Microsoft offers progress report on carbon-neutral pledge

Last May, Microsoft adopted a carbon-neutral pledge along with an internal carbon fee that encourages business units to reduce their emissions - or face a financial penalty.

This week, the developer published a progress report on the Microsoft Green Blog in the form of an interview with TJ DiCaprio, a senior director of environmental sustainability for the company and the person who dreamed up the strategy in the first place.

So what has happened so far?

For one thing, Microsoft's business groups have to account for the carbon fee in their long-term operating cost estimates and scenarios. So an investment in a cloud service line, for example, would need to consider the energy consumption of the servers behind it. In other words, the right conversations are happening for the company to be thinking more sustainably.

"Our governance council provides the flexibility to allow the carbon price to grow over time to meet investment goals," DiCaprio told the Microsoft Green Blog. "The carbon price will likely increase over time as we expect the price of carbon offset projects to also increase over time. In this first year, the carbon price has proven effective at facilitating the right conversations and initiating net new carbon reduction projects across the company."

The fees that are collected are reinvested in energy efficiency, renewable energy and carbon offset projects. The first money, collected in October 2012 for Microsoft's first quarter, went to support wind, hydro and biomass projects.

Microsoft also is creating energy-efficiency "grants" that will support proposed initiatives such as metering installations, lighting retrofits, energy management programs and travel reductions. 

This wasn't part of the original plan, but the concept was added after conversations across the company over the past six months.

"By engaging in brainstorming and listening to feedback, we heard loud and clear from stakeholders across the company that investments that directly support business group efforts would be much more effective than simply a punitive model," DiCaprio said.