Microsoft Goes Carbon Neutral
In early 2020, Microsoft made a stunning announcement—the world’s largest software
company pledged to go carbon negative by 2030, and by 2050 to remove all of the CO2
that it has emitted since the company was founded in 1975. In a blog post justifying this
policy, Microsoft President Brad Smith laid out the ethical and moral imperative for a
major corporation such as Microsoft to adopt such a policy. He stated that:
The scientific consensus is clear. The world confronts an urgent carbon problem.
The carbon in our atmosphere has created a blanket of gas that traps heat and is
changing the world’s climate. Already, the planet’s temperature has risen by 1
degree centigrade. If we don’t curb emissions, and temperatures continue to
climb, science tells us that the results will be catastrophic.
While the world will need to reach net zero, those of us who can aAord to move
faster and go further should do so. That’s why today we are announcing an
ambitious goal and a new plan to reduce and ultimately remove Microsoft’s
carbon footprint.
Microsoft has, in fact, been carbon neutral since 2012, in part by purchasing what are
known as oMsets, which finance projects that absorb carbon dioxide, such as forest
preservation.
To become carbon negative by 2030, Microsoft will take a number of additional steps. It
plans to have 100 percent renewable energy running its facilities by 2025 and to
completely electrify its campus vehicle fleet by 2030. This is no small feat since
Microsoft has large server farms all around the world to support its Azure cloud
computing business. Server farms utilize enormous amounts of electricity, so Microsoft
will have to make substantial investments in renewables to achieve this goal.
In addition, Microsoft has set up a $1 billion innovation fund to develop technologies for
carbon reduction. The company is also moving forward with plans to invest in carbon
capture projects including planting more forests, improving the ability of the soil to take
up carbon from the atmosphere, and developing technologies for directly removing
carbon from the atmosphere and sequestering it underground. Microsoft has also
pulled back the curtain on a Sustainability Calculator to show its Azure customers the emission level associated with their Azure cloud computing services. Progress toward
the company’s lofty goal will be tracked in an annual Environmental Sustainability
Report.
Observers note that companies like Microsoft are increasingly feeling pressure from
their stakeholders to take action on emissions. A growing number of investors want to
see changes, as do many consumers and employees. Commenting on Microsoft’s
actions, Dickon Pinner, global head of McKinsey & Co.’s sustainability practice, noted
that, “Sooner or later, regulators will react and capital will react, so it is just a good
business decision if you have some confidence where this is heading.” In other words,
Pinner believes that Microsoft is simply getting ahead of the inevitable by taking such
actions and that this is good business strategy.
Microsoft is not the only major tech company to make carbon reduction part of its
sustainability strategy. Its Seattle area rival, Amazon.com, stated in 2019 that it would
add a fleet of 100,000 electric delivery vehicles as part of its drive to be carbon neutral
by 2040. Attaining that goal would require Amazon to have no net release of carbon
dioxide into the atmosphere by either oMsetting emissions through actions such as
planting trees or by fully eliminating emissions. Amazon has stated that it expects 80
percent of its energy use to come from renewable sources by 2024, up from 40 percent
at the time of its 2019 environmental pledge. Apple and Google also have pledged to be
carbon neutral, although by setting itself a carbon negative goal, Microsoft may have
raised the bar for its rivals.
While Microsoft’s strategy may seem audacious, not everyone thinks that Microsoft is
going far enough. Critics note that the company has links to the oil and gas industry and
that over the past year, Microsoft has struck deals with companies like ExxonMobil and
Chevron to move their data onto the Microsoft’s Azure cloud computing service. These
critics, which includes some of the company’s own employees as well as outside
environmental activists, believe that the company should not do business with oil
majors unless they also commit to sustainability policies.
Sources
A. Tilley and R. Gold, “Microsoft Raises Stakes in Corporate Climate Pledge Race,” The
Wall Street Journal, February 17, 2020; Brad Smith, “Microsoft Will Be Carbon
Negative by 2030,” OMicial Microsoft Blog, January 16, 2020; “Microsoft’s Carbon
Negative Goals Could Push Other Tech Companies to Catch Up,” The Real Deal,
January 25, 2020.
Case Discussion Questions
- Is Microsoft’s decision to go carbon negative by 2030 in the best interests of
Microsoft’s stockholders? What about other stakeholders such as the company’s
customers, employees, suppliers, and the communities in which it does business? - Viewed through the lens of “rights theories,” is Microsoft’s decision to go carbon
negative by 2030 ethical? - Apply John Rawls’ concept of the veil of ignorance to Microsoft’s decision. What
conclusion do you reach about Microsoft’s decision?