This week, Microsoft made a big announcement about its plans to tackle climate change. It said that by 2030, it will be carbon-negative – meaning that its net carbon emissions will be less than zero.
For a gigantic technology company such as Microsoft, this is a big undertaking. The company goes into some detail about how it plans to make it happen (more on that later), but it’s also a highly symbolic and important step.
Climate change and the effect of carbon emissions has slowly gathered pace in the news cycle lately as scientists have grown increasingly concerned about the fate of the planet. Through protests such as Extinction Rebellion and leaders such as Greta Thurnberg, the world has – on the whole – come to a new consensus on the importance of environmental issues.
But many commentators argue that a consensus among the general public, and small actions like improving recycling habits and ditching plastic straws, while important, cannot have the same impact as a wholesale change in industrial practices. What they ask for instead is for the world’s biggest companies to start taking action and leading by example – as well as forced change from governments, something which is beginning to take place.
And that’s why Microsoft’s commitment to climate change is so important: it represents leadership and an actual attempt to make things happen. It certainly will not be an easy success story, given the scope of the target, and may well cost the company money (though it may come with other benefits like improved customer goodwill), but according to the company’s executives, it’s worth doing because it’s an important cause.
As Microsoft’s president Brad Smith writes in the company’s announcement, the “world’s climate experts agree that the world must take urgent action to bring down emissions”.
“Ultimately, we must reach “net zero” emissions, meaning that humanity must remove as much carbon as it emits each year. This will take aggressive approaches, new technology that doesn’t exist today, and innovative public policy. It is an ambitious – even audacious – goal, but science tells us that it’s a goal of fundamental importance to every person alive today and for every generation to follow,” Smith says.
While the world eventually needs to hit net zero carbon emissions – known as carbon neutrality – Smith says, those who “can afford to move faster” – in this case, Microsoft, should. The aim, therefore, is to be carbon negative by 2030, and by 2050, it wants to “remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975”.
Making such a commitment, Smith says, requires backing it up with a solid plan. It wants to start by cutting its carbon emissions by more than half – something it will fund by expanding its internal carbon fee, which it has had in place since 2012 and which increased last year, to start charging not only its direct emissions, but those from our supply and value chains.
That means that as of next year, Microsoft’s supply chain procurement process will include an explicit provision for carbon reduction – the results of which will be published in a yearly Environmental Sustainability Report.
It will do other things, too, like supporting its customers with their own carbon reduction plans, while advocating policy initiatives that “accelerate carbon reduction and removal opportunities”.
Of course, all of this will cost money. Microsoft says that its new Climate Innovation Fund will invest $1 billion over the next four years. That money will primarily be deployed in two areas: to accelerate ongoing technology development by investing in project and debt finance; and to invest in new innovations through equity and debt capital, the company says.
The lesson for other technology companies is that it can be done – and as many tech executives are likely to know, staff, customers and partners are now increasingly likely to demand environmental policies. As with all big issues such as this, one organisation’s leadership may go a long way towards pushing others to do the same.