You may not know Microsoft provides an AI-based sustainability platform to help businesses make climate decisions

Stock investors have rewarded Microsoft Corp. in the past for its cloud-computing business and recently for its foray into artificial intelligence. So it should be no surprise that one of the technology giant’s most innovative commitments to sustainability involves a dose of both specialties.

The Microsoft Cloud for Sustainability platform offers AI-based tools like “what-if analysis” for in-depth sustainability insights and forecasting, assisting organizations in data-driven decision-making regarding their environmental impact.

But Cloud for Sustainability isn’t just a tool; it shows that Microsoft MSFT strongly supports computer technology to zero our net effect on the environment. By talking with customers and partners, the company helps make its idea of sustainability known. Its initiatives in climate action has exerted a steady influence across different businesses.

One example: In November, the United Nations and Microsoft announced a partnership that will enable the UN Framework Convention on Climate Change to create a new AI-powered platform and global climate data hub to measure and analyze global progress in reducing emissions. This will dramatically simplify the process to validate and analyze climate data submitted by the 196 Parties to the Paris Agreement, the company said in a press release.

“The world must move faster to reduce carbon emissions. Simply put, you can’t fix what you can’t measure, and these new AI and data tools will allow nations to measure emissions far better than they can today,” said Brad Smith, vice chair and president of Microsoft.

The company

Microsoft started in 1975 when Bill Gates and Paul Allen teamed up to create a computer software venture. Located in Redmond, Wash., Microsoft became a household name for making and selling many software products like the Windows operating system and Microsoft Office suite of applications — who doesn’t remember the animated paper clip?

Microsoft today is a worldwide technological powerhouse, competing in a variety of industries. It vies with Apple and Alphabet’s Google GOOG in personal computing, particularly in operating systems and productivity apps. Apple’s macOS and iOS, as well as Google’s Android and Chrome OS, are competing with Microsoft’s Windows and Office suite. Amazon’s AMZN AWS and Google Cloud Platform compete with Microsoft’s Azure in cloud computing.

Microsoft’s Xbox competes with Sony’s PlayStation and Nintendo’s consoles in gaming. Professionally, LinkedIn (owned by Microsoft) competes with new platforms as well as existing job sites. Microsoft’s Bing competes with Google’s top engine in search engines.

Microsoft on Tuesday reported $62 billion in revenue for its fiscal second quarter that ended Dec. 31, up from $52.7 billion a year earlier. Net income totaled $21.9 billion, or $2.93 a share, up from $16.4 billion, or $2.20, in the year-ago quarter. The company’ stock is trading near an all-time high above $400 a share. It pays an annual dividend of $3 a share, for a yield of 0.74%.

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The sustainability plan

Innovation and investment in climate solutions are at the heart of Microsoft’s approach, driving decarbonization and energy efficiency across their operations. Their engagement in climate policy advocacy and active participation in forums like the Green Software Foundation highlight their dedication to reducing the environmental impact of digital technology. Among the efforts:

• The role of digital technology in Microsoft’s net zero strategy is pivotal. With their Cloud for Sustainability and Sustainability Manager, Microsoft is enabling effective carbon accounting and environmental risk management. These digital sustainability solutions provide a platform for global sustainability initiatives, enhancing corporate governance and ensuring ESG compliance.
• Further enhancing its sustainability suite, Microsoft focuses on integrating data for carbon, water and waste, offering diverse methods for data collection and specialized calculations. This integration enables accurate sustainability reporting and goal tracking. Moreover, Microsoft’s Environmental Credit Service innovates in carbon credit transparency, ensuring credible tracking from creation to retirement, boosting market confidence.
• Project ESG Lake is a key component that was created to assist firms in managing and preparing their data for comprehensive analysis, hence furthering their sustainability goals. This solution offers a comprehensive environmental, social and governance data model with over 400 tables covering a wide range of topics such as carbon, water, waste, social, governance, biodiversity and general business. It lets businesses create a complete data estate by centralizing data from diverse business divisions and supply chains into a uniform schema that is ready for sophisticated analytics and reporting.
• Microsoft’s customer and partner engagement is crucial in extending its sustainability impact. By collaborating with various stakeholders, they are fostering a green workforce development, promoting ecosystem services and facilitating a clean energy transition.
• The big tech company wants to make its effect on the environment smaller. Its goal is strong: not just lower carbon pollution but also remove it completely. Microsoft is really getting behind renewable energy. The company wants to fully move all of its energy use over to renewables by 2030. Microsoft’s look into new ideas like eco-friendly airplane fuel shows their creative nature. The company is also supporting a circular economy that aims for no waste and good use of water.

The challenges

Microsoft faces challenges in its ESG efforts, particularly in managing Scope 3 emissions, which constitute over 96% of its total emissions. These emissions mainly come from indirect sources such as purchased goods and services, making them complex to address within Microsoft’s extensive supply chain.

To combat this, Microsoft has updated its Microsoft Cloud for Sustainability platform, enhancing ESG reporting and Scope 3 emissions management. This platform aids companies in managing environmental impacts with better data collection and reporting.

In its journey to become carbon-negative, water-positive and zero-waste by 2030, Microsoft has achieved progress in water replenishment and the reduction of single-use plastics. However, the company acknowledges the ongoing challenges in meeting these objectives. Furthermore, Microsoft is committed to ecosystem protection, aiming to protect more land than it uses, with significant progress already made.

Governance practices, including board diversity and executive compensation alignment with long-term sustainable performance, remain key areas of focus for Microsoft. The company’s transparency in reporting and stakeholder management also continue to be areas of development. Through these initiatives, Microsoft not only focuses on internal operations but also seeks to influence global sustainability, leveraging technology like the Planetary Computer and policy initiatives.

The upshot

Microsoft’s ESG rating is not just a number; its initiatives in environmental footprint reduction, from renewable energy to sustainable operations, reflect its comprehensive approach to environmental sustainability. With a commitment to ecosystem protection and a knack for operational efficiencies, Microsoft is redefining what sustainable products and services look like.

By leveraging digital technology and policy engagement, Microsoft is not only minimizing its own environmental impact but also setting new standards in corporate environmental responsibility and driving data-driven sustainability solutions.