Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

leonkaye headshot

Microsoft Commits to Carbon Neutrality

Words by Leon Kaye

Microsoft's exhibit at CES Las Vegas (Leon Kaye)
Microsoft has committed to become carbon neutral beginning on July 1, the start of the company’s new fiscal year. The shift results from three years of internal discussions within the company to improve Microsoft’s carbon footprint and environmental performance. The company will roll out the new changes, including a new accounting system, across its operations in over 100 countries.

The new accounting system at Microsoft will be based on an internal carbon fee that the company’s finance department will charge to all of the company’s business groups. Each division will be tasked with finding a more efficient way to offset the carbon emissions associated with their fuel consumption and air travel. Hence the new carbon strategy at the company’s Redmond, WA headquarters and beyond will have three pillars: be lean, be green and be accountable. 

Employees within at all functions within Microsoft will be affected by the new carbon accounting rules, whether they work in data centers, software development laboratories, administrative buildings, or are traveling for the company. The carbon pricing and charge-back model will push the company to increase its overall energy efficiency and consume more renewable energy instead of conventional fossil fuels. For carbon emissions that cannot be canceled out via efficiency measures, Microsoft promises to purchase renewable energy credits and carbon offsets.

The plan will evolve through four steps. First, beginning on July 1, all business groups must include the price of carbon into their budgets. The business units in turn will be able to reduce their “carbon liability” by decreasing their usage of energy by sourcing renewable energy directly or cutting back on air travel. Each group in turn will pay a carbon fee for each metric ton of carbon associated with their operations. Finally, those carbon fees will be deposited into a central fund from which carbon offsets or renewable energy can be purchased.

Could Microsoft influence companies both large and small to follow its carbon neutrality path? The software giant has morphed into a sustainability leader within the technology industry, from improving its green IT credentials to embedding sustainability thinking throughout the entire organization. The challenge for public companies is to demonstrate that any such path like the one Microsoft is taking will not affect shareholder value in any way. For smaller firms, the complexities of carbon accounting may spook a CFO or controller. But at a time when governments across the world cannot agree on how to manage carbon, companies like Microsoft that have believed a carbon tax is all but inevitable are moving ahead and regulating themselves.

Leon Kaye, based in California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and Inhabitat. You can follow him on Twitter.

Photo courtesy Leon Kaye.

Leon Kaye headshotLeon Kaye

Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.

Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.

Read more stories by Leon Kaye

More stories from Energy & Environment