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Microsoft's emissions rose 22.7% in 2021 despite carbon negative pledge

The company said that Scope 3 emissions are the “most difficult to control and reduce”

Microsoft has revealed its Scope 3 emissions have gone up by 22.7% year-on-year, despite pledging to be carbon neutral by 2030.

The tech giant increased its business revenue by 20% in its most recent fiscal year and managed to reduce its Scope 1 and 2 emissions by approximately 16.9% by purchasing renewable energy, it revealed in its 2021 Environmental Sustainability report published yesterday.

Scope 1 emissions are attributed to fuel combustion, company vehicles or fugitive emissions, while Scope 2 emissions account for purchased electricity or heat.

Scope 3 emissions cover all parts of the company’s value chain, including purchased goods, waste, business travel, employee commuting, and use of sold products.

This third category represents the majority of Microsoft’s emissions (97.96%), which the company has committed to effectively neutralising by 2030. This includes carbon emitted from electricity generation to power devices and emissions related to the use of concrete and steel in new constructions.

A major source of the increase was in capital equipment, which includes emissions to produce Microsoft hardware, as well as the carbon emissions associated with the construction of new buildings, including both data centres and office space. This segment increased 41% in 2021, accounting for around 30% of the Scope 3 total.

Emissions associated with powering of products sold, including Xbox and Surface devices, also increased 32% for the period, accounting for around 29% of Scope 3 emissions.

Electricity used to power devices largely comes from grids reliant on carbon intensive sources, so Microsoft is forced to account for that carbon for the lifetime of its devices to accurately track Scope 3 emissions. This is done by calculating a device’s climate impact based on where the device was sold, as different parts of the world have a different mix of electricity generation sources.

The tech giant has announced a range of measures to help reduce its Scope 3 emissions, even as it continues to grow as a company.

“First, in addition to the absolute carbon emissions cap we’ve set for Microsoft, we are accelerating work to set business-group specific annual carbon intensity targets based on fundamental business drivers,” said Microsoft president Brad Smith. “We will connect our performance against these targets with other business review processes, including with the company’s Senior Leadership Team.”

He added that the company will restructure and increase its internal carbon fee to help incentivise more aggressive measures to reduce Scope 3 emissions and better match the underlying cost of carbon abatement. This includes raising the business travel fee to $100 per metric ton of carbon dioxide (mtCO2e) in the next fiscal year to better support the purchase of sustainable aviation fuel.

Lastly, the company will also redouble its efforts on measurement, to help accelerate the adoption of industry standards for carbon accounting. It said the need for a more holistic focus on measurement goes beyond Microsoft, and that wider industry takeup is critical.

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“The results show just how carbon emissions are not yet decoupled from economic growth,” said Austin Whitman, CEO of Climate Neutral. “As long as this continues, emission reductions will be at odds with economic growth.”

Whitman pointed out that Microsoft is now setting “carbon intensity targets”. While these are helpful, he noted that intensity targets will not ensure absolute reductions.

“Microsoft is not alone in struggling to track along its reduction trend line, especially for Scope 3 emissions,” he added. “The key question people aren't asking is what should the expectations be for an annual "correction" by companies that miss their reduction goals. Microsoft is investing in around 1.5m tonnes of removals every year, but the residual emissions are significantly more than that, and rising.”

Last year, Microsoft was urged to limit its corporate travel to 2020 levels permanently, and show that its video conferencing tools can be used to limit its impact on the environment, as reported by the Guardian. The Just Use Teams campaign said that the company had spoken about the urgent need to tackle climate change but remained among the top 10 corporate flyers globally.

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