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Here’s why Microsoft’s carbon footprint grew 21% last year, as profits swelled

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Microsoft’s Chief Environmental Officer Lucas Joppa (left) and President Brad Smith. (Microsoft Photo)

Microsoft on Thursday released its annual Environmental Sustainability Report for 2021, covering its progress on goals for climate impacts, water conservation, waste reduction and ecosystem protection.

While the Redmond, Wash.-based software and cloud giant has wide-ranging environmental initiatives, the focus for many comes down to one number: How big was the company’s carbon footprint?

The answer? Bigger than they’d like.

After three years of slight declines in emissions, Microsoft saw a 21% jump from 11.2 million metric tons of carbon dioxide equivalent released in 2020 to nearly 13.8 million metric tons released last year.

Microsoft has vowed to be transparent in its climate efforts and company leaders waited only until the report’s third paragraph to acknowledge the sizeable increase.

“2021 was a year of both successes and challenges,” said President Brad Smith and Chief Environmental Officer Lucas Joppa in the forward to the report.

Though the company reduced some of its emissions sources, it grew in the massive “scope 3” category, which covers emissions from third parties — namely the goods and services purchased by Microsoft, the energy used by Microsoft’s consumer products, and the concrete and steel needed for its construction projects.

“Our scope 3 emissions increased year over year, due in substantial part to significant global datacenter expansions and the growth in Xbox sales and usage as a result of the pandemic,” said Smith and Joppa.

Microsoft has set of goal of becoming carbon negative by 2030. By that time, the company has promised to slash its scope 3 emissions in half compared to its 2020 levels and offset the remaining carbon. Last year, the company paid for the removal of 1.4 million tons of carbon through reforestation, capturing carbon from the air and other efforts. It plans to purchase 1.5 million tons of offsets during the current fiscal year.

While emissions rose, so did the company’s profits. Microsoft posted profits of $18.8 billion in the December quarter, an increase of 21%. In a blog announcing the sustainability report, Smith and Joppa said that annual business revenue had increased 20% last year.

Though the company is one of the world’s most valuable and has a market capitalization of about $2.16 trillion, its footprint of 13.8 million metric tons of carbon is relatively small. Washington state, by comparison, emitted 99.6 million metric tons in 2018, the most recent available data.

Rival Amazon also reported an increase in emissions in its 2020 report. As its sales skyrocketed during the pandemic, its carbon footprint grew by 19%. Amazon has not released 2021 data.

In the report Microsoft also noted:

  • The allocation of $471 million of its four-year, $1 billion Climate Innovation Fund to climate tech projects that reduce or remove carbon, as well as address water and waste challenges. Recent investments include LanzaJet, BlocPower and Eversource.
  • A $100 million grant to Breakthrough Energy Catalyst, an initiative led by Microsoft co-founder Bill Gates to fund the commercialization of climate technologies.
  • Signing of agreements to purchase approximately 5.8 gigawatts of renewable power from projects in 10 countries.
  • Unveiling of Microsoft Cloud for Sustainability, a platform to help organizations manage sustainability projects; the effort is in “public preview.”
  • An increase of its internal carbon fee, a charge the company applies to its own operations to help pay for sustainability initiatives such as the purchase of cleaner aviation fuel.

Other accomplishments noted in the report include protecting more than 17,000 acres of land; expanding its AI for Earth program; investments in programs providing clean water and water replenishment; certification of four zero waste datacenters; and plans for additional “circular centers” where 90% of datacenter electronics are reused.

While Microsoft has been a corporate leader in climate issues, it has also faced criticism for providing Azure cloud services to oil and gas giants including Shell and Chevron.

Smith and Joppa conclude their blog with a statement regarding their work in the energy industry.

“While we will continue to offer commercial technology to anyone, we will partner most closely with those energy industry customers who have a net zero-by-2050 goal, in recognition of the transformational role they will play in delivering on the world’s renewable energy needs,” they said.

Last year Shell committed to reaching that goal. Chevron and Exxon have each announced an “aspiration” to get to net zero — but are not including scope 3 emissions in their tallies.

How the pledge will play out to “partner most closely” with energy companies with climate goals remains to be seen.

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