Microsoft published its Environmental Sustainability Report on Thursday, and it has some bad news. The company's carbon dioxide emissions increased 21.5% last year compared to 2020.
That's despite Microsoft setting an ambitious goal of becoming carbon negative in the next eight years, and it comes a week after Microsoft received an “A” rating in an evaluation of how well companies are dealing with their climate impact. (Awkward.) So what gives?
Thursday’s news exposes a larger issue: the fact that transparency isn't everything. Setting lofty goals and reporting on progress is important and can certainly earn a company good press, but it's no substitute for actually making progress toward meeting those goals. Microsoft earned an “A” rating in last week’s ranking put together by As You Sow, a corporate accountability nonprofit, primarily because it's extremely clear in reporting its targets and emissions. But the challenges Microsoft is having in meeting its high standards show how tough addressing climate change is, even for leaders in the corporate climate plan game, absent more support.
The 21% increase in emissions at Microsoft mainly came from Scope 3 emissions, which are those which come from assets not directly owned by the company. Microsoft built data centers and acquired materials for production, which bumped up those emissions. Another chunk of the increase came from emissions tied to customers using its products: about 30% of their overall Scope 3 emissions.
On the bright side, its Scope 1 and 2 emissions — that is, those that come from direct and indirect sources tied to the company like its buildings and energy it buys — decreased last year. But Scope 3 emissions are the largest source of the company's carbon pollution, accounting for roughly three-quarters of its total footprint. (The same is true for most companies.)
Many companies don’t even report Scope 3 emissions, though. Microsoft was one of only 10% of companies in the As You Sow report that did. Square, Tesla and Paypal are among tech companies that insufficiently report their Scope 3 emissions. So while Microsoft certainly took a big step backward last year in terms of emissions and reaching its 2030 goal, it’s also hard to tell how much more — or less — its competitors are doing.
Inconsistent reporting is a major barrier to advancing corporate and country-level accountability on climate goals. The Greenhouse Gas Protocol is one of the most common standards for emissions accounting. But there's no set standard and huge gaps. A major 2021 Washington Post investigation into countries' emissions reporting as part of the United Nations process found that there’s somewhere between 8.5 and 13.3 billion tons of misreported emissions worldwide. Corporate reporting is even less standardized.
Microsoft is a small piece of the emissions pie globally. But it's struggles to meet its goals show the need for proper regulations and policies that help companies get on track in the first place.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE