Microsoft is promising "stronger steps" to help reduce its carbon emissions after a surge in 2021 caused by increased demand for its cloud and devices like the Xbox.
Microsoft took a step backwards in 2021 on its goal, first aired in 2020, to become carbon negative by 2030. The company disclosed a significant 23% rise in carbon output in its 2021 sustainability report.
Microsoft breaks down its carbon emissions into three categories: Scope 1 includes direct emissions from fossil fuels used onsite and executive travel; Scope 2 includes indirect emissions from purchased electricity supplied to data centers, buildings and campuses; and Scope 3 includes purchases goods and services, fuel, waste, business travel, employee commuting, use of sold products and more.
Scope 3 accounts for 97.96% of Microsoft carbon emissions and relates to its supply chain and the products and services it sells, from Microsoft 365 to Azure, Xbox and Surface devices.
In FY 2021, Scope 3 carbon emissions rose 22% to 13.78 million metric tons of CO2, up from 11.24 million metric tons of CO2 in FY 2020. Since FY18, its Scope 3 emissions had been declining slightly each year.
Announcing the report in a blogpost, Microsoft president Brad Smith said "progress is not linear" when it comes to cutting carbon emissions.
Microsoft notes in the report that its "overall increase in emissions is driven mainly by the growth of our cloud services business and an increase in sales and usage of our devices."
In 2021, Microsoft did however reduce its Scope 1 and 2 emissions by 16.9%.
Microsoft says that it is committed to reducing its Scope 3 emissions by more than half by 2030.
"While we do not have direct control over most emissions in the Scope 3 category because they are generated by third parties, they represent more than 97 percent of our total emissions. Our carbon negative commitment includes reducing these emissions and removing what we cannot reduce, which we do through a reduction strategy in campuses and datacenters, rethinking the design of our devices, and engaging with our supply chain," it says.
Smith said rise in Scope 3 emissions are the most difficult to control and reduce and was due to business growth since the pandemic pushed work and education online.
"Our emissions outputs took place against a backdrop of significant business growth in 2021," explained Smith.
"In this time period, our business revenue grew by 20%. We significantly expanded our global datacenter footprint to meet the increased demand for Microsoft's cloud business and we saw a growth in devices sales, especially Xbox and associated usage due in part to the pandemic.
"Our experience this past year has provided us with critical and additional early learning on our path towards our 2030 carbon negative milestone, and we are applying this learning quickly with additional measures to strengthen efforts to reduce our Scope 3 emissions."
To help cut Scope 3 emissions, Smith said Microsoft is "accelerating work to set business group-specific annual carbon intensity targets based on fundamental business drivers."
It will connect its performance against these targets with other business review processes. It's also restructuring and increasing its internal carbon fee to incentivize carbon reductions.
And to address supply chain emissions, Smith notes that its Supplier Code of Conduct requires in-scope suppliers to report their emissions. Microsoft now has data from more than 87% of suppliers with the majority included in its carbon accounting reporting.
Microsoft's Xbox team also outlined what it's doing to build more sustainable devices, including improvements to Energy Saver sleep mode, which consumers less power than Standby mode. It's also looking at materials used to build devices. The Xbox Series S console uses post-consumer recycled (PCR) resin and the plan is for future consoles and controllers to use at least 28% PCR by May 2022, while removing plastic from packaging.
Apple and Google have historically released their respective sustainability reports in March.