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Last week. Microsoft joined the likes of Amazon. Apple. Tesla and other tech giants in a pledge to dramatically reduce its carbon footprint in the coming years. In fact. the company aims to achieve carbon negative status by 2030. meaning that it will remove more CO2 from the atmosphere than it pumps out over the course of normal business operations. By 2050. the company intends to remove all the carbon it has emitted since its founding in 1975. This will purportedly be achieved through dramatic investment in carbon capture and storage technology. and carbon offsets (reforestation). In his official statement on January 16. Microsoft President Brad Smith had this to say:
The scientific consensus is clear. The world confronts an urgent carbon problem. The carbon in our atmosphere has created a blanket of gas that traps heat and is changing the world’s climate. Already. the planet’s temperature has risen by 1 degree centigrade. If we don’t curb emissions. and temperatures continue to climb. science tells us that the results will be catastrophic…those of us who can afford to move faster and go further should do so. That’s why today we are announcing an ambitious goal and a new plan to reduce and ultimately remove Microsoft’s carbon footprint.
What’s Driving The Carbon Reduction Phenomenon?
2019 marked a crucially important year for shareholders of publicly traded companies. one that produced staggering returns. At the close of 2019 the NASDAQ hit almost 9.000 points. and the DOW reached new highs as the market steamed ahead into 2020. The S&.P surged 29% by the close of the year. marking its best return since 2013.
Yet shareholders did not just see a continued push for higher returns. they saw a complete and historic shift in what a corporation “ought to be.“ In fact. a new mandate has taken over publicly traded companies. and it presents itself in the form of “shareholder activism.“ Spearheaded by the Business Roundtable. and signed by 181 CEOs of global corporations. their statement sought to craft a new definition for the “purpose of a corporation.“ Laurence Fink. the CEO of BlackRock. in his annual letter to shareholders. further articulated the pressing need to combat climate change and expressed his belief that “we are on the edge of a fundamental reshaping of finance.“
PROMOTED
But by the latter half of 2019. shareholder returns seemed to have taken a backseat to this newfound activist platform. This shift is due in large part to Congress’s inability to pass federal legislation aimed at environmental protection. sustainability. and combatting climate change. Consequently. companies have taken it upon themselves to provide lasting solutions. driven by shareholder demands. We can expect to see more of the same for 2020. as younger generations are more environmentally aware than their parents.
Enter Microsoft
Microsoft is an undisputed giant of the tech industry. From investing $1 billion in Artificial Intelligence to winning the coveted JEDI Contract over rival Amazon. Microsoft has been making major moves over the past year. In 2019 the company’s shares posted a whopping 55% gain.
The next big thing is saving the planet. The company intends to reach a carbon negative by 2030 through a halving of their current carbon output and massive investments in carbon removal. This goal – which encompasses both direct emissions and Microsoft’s entire supply and value chain – will be funded in part by expanding its internal carbon fee. which has been in place since 2012.
To realize this goal. Microsoft plans to invest heavily in carbon sinks. This includes anything that can capture carbon dioxide from the air and or sequester it underground. from forest restoration to carbon capture devices.
Furthermore. Microsoft initiated a $1 billion Climate Fund. which aims to accelerate the global development of carbon reduction. capture. and removal technologies. Microsoft’s President Brad Smith acknowledges manufactured carbon capture devices “are not yet affordable and effective.“ but remains confident that costs will drop as technologies improve and scale is achieved.
Ahead of the Curve
Microsoft’s goals reach far beyond those of their rivals like Amazon. who intend to “only“ go carbon neutral by 2040. For Amazon. however. achieving carbon negative is a much taller order: the company not only produces carbon in its warehouse power usage. but by its shipment of over 10 billion items per year — made possible through a massive energy-intensive value chain.
Amazon CEO Jeff Bezos has not shied away from climate related corporate responsibility either. He stated publicly that “We know we can do it and we know we have to do it.“
Amazon has vowed to run on 100% renewable energy by 2030. Google and Apple have already hit that threshold through buying enough renewable energy to match their total global annual electricity use. Microsoft has previously lagged behind its peers here. but intends to hit 100% green energy for all of its infrastructure needs by 2025.
Moving ahead. it seems that Silicon Valley – driven by shareholder activism – will continue to lead the way in environmental sustainability. It may be easier for the tech sector to go green than energy intensive industries like mining. metallurgy. petrochemical. and aviation. but Microsoft and other tech giants should be commended for leading the charge.
