On January 28, 2021 Microsoft released its first Environmental Sustainability Report “A Year of Action” documenting progress the company made since announcing its 2020 commitments to become a carbon negative, water positive, zero waste company that protects more land than it uses by 2030. See a summary of the report in my previous blog post “Part one: A review of the Microsoft 2020 Environmental Sustainability Report A Year of Action.” This post will explore the carbon negative commitment. The third and final post will close out with a deeper look at water positive, zero waste and ecosystems, including the mysterious Planetary Computer.
Background
A company is carbon negative when it removes more carbon from the atmosphere than it emits each year. For the purposes of this post, carbon is shorthand for all greenhouse gases. If you want to understand why adding too much carbon to the atmosphere is bad, check out this great primer.
Microsoft will achieve carbon negativity through a combination of reduction and removal, making deep reductions in emissions first and foremost, then using removal only for the residual footprint. This is rare. There aren’t many carbon negative companies, which means achieving this commitment will require operating in uncharted territory. Indeed, the report and accompanying white paper, Microsoft carbon removal "Lessons from an early corporate purchase", make this point repeatedly as they describe the frustrating gap between ambition and reality. Today we lack the technology, markets, and commonly accepted accounting standards and methodologies required for carbon removal on a scale big enough to make a difference. Despite all this, Microsoft is attempting to blaze a trail through the wilderness that others can follow.
"While the world will need to reach net zero, those of us who can afford to move faster and go further should do so." Microsoft President Brad Smith
Arguably, carbon is where Microsoft focused most of its year one efforts, and for good reason. I recently had the chance to ask Microsoft’s Chief Environmental Officer Lucas Joppa “What keeps you up at night?” and the carbon problem was at the top of his list. From melting ice caps, to rising sea levels, more frequent extreme weather events, drought, heat waves, mass extinctions and a looming global migration crisis, the carbon problem is really one of systemic destabilization – the kind that could topple civilization as we know it. If climate science is telling us one thing most emphatically, it is that we need to drastically reduce the amount of carbon in the atmosphere immediately. This is why reduction of emissions simply will not be enough, for Microsoft or anyone else. As the chart below demonstrates, carbon removal will be critical to stabilizing the Earth’s climate.
Scoping it out
To learn more about Scope 1, 2, and 3 emissions, watch this 5 min video narrated by Lucas Joppa
Each of the 2020 carbon negative accomplishments represents an impressive amount of hard work and groundbreaking firsts. Microsoft has proven its willingness to wade through the ambiguity of underdeveloped carbon removal markets and nascent technology like direct air capture to assess feasibility so others can benefit. Further, the company has already made significant progress on how it measures and reduces carbon emissions throughout its entire supply chain. Consider just a few of these points:
- Microsoft charges its own internal business groups a real fee on their emissions as an incentive to drive them down and a way to raise capital for funds that reward sustainable innovation internally. I am not aware of many companies, especially the size of Microsoft, that actually charge a real carbon fee – most use what are called "shadow prices."
- Few companies have begun to measure their Scope 1 or 2 emissions, let alone reduce or remove them. Even fewer have done this for Scope 3.
- Additionally, the company extended this real fee from its Scope 1 and 2 emissions out to Scope 3, which are the indirect emissions associated with its supply and value chain. This means it collects revenue on emissions it did not directly produce! Microsoft’s updated Supplier Code of Conduct essentially says, “if you want to continue doing business with Microsoft, you will need to measure and disclose your own emissions because ultimately, they are part of our footprint and we’re taking responsibility for that.” In essence, the company is using a carrot and stick approach with its own internal business groups and its suppliers to ensure everyone is coming along on this carbon negative journey.
Why is the inclusion of Scope 3 emissions so significant? Look no further than this chart:
A whopping ~95% of Microsoft’s emissions are Scope 3 which means that the company can only control ~5% of its own carbon footprint directly. The vast majority of emissions comes from the upstream parties Microsoft relies on to build its products and eventually, the downstream parties that consume them. Simply put, driving down the emissions of Microsoft’s entire supply and value chain is the only viable path to carbon negativity by 2030 and that is no easy task. It’s a fascinating example of just how far the private sector can go in incentivizing behavior change in others. Actions like these are not a substitute for government action (like a long overdue price on carbon) but they are an ambitious and positive step in the right direction.
Drawdown
While these efforts are laudable they are simply not enough. Carbon emissions are measured in billions of metric tons - millions barely move the needle. Microsoft was only able to procure 1.3M metric tons of carbon removal in its first year (the largest annual purchase of carbon removal ever made by a single company). Even so this represents a tiny fraction (just 0.5%) of the 50B metric tons humanity pumps into the atmosphere every year. In order to sequester carbon at scale, Microsoft must help catalyze a market for carbon reduction that barely exists while relying on technology that is largely unproven.
“For the world to achieve a net-zero carbon economy, Microsoft’s removal demands must make up a tiny fraction global demand and supply – not the entirety of it.” - Lucas Joppa
That is largely the story of year one on Microsoft’s carbon negative journey. In my own words, what is needed to accomplish this doesn’t exist yet, but that isn't stopping Microsoft from trying anyways; somebody has to go first. The company will deploy all its resources and influence to help everyone build what is needed to ensure a livable future for all life on Earth. And it will be transparent about the successes and failures along the way to make sure it all happens as quickly as possible because the clock is ticking.
“Stabilizing the global climate system will require a heroic societal effort. The world must drastically reduce carbon dioxide and other greenhouse gas (GHG) emissions. But reductions won’t be enough. As a global society we must also remove large amounts of carbon from the atmosphere, to avert the worst social, economic and environmental impacts of a rapidly changing climate. And we must do so while recovering from a pandemic.” – Carbon Program Manager Elizabeth Wilmott and Lucas Joppa
- See a summary of the overall report in Part One of this blog series
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Explore the water positive, zero waste, and ecosystems commitment in Part Three
Want to go deeper and learn more about carbon removal?
- Microsoft carbon removal "Lessons from an early corporate purchase" white paper (read it!)
- Companion blog published by Microsoft’s Chief Environmental Officer Lucas Joppa
- Companion blog published by Microsoft’s President Brad Smith
- Explainer: Understanding the Math Behind Microsoft’s Commitment to Become Carbon Negative by 2030 - ...
- National Academies of Sciences, Engineering, and Medicine 2019 report
- 2021 Carbon Dioxide Removal Primer
- Project Drawdown
Comments, questions and feedback welcome below!
Drew