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Microsoft’s “moonshot” climate initiative nets 6% carbon reduction

Executive pay will be partially based on environmental performance in 2021

Microsoft released its first sustainability report since announcing a “moonshot” program to combat climate change in 2020. The report admits there's a long way to go, but the numbers show Microsoft's commitments are more than just hot air.

The company began making good on its sustainability goals with a 6% carbon emissions reduction, bringing it down from 11.6 million metric tons to 10.9 metric tons. That’s a reduction of around 730,000 tons, said Microsoft president Brad Smith in a blog post detailing its climate achievements over the last 12 months.

Microsoft used various techniques to cut carbon emissions, including fulfilling a 2020 commitment to expand its internal emissions tax. It now includes what it calls “Scope 3” emissions from external sources — namely suppliers and customers. 

Its internal divisions pay $5 for each ton of carbon emitted by its suppliers or when customers use its products and services. The Xbox division responded to the tax by lowering the power draw on gaming consoles from 15 watts to just 2 watts, Smith said.

Microsoft complements its carbon-reduction strategy with another effort to remove existing carbon from the atmosphere. To that end, Microsoft has paid to remove 1.3 million tons of carbon across  26 projects operated by 15 suppliers.

The company published the data about its environmental progress in its sustainability report, which revealed that renewable energy amounted to 95.2% of its overall energy usage. Most of that energy came from renewable energy credits and power-purchase agreements, such as a 500-megawatt deal it signed with Sol Systems in June 2020. 

Microsoft is encouraging more executive-level commitment by using sustainability progress to determine executive pay beginning in 2021, including CEO Satya Nadella’s compensation.

The company launched the sustainability initiative last January to be carbon negative by 2030. So, within the next nine years, Microsoft must remove more carbon from the environment than it puts into it. 

By 2050, Microsoft aims to have neutralized all of its historical emissions, negating its past carbon footprint.

Smith called for more innovative solutions than simply buying carbon credits that effectively offload carbon reduction onto other organizations. "It’s imperative that we move away from paying for carbon avoidance and focus on paying for carbon removal," he said, adding: "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."

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