Happy new year, everyone.
Last week, Microsoft made a hugely significant announcement that I urge you to read, and read all the way to the end.
Why would this former journalist say that the most important thing you can do this week is to read a wordy corporate press release and talk about it with people you know?
Microsoft makes a uniquely bold pledge relating to carbon removal.
The company lays out an incredibly detailed plan that could be a blueprint for others to follow.
Microsoft is explicitly trying to spur action by others.
1) The carbon negative pledge
Here is the bold pledge:
“By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”
Many companies make sustainability pledges, but look for the ones who are focusing on being carbon negative, and not just carbon neutral. Pledging to remove all emissions (including indirect ones) going back to 1975 is a BIG DEAL.
Why does that matter? If we did everything perfectly and stopped putting more carbon into the atmosphere tomorrow, we would still have a big problem on our hands because of what’s already in the atmosphere. That’s why decarbonization is key. There are nature-based solutions to carbon removal (plant more trees or change the way we farm, for example) and technology-based solutions. The latter are nascent and require more investment.
2) The detailed plan that is based on math
The carbon negative pledge is significant, but perhaps even more unique is the detailed nature of Microsoft’s plan to remove its carbon footprint. As far as I know, it is the most detailed carbon removal plan that any company has ever laid out. Other companies like Intuit, Stripe and, just this week, Starbucks, have also made inspiring commitments to be carbon negative. But none of these plans are as specific as Microsoft’s is.
Microsoft starts by explaining one critical aspect of carbon math — how to account for different categories, or scopes, of emissions. Below is an abbreviated version of its explanation, or you can watch a great video here:
Scope 1: Direct emissions that your activities create — like the trucks that transport your products.
Scope 2: Indirect emissions that come from the production of the electricity or heat you use, like the traditional energy sources that power a building.
Scope 3: Indirect emissions that come from all activities you engage in. For a business, these emission sources can be extensive, and must be accounted for across its entire supply chain, the materials in its buildings, the business travel of its employees, and the full life cycle of its products, including the electricity consumed when using the product.
Scope 3 emissions can be the hardest to measure and act on, so the fact that Microsoft is diving head first into them is meaningful.
The company is using an internal carbon fee to tackle these emissions. The head of each business unit within Microsoft will have to pay a tax for scope 1, 2 and 3 emissions. They say this isn’t just a “shadow fee” that is calculated but not charged. Real money is paid, and that money goes toward sustainability improvements.
This model alters the math for the decision-makers by forcing them to pay for carbon instead of assuming it’s free. Not calculating the true cost of emissions across supply chains has distorted the true cost of everything in our society for decades, and it’s a big reason we are facing a climate crisis. Companies’ entire notion of accounting needs to change.
3) Urging others to act too
One key part of Microsoft’s plan is its new Climate Innovation Fund, where it commits to investing $1 billion over the next four years into new carbon reduction and removal technologies. They say: “We understand that this is just a fraction of the investment needed, but our hope is that it spurs more governments and companies to invest in new ways as well.”
There is also some polite, yet direct, shaming of others who are patting themselves on the back but not doing enough.
“While we at Microsoft have worked hard to be ‘carbon neutral’ since 2012, our recent work has led us to conclude that this is an area where we’re far better served by humility than pride. And we believe this is true not only for ourselves, but for every business and organization on the planet.”
The announcement closes with: “This is a bold bet — a moonshot — for Microsoft. And it will need to become a moonshot for the world.”
It’s fair to say, “OK, but any company can put out an inspiring press release and put on a good show. How do you KNOW it’s meaningful?”
Healthy skepticism is always good. But there is something truly exciting here. The boldness of the targets. The detailed nature of the plan. The fact that the CEO, CFO and President were on stage for the announcement, and not just the Chief Environmental Officer.
I think businesses are going to be hit from all sides with the need to decarbonize. It will be a hiring and retention problem, a finance problem, a how-you-operate-your-core-business problem, a how-you-innovate problem. It will also be a competitive problem, as consumers start to favor companies that are taking this issue seriously.
The question is, when does this happen and how do businesses react? Having a giant company like Microsoft take this on now could help spur others to act sooner and more boldly. If you work at an organization that needs to change (most do!), talk about what Microsoft is doing with your colleagues.
Let’s hope for more moonshots.
Other interesting things I’ve read or watched recently:
“The Biggest Little Farm” is a great documentary about regenerative farming, a solution for removing carbon from the atmosphere.
Compostable take-out containers are not necessarily better than plastic ones.
The News & Observer in Raleigh has published a series on the environmental impact of the wood pellet industry. Biomass is not clean energy.
Please pass along your feedback on this week’s newsletter and ask your friends to sign up. Has anything inspired you to make changes in your life? What future topics would you like to see broken down?