Why Microsoft is Imploring its Suppliers to go Green

In a significant shift towards environmental accountability, Microsoft is calling upon its suppliers to play a crucial role in drastically reducing emissions.

Recognising that its Scope 3 emissions contribute to over 97% of its total carbon footprint, Microsoft has identified that nearly three-quarters of these emissions originate from two primary areas: purchased goods and services, along with capital goods.

Melanie Nakagawa, Microsoft's Chief Sustainability Officer, emphasises the importance of this supplier collaboration: "Nearly 75% of Microsoft’s Scope 3 emissions come from purchased goods and services (things like raw materials, office supplies) and capital goods (these include buildings, vehicles).

"This is an important reminder that our suppliers play a pivotal role in helping us reach our goal of carbon negative by 2030."

Supplier collaboration emphasized at Singapore summit

The recent Microsoft Global Supplier Sustainability Summit in Singapore served as a significant platform for suppliers from Asia and beyond to convene and strategise for long-term emissions reductions.

Melanie reiterated that Microsoft prioritises decarbonisation as a necessity, not a choice. The summit aims to become a regular collaborative effort to further this critical agenda.

Will Hudson, Microsoft’s Director of Energy & Sustainability Policy, introduced the summit's objectives: "Microsoft is not doing this work because decarbonisation is easy; we are doing it because it is necessary."

For Microsoft to achieve its carbon-negative goal by 2030, it first needs to minimise Scope 1 and 2 emissions and then drastically halve Scope 3 emissions, which include emissions from Microsoft’s hardware and infrastructure, as well as customer usage of its products.

Targeting emissions hotspots in the supply chain

Integral to Microsoft’s strategy is targeting "hotspots" in its supply chain which are heavy emitters, yet offer significant potential for reductions. These include the raw materials used in data centres, such as metals, glass and plastics, where emissions stem from mining, smelting and forming processes.

The role of electricity as a thematic emphasis was underscored: switching to clean energy is critical, yet many suppliers still face challenges in accessing reliable carbon-free electricity (CFE).

Addressing this, Microsoft’s 2024 Supplier Code of Conduct now mandates suppliers to transition to 100% CFE for goods and services by 2030, stimulating new CFE generation rather than reallocating existing power sources.

"This approach will drive new CFE generation into the grid and push down fossil in the power mix," Will adds.

Investment and technology for emission reductions

Through its US$1bn Climate Innovation Fund, Microsoft is investing in technologies that facilitate carbon reductions and removals.

A highlighted investment is LineVision, which utilises AI to boost capacity in existing transmission lines, thus accommodating more renewable energy without additional infrastructure.

Internally, Microsoft has implemented AI for complex emissions tracking within its supply chain.

Leo Aspauza, Director of Cloud Supply Chain Sustainability, points to an arduous task: “There are tens of thousands of lines of calculations to calculate the carbon footprint of one device.”

Currently, 70% of Microsoft’s product carbon footprints are calculated using primary data from suppliers, far exceeding the industry average of 20%.

This efficiency allows Microsoft’s sustainability teams to prioritise action over data collection, thereby focusing on energy efficiency and supplier access to renewable energy.