Perry Cleveland-Peck

Back in 2020, many companies set lofty climate goals for the end of the decade. Now, midway to that deadline, some are rolling back their environmental targets.

But not Microsoft.

Despite a general retreat from all things green in the corporate world and amid a global rollout in artificial-intelligence infrastructure that wasn't anticipated in 2020, the tech giant is sticking to its climate guns. On Thursday, Microsoft published its 2024 sustainability report and its core ambition of being "carbon negative by 2030" remains front and center.

"We're at the halfway point," Microsoft Chief Sustainability Officer Melanie Nakagawa said. "As we enter the second half of this decade, nothing has changed."

Reducing carbon emissions is seen as key to mitigating climate change. Companies are under pressure to lower the emissions, not only from their own operations, but also those of their suppliers to achieve "net zero," "carbon neutral" or "carbon negative" goals.

Microsoft defines "carbon negative" as reducing its direct emissions -- known as Scope 1 and 2 emissions -- to near zero, and lowering its indirect emissions -- those that come from its supply chain, known as Scope 3 -- " by more than half from a 2020 baseline," which it will offset with carbon-removal credits. It hopes to achieve this every year, starting in 2030.

In 2020, the company reported 11.5 million metric tons of CO2 equivalent Scope 3 emissions, so it wants to cut that to less than 5.8 million mtCO2e in 2030. This represents something of a problem for Microsoft as its Scope 3 emissions have been rising sharply each year since 2020 thanks in large part to the build-out in data centers needed for the AI revolution, which require high-emissions materials such as concrete and steel, along with lots of power.

According to its latest sustainability report, Scope 3 emissions made up more than 97% of Microsoft's total greenhouse gas footprint last year. They were up 26% compared with 2020, at 15 million mtCO2e. This is an improvement on the previous year, when Microsoft reported a 31% rise in Scope 3. Between 2020-24, Microsoft emitted a total of 75.5 million tCO2e, according to its sustainability reports.

The company, which is 50 years old this year, has an additional goal of being carbon negative for its entire history by 2050, meaning that by midcentury it wants to have removed an amount of carbon equivalent to all its historical operational (Scopes 1 and 2) emissions. So how exactly is Microsoft doing this and does the company have any chance of achieving its goal?

Microsoft has committed to an astonishing number of carbon offset agreements since 2020, and its appetite for them appears to be only growing. To date, Microsoft has split its carbon deals almost evenly between nature-based carbon removal (forest planting) projects and "durable" projects -- those "permanent" carbon technologies that include direct air capture, or DAC (sucking carbon out of the sky); bioenergy and carbon capture and storage, or BECCS (capturing and storing emissions from biofuels); enhanced rock weathering (accelerating natural chemical reactions that binds carbon to rocks); and biochar (charcoal made from biomass). Hardly a week has gone by of late without another carbon deal from Microsoft being announced.

Since the start of April, the company has contracted 12,000 tons of durable carbon removal from an enhanced rock weathering project in Brazil, 3.7 million tons from a BECCS project in the U.S., 6.75 million tons from another BECCS project in the U.S., 44,000 tons from a biochar project in the U.S.; 1.75 million additional tons in a BECCS project in Sweden (taking the total in that project to 5 million tons) and 1.24 million tons from a biochar project in Bolivia, according to carbon markets intelligence firm AlliedOffsets -- a total of about 14.7 million tons.

That alone is about half of all durable removal credits ever purchased.

In the same period, Microsoft also contracted more than 2 million tons in two nature-based forestry projects, and a further 60,000 tons from a soil carbon project. The company also signed an agreement with a carbon management firm to source a further 18 million nature-based removal credits.

Between 2020 and 2024, Microsoft entered agreements to procure nearly 30 million metric tons of carbon removal, according to its latest sustainability report -- with nearly 22 million tons contracted in 2024 alone. When you include deals made in the current year, AlliedOffsets estimates Microsoft has purchased close to 69 million tons in 45 projects since 2020. Many of the agreements are for projects with life cycles that extend beyond the end of the decade.

The estimated market value of the credits Microsoft has bought or committed to purchasing exceeds $8 billion, according to AlliedOffsets.

Brian Marrs, Microsoft's senior director of energy and carbon removal, said recently that in order to meet its 2030 goal the company "will be buying, for delivery in that year, mid single digit millions -- around 5 million tons a year -- to backstop ultra-hard-to-abate emissions that feature in the company's profile." This means that Microsoft needs to reduce its current annual Scope 3 emissions output by around 10 millions tons in the next five years.

Last year, the company for the first time required its suppliers to transition to 100% carbon-free electricity for their delivered goods and services in an effort to lower its supply chain emissions. But is this enough?

"It's, of course, possible," said Robert Hoglund, co-founder of carbon removal database CDR.fyi. "If they only have 5 million tons of emissions left by 2030, then yes, it will be relatively easy for them to meet the target. If they have 20 million tons of emissions, it would probably be unlikely."

Hoglund added that Microsoft is the only large company "doing what it takes" to reach a near-term net-zero target in all scopes. "Besides being the biggest CDR buyer, they are also one of the world's largest buyers of renewable energy, innovate on purchasing green steel, and do a lot more. Others should see them as an inspiration," he said.

Microsoft doesn't just want to offset its way out of its carbon conundrum. As well as paying for removals, the company is investing heavily in efforts to reduce the CO2 generated in its value chain. The company is now directly engaging with its suppliers to procure low-carbon alternatives to the materials they provide for the company.

"We are currently implementing strategies across the biggest wedges of what constitutes our Scope 3 emissions," Microsoft CSO Nakagawa said. "We have identified where the largest sources of emissions are coming from in our supply chain, and it's things like fuels, building materials -- when we build new campuses or data centers, it comes with embodied carbon in steel and concrete."

Microsoft recently announced a partnership with cement startup Sublime Systems to buy 622,500 metric tons of low-carbon cement. Under a new type of environmental attribute certificate $(EAC)$, Microsoft can either use the material itself or allow the company to sell it on and claim the carbon savings in its own emissions accounting.

In another deal using a similar model announced recently, Danish shipping company Norden said that it is working on a pilot project with Microsoft to help the tech company reduce its maritime emissions. Microsoft's goal is to cut its Scope 3 maritime emissions by almost 10,000 tons of CO e in three years.

Nakagawa said Microsoft is aiming to build markets for products that it needs to meet sustainability goals. "These are markets that in many cases didn't exist even five years ago, and many of them are still nascent. Over the next five years and beyond, our focus will continue to be on scaling these markets and eventually reaching the tipping point where societywide adoption takes hold," she said. "We remain pragmatically optimistic."

Write to Perry Cleveland-Peck at perry.cleveland-peck@dowjones.com

(END) Dow Jones Newswires

May 29, 2025 12:08 ET (16:08 GMT)

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