Microsoft’s New Strategy to Cut Soaring Scope 3 Emissions

Microsoft is launching a strategy to drive down its Scope 3 emissions, which have increased by 30.9% in the last year – largely because of the development of new data centres.

The software giant’s 2024 Environmental Sustainability Report reveals numerous positive developments, including a 6.3% drop in Scope 1 and 2 emissions since 2020.

But, in a joint foreword, Microsoft Vice Chair and President Brad Smith and CSO Melanie Nakagawa – number three in Sustainability Magazine’s Top 100 Women in Sustainability – admit that a renewed focus is required on Scope 3.

They say: “Leaders in every area of the company have stepped up to sponsor and drive this work.”

The Scope of the problem

Brad and Melanie say carbon reduction “continues to be an area of focus, especially as we work to address Scope 3 emissions”.

They add: “In 2023, we saw our Scope 1 and 2 emissions decrease by 6.3% from our 2020 baseline. This area remains on track to meet our goals.

“But our indirect emissions (Scope 3) increased by 30.9%. In aggregate, across all Scopes 1–3, Microsoft’s emissions are up 29.1% from the 2020 baseline.”

The Scope 3 increase is down to a range of factors, but dominated by new data centres.

Brad and Melanie say: “The rise in our Scope 3 emissions primarily comes from the construction of more data centres and the associated embodied carbon in building materials, as well as hardware components such as semiconductors, servers and racks.”

How do we solve a problem like Scope 3?

The big question for Microsoft is how to stop the surge – then reverse it.

The answer lies in a company-wide drive to reduce Scope 3 emissions, with five specific areas of focus.

Brad and Melanie says: “This has led to the development of more than 80 discrete and significant measures that will help us reduce these emissions – including a new requirement for select scale, high volume suppliers to use 100% carbon-free electricity for Microsoft delivered goods and services by 2030.”

The five-pronged focus comprises:

1 – Improving measurement by harnessing the power of digital technology to garner better insight and action

2 – Increasing efficiency by applying data centre innovations that improve efficiency as quickly as possible

3 – Forging partnerships to accelerate technology breakthroughs through investments and AI capabilities, including for greener steel, concrete and fuels

4 – Building markets by using Microsoft’s purchasing power to accelerate market demand for these types of breakthroughs

5 – Advocating for public policy changes that will accelerate climate advances.

And now for (plenty of) good news

The report clearly does not shy away from the immense challenge of Scope 3 emissions.

But it also outlines numerous areas of sustainability progress by Microsoft in 2023.

Brad and Melanie say: “Over the last four years since setting our commitments, we have worked together to overcome bottlenecks and have accelerated progress in meaningful ways.

“The innovation and collaboration driven by our employees, partners, customers, Climate Innovation Fund portfolio companies, and so many more are what make progress possible.”

Progress includes:

• 23.6 million MWh of renewable energy used in FY23
• 19.8 GW of renewable energy assets contracted, including projects in 21 countries
• More than five million tons of carbon removal contracted
• Provided more than 1.5 million people with access to clean water and sanitation solutions
• 18,537 tons of solid waste diverted from landfills and incinerators
• Single-use plastics use in Microsoft product packaging down to 2.7%
• 15,849 acres of land designated as permanently protected.

Four out of six

The report outlines how Microsoft has “overcome multiple bottlenecks and accelerated progress in meaningful ways”.

Brad and Melanie say: “We are on track in several areas. But not in every area.

“In four areas we are on track, and in each of these we see progress that has the potential to have global impact beyond our own sustainability work.”

They are:

• Reducing direct operational emissions (Scope 1 and 2)
• Accelerating carbon removal
• Designing for circularity to minimise waste and reusing cloud hardware
• Improving biodiversity and protecting more land than Microsoft uses.

The two areas where Microsoft is not yet on track are reducing Scope 3 emissions and “reducing water use and replenishing more water than we consume in our data centre operations”.

Brad and Melanie say: “Even amid the challenges, we remain optimistic. We’re encouraged by ongoing progress across our campuses and data centres and throughout our value chain.

“Even more, we’re inspired by the scores of executives and employees across Microsoft who are rolling up their sleeves and identifying new and innovative steps that are helping us to close critical gaps.”

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