Insight & Analysis

Microsoft talks net zero and how its cloud services can help companies meet Scope 3 targets

Published: Mar 2023

In a recent webinar, Microsoft’s Global Sustainability Specialist Natalie Pullin explains how the tech giant plans to meet its net zero goals and remove all its historical carbon emissions by 2050. As corporate treasury begins to get to grips with the carbon footprint required to store archived data, she says Microsoft’s cloud technology can help companies reduce Scope 3.

There is a distinct difference between carbon neutral and net zero, clarifies Microsoft’s Natalie Pullin, Global Sustainability Specialist in a recent webinar with Finastra’s Jay Mukhey, ESG Senior Director at the financial software company. Companies aiming for carbon neutrality will purchase offsets, effectively buying themselves out of their carbon emissions. In contrast, net zero involves setting targets and reducing emissions. “Companies should be investing in carbon reduction first and foremost, before thinking about offsets,” said Pullin.

The World Economic Forum adds that carbon neutral can cover a defined part of business operations and typically accounts for CO2 emissions, but not other greenhouse gases. Net zero on the other hand means a company reduces all greenhouse gas emissions across its whole supply chain.

Microsoft’s ambitious sustainability targets include being carbon negative, water positive (replenishing more water than it consumes) and producing zero waste by 2030. The tech giant has also pledged to reduce its historical emissions by 2050, and has committed to deriving all its energy from renewable sources, all the time, by 2030.

Microsoft began its sustainability journey in 2009 when it published its first carbon neutral goal. Today, strategy has evolved into new areas spanning how the company thinks about the energy efficiency of its buildings. Elsewhere it has developed an internal carbon tax whereby managers are encouraged to think about the carbon emissions within their segment, and their own responsibility to cut emissions.

Carbon neutral cloud services

Microsoft, a leading provider of cloud technology, can support companies seeking to reduce their Scope 3 emissions in their supply chain. It’s an area treasury is increasingly focused on as companies get to grips with the carbon footprint and electricity required to store archived data. “We enable customers to be carbon neutral with respect to their cloud emissions,” said Pullin. Reporting Scope 3 emissions requires companies gather emissions data in their value chain and “we are our customers value chain,” she continued. “If you partner with us, by design you are carbon neutral.” Statistics show that for some technology companies, as much as half of their Scope 3 emissions emanate from the cloud.

She added that Microsoft’s data centres are not only focused on their emissions and innovations to reduce carbon within the services it provides, but is also targeting reduction in waste and reducing the emissions used producing its hardware. Microsoft is also exploring how it can support its customers measure their own carbon emissions. Elsewhere, the tech giant has developed methodologies to better calculate emissions, giving the company confidence it is reducing the emissions of its cloud services.

Microsoft is also exploring how to increase the sustainability and reduce energy use in software development. This could be around writing code more efficiently, using AI and machine learning or storing data in cloud platforms that don’t use so much energy.

Pullin and Mukhey discussed the benefits of migrating to the cloud, including cyber security, scalability and innovation. The importance of cyber security is growing as corporates report and disclose more in response to regulatory changes, in turn requiring more data. The ability to have accurate data that pertains to your carbon emissions is very important and the rise in ESG data also brings more risk with commercially sensitive, granular ESG data.

The conversation turned to how technology is supporting companies meet sustainability targets in new ways like video meetings and e-signatures. “Our consumption of financial services will be increasingly driven by technical innovation,” said Murkhey. Pullin said banks are starting to think about how they can use the Metaverse for banking services whereby younger generations can access banking services as an avatar in a digital space. Tools and technologies such as Web 3, non-fungible tokens (NFTs), virtual reality (VR) and augmented reality (AR) form the foundation for the virtual world in a metaverse where users can play, learn, socialise and interact.

Preparation

The conversation concluded with Pullin offering advice to companies at the start of integrating sustainability targets. It should begin with gathering more data that offers granularity and the ability to understand the source of carbon emissions. It should include prioritising reduction initiatives and introducing reduction targets across operations and into value chain. For companies at the beginning of their journey it could begin with simple initiatives like turning the lights off and reducing paper, she said.

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