Microsoft’s internal carbon fee to raise 567% as Scope 3 emissions jump in 2021


Microsoft’s internal carbon fee to raise 567% as Scope 3 emissions jump in 2021


Microsoft released on Thursday the update of its sustainability commitment, pledging to become carbon negative, zero waste, water positive by 2030. It also raised inter-company penalties for business travel by 567%.

According to the annual sustainability report published by the tech giant, the company reduced its Scope 1 and Scope 2 emissions by 17% in 2021 by purchased larger amount of renewable energy. Nonetheless, Microsoft’s full scope emissions climbed last year, with Scope 3 emissions, which account for the majority of the company's carbon footprint, increasing by 23% due to capital equipment expenditures, new datacenter building, and higher product usage.

Microsoft is thus adopting “aggressive measures” to reduce the amount of Scope 3 emissions it creates, which includes business travel.

It currently charges US$15 per metric tonne of carbon dioxide equivalent for business travel, but the rates will increase to US$100 per metric tonne in July 2022. The money is put aside for the company to invest in areas that will assist it in becoming more environmentally friendly.

“To help motivate more strong actions to decrease Scope 3 emissions, we're restructuring and increasing our internal carbon charge,” said Microsoft. The company said that it will be able to better support the purchase of sustainable aviation fuel by raising the carbon fee.

A growing number of businesses are attempting to reduce their carbon footprint, and Scope 3 emissions frequently account for the majority of a company's overall greenhouse gas emissions. They have the potential to exceed Scope 1 or 2 emissions, which are emitted by buildings or computed based on power use.

According to the Microsoft’s blog post, the increase is only the start. To meet the FY30 goals in a more competitive market, Microsoft will continue to increase the annual fee at a faster rate, which will help promote energy efficiency and design changes that use low carbon materials.

While the move is intended to discourage employees from traveling, it also encourages airlines and hotels to provide greener alternatives. “The increase in their internal charge for business travel aims to alter company behavior toward fewer or lower-carbon travel and accommodation options, as well as fund emission reduction activities,” said Tom Wood, Emitwise's carbon accounting lead.


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