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Microsoft raises its voice on climate priorities

The technology giant declares energy and carbon policy goals, underscores role of digitization in speeding low-carbon economy transition.

An executive addressing journalists, with animated expression

Brad Smith, president and CEO of Microsoft, addresses media and others at a briefing during Climate Week NYC 2022. Courtesy of Microsoft

A little-known bit of corporate climate trivia that might have slipped under your radar: In early 2020, before the COVID-19 pandemic paralyzed the world, Microsoft began work to establish a separate corporate office in New York City dedicated to liaising with the United Nations.

The vision, as Microsoft’s vice president of U.N. affairs John Frank explained in October 2020, is "to engage with the UN community, build relationships and learn, and help make Microsoft’s partnerships more impactful."

Last week, the company used that office as the stage to outline its latest initiatives aimed at addressing climate change. The company’s agenda has grown increasingly sophisticated in the almost three years since it declared its intention to become "carbon negative."

During the Climate Week briefing, the company’s vice chair and president Brad Smith underscored Microsoft’s threefold agenda: getting its own house in order with respect to carbon emissions and other climate-related concerns, including water consumption; fostering digital technology that the world needs to build a more sustainable future; and supporting efforts to nurture societal changes — skills, markets and laws — that support the just transition to a clean economy.

"My not just ambition but really dream for Microsoft is that we will do more than any institution to help other people do more to create a net-zero world," Smith said during his remarks.

Digitizing the transition

For Microsoft, that progress has been uneven — and Smith acknowledged there will be hiccups along the way. In March, the company reported a 23 percent year-over-year rise in its Scope 3 emissions, alongside a 20 percent rise in its revenue — fueled by data center expansion and a growth in device sales, such as the Xbox. Its Scope 1 and 2 emissions were reduced by 17 percent.

But Microsoft is using that experience to inform software, cloud services and business analytics designed to scale and accelerate the economic transition. 

Make no mistake, this is a revenue-generating opportunity. The Redmond, Washington, company moved earlier this year to commercially deliver the Microsoft Cloud for Sustainability, an enterprise software application that helps companies large and small manage the various metrics relevant for measuring carbon emissions. That space has become increasingly crowded, with several of its closest enterprise software rivals pursuing market share, mostly notably Salesforce, which announced its own ESG management platform in September 2019.

Microsoft’s deep influence and relationships in the energy sector, and its data about that industry, should not be overlooked — the very same fossil fuels ties for which the company has been criticized both by activists and its own employees.

If we don’t have a climate strategy that includes these people, we don’t have a climate strategy.

During the briefing, Microsoft and several partners outlined two compelling examples of how Microsoft-enabled digital technologies could accelerate the low-carbon energy transition.

The first centered on a collaboration with nonprofit TerraPraxis, centered on helping coal plant operators determine the best ways to retrofit their facilities to run on carbon-free energy. The idea is to create a replicable way for gathering data to help more than 2,400 coal plants be reconfigured to run nuclear power. The grid infrastructure surrounding these facilities can help developers add this carbon-free energy more quickly, by streamlining permitting, and it will leverage the skills and talents of coal plant workers into the future, said Eric Ingersoll, one of the directors of TerraPraxis.   

"If we don’t have a climate strategy that includes these people, we don’t have a climate strategy," he said.

The second resource demonstrated at the briefing is a "living atlas" that uses satellite imagery from Planet Labs to reveal utility-scale solar and wind installations around the globe — a database intended to help communities and countries gain a better understanding of capacity and land use considerations, among other things.

Dubbed the Global Renewables Watch, the massive repository initially includes maps from Germany, India, Brazil and Egypt, with a full global inventory anticipated in early 2023.

The Nature Conservancy, one of Microsoft’s partners in the venture, sees the resource as imperative for helping guide better policy decisions. "The transition needs to be nature positive, and it needs to be equitable," said Nature Conservancy CEO Jennifer Morris during the briefing. 

As an example of the sort of situation the database will help ameliorate, Morris pointed to the state of Virginia, where one of the biggest threats to forests is solar farms. Because of state permitting and siting regulations, it’s currently easier to get massive projects approved that encourage deforestation rather than smaller installations across multiple sites. This resource will help flag those concerns earlier and provide policymakers and other stakeholders with more data. "This is an unintended consequence," she said.

Deal signing photo between TerraPraxis and Microsoft with three smiling people

From left, Microsoft President Brad Smith signs partnership deal with Kirsty Gogan and Eric Ingersoll, directors at TerraPraxis. Photo courtesy of TerraPraxis

Speaking of policy

Microsoft used Climate Week to share more details about carbon and electricity policies that it sees as playing a crucial role in advancing global decarbonization progress. The company has published two briefs that will guide its advocacy and engagement initiatives that "put important stakes in the ground for Microsoft in terms of how we will use our voice as a company." These principles are global in nature, and not focused on any particular region.

"We want regulations to encourage progress that is tangible, that is measurable, that is concrete, that is fast," Smith said.

The company approached carbon and electricity policy suggestions with two primary thoughts in mind, he said: The frameworks necessary for the world to transition and the policies necessary to help corporations such as Microsoft achieve its own goals.

"The principles that we set forth are grounded in our focus on achieving tangible results, enabling a flexible rather than one-size-fits-all approach, and recognizing the role digital technologies will play as we expand market opportunities for all," the company’s senior director of global sustainability policy, Michelle Patron, writes in a blog outlining the strategy.  

When it comes to carbon, Microsoft’s commentary focuses on reporting regulations, as well as policies instrumental for removal and reduction. Here are some highlights:

  • When it comes to reporting, the company advocates "consistent, robust and interoperable GHG reporting metrics," flexibility of disclosure requirements and recognition of the role new technologies will play in tracking and calculations.
  • On the topic of reduction, Microsoft seeks a multisector approach that incentivizes reduction in hard-to-abate industries. "The path to net-zero emissions is heavily influenced by a country’s stage of economic development and natural resource mix," Patron notes. "Innovations in financing mechanisms, technology design and deployment approaches, and participation models can help countries in the Global South, which may be at the beginning stages of climate mitigation and adaptation journeys, to advance immediately beyond traditional carbon-intensive infrastructure."
  • Regarding removal, Microsoft seeks policies that drive "clean accounting and high-quality standards" and that prioritize approaches that are "highly durable."

There are three pillars to Microsoft’s electricity policy priorities: accelerating the transition to clean energy generation, modernizing and improving grid infrastructure and encouraging an "equitable energy future." Some quick takeaways:

  • Microsoft encourages a diversity of generation options including solar, hydro, wind, nuclear and green hydrogen. 
  • It sees transmission planning and siting policies and simplifying the permitting process as priorities, as well as the use of digital technologies for management, optimization, security and stabilization.
  • Getting clean energy markets right in the Global South is crucial. 

You can expect Microsoft to use the upcoming COP 27 in Sharm El Sheikh, Egypt, to expound on these principles of policy advocacy. When I asked Smith at the briefing whether Microsoft intends to prioritize any regions in the short term, he said the company is taking a global view, pointing to the company’s recent work in the runup to the U.S. passage of the Inflation Reduction Act.

"Even in the United States, that work is not complete, because now we have a law, but now the law needs to be implemented," he said. "You’re going to see us focus around the world on the connection between what we see as carbon accounting and the need for globally standardized and effective and efficient measurement, reporting requirements. Most of what you’re going to see is going to need to be pursued, frankly, at the country level. I will see in addition to that, and with an eye towards COP 27, I think that the Global South needs and deserves a stronger voice when it comes to climate issues.”

No details yet, but Smith said to watch for Microsoft to introduce new digital services that give scientists, researchers and climate influencers in countries such as Africa the information and resources to amplify their own knowledge and positions. 

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