Q&A: How Microsoft is driving impacts on the ground
In the Q4 2016 Gold Standard Market Report>>, we feature a Q&A with Microsoft on their innovative climate strategy. By applying an effective internal price on carbon and financing community projects worldwide, Microsoft has operated at 100% carbon neutrality since 2012. Going forward, Microsoft looks to go “beyond carbon neutral” by expanding its carbon offset programme to address broader sustainable development objectives.
Read below for the full Q&A with Tamara "TJ" Dicaprio, Senior Director of Environmental Sustainability at Microsoft Corporation.
Tamara "TJ" Dicaprio
Sr. Director, Environmental Sustainability
Can you give us an overview of Microsoft’s climate strategy?
At Microsoft, we are committed to taking significant action to address climate change. We have taken a number of steps to manage our environmental footprint, perhaps most notably through our carbon program. Since 2012, our commitment to carbon neutrality and our carbon fee model have helped us ensure that we responsibly manage the direct carbon (or climate) impact of our business.
However, our commitment does not end there. While we are addressing the carbon impact of our operations and cloud services, we are also embracing the potential to use our technology—in particular our cloud services—to help individuals, organizations, and communities in the global transition to a low-carbon economy.
Since July 2012, we have operated at 100 percent carbon neutrality—or climate neutrality—for all of our operations, including our datacenters, offices, software development labs, manufacturing plants, and business air travel. As we pursue sustainable operations, we aspire to:
- Be lean—reduce energy consumption and travel.
- Be green—make environmentally responsible choices with our renewable electricity and carbon credit procurement.
- Be accountable—quantify and hold groups responsible for carbon impact.
Our carbon neutral commitment, together with a focus on being lean, green, and accountable in our operations, enables us to operate responsibly and grow sustainably.
Our carbon neutral commitment is underpinned by an internal carbon fee, one of the first of its kind, that holds our business units financially accountable for the emissions from their operations, including energy consumption and air travel. We earmark the funds that we collect through the carbon fee for emissions reduction and climate protection initiatives. Our carbon fee plays a pivotal role in our carbon program.
We use the carbon fee funds in four investment categories:
- Renewable energy, helping to expand the renewable energy market worldwide.
- Carbon offset community projects, supporting sustainable development globally, in particular in the areas of our datacenter operations.
- Climate Grants, driving climate-related energy and technology innovation.
- Track-and-report projects, helping to ensure our transparency and accountability.
Since making our carbon neutral commitment, we have reduced carbon emissions by more than 9 million metric tons of carbon dioxide equivalent (mtCO2e).
However, we recognize that there is more that we can do outside of our operations. We continue to expand on our vision, going “beyond carbon neutral” to take a more holistic approach, both globally and locally. As we expand our program, we base our work on four sequential desired outcomes: (1) internalize the external cost of our emissions, (2) transform the culture of our company, (3) catalyze and accelerate climate-neutral innovation, and (4) support the transition to a low-carbon economy.
Microsoft was an early mover and innovator in using carbon pricing. What was your motivation and how has it changed how you do business?
At Microsoft, we understand that climate change is a serious challenge requiring a comprehensive and global response from all sectors of society. Our carbon program has helped us to increase awareness and education while raising funds to ignite environmental initiatives across the company. In the long term, it is also helping us to grow strategically as a sustainable business.
We built our carbon fee model to be as simple and replicable as possible, in the hopes that others would adopt and adapt it to fit their own organizational requirements. Over the last few years we have published several white papers and participated in a number of advisory councils to help our customers overcome potential hurdles as they work to implement their own ambitious carbon targets and internal carbon fees.
Why did you decide to begin investing in climate protection projects? Are you interested primarily in ‘climate neutral’ claims?
Climate protection projects are critical to our carbon program and, by extension, our operations. We invest in climate protection projects such as preparedness planning to ensure that we operate resiliently in the face of potential impacts from climate change. We also invest in carbon offset community projects around the world to compensate for the emissions associated with our business air travel and any energy consumption in regions where we cannot procure renewable energy. These carbon offset investments are important to our operational strategy, but they also positively affect communities around the world. To date, the carbon offset community projects that we have invested in have had an impact on more than 7 million people. These projects are directly contributing to the development of a low-carbon economy while helping increase energy access, improve education and healthcare, and empower women. We also align these investments with the United Nations (UN) Sustainable Development Goals (SDGs).
Our commitment to carbon, or climate, neutrality provides a clear corporate-wide direction for our own operations, but it also creates a significant opportunity to contribute more broadly. We started with the carbon fee, which internalizes the external cost of our emissions, helping us to drive awareness and education. This has helped to transform the culture of our company, embedding sustainability into the core and making it business as usual. We now have the foundation to catalyze and accelerate climate-neutral innovation, with the carbon fund providing the financial means to support and drive innovative climate-neutral projects that will lead to long-term global and local impact. As we continue to evolve our carbon program, we are beginning to measure its impact not just in terms of organizational value but also in terms of social contribution—using the financial resources and technological innovations made possible by the program to help with the long-term shift to a low-carbon economy.
How do you choose what projects to support with the funds generated by your internal carbon fee? How do Gold Standard projects figure into your portfolio?
Over the last four years, we’ve supported more than 45 projects in 26 countries. After an initial focus on investing in the areas of our operations, we evolved our program to also invest in projects that support youth and education. We have intentionally kept a broad portfolio including forestry, solar, wind, biomass, methane capture, cookstoves, and water filtration, all of which are essential to low-carbon sustainable development. In addition, energy access, opportunities for technology to enhance project impacts, and proximity to our datacenter locations are all key criteria that our offset partner, Natural Capital Partners, considers when reviewing possible opportunities.
All the projects that we support are verified and validated to a third-party standard, with approximately one-third from the Gold Standard (mainly the cookstove and water filtration projects).
How important are the beyond-carbon sustainable development benefits? Do you consider outcomes from these climate protection projects as delivering against your other CSR or sustainability priorities?
We are expanding our carbon program to address the broader carbon impact of our business on the planet while actively contributing to the low-carbon transition through responsible and inclusive technology, research, and innovation. The beyond-carbon benefits delivered by the projects are an important part of this commitment by ensuring that our funds are contributing to sustainable development. I recently visited two of the projects that we support in Africa—in Malawi and Madagascar. It was inspiring to see first hand the impact of our investments on the communities in addition to the greenhouse gas (GHG) benefit of conserving forests. For example, in Malawi, farmers are starting beekeeping as a new source of income. In Madagascar, organizers are helping the communities to raise goats and chickens as an alternative source of meat to eliminate the need to hunt lemurs in the forests, training local people as guides and cooks to support eco-tourism, providing instruction on new rice-growing techniques to improve productivity, and developing a “pay it forward” club to enable all members of the community to raise goats (see http://blogs.microsoft.com/green/2016/10/10/on-location-how-microsofts-carbon-fee-is-empowering-communities-in-africa to learn more).
Is Microsoft aligning its work or CSR priorities to the Sustainable Development Goals? If yes, where are you in your journey? Have you taken steps to assess your impact on natural and social capital?
We increasingly prioritize alignment with the UN SDGs for our carbon offset community project investments, helping ensure that our investments support a unified approach to climate action and broader community action. We hope to work in closer partnership with the UN to explore opportunities to further align our carbon offset community investments with the SDG goals and targets.
How does Microsoft communicate about your offsetting program? What do you think are key success factors in getting positive feedback?
We continue to participate in advisory councils and working groups to share best practices and lessons learned.
We use our blogs to talk about the projects, particularly focusing on non-carbon benefits such as biodiversity conservation, education, and health benefits. The 2015 UN Momentum for Change Lighthouse Activity Award also provided a platform to share our journey. We’ve also published a series of white papers that describe our efforts, including a playbook for setting up a carbon fee program; we published our fifth white paper, available at http://aka.ms/beyond, in November 2016.
Continuous communication is essential to getting positive feedback in a large organisation like Microsoft.
What recommendations do you have for companies considering climate strategies, including carbon offsets?
Ensure that you align with your organization’s values, mission, and strategies.
Surround yourself with experts—use the knowledge and experience of your partners to keep your program current and credible.
 Read the UNFCCC Climate Neutral Now press release to learn more about this initiative.
 Download our white paper “Becoming carbon neutral: how Microsoft is striving to become leaner, greener, and more accountable” to learn more about our carbon neutral commitment.
 According to CDP, the use of internal carbon pricing is on the rise and gaining visibility, as evidenced through recent articles by Triple Pundit and Environmental Leader.
 Download our white paper “The Microsoft carbon fee: the what, why, and how of Microsoft’s efforts to drive culture change” to learn more about the carbon fee model.