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Microsoft reveals progress on carbon goals: 'This is both a giant leap and a modest step'

Tech giant has reduced carbon emissions by six per cent in the past 12 months

Microsoft has reduced its carbon emissions by six per cent since it announced its intention to be "carbon negative" last year.

The tech titan set out its carbon goals last year, which included cutting carbon emissions by 50 per cent and expanding its internal carbon fee by 2030, as well as eradicating its entire historical carbon footprint.

Since that announcement 12 months ago, Microsoft reported that it has cut its carbon emissions by 730,000 metric tons and has purchased the removal of 1.3 million metric tons of carbon from the atmosphere.

"While we've naturally spent much of the first year building the foundation for the decade ahead, we've also started to make real and measurable progress in reducing Microsoft's carbon emissions," wrote president Brad Smith (pictured top left, alongside CFO Amy Hood and CEO Satya Nadella) in a blog post.

"A small part of last year's reduction was due to the type of decreased activity the world experienced because of COVID-19. Obviously, that aspect is unsustainable, making other and more significant sources of progress more important. At the top of this list is the need to accelerate a shift from fossil fuels to renewable energy in our facilities and emissions reductions by our suppliers."

Smith outlined two factors that were accelerating its carbon and sustainability goals. One is the extension of its internal carbon tax to include emissions from its suppliers and customer use of its products. This tax will start at $5 per ton and will increase each year. The other factor is making ensuring that supplier contracts include a carbon price.

"One thing we continue to learn from this aspect of our work is that we must raise the bar on standards," he continued.

"As we said last January, we need to get real on carbon math. The current methods used for carbon accounting are ambiguous and too discretionary. We need clear protocols to ensure that progress reported on an accounting statement is truly progress in the real world.

"As we work to decarbonise our supply chain, the role of contracts is key. Supplier contracts today do not include a price on carbon - and they must. Passive purchasing is not sufficient."

Smith said that the purchase of 1.3 million metric tons of carbon from 15 suppliers across 26 projects has been Microsoft's "most dramatic action" in the last year and claimed it was the largest annual carbon removal purchase by any company in history.

"This is both a giant leap and a modest step. On the one hand, we believe this is the largest annual carbon removal purchase any company has ever made. It's creating a new and dynamic economic market that the world needs," he stated.

"But compared to what we need to accomplish by 2030, it's only an initial step. Using our moonshot analogy, I think of it this way - if our goal is to get to the moon by the end of this decade, this is the equivalent of sending an astronaut into orbit around the earth. It puts us on the right path, but we have a long journey ahead."

Carbon reduction has to work alongside carbon removal in order to see any tangible change, Smith said, adding that the process it has implemented in the last 12 months has shone a light on its flaws.

"Today there is no real existing carbon removal ecosystem and the world must build a new market on an unprecedented scale and timeline, from nearly scratch. This will be incredibly hard, requiring integrity, public-private coordination, and heavy investment simultaneously," he wrote.

"In addition, it's imperative that we move away from paying for carbon avoidance and focus on paying for carbon removal. What's the difference? Carbon avoidance may involve paying someone to not emit carbon on your behalf, while carbon removal involves paying someone to remove carbon on your behalf.

"Of course, the carbon crisis at times requires that we avoid taking new steps that would emit additional carbon. But paying someone not to emit carbon is literally paying someone to do nothing. And we know we won't solve the climate crisis by doing nothing. We need to do something, and it needs to be big."

Smith also announced that progress on sustainability goals would be a factor in determining executive pay from July onwards, and this policy would apply to all, including CEO Satya Nadella.

"A final lesson from our work this past year is that when it comes to the carbon crisis, knowledge is the ultimate power," he stated.

"We all have so much to keep learning. During the next three decades, we will need technology breakthroughs on a par with those that propelled humanity to the moon a half century ago."