MSFT Microsoft Corporation

By Aaron Tilley and Russell Gold 

Microsoft Corp. is pledging to eliminate its carbon emissions and invest $1 billion as part of a wider climate commitment, raising the stakes in the corporate race to show greater awareness of environmental concerns.

The software giant on Thursday said it would become "carbon negative" by 2030 -- taking more carbon out of the air than its operations and those of its supply chain produce. This goes a step beyond promises made by some of its high-profile Silicon Valley competitors.

By 2050, Microsoft says, it will have eliminated all emissions it has produced since its founding in 1975.

Companies have been feeling the heat to help reduce greenhouse gas emissions that contribute to the changing climate. Scientists at the National Aeronautics and Space Administration and the National Oceanic and Atmospheric Administration, which independently track world temperatures, this week said in an annual report that 2019 was the second-warmest year on record.

Microsoft said it has been carbon neutral since 2012, in part by purchasing so-called offsets, which finance projects that prevent further emissions, such as preserving forests. It now plans to have 100% renewable energy running its facilities by 2025 and completely electrify its campus vehicle fleet by 2030.

"One of the conclusions we've come to is that this is an area where neutrality simply is not enough, and we need to be more ambitious," Microsoft President Brad Smith told a group of journalists this week.

Mr. Smith said the Xbox gaming system is one of Microsoft's biggest carbon footprint contributors. The environmental pledge, he said, will drive efforts such as making the devices more energy-efficient.

Of course, Microsoft isn't a major manufacturer, making it easier for it to tackle emissions compared with companies that are more focused on manufacturing. Microsoft said its operations and suppliers would emit 16 million metric tons of carbon in 2020. Dow Chemical Co. has to account for about 113.5 million metric tons.

Companies pledging to actually take more carbon out of the air than they put in are rare. Software maker Intuit Inc. said in September it would take such a step by 2030. CDP, an international nonprofit organization that presses companies to disclose their environmental impact, says only two companies in its database have pledged to reduce emissions in a verifiable manner to reach a net-zero level: Swedish property developer Castellum AB and German professional services firm Sustainable AG.

This "is at the vanguard of corporate climate action," said Sue Reid, vice president of energy and climate at Ceres, a nonprofit that urges investors and companies to set sustainability goals. "There are a small number of companies that have gone beyond net zero."

Amazon.com Inc. last year said it would add a fleet of 100,000 electric delivery vehicles in a drive to be carbon-neutral by 2040. That requires Amazon to have no net release of carbon dioxide into the atmosphere by either offsetting emissions through actions such as planting trees or by eliminating emissions altogether.

Amazon has said it expects 80% of its energy use to come from renewable sources by 2024, up from 40% at the time of its environmental pledge.

To become carbon negative across its entire operations, Microsoft plans to use technologies that remove carbon and store it for long periods underground, in the soil or in a biosphere. That pledge could prove difficult since much of this technology is still maturing and it is unclear whether it is scalable. Globally, there is only capacity to capture and store 40 million metric tons in a variety of industrial and experimental projects.

Julio Friedmann, a research scholar at Columbia University's Center on Global Energy Policy and a former Energy Department official in the Obama administration, said companies investing in carbon-negative technology could have a competitive advantage in years to come if future policies require companies to limit their emissions.

"The thing I find most exciting about what Microsoft is trying to do here is that the future is made one brick at a time, and they're going to buy the first bricks. They're going to help create an industry by procurement," he said.

Microsoft said it would provide $1 billion to the Climate Innovation Fund over the next four years to back development of carbon-removal technology.

The environmental commitments are only the latest area where tech companies are competing to say they are addressing a range of societal ills. Microsoft last year said it would spend $500 million on new housing in the Seattle area, around its Redmond, Wash., headquarters. Alphabet Inc.'s Google followed with a $1 billion commitment to housing in the San Francisco Bay Area. Apple Inc. in November committed $2.5 billion to affordable housing in California.

But Microsoft's environmental stance has faced criticism over the company's links to the oil-and-gas industry. Over the past year, Microsoft has struck deals with Exxon Mobil Corp., Chevron Corp., and Schlumberger Ltd. to move their data to the cloud.

Microsoft, like with many tech companies, is having to contend with a more activist workforce pushing for a more progressive position across environmental, social and political issues. Microsoft employees have criticized the company's courting of the oil-and-gas industry to push adoption of its cloud computing service, Azure.

In response to some of those energy deals, a group of Microsoft employee activists said, via Twitter, "It's no longer possible for us to ignore Microsoft's complicity in the climate crisis." Microsoft declined to comment on the tweet.

Write to Aaron Tilley at aaron.tilley@wsj.com and Russell Gold at russell.gold@wsj.com

(END) Dow Jones Newswires

January 16, 2020 12:44 ET (17:44 GMT)

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