Microsoft Corp. is a software company that creates, licenses, and supports software products, services, and devices. The company provides various operating systems, cross-device productivity apps, server apps, software development tools, etc.
The idea behind the Carbon Fee Program
In the late 2000s, Microsoft transitioned to a cloud-based business model. Its growth led to the need for more data centres and an increase in energy consumption. Resultantly, it led to environmental and societal threats like Climate change. Environmental sustainability became a key in Microsoft’s agenda and in July 2012, it pledged to become carbon neutral.
To help Microsoft in the pursuit, its Senior Director of Microsoft Sustainability (Environmental) Tamara DiCaprio, helped develop an internal carbon footprint strategy, established an internal governance model, and shaped the direction of Microsoft’s internal corporate carbon reduction policy, of which the carbon fee program was a part.
“One of the ways we stay accountable is by putting an internal price on carbon and charging business groups for the cost to offset their emissions related to energy consumption and air travel through a carbon fee model. The effect is that we are now internalizing sustainability across our business, and being a technology company we’re often looking to technology as part of our strategy”.
– Tamara DiCaprio
The carbon fee model imposes fees on business units within Microsoft Corporation according to their carbon emissions.
“What we do, technically speaking, is we cascade the price of carbon down through the different business units and then we collect the funds in the central pot and use all those funds for environmental initiatives to reach carbon neutrality.”
– Tamara DiCaprio
Microsoft also funds carbon-offset projects in developing countries. Microsoft’s nonprofit work is “changing people’s lives” by helping developing countries industrialize in sustainable ways.
“We are not only reducing carbon in Kenya and emerging nations but also taking money from developing countries and getting them out to the emerging nations to develop a low carbon economy.”
As of 2015, Microsoft cut emissions of around 7.5 million tons of carbon dioxide and saved more than $10 million in energy costs in three years. The fee collected from the program was utilized for several cost and carbon savings initiatives. Such as employing new building sensors to improve energy consumption across 125 buildings of the company.
In 2020, Microsoft committed that it would become carbon negative by 2030.
Under its Carbon fee program, Microsft initially used to collect fees based on direct emissions from company vehicles, purchase of electricity, and business air travel. But from 2020 onwards, Microsoft started charging their internal business groups for indirect emissions from supply chain and product use too. Moreover, the company has begun working with its suppliers to help them understand their carbon contributions and how to reduce them.
Microsoft has committed that by 2050, it will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.
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