'Transformation through transparency': How Microsoft will collaborate to meet its carbon-negative goals
EXCLUSIVE: As it strives to meet its boldest sustainability target to date - becoming "carbon-negative" by 2030 - Microsoft will need to forge innovative collaborations with businesses across and beyond its supply chain.
That is according to the tech giant’s general manager of supply chain sustainability and cloud computing Paul Clark, who provided more detail as to how the firm is planning to meet the lofty ambition.
Announced last week, the target will see Microsoft halve emissions across its operations and supply chains within the next decade, while investing to offset an equivalent greater than the remaining emissions. It ultimately acts as a milestone on the pathway to a new longer-term ambition to remove all carbon that Microsoft has emitted since it was founded in 1975 from the atmosphere by 2050.
Microsoft has been operating on a carbon-neutral basis since 2012. Some may argue this gives it the upper-hand in achieving carbon-negativity, but because its past work has focused heavily on offsetting and has not covered the supply chain, Clark explained, meeting the new 2030 and 2050 aims will require a “transformation” in approach.
“The past several years have seen the lion’s share of investment going towards Scope 1 (direct) and Scope 2 (power-related) emissions – at Microsoft and in the wider tech sector,” Clark said, speaking ahead of his appearance at edie’s Sustainability Leaders Forum (scroll down for full details).
“There hasn’t been major investment in reducing Scope 3 (indirect) emissions because, when you start looking at your supply chain, you have to bring about new behaviours not only within your company but within your partners. “
To that end, Microsoft’s new targets are being backed with a $1bn funding pot, which will be allocated to supply chain partners wishing to invest in carbon reduction. Clark dubbed this measure “one of the most exciting” facets of Microsoft’s plans and explained that the funding will be made available to upstream and downstream organisations alike.
Organisations which “may not be in a position to make the investment needed to bring about large impacts on carbon emissions alone” – either because of their size or because they are located in a region or nation with poor policy or infrastructure support – will be prioritised, Clark elaborated. Funding will be allocated to both carbon reduction and carbon offsetting projects.
A framework regarding how grants from the $1bn pot will be distributed is yet to be finalised and is set for completion within two years. While this work takes place, Clark explained, Microsoft will invest in projects which enable the collection of accurate, detailed and comparable data regarding Scope 3 emissions across its supply chain. Rather than being introduced on a “top-down” basis, Clark is hoping to see such projects developed through “deep” collaboration.
“In the years ahead – hopefully sooner rather than later – we’ll start getting aggressive in bringing about consistency in the way that supply chain emissions are measured,” Clark said. “As soon as we have that, we’ll be able to track improvements over time… If you can measure an impact, you can not only manage it but plot a course to transformational change.”
As a first step towards improving data on Scope 3 emissions, Microsoft will add new data collection and sharing requirements to supplier contracts by the end of the year. Where suppliers face challenges in meeting these requirements, they will be supported to overcome them rather than having their contracts closed in the first instance, Clark clarified. Microsoft already places disclosure requirements on those applying for funding through its AI for Earth initiative.
The good news for Microsoft is that supplier disclosure of sustainability data is on the increase globally. 2019 research from CDP found that more than 110 of the world's largest companies are now requesting sustainability data from their suppliers, up from just 14 in 2008, at a time when the average corporation’s supply chain emissions are around five-and-a-half times greater than those generated by their direct operations.
While praising the work of industry groups, individual businesses and disclosure platforms in bringing about this trend, Clark said the next “phase” of work must focus on unifying metrics to bring about more accurate and comparable data.
While it is an important first step, having better environmental data is pointless unless it is analysed and acted upon. Microsoft is “acutely aware” of this and a “huge sense of urgency” to drive “transformation through transparency” is now palpable across the business, Clark said.
He maintained that, for Microsoft to deliver against that vision, the business will need to forge new partnerships in a way that not only boosts data sharing, but knowledge, expertise and physical resource sharing as well.
On the latter – which fits into both carbon and resource goals, given that emissions from material systems account for 45% of the global annual total – the company has recycled hardware since its inception. But it has gradually been taking its circular economy work “out-of-house” to improve efficiency, drive progress beyond its internal operations and to prioritise material reduction and reuse over recycling, according to Clark.
A recent example of this has been the successful integration of components from end-of-life enterprise servers into new consumer electronics for children. Microsoft takes back the servers and separates the servers, but a third party is responsible for building them into new products and selling them.
In order to make such collaborations easier in the future, Microsoft has working behind-the-scenes for more than two years to improve “design for data and dismantling”, Clark revealed. Regarding data, the company is documenting every component of every piece of hardware in the cloud, down to the “complete bill of materials”. In conjunction with designs that enable components to be easily reused, this activity will help Microsoft create new supply chains for second-life assets in a way that maximises efficiencies and creates benefits for all participants.
For Clark, the fact that Microsoft is now able to collaborate in both competitive and precompetitive forums, both within and beyond its current supply chains, is down, in no small part, to the rise of climate and resource discussions over the past two years. Changing consumer and investor demands, being voiced loudly on a global and public stage, are materialising as new business commitments and national policies around emissions, resources and waste.
“Over the next 24 months, I’ll be interested to see how the impacts play out in terms of collaboration in the supply chain, across different facets of the industry… I think we’ll start seeing a lot more lease-based models, take-back models, resale models, partnership models,” Clark said.
“Meeting the need for new tools, new processes new thinking… will require engagement. Starting that engagement now will help you and your partners develop the best way to manage your value chains ahead of the global emergence of this new economy.”
His advice for businesses which may be tackling “inertia” or approaching the need for change as a challenge rather than an opportunity is to set a bold target that is future proofed against planned legislation changes.
“I don’t think that people sitting in the C-suite aren’t aware of the need to act in ways that go beyond past or current approaches… Your partners now will be changing around you; why not start having the conversation with them proactively rather than waiting to react to legislation?”
Indeed, Microsoft is not alone in its carbon negativity commitment. Going “beyond net-zero” is also a strategic target for the likes of AstraZeneca, Interface and Drax; “net positivity” is also growing as a buzzword; and, in the tech sector itself, Google is reportedly exploring carbon negativity as an extension of its past climate progress.
Microsoft at edie’s Sustainability Leaders Forum 2020
Microsoft's general manager of supply chain sustainability and cloud computing Paul Clark will be appearing at day two of edie's Sustainability Leaders Forum 2020 as part of a high-level panel discussion on accelerating circular economy progress. The panel will also feature expert speakers from Mars and PepsiCo.
During the two-day event at London's Business Design Centre on 4 & 5 February, some of the biggest companies, individuals and organisations championing sustainability will gather to discuss the emergency response in transitioning to a net-zero economy.
The flagship, multi-award-winning event features keynotes speakers including former President of Ireland Mary Robinson; Rebecca Marmot, Unilever CSO; Tom Szaky, TerraCycle CEO; Gilbert Ghostine, Firmenich CEO plus directors and senior managers from Interface, Vattenfall, John Lewis, Taylor Wimpey, Aviva, Pernod Ricard, LEGO Group, M&S, Diageo, Tesco, WSP, BASF, Mondelēz and more. For details and to register, visit: https://event.edie.net/forum/