using and as high as 98 percent more carbon-efficient, are
Scope 3 hydrogen fuel cells as backup power for datacenters. due to Microsoft’s extensive investments in IT efficiency
Indirect emissions from all from from chips to datacenter infrastructure, as well as
other activities in which Zero carbon transport
renewable energy.
you΄re engaged We will electrify our global campus operations vehicle
fleet, over 1,800 vehicles, by 2030. This work encompasses We also prioritize supporting local communities in which
every vehicle that supports our office locations around the we operate datacenters with programs to reduce local
These emission sources can be extensive.
world. With many vehicle types, ownership structures, and air pollution, improve air quality, and cut carbon
They cover all parts of your supply chain, from
regional market variations, we have begun developing a emissions. Projects include initiatives that enable the
materials in buildings, business travel for your
10 year execution strategy that will demonstrate market shift to clean, affordable, renewable energy and that
team, and product lifecycle all the way to the
demand for zero carbon transportation and interweave transform the grid towards a low-carbon future, such
electricity your customers consume.
technology to enable our goals. as distributed renewables installations, community
This is the largest category of all the different ground mount systems, localized clean energy plans,
emission scopes and poses one of the largest Improving operational efficiency in buildings and renewable energy education.
areas for improvement. Since 2012, we’ve deployed an energy smart buildings
(ESB) solution that has reduced energy consumption and Find out
more here
costs by 6 to 10 percent at Puget Sound, Las Colinas,
Beijing, Shanghai, Fargo, Charlotte, Silicon Valley,Overview Carbon Water Waste Ecosystems Appendix 18
Carbon negative (continued)
Moving to 100% renewable energy assets, as well as their customers’ consumption, to supply
them with continuous renewable energy. Azure IoT
We support local Supporting climate equity and environmental justice
We recognize that climate and environmental issues don’t
By 2025, we will reach our 100 percent renewable energy
goal by purchasing enough renewable energy to match our solutions also allow users to adjust their business communities in which affect every community in the same way and that we need
operations to better fit the availability of renewables,
electricity consumption at our datacenters, buildings, and
campuses worldwide. We are well on our way to reaching monetizing their energy flexibility and decreasing their we operate datacenters to address environmental equity as a broader issue. In fact,
those most affected by climate change are those who have
this goal, as we began purchasing renewable energy via carbon footprint. This solution is being used at our with programs to reduce contributed the least to climate change. Renewable energy
long-term power purchase agreements (PPAs) in 2013, and Swedish offices and, in the third quarter of 2020, we procurement can help address these inequities.
have steadily signed more deals in subsequent years, announced that our new datacenter region in Sweden will local air pollution, improve In June 2020, we announced our largest power PPA to
purchasing renewable energy across three continents. also rely on the solution—which is now available to
customers throughout the country via Vattenfall.
air quality, and cut date with this in mind. Our 500MW PPA with Sol Systems
Our approach to renewable energy has two core tenets:
regional impact and additionality. We have focused on Piloting distributed generation carbon emissions. is a first-of-its-kind initiative, tying the purchasing of
renewable energy to environmental justice and equity in
regional matching to operations, because where and We believe distributed energy generation has a key role under-resourced communities. This partnership:
how you buy matters—the closer the new wind or solar to play in the transition to a zero-carbon grid. In 2020,
• Prioritizes projects in under-resourced communities,
farm is to your datacenter, the more likely it is those zero Microsoft launched a new project to pilot this work. We
working with local leaders and prioritizing minority
carbon electrons are powering it. Microsoft, as a result, is partnered with SSE Airtricity, Ireland’s largest provider of
and women-owned businesses.
sometimes a market driver, striking the first or the largest 100 percent renewable energy and a part of SSE Group,
corporate PPAs in a state or region that was not to install and manage a large number of internet- • Provides at least $50 million for community-led grants
previously viewed as a good market for renewables. We connected solar panels, which are connected via Azure and investments that support educational programs,
also focus on additionality, using our capital to fund new IoT to Microsoft Azure. Software tools then aggregate job and career training, and programs that support
projects that may not succeed without our investment. and analyze real-time data on energy generated by the access to clean energy and energy efficiency.
solar panels, allowing optimization and reduction of the
We utilize on-site energy when it makes sense. For • Ensures that community benefits are realized with
carbon footprint of electricity grids globally.
example, we currently power 25 percent of our Silicon accountability measures, including using third-party
Valley campus from on-site photovoltaic panels. Grid-interactive energy storage batteries evaluators to quantify and document social and
Microsoft has successfully piloted, in partnership with environmental outcomes of the initiative.
Our efforts go well beyond procurement because we Eaton and PJM Interconnection, grid-interactive energy
recognize that simply adding more renewables is Outside of the US, we are also using our procurement in
storage batteries in Virginia and Chicago. Utilizing
insufficient. We are innovating ways to enable utilities to support of climate equity. In the third quarter of 2020,
Eaton’s EnergyAware technology, we used a battery that
on-board increasing amounts of renewables in an Microsoft purchased the first-ever Peace REC (P-REC), issued
typically sits in our datacenter as a backup system,
effective and efficient way, so more people can benefit by Energy Peace Partners from Congolese solar developer
hooked it up to the grid to receive signals about when to
from renewable energy, including the following: Nuru’s newly commissioned 1.3MW commercial solar-plus-
take in power, when to store it, and when to discharge to
storage project in Goma, Democratic Republic of the Congo.
24/7 renewable energy matching solutions support stability, grid balancing, and integration of
The purchase helped Nuru install and operate 35 mini-grid-
In 2020, we launched a new 24/7 matching solution with renewable energy. With thousands of batteries as part of
connected streetlights in the Ndosho neighborhood of Goma.
Swedish energy company Vattenfall—a first-of-its-kind our backup power systems, this pilot demonstrates the
approach that allows an hourly-matched supply of 100 potential to rapidly scale storage solutions, allowing
percent renewable energy. Microsoft Azure IoT gives datacenters to support grid stability, furthering the
renewable energy suppliers, like Vattenfall, real-time penetration of renewable energy. Following the
data on their renewable energy and energy storage successful pilots, we are investigating the suitability of
In our datacenters, we’re measuring and improving efficiency.
further deployment at new projects in other geographies.Overview Carbon Water Waste Ecosystems Appendix 19
Carbon negative (continued)
Reducing Scope 3 emissions Scope 3 Further improving energy efficiency of
8.9%
We are reducing our Scope 3 emissions by more than devices and software
half by 2030. While we do not have direct control over In our devices and software, we are continuing to
the majority of emissions in the Scope 3 category, they reduce carbon emissions and environmental impact
represent the bulk of our emissions and we are from design to manufacturing. For further information
Our Scope 3 carbon see the Devices Sustainability Report.
addressing them in our carbon negative commitment
emissions related to
by the following methods: Surface
devices was reduced
Improving supplier emissions data tracking by 8.9 percent (-524K The Surface Pro X uses less power than the Surface Pro 6,
In 2020, as reported to us by CDP, our top suppliers mtCO2e) from a 2017 while providing similar high performance. Estimated
reduced their collective carbon footprint by 21 million base year. total energy consumption for the Surface Pro X is 13.1
metric tons of carbon dioxide equivalents (CO2e). kWh/year, compared with 18.2 kWh/year for the Surface
Our Devices team built an Audit Management System Pro 6, equivalent to a 28 percent reduction.
using Microsoft Power BI to embed compliance and Xbox
sustainability into our business. Now, we can track Xbox recently added Regulatory Standby Plus (RS+) as a
performance and enable continuous supply chain new power mode. At a high level, RS+ will provide the
improvements by tracking supplier maturity in social power savings and environmental benefits of RS with the
and environmental accountability. benefits of keeping the user’s OS and content up to date.
Improving supplier emissions reporting This can reduce power from 15W to less than 2W during
In 2020, we updated our Supplier Code of Conduct to standby mode.
now require a greenhouse gas emission disclosure. This Windows
is a first step to increase transparency and enable us to In May 2020, we launched the Windows Software
work collaboratively with our suppliers to help reduce Sustainability Initiative. It aims to reduce the carbon
their emissions. footprint of Windows software and will establish a set
Extending the carbon fee to Scope 3 emissions
In 2021, this data will become an explicit aspect of our of best practices for energy-efficient Windows app
We established our internal carbon fee in 2012 to fund development. We will build on this in FY21, aiming to
procurement processes for our supply chain, including
our carbon neutrality commitment. In 2019, we raised reduce the energy consumption of the top 20 most-used
informing buying decisions. We will continue working
the fee to $15 per ton, which we charged to each Windows experiences, which together represent 90
with our suppliers to on-board them to our new
business group across Microsoft based on their Scope 1 percent of active Windows energy usage.
approach and ensure compliance.
and 2 carbon emissions and business air travel.
Find out
In 2020, we expanded the fee to cover each business more here
group’s Scope 3 emissions. While we’ve initially set the
fee at a lower rate for Scope 3, it will ramp up over time
until there is one single fee across our entire emissions
portfolio. We are already seeing results, with accelerated
investments in the energy efficiency of our software
and hardware. Above left: Surface Pro X
Above: XboxOverview Carbon Water Waste Ecosystems Appendix 20
Carbon negative (continued)
Reducing embodied carbon Shifting to virtual events For example, Microsoft’s multiple-day MVP Global Reducing carbon from travel with SAF
In our 500-acre Puget Sound Campus Modernization We began shifting events to a virtual format using Teams Summit event in March 2020 was migrated to a When employees do travel, we want to use our travel
project, we are partnering with industry leaders to pilot with our 2019 shareholder meeting. With virtual events virtual format on Teams. The Summit included over dollars wisely and in support of greener options,
and fund a new tool, the Embodied Carbon in becoming the norm due to COVID-19, we held all our 2,000 attendees from around the world. By hosting including sustainable aviation fuel (SAF).
Construction Calculator (EC3). EC3 enables data-driven 2020 events virtually, including flagship events like Build, the event virtually as compared to in-person, the carbon
In October 2020, Microsoft announced a partnership
decisions in selecting carbon smart building materials Ignite, and Inspire as well as smaller regional and emissions were estimated to be lowered by nearly 5,000
with Alaska Airlines and SkyNRG to supply an amount of
while highlighting which materials have the greatest business group events. We relied on Teams, finding metric tons. This is equivalent to removing roughly
SAF that will cover Microsoft employees’ travel on three
capacity for impact on the project—so we can prioritize new ways to operate seamlessly and collaboratively— 390,000 cars from the road for one day, which is more
frequently traveled Alaska routes—between Seattle and
investments accordingly. and are beginning to calculate the carbon benefits of than the number of cars crossing the George Washington
San Francisco, San Jose, and Los Angeles. The SAF,
this approach. Bridge per day, or the amount of carbon absorbed over 10
In our modernization project, we set a 30 percent supplied by SkyNRG and produced from waste oil, is one
years by planting nearly 150 acres of forest, which is over
reduction target for embodied carbon. The commitment way for the aviation industry to reduce carbon emissions
half the size of Central Park. In 2021, we intend to share
to using EC3 via third-party verified environmental on a lifecycle basis. It is also a way for us to reduce the
additional information on the carbon emissions impacts
product declarations (EPDs) led to the first manufacture- emissions associated with our business travel in Scope 3.
of our larger events, such as Build, and on remote work.
specific and product-specific EPDs for precast concrete This first-of-its-kind partnership in the US is a model
in the US. Based on our lessons learned, we are other companies can use to reduce their employees’
expanding the use of the EC3 tool to our datacenters and carbon emissions associated with business travel.
other new campuses to reduce embodied carbon.
Our partnership with Alaska builds on our commitment
Rethinking travel to more sustainable air travel that we started in October
For the past several years, we’ve encouraged employees 2019 via a partnership with KLM, where we committed
to rely more on Microsoft Teams and less on travel to to purchase the SAF equivalent to all flights taken by
work with their colleagues and customers. In 2020, prior Microsoft between the US and the Netherlands on KLM
to COVID-19, we began empowering employees with and Delta Airlines.
more information and new choices, including
TripTrackerLite, which delivers personal travel statistics
including carbon impact from travel. We worked with
our travel partner, Concur, to provide the estimated
carbon emissions of flights and help employees
compare the carbon costs, as well as financial costs,
of their travel options.
We’ve encouraged employees to rely more on Teams and less on airline travel.Overview Carbon Water Waste Ecosystems Appendix 21
Carbon negative (continued)
1M
Removing carbon
In 2018, the Intergovernmental Panel on Climate Change
metric
(IPCC) special report on 1.5°C found that reducing
emissions by transitioning to zero-carbon energy, avoiding
deforestation, and increasing energy efficiency will be vital,
tons
but insufficient, to prevent the level of warming rising to
unsafe levels. Carbon removal—the process of extracting
carbon dioxide from the atmosphere and storing it in
nature and deep in the Earth—will be crucial to achieving
our climate goals. Microsoft’s commitment to become of carbon removal
carbon negative will require us to purchase an increasing contracted for in 2020.
amount of carbon removal.
Meeting our goal will require the market to evolve—
offering many more, better-quality carbon removal Our initial portfolio focused on nature-based solutions.
services at increasingly affordable rates. We intend to use
our procurement of carbon removal to drive demand for
Results of the first carbon removal RFP
high-quality carbon removal methods through our
criteria, projects, and market innovations. In July 2020, we issued a request for proposal (RFP)
to source carbon removal from a range of solutions.
In 2020, we launched our removal program, with a goal Our initial portfolio focused on nature-based climate
to contract for the removal of 1 million metric tons of solutions due to pricing and availability. We will shift to
carbon dioxide from the environment. a blend of nature and technology-based solutions as
We began with establishing key principles and defining they become more viable. Our portfolio includes:
our scope. We also enlisted the support of third-party • Reforestation projects in Peru, Mississippi, Nicaragua,
scientific and market advisors, including NGO Winrock and India.
International and the advisory firm CarbonDirect, to Carbon removal will be crucial to achieving our climate goals.
inform our procurement strategy. • Improved forestry projects in the US.
• Soil carbon removal projects in the US and Australia.
Carbon removal principles Carbon removal solutions • Biochar projects in Europe and Australia.
• Engineered solutions such as direct air capture and bio-
oil sequestration.
Bioenergy
Afforestation Direct air
Net Scientific Avoidance Other Soil carbon with carbon Beyond the projects we supported, our RFP process
and capture
negativity verification of harm considerations* sequestration capture and brought us a new level of insight about quality and
reforestation (DAC)
storage* volume on the market today. We need far clearer
standards for carbon removal durability and reversal
* Consideration of scalability, affordability, climate equity, geographic location, and technology innovation. * (BECCS).
risk, and we need collective buying and investment to
accelerate and scale this nascent market.Overview Carbon Water Waste Ecosystems Appendix 22
Driving innovation
Digital tools 10K
Microsoft Sustainability Calculator
We have introduced the Microsoft Sustainability
Calculator, which provides our customers with
for carbon transparency into their carbon emissions resulting
from their cloud usage, making Microsoft the only
cloud provider to provide full transparency to
Over 10,000 users of EC3
tool, hosted on Azure,
to improve transparency
reduction
customers across all three scopes of emissions. Using of carbon emissions in
AI and advanced analytics, the Sustainability building materials.
Calculator shows reduction trends for customer cloud
usage over time, providing the ability to forecast
cloud emissions and simplify carbon reporting. It uses
We believe that Microsoft’s consistent and accurate carbon accounting to
most important contribution to quantify the impact of Microsoft cloud services on
customers’ environmental footprint and can compile
carbon reduction will come not the information into reports for voluntary or statutory
from our own work alone, but by reporting requirements.
helping our customers, partners, Find out
Helping our customers, partners, and suppliers around the
and suppliers reduce their carbon more here
world reduce their carbon footprints.
footprints through our learnings
and with the power of data, AI, Embodied Carbon in Construction
Calculator (EC3)
and digital technology. Launched in November 2019 and hosted on Azure, the
free EC3 tool reveals the embodied carbon in materials
so architects, engineers, and contractors can make
informed choices, selecting materials with the lowest
climate impact.
There are now over 10,000 users of the EC3 tool. It
received the World Green Building Council΄s Chair΄s
Award on Global Green Building Entrepreneurship in
2020 and has a global database of carbon data for
almost 5,000 individual building products across major
material categories.
Find out
more here
Microsoft Sustainability Calculator.Overview Carbon Water Waste Ecosystems Appendix 23
Driving innovation (continued)
40%
Enabling customers and partners Providing growers with insights to lower GHGs
across industries Cloud Agronomics uses remote-sensing technology and
Advancing the energy transition AI, leading a new wave of proactive analytics to lower
BP and Microsoft have formed a strategic partnership greenhouse gas emissions and spur sustainable food
In the US, buildings
to further digital transformation in energy systems and production. They scan crops and soils using
account for 40 percent
advance the net zero carbon goals of each company. In hyperspectral imaging, generating lab-grade analysis
of overall energy
2020, the companies signed an agreement to co-explore from the air. Then, within Azure, calibration and analysis
consumption.
co-innovation opportunities across several key areas of algorithms convert the data into insights. Through their
decarbonization that are important for our journey as crop nutrient and soil carbon measurement products,
well as for the world. We are currently focused on IoT, Cloud Agronomics is building one of the largest tagged
AI, and cloud solutions that are intended to advance datasets for agriculture, removing verification as a key
smart and clean cities, clean energy parks, and barrier to scale and boost soil-based carbon offset
consumer energy. projects around the world.
IoT and AI can improve
Supporting technology-backed geological carbon Enabling new energy efficiencies building efficiency. Unlocking sustainable agriculture
sequestration A robust partner ecosystem, relying on Azure, is Land O’Lakes, Inc. and Microsoft forged a new alliance
In the last quarter of 2020, Microsoft signed a accelerating Microsoft’s impact on carbon reduction. in 2020, aimed at pioneering new innovations in
memorandum of understanding (MOU) to explore ways ABB energizes the transformation of society and agriculture. The work is already underway to build a
to support the Northern Lights carbon dioxide transport industry to achieve a more productive, sustainable connected Digital Ag platform on Azure that brings
and storage project. It is a joint effort of the Norwegian future. The IoT cloud platform for ABB Ability solutions is Land O’Lakes΄ portfolio of digital tools into a
government and energy firms Equinor, Shell, and Total based on Azure. Honeywell is using Azure in Honeywell standardized architecture. In addition, the teams have
that chains together technologies developed for the Forge, its Enterprise Performance Management software been collaborating on the initial build of soil health
energy industry across decades, using them in new that integrates with Microsoft Dynamics 365, enabling technologies that bring data from sensors and satellites
ways to provide for the effective transportation, receipt, predictive maintenance applications to improve together with farmer behavior data to predict carbon
and permanent storage of carbon in a reservoir in performance and energy efficiency across enterprise sequestration. These estimates, as well as information in
Norway’s North Sea. As part of the MOU, Microsoft environments. Johnson Controls and Microsoft Truterra Insights Engine, can help reduce carbon for the
and Northern Lights partners will explore opportunities expanded their partnership in December 2020 with a planet while turning a profit for farmers.
to integrate digital expertise, supporting the work to new collaboration to digitally transform how buildings
standardize and scale carbon capture across Europe and spaces are conceived, built, and managed to deliver
and use the transport and storage facilities as part energy optimization among other benefits. Together with
of Microsoft’s climate ambitions. Microsoft Azure, Schneider Electric’s EcoStruxure digital
solutions empower all to make the most of our energy
and resources, bridging progress and sustainability.
You can learn more about these and other
partner solutions at:
Find out
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