2021
Environmental
Sustainability
ReportFrom pledges to progress

Overview

Carbon

Water

Waste

Ecosystems

2

AppendixContents
Overview

Carbon negative

Water positive

Ecosystems

Zero waste

Appendix

Foreword

4

Our approach16

Our approach45

Our approach62

Our approach79

Appendix A:

2021 progress

6

Getting to carbon negative

20

Getting to water positive

48

Getting to zero waste

6581

How we report

How we work

7

Reducing Scope 1
and 2 emissions

21

Reducing our water footprint

48

Driving transformation

69

Taking responsibility for ourland footprint
Driving transformation

82

Feature story:
100/100/0 carbon-free energy

23

Enabling systems change84

Key trends

87

Reducing Scope 3 emissions

25

What’s next?

88

Removing carbon

30

Resources

89

Driving transformation

31

Enabling systems change

34

Key trends

41

What’s next?

42

Resources

43

Feature story:
Employee engagement

9

Commitments and progress

11

About this report

13

For the best experience, we
recommend using the free
software Adobe Reader, or iBooks
if viewing on an Apple mobile
device. Interactive functionality
may be limited when viewed ina web browser.
This report is part of the Microsoft
CSR and sustainability reporting suite.
Visit the Microsoft
reports hub

2.5M

metric tons of carbon
removal contracted in FY21
and FY22

Replenishing water
Improving access to water
Driving transformation
Enabling systems change

50
52
53
55

Enabling systems change
Key trends
What’s next?
Resources

71
74
75
77

91

Appendix B:
Commitments

92

Partnerships

93

Memberships

93

Recognitions

94

EPEAT

95

Key trends

58

What’s next?

59

Appendix C:

Resources

60

Endnotes

96

Appendix D:

1.3M

cubic meters of water replenishment
projects funded in FY21

15.2K

metric tons of waste diverted
from landfills

24

petabytes of environmental
data now available

Section 1: Our
environmental data

97

Independent accountant’s
review report

112

Section 2: Additional
environmental indicators

113

Appendix E:
Policy117

Overview

Carbon

Water

Waste

Overview

Ecosystems

3

AppendixContents
Foreword

42021 progress

6

How we work

7

Feature story:
Employee engagement

9

Commitments and progress

11

About this report13Overview

CarbonWater

Foreword
Microsoft’s sustainability
commitments: two years into
our ten-year journey
By Brad Smith, President and Vice Chair and
Dr. Lucas Joppa, Chief Environmental Officer

Waste

Ecosystems

4

Appendix

As we look towards 2030, the world will need all theingenuity it can muster. Because as significant as
COVID-19 is, it’s not the only challenge our world faces.
Climate change presents environmental, social, andeconomic crises on a whole new level. For nearly two
millennia humans have been carbonizing our planet and
we need to act together to decarbonize.
Our first annual sustainability report, released in January
2021, showed early progress on our commitments tobecome a carbon negative, water positive, zero wastecompany by 2030 and protect ecosystems by building
a Planetary Computer.
2021 was a year of both successes and challenges.
While we continued to make progress on several of ourgoals, with an overall reduction in Scope 1 and Scope
2 emissions, our Scope 3 emissions increased year
over year, due in substantial part to significant global
datacenter expansions and the growth in Xbox sales andusage as a result of the pandemic.

A closer look at 2021

We work to limit these emissions when we design andmanufacture our products, and work with our suppliers
to report and reduce their emissions—but still saw anincrease. This serves as an important reminder that Scope
3 emissions are the most difficult to control and reduce.
This year has highlighted the challenges of reducing
Scope 3 emissions and we’re committed to sharing ourlearnings to help other organizations who are wrestlingwith these same challenges.
One Scope 3 category that saw an annual increase
was capital equipment. This category includes theemissions to produce equipment we bought this year
(and will use for a long time) as well as the carbon
emissions associated with the construction of newbuildings including both datacenters and office space.
For example, as the Microsoft Cloud business expands,
construction of new datacenters and new server
equipment is needed to support growing customer
demand. The emissions associated with the capital
equipment category accounted for about 30 percent
of our Scope 3 total this year.

During our most recent fiscal year, we grew businessrevenue by 20 percent while continuing to reduce ouroperational emissions, as represented by Scope 1 and 2
combined, with a decrease of approximately 17 percent
through our purchasing of renewable energy.

Another Scope 3 category that saw an increase was theuse of our products, specifically the estimated emissions
associated with powering products we sold including
Xbox and Surface devices. This category accounted forabout 29 percent of our Scope 3 total this year.

However, as our business has grown and we’ve seen
increased use of our devices and cloud services, ourtotal Scope 3 emissions (comprising the company’s
entire value chain) have increased by about 23 percent
year-over-year. These emissions include, among otherthings, the carbon emitted from electricity generation to
power devices at home or at work and for producing theconcrete and steel we use in construction.

Around the world, the electricity used to power devices
today largely comes from grids reliant on carbonintensive sources such as coal or gas, so Microsoft mustaccount for that carbon for the lifetime of our devices
to accurately track our Scope 3 emissions. And, because
every part of the world has a different mix of electricity
generation sources, we calculate a device’s climate
impact based on where the device was sold.

The journey to net zero
Despite these Scope 3 increases, we remain dedicated tobuilding a world better than the one we found, and to
helping our customers and partners achieve the same.
The impact of this work will not all be felt immediately,
and our experience this year highlights a few takeaways
relevant to many organizations executing against theirsustainability commitments.
1. Progress won’t always be linear. The rate at which
we can implement emissions reductions is dependent
on many factors that can fluctuate over time, ranging
from our own business growth and supplier mix
to the rate of growth of green infrastructure, suchas the supply of and transition speed to renewableenergy. Additionally, different sources of emissions
will be addressed on different time frames as climate
technologies and renewable alternatives advance.
And as measurement methodologies improve andnew standards emerge, companies like ours may see
emissions rise or fall year-over-year.
Nonetheless, the challenge remains: we must
continuously improve on our efforts to decouple ouremissions from our growth until we reach our carbon
negative commitment in 2030. Some of this will happen
through the completion of specific goals such as ourshift to a 100 percent electric campus vehicle fleet, ourmove away from diesel fuel as a backup energy sourcefor our datacenters, and the carbon benefits of ourwaste reduction improvements due to our expanding
fleet of Circular Centers. Other progress will happen
through the expansion of our renewable energy
purchasing program to cover the energy consumptionof our consumer devices, through advances by our
suppliers in reducing their own emissions, and throughincreased purchasing of new materials as they enter themarkets, including green steel, low carbon concrete,
and other infrastructure components of a future net
zero carbon economy.

Overview

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Water

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5

Appendix

Foreword (continued)
2. Progress relies on us all counting carbon
consistently. There are several external factors orbugs in the world’s net zero carbon program that
if addressed will help us all make greater progress
toward our net zero goals. The world lacks a common
meaning of the term net zero and a common unitof measurement for assessing the climate impact ofvarious net zero approaches, and we must all focus on
maturing the markets needed to achieve a net zerocarbon economy by 2050. We explored these topics
in greater detail through the lens of our work on
carbon removal.
We will continue to innovate and invest to meet our
ambitious commitments and we’ll do so in a principledway. We will also continue to be transparent about ourprogress, our challenges, and our learnings to help
others on their journey. As we look to the future we arecommitted to:• Counting everything, including challenging Scope 3
emissions. We are putting programs in place to help
lower them, from working with our suppliers to help
them decarbonize to continuing to innovate withour company-wide internal carbon tax to incentivize
emissions reduction and continuing to invest in
carbon removal.
• Only investing in carbon removal offsets instead of
traditional avoided emissions offsets because removal
is an underdeveloped and critical tool to solve theworld’s climate challenge. You can only get to net
zero when you’ve reduced all that you can and yourremaining carbon emissions are completely balanced
by long-term carbon removal. Last year, we madethe world’s largest purchase of carbon removal at
1.4 million metric tons and in this fiscal year we are on
track to top that by procuring 1.5 million metric tons.

From pledges to progress
While 2021 presented us with some new learnings, we’vealso made some great progress that we share in moredetail in this report. A few examples that illuminate thediversity of our work include the following.
• Four datacenters are Zero Waste certified, with newcertifications for the San Antonio, Texas and Quincy,
Washington datacenters and renewed certifications for
our Boydton, Virginia and Dublin, Ireland locations.
• We announced the Microsoft Cloud for Sustainability
to provide comprehensive, integrated, and automatedsustainability management for organizations at any
stage of the sustainability journey.
• Through an investment from our Climate Innovation
Fund, we’re helping LanzaJet complete theirsustainable fuels plant in Georgia—a move thatwill help decarbonize our datacenters as well as theairline industry.
• While overall device emissions grew because of higher
sales and usage, we reduced the carbon footprint
for several of our products. Surface Pro 8 is one of
the most energy efficient Surface Pros ever and we
introduced Energy Saver, a new low-power standby
mode for Xbox consoles.
• We granted $100 million to Breakthrough Energy
Catalyst to accelerate the development of climate
solutions the world needs to reach net-zero across four
key areas: direct air capture, green hydrogen, long
duration energy storage, and sustainable aviation fuel.

We are committed to becoming a carbon negative, water positive, zero waste company by 2030.
With net zero becoming the new normal—more than
1,500 companies with total net revenue of $11.4 trillion
have pledged that they will become carbon neutral or
net zero—the world must move from climate pledges toclimate progress.

a net zero, environmentally sustainable future. And while
the shape of what the future holds is unknown, we
will continue to build the foundations needed today
and do the work that needs to be done to deliver on
our commitments.

As a leading technology provider of sustainable
solutions, Microsoft stands ready to support ourcustomers, partners, and the world in the move towards

It’s what the world needs us all to do.

Brad Smith
President and Vice Chair

Dr. Lucas Joppa
Chief Environmental Officer

Overview

CarbonWater

2021 progress$571M

Allocated $471 million to date via our
Climate Innovation Fund to accelerate
our carbon goals, as well as water andwaste. We also donated $100 million to
Breakthrough Energy’s Catalyst initiative.

Waste

Ecosystems

Carbon

2.5M

Water
tons

In FY21 and FY22, Microsoft successfully
contracted to remove 2.5 million mtCO2,
meeting our cumulative two-year goal.

5.8

6

Appendix

GW

In FY21, we signed new power purchaseagreements (PPAs) for approximately
5.8 gigawatts (GW) of renewable energy
across 10 countries around the globe.

87%

supplier reporting
In July 2021, 87 percent of our in-scope
suppliers reported their emissions to CDP,
up 12 percent from 2020.

Microsoft Cloud for
Sustainability
In July 2021, we launched the Microsoft
Cloud for Sustainability to provide
comprehensive, integrated, and automatedsustainability management.

1.3M

Waste
m³

Ecosystems

CircularCenters

In FY21, Microsoft invested inreplenishment projects that are expected
to generate over 1.3 million cubic metersof volumetric benefits.

We have planned five Circular Centers, with
Amsterdam open, construction underway
in Boydton, Virginia, and three more to be
added in 2022.

670M>15,200

>95K

Zero

Our programs with Water.org
account for over 670 million
9
liters of water benefit
per year.

peopleThrough our partnership with Water.org,
10
we provided more than 95,000 people
with access to safe water or sanitation.

U.S. Water Prize
In 2021, Microsoft was awarded the U.S.
Water Prize for Outstanding Private Sector
Organization for adopting our water positive
program and committing to being water
positive by 2030.

tons

In FY21, we diverted more than 15,200 metrictons of solid waste otherwise headed tolandfills and incinerators.

Waste

Four datacenters are Zero Waste certified,with new certifications for the San Antonio,
Texas and Quincy.

18%

reduction

We reduced single-use plastics in our
Microsoft product packaging by 18 percent.

>17,000
acres

In FY21, we contracted toprotect more than 17,000
acres of land.

>500

users

The Planetary Computer private preview
released as planned in April 2021, with morethan 500 users signed up and using the APIs
and scalable compute.

24

petabytes

We have made available 24 petabytes ofdata with more than 30 key environmental
and Earth observation datasets to Azurein consistent, analysis-ready format that isfreely available for use by anyone.

850+

grantsSince its inception in 2017, our AI for Earthprogram has provided more than 850 grants
to organizations working in 110 countries
around the world, granting more than
$20 million in Azure credits.

Overview

Carbon

Water

Waste

Ecosystems

7

Appendix

How we work
Microsoft’s commitments to becomecarbon negative, water positive, andzero waste by 2030 while building a
Planetary Computer are well known.

Set ambitions
based onthe science

Report on
everything,
not just
progressHow
we work

Scale strategy
to achieve
ambitionsby using the“whole ofthe business”

Take steps
to acceleratemarkets,
ecosystems,
and global
progress

Set thetone fromthe top

Make it central
to the businesswhile making it
relevant at businessgroup levels

Hold everyone
accountable forprogress and agovernance structure
to track progressin real time

To guide the progress across the company on thosegoals, we have changed the way our sustainability
strategy and accountabilities are set and how progress
is evaluated. In the interest of transparency and also tohelp other organizations get started, we are sharing how
we work first, prior to our commitments and progress onthem—sustainable digital transformations require both
strategic frameworks and cultural buy-in to be successful.

Set ambitions based on the science
The best available science and policy indicate that everyorganization needs to do even more in far less time thanpreviously thought. As we saw the science in 2019, it was
clear that our carbon neutral goal was not what the world
needed—the world needs to reach net zero by or before
2050. That meant we needed to set goals aligned to thescience and language of the science, and we needed to be
more ambitious. In 2020, we made a series of environmental
sustainability commitments, including being carbon
negative, water positive, and zero waste by 2030.

Scale strategy to achieve ambitions byusing the “whole of the business”
At Microsoft, we think about the positions of influencethat we can use. We start by taking accountability for ouroperations as a company, but we expand this significantly
as we think about the different roles that we play as acustomer, supplier, investor, employer, policy advocate,and partner in innovation to customers, organizations,and institutions around the world. The challenge is tofind where our organization can have the most impact
across our positions of influence.

Microsoft looked at our commitments based on ouroperational footprint across carbon, water, waste, andecosystems, the technology that we provide to ourcustomers and partners to power their sustainability
initiatives, and larger influence that we can have on theworld with research, investments, strategic partnerships,
and policy and advocacy.

Set the tone from the top
Sustainability is no longer just a corporate social
responsibility (CSR) function or a way to mitigate
risk—it must be mainstreamed into every part of thebusiness. That starts with making sustainability part ofthe brand commitment and embraced by all leaders.
At the heart of our culture is the understanding that for
Microsoft to do well, we need the world to do well andthat we are a company that pursues profit by solving
the problems of people and the planet. This belief isdeeply held by the leadership of Microsoft—the CEO,CFO, and President—the entire company sees thecommitment and it sets the tone across the company
that sustainability is at the core of our business.

Make it central to the businesswhile making it relevant at businessgroup levels
Corporate commitments give your company a northstar, but you need to embed the strategy and build
operational commitments across your business.
At Microsoft, we knew we needed a way to implement
and execute on our strategy across the entire company,
in every business group. For each focus area (carbon,
water, waste, and ecosystems), we set commitments ineach business group and developed roadmaps to reachthese commitments. We are also committed to enabling
our suppliers with capacity-building tools and resources,
as well as sustainable supply chain financing.

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Appendix

How we work (continued)
Hold everyone accountable forprogress and a governance structure
to track progress in real timeGovernance and accountability are critical to ensuring
alignment and prioritization across your business.
At Microsoft, we hold our business groups accountable
for their carbon emissions via an internal carbon fee of$15 per metric ton. In January 2021, we expanded thecarbon fee so that it includes Scope 3 emissions fromour supply and value chain, in addition to Scope 1 andScope 2. We set measurements and scorecards for eachbusiness group’s sustainability commitments across thecompany and review progress twice a year. We haveestablished a Climate Council that includes seniorbusiness leaders from every business group to provide
sustainability advice, collaborate, drive alignment,
prioritize resources and funding, and review progress on
our commitments. We also tie a portion of our executive
incentive plan to our carbon reduction goals.

Take steps to accelerate markets,
ecosystems, and global progress
If the world is going to meet net zero goals by 2050,
companies need to use their entire ecosystem and allof their positions of influence. In addition to taking
accountability for our operational footprint acrosscarbon, water, waste, and ecosystems, Microsoft is
deploying capital, supporting innovation, and advocating
for larger policy change. We led the largest corporatecarbon removal RFP last year, spending our dollars todrive the carbon removal market forward and to address
our own needs.

Our $1 billion Climate Innovation Fund is investing inorganizations across our areas of commitment to build
a larger, more robust ecosystem of effective companies
and solutions. Our sponsorship at COP26 and numerous
engagements with governments at the city, regional,
state, and national levels are aimed at creating policy
environments that further accelerate the impact of thiswork and the transition to net zero.

Report on everything,
not just progressTransparency is both embedded in each step and a
specific commitment. In this report, as well as otherwhite papers, methodology papers, and speaking
engagements, Microsoft is committed to sharing ourlearnings with the world. When things go well, we will
share that as well as the playbooks to follow to achieve
similar results outside our organization. And if things
go less well, we will share that too so we can all learn
and grow together. We are also delivering innovativetechnology and services to help our customers andpartners power environmental sustainability. And we go
beyond that with our biggest bets in policy, investment,
catalytic partnerships, and research and development.

Sustainable digital transformations require both strategic frameworks and cultural buy-in to be successful.

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Appendix

Employee engagement
Feature story

Empowering
our global
workforce
We recognize that our employees
are the most important asset andresource in advancing innovationin sustainability and are creating
opportunities for them to contributeto our efforts.

At Microsoft, empowering our global workforce is thecenter of our sustainability strategy. Both Microsoft
and LinkedIn have employee communities who drive
bottom-up sustainability initiatives to educate, inspire,
and activate every employee to advance the company’ssustainability goals. The Microsoft Sustainability
Connected Community is an employee-led groupof 5,000 members and 32 regional chapters whose
mission is to make sustainability part of everybody’s
job. The LinkedIn Go Green sustainability engagement
program includes one out of every eight employees andits 26 chapters are focused on empowering employees
to take green action at home, in the office, and in theircommunities. Both groups engage employees on oursustainability commitments while using Microsoft and
LinkedIn technology to innovate real-world solutions tothe climate crisis through the following activities.

Ecochallenges
Microsoft and LinkedIn employees participated in virtual
Ecochallenges for three weeks around Earth Day 2021 to
gamify personal sustainability. Seven thousand people
prepared 31,000 meatless or vegan meals, saved 197,000
pounds of CO2, diverted 227,000 plastic containers andbottles from landfill, saved 392,000 gallons of water, andspent 239,000 minutes learning about sustainability.
Run an ecochallenge to give your employees theopportunity to learn and practice habits that support
them on their personal sustainability journey.
Find out more at
Ecochallenge.org

Empowering our global workforce is the center of our sustainability strategy.

Hack for sustainability
Microsoft employees self-organize into working groups
all year long and “hack for sustainability” by partneringwith each other to create innovative solutions to realworld environmental challenges. In 2020, Microsoft had
125 projects with 879 participants, and 93 percent ofparticipants indicated their interest in continuing thework beyond the Hackathon. One award-winning projectfrom the Microsoft Global Hackathon, Soil as a Service,created a way to lower the cost of measuring organiccarbon in soil using a sensor hooked up to Microsoft
Azure IoT. This innovative solution lowers the cost ofmeasurement significantly, incentivizing farmers tochange their land management practices and helping
nascent carbon marketplaces to quantify their impact.
The project has been picked up by a business group for
further research and exploration.

Ongoing sustainability ideating and hacking
The Microsoft Garage provides a platform for
hackathons and ideathons all year long, including
our month-long Sustainability Ideathon for Earth
Day 2021 and the year-round Sustainability programusing our HackBox platform for employees to collectideas, share concepts, create projects, form teams, andinspire colleagues globally to participate in Microsoft’s
sustainability journey.

Employee-led sustainability projects
Employees from every facet of Microsoft and LinkedIn
are empowered to lead collaborative cross-company
sustainability projects at any time. This year, our platform
has facilitated 200 projects from more than 1,000
employee “hackers,” with projects ranging from digitalforesting, to smart bird feeders, to building software thatwill help retrofit the world’s coal power plant fleet withmodular nuclear reactors.

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Appendix

Employee engagement (continued)
Sustainable disposition of IT assets
The Sustainability Community not only helps Microsoft
lower its own operational carbon and waste footprint,
but also creates a way to share these best practices
with external organizations so they can do the same.
A Microsoft employee noticed a gap in our internal
processes: as customers migrate from on-premises IT
assets to the cloud (Azure), the on-premises hardware,like servers and racks, becomes e-waste, which cancreate serious environmental hazards if it’s not properly
disposed of. The issue was raised to the Azure leadership
through the community, and a new resource wasdeveloped to guide customers on how to ensure thesustainable, secure, and compliant disposition of IT
assets. This guide is being used by our Azure Migrate& Modernize Program (AMMP) customers, throughwhich 20,000 virtual machines and 2,000 databases
have been migrated.
Learn more about the
IT Asset Disposition Guide

Sustainability training
In October 2021, we launched the Sustainability in Action
badge. This is the first all-employee learning course
focused on sustainability, with four hours of content on
carbon, water, waste, and ecosystems. Within the firsttwo months, more than 3,000 employees completed
the course, and can serve as sustainability champions
in their daily work as well as personal lives.

Employee-led educationst

In April 2021, to celebrate the 51 anniversary of
Earth Day, the Microsoft Sustainability Community
organized three days of learning sessions to educate,inspire, and activate employees on the importanceof sustainability. Volunteers coordinated more than
40 sessions and generated 30 hours of evergreen

learning content covering topics from green software
engineering to how to live a zero waste lifestyle athome. More than 3,600 people from 56 countries
participated. LinkedIn celebrated Earth Day with over61 global experiences and participation from nearly
2,900 employees at the virtual events.

Our employee communities drive bottom-up sustainability initiatives to educate, inspire, and activate employees.

3,000

3,000 employees completed
Sustainability in Action training
within the first two months.

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AppendixCommitments and progress
Carbon negative
Microsoft is committed to be acarbon negative company by 2030.
To achieve this, we are improving
efficiency in our operations, devices,and supply chain; we are delivering
technology to help our customers
measure and manage their carbon
emissions more effectively; and weare breaking new ground with carbon
removal purchases and investments
to help develop the crucial, nascentcarbon reduction market.

Find out
more here

Our commitments

Water positive

Our commitments

Carbon negative
By 2030, we will be carbon negative, and by 2050,
we will remove our historical emissions since wewere founded in 1975.

Microsoft is committed to be a water
positive company by 2030. To achievethis, we will continue our water
stewardship work across our operations,building on the steps taken to reduce
the water consumption in our
datacenters and campuses over the
past decade. In addition to reductions,
we aim to become water positive
through expanding access to cleanwater and replenishment projects.

Water positive
By 2030, we will replenish more water than we use.
We will reduce the water intensity of our direct
operations and replenish in water-stressed regions
where we work.

Reduce direct emissions
We will reduce our Scope 1 and 2 emissions to nearzero by 2025 through energy efficiency work andby reaching 100 percent renewable energy.
Replace with 100/100/0 carbon free energy
By 2030, 100 percent of our electricity consumption
will be matched by zero carbon energy purchases
100 percent of the time.
Reduce value chain emissions
By 2030, we will reduce our Scope 3 emissions by
more than half from a 2020 baseline.
Remove the rest of our emissions
By 2030, we will remove more carbon than we emit.
By 2050, we΄ll remove an equivalent amount ofcarbon to all our historical emissions.

Our progress

2.5M tons New tools
Contracted for 2.5M metrictons of carbon removal in
FY21 and FY22

Launched the Microsoft
Cloud for Sustainability

5.8 GW

87%

Signed new PPAs for
5.8 GW of renewableenergy in FY21

87% of in-scope suppliers
reported emissions to CDPReduce water waste in datacenter operations
By 2024, we will reduce water waste in our datacenter
operations by 95 percent.
Increase access to water
We will provide 1.5 million more people with accessto clean water and sanitization services.

Find out
more here

Our progress
3

1.3M mInvested in replenishment
projects expected togenerate 1.3M cubic
meters of water benefits>95K

Provided 95K people withaccess to water via ourpartnership with Water.org

U.S. Water
PrizeAwarded U.S. Water Prize
for Outstanding Private
Sector Organization

670M

Delivered 670M liters ofwater benefits per year via
programs with Water.org

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AppendixCommitments and progress (continued)
Zero waste

Our commitments

Ecosystems

Our commitments

Microsoft is committed to becomea zero waste company by 2030.
We are taking an increasingly circularapproach to materials management
to reduce waste and carbon emissions.
Our approach includes design andmaterial selection, responsibly
sourcing materials for our operations,products, and packaging, andincreasing the use of recycled content.
We keep products and materials in
use longer through reuse, repair,and recycling programs.

Zero waste
By 2030, we will be zero waste across our direct business.

Microsoft is committed to protect
more land than we use by 2025 while
also building a Planetary Computer.
We need a strong, efficient, scalable
way to monitor, understand, measure,and ultimately manage the impactof our actions or inactions on
ecosystems—both globally andlocally. Microsoft is well on our way
to providing access to the world’s
critical environmental datasets anddelivering a computing platform tomeasure, monitor, model, and manage
healthy ecosystems.

Build a Planetary Computer
We will aggregate environmental data from aroundthe world and put it to work through computing
and machine learning in a new Planetary Computer.

Find out
more here

Increase reuse of servers andcomponents through Circular Centers
By 2025, 90 percent of servers and components within
our regional datacenter networks will be reused.
Eliminate single-use plastic
By 2025, we will eliminate single-use plastics in all
Microsoft primary product packaging and all IT asset
packaging in our datacenters.
Make fully recyclable products and packaging
By 2030, we will design Surface devices, Xbox products
and accessories, and all Microsoft product packaging
to be 100 percent recyclable in OECD countries.
Drive to zero waste operations
By 2030, we will achieve 90 percent diversion ofoperational waste at datacenters and campuses
and 75 percent diversion for all construction anddeconstruction projects.

Our progress

Take responsibility for our land footprint
We will take responsibility for the ecosystem impactsof our direct operations by protecting more land thanwe use by 2025.

Find out
more here

Our progress

CircularCenters

18%>17K acres >500 users>15K tons

Zero Waste

24
850+
petabytes grants

Planned 5 Circular Centers
in FY22

Diverted more than
15,200 metric tons ofsolid waste across direct
operations in FY21

Reduced single-use plastics
in product packaging by
18% in FY21

Certified four datacenters
as Zero Waste withnew certifications

Invested to protect morethan 17,000 acres of land
in FY21

Released the PlanetaryComputer and have over
500 users signed up

Made available 24
petabytes of data available
in the Planetary Computer

Our AI for Earth program
has provided more than
850 grants since 2017

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Appendix

About this report

Transparent andaccountable
reporting on
progress
A key principle of our work is transparency.
This report, published annually, includes our
strategy, progress against our goals, and key
challenges and trends we see in this work. We
also publish our environmental data, which isincluded in Appendix D. Deloitte & Touche LLP
performed a review relating to specified
information within Section 1 of Appendix D.
We continue our work to provide leadingtransparency, visibility, and reliability in our
non-financial reporting.
Read about how we report inAppendix A
Read about our environmental
data in Appendix D

How we think about sustainability
Layers of increasing impact
We think about Microsoft’s approach tosustainability in layers of increasing impact
and have structured this report accordingly inchapters across our commitments in carbon,
water, waste, and ecosystems. Each chapter
follows this approach, as outlined here andon the following page.

Operations
We start with taking accountability for ourown operational footprint, which is relatively
small. For example, we account for less than
.03 percent of carbon emissions globally.

ms change
Systesformation
Tran
Operations

Transformation
We then look at how Microsoft technology
can help our customers and partners power
their environmental sustainability.

Systems change
We also look at Microsoft’s biggest bets inpolicy, investments, catalytic partnerships,
and research and development.
Endnotes are used throughout the report;
all references are hyperlinked and a full text
explanation of all endnotes can be found in
Appendix C.

Carbon

Water

Waste

Ecosystem

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Appendix

About this report (continued)
How to read this report

Our
approach

Operations

Transformation

SystemschangeKey trends,
what’s next,
and resources

An explanation of why this program isa focus, what our commitments are, andwhat our progress and accomplishments
were for the past year.

A look at our approach to reduce, replace, or
remove our footprint across how our products
and facilities are sourced, manufactured,
operated, and managed at end of life.

A review of the latest innovations fromMicrosoft to help our customers and partners
power environmental sustainability throughour learnings, technology, and services.

A look at how we’re driving global changewith our biggest bets in policy, investment,
catalytic partnerships, and researchand development.

A recap of key trends we’ve observed thisyear, what’s coming next for Microsoft,and resources for organizations on theirsustainability journeys.

Campuses and datacenters

Devices

Supply chain

In each building at every campus and datacenter, sustainability
is a key priority for Microsoft across all phases of a project—from site selection to design and construction to operations
and decommissioning.

Sustainability in our devices means looking at the impactthat we have on our planet as we design, manufacture, andship our devices, software, games, and operating systems,
as well as product usage and end of life.

Our operational commitments extend into our supply
chain. We work with our suppliers to report theiremissions, design plans and new approaches to reduce
their emissions, and track progress over time.

Reducing Scope 1 & 2 emissions
see page 21

Reducing Scope 3 emissions
see page 27

Reducing Scope 3 emissions
see page 25

Getting to zero waste
see page 67

Reducing our water footprint
see page 48
Getting to zero waste
see page 65
Ecosystems—Taking responsibility
for our land footprint see page 81

Reducing Scope 3 emissions
see page 29

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Appendix“The key to addressing
climate change at a company
like Microsoft is to partnerwith every industry tounderstand how it functions,discern the elements vital toits success, share and adapt
solutions, and help ourcustomers chart an informed
path to decarbonization.”
Brad Smith, President and Vice Chair

Contents
Our approach

16

Getting to carbon negative

20

Reducing Scope 1
and 2 emissions

21

23
Feature story:
energy100/100/0 carbon-freeReducing Scope 3 emissions

25

Removing carbon

30

Driving transformation

31

Enabling systems change

34

Key trends

41

What’s next?

42

Resources

43

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Appendix

Our approach

A commitment
to a carbon
negative future

The context
The consequences of climate change are increasingly
apparent, from wildfires to devastating flooding.
The scientific reality of climate change is more accepted
than ever before—to avert the worst effects of therapidly changing climate, the world needs to transition
to a net zero carbon emissions economy by 2050.
But we still lack key strategies to avoid catastrophic
climate change.
The world needs agreement on the meaning of global
net zero emissions, measurement to track our progress
toward net zero, and mature markets for carbon
reduction and removal that are necessary to get us there.
Through our operations, technology, and advocacy,
Microsoft is addressing these three areas to help drive
the change that society needs.
Our strategy to reach carbon negative by 2030 isrelatively simple—we will reduce our Scope 1 and 2
emissions to near zero by improving efficiency, adopting
1
new solutions, and purchasing zero carbon energy.
We are engaging suppliers and our business groups to
cut our Scope 3 emissions by more than 50 percent and
we’ll rely on carbon removal to reach carbon negative.
This year, we took strides forward on zero carbon energy,
continued progress on carbon removal, and improved
our methodologies and measurement of emissions data
across the company. We will continue to further refine
how we measure and approach these categories as wemove forward. We also took new steps to accelerate
the work of others via the launch of a new solution, theMicrosoft Cloud for Sustainability, to help our customers
measure their carbon emissions more effectively, andcreated resources to help decarbonize our supply chain.

Our commitment: carbon negative by 2030
and by 2050 to remove from the atmosphere an equivalent amount of all the carbon dioxide ourcompany has emitted either directly or by our electricity consumption since we were founded in 1975.

Reducing direct emissions

Empowering customers and partners

We will reduce our Scope 1 and 2 emissions tonear zero by the middle of the decade throughenergy efficiency work and reaching 100 percent
renewable energy by 2025.

We will help our suppliers, customers, and partners
around the world to reduce their carbon footprints
through our learnings and with the power of data,
AI, and digital technology.

Replacing with 100/100/0 carbon
free energy

Using our voice on carbon-related
public policy issues

By 2030, 100 percent of our electricity consumption
will be matched by zero carbon energy purchases
100 percent of the time.

We will support new public policy initiatives toaccelerate carbon reduction and removal opportunities.

Reducing value chain emissions

Investing in the future

By 2030, we will reduce our Scope 3 emissions
by more than half from a 2020 baseline.

We have created a $1 billion Climate Innovation Fund toaccelerate the global development of carbon reduction
and removal technologies, as well as related climate
solutions to reduce water and waste.

Removing the rest of our emissions
By 2030, Microsoft will remove more carbon
than it emits. By 2050, we΄ll remove an equivalentamount of carbon to all our historical emissions.

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Appendix

Our approach (continued)
Our progress

Reduced Scope 1 87% supplierand 2 by 16.9%
reporting
We reduced our Scope 1 and 2 (marketbased) emissions by 58,654 metric tons ofcarbon dioxide equivalents (mtCO2) in FY21.
Scope 3 emissions increased by 22.7 percent.

5.8 GW ofrenewableenergyIn FY21, we signed new power purchaseagreements (PPAs) for approximately
5.8 gigawatts (GW) of renewable energy
across 10 countries around the globe, totaling
more than 8 GW of renewable energy via
PPAs or long-term contracts.

Supplier
reporting tools
We released a set of in-depth capacitybuilding tools and resources, developedin partnership with ENGIE Impact, WSP,
and CDP to help companies, especiallyour suppliers, report their greenhousegas (GHG) emissions and set strategies
to reduce emissions from electricity.

In July 2021, 87 percent of our in-scope
suppliers reported their emissions to CDP,
up 12 percent from 2020. This data informs
suppliers’ baselines for reduction targets andgives Microsoft a more accurate picture of its
Scope 3 emissions. Following the CDP cycle,
Microsoft built out action plans with suppliers
to assess and report emission reductions
through 2030.

Launched theMicrosoft Cloudfor Sustainability
In July 2021, we launched the Microsoft
Cloud for Sustainability to provide
comprehensive, integrated, and automatedsustainability management for organizationsat any stage of the sustainability journey.

2.5M tons
carbon removal

Improved device
efficiency

In FY21 and FY22, Microsoft successfully
contracted to remove 2.5 million mtCO2,
meeting our cumulative two-year goal.
2
This includes 1.4 million mtCO2 contracted
in FY21 and 1.1 million mtCO2 contracted
to date in FY22, on path to meet our goalof 1.5 million mtCO2 in FY22.

While overall device and console use phaseemissions grew as a result of higher sales andusage during the pandemic, we reduced thecarbon footprint for several products andusage scenarios:$571M• The new Surface Laptop Studio has a
30 percent smaller carbon footprint than3
its predecessor, the Surface Book 3 13”.

Allocated $471 million to date via our
Climate Innovation Fund to accelerate
our carbon goals, as well as water andwaste. We also donated $100 million to
Breakthrough Energy’s Catalyst initiative.

• Surface Pro 8 is one of the most energy
efficient Surface Pro devices ever.

• Energy-saving mode, a new
low-power standby mode for Xbox
consoles, uses as little as 0.5W.
A year of progress and impact to get to carbon negative by 2030.

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Appendix

Our approach (continued)
Carbon Table 1

Carbon Table 2

Tracking our yearly progress toward carbon negative by 2030

Tracking our yearly emissions across Scopes 1, 2, and 3

In FY21 we procured the removal of 1.4 million metric tons of carbon as one of our initial steps towards achieving
our 2030 commitment.

In FY21, we reduced our Scope 1 and 2 (market-based) emissions by 16.9 percent. We saw an increase in Scope 3
emissions driven by growth of our cloud services business and an increase in sales and usage of our devices.

A Microsoft emissions

B Avoided emissions

C

Carbon removal

Scope 1

Scope 2

Scope 317

Performance
16M
14M

A

12M
10M

A

A

A

FY18

A

Metric tons CO2e

6M

A

4M

-4M

B

B

B

B

A company is carbon
negative when it
removes more carbon
than it emits each year.

C-6M

Carbon negativeby 2030

11,745,000

275,420
117,956

Base
year

FY20

11,239,000

228,194
118,100

Current
year

FY21
0

13,785,000
2M

C
FY30

Base Current
year year

Targetyear

a. Chart has been updated to reflect latest actual values which incorporate latest methodology and structural change
adjustments. A portion of the 1.4 million metric tons of removal will apply to future years.
b. Overall increase in emissions is driven mainly by the growth of our cloud services business and an increase in sales
and usage of our devices.

183,329
99,008

11,466,000

4M

6M

8M
Metric tons CO2e

-8M
FY17 FY18 FY19 FY20 FY21

139,066
107,452

FY19

8M

2M
0
-2M

10,662,000

FY17

a. Scope 2 and 3 values are market-based.

10M

12M

163,935
123,704

14M

16M

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Appendix

Our approach (continued)
Carbon Table 3

Breaking down of our FY21 Scope 3 emissions by source
Scope 3 represents the majority of Microsoft’s emissions, and we are committed to reducing these emissions by more than 50 percent by 2030. Tracking and reporting against thiscategory of emissions is critical for net zero progress.

1
Scope 3 Categories
1

Scope 1

0.88%
10

Scope 311

97.96%

Scope 2

1.16%
5
9

7

3
8

a. Scope 2 and 3 values are market-based.
b. Overall increase in emissions is driven mainly by the growth in the categories
of purchased goods and services, capital goods, and use of sold products.

462

Purchased Goods & Services 35.03%

2 Capital Goods

29.70%

3 Fuel- and Energy-Related
Activities (Market-Based)

2.20%

4 Upstream Transportation

1.60%

5 Waste0.04%

6 Business Travel

0.16%

7 Employee Commuting

0.57%

8 Downstream Transportation

0.32%

9 Use of Sold Products

28.07%

10 End of Life of Sold Products

0.14%

11 Downstream Leased Assets

0.13%

See appendix for more dataon our carbon emissions

5.8 GWIn FY21, we signed new
PPAs for approximately
5.8 GW of renewableenergy across 10 countries
around the globe, totaling
more than 8 GW ofrenewable energy via PPAs
or long-term contracts.

Overview

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Getting
to carbon
negative
It is critical that companies take arigorous approach to achieving net
zero. This begins with recording andreporting emissions with better datacollection and automation, reducing
emissions as much as possible,
replacing electricity consumption
with renewables, and removing
the remaining emissions.

Waste

Ecosystems

20

Appendix

In January 2020, Microsoft announced its intention to
be carbon negative, which will see us cut our greenhousegas (GHG) emissions across our operations to nearlyzero and by over half by 2030 across our value chain
with improvements in energy efficiency, replacingwith renewable energy for Scope 2, and removing
the remainder of emissions. We will also remove theequivalent amount of our historical carbon emissions
by 2050.

>50%

We are committed to cutting our GHG emissions byover half by 2030 across our value chain, removing
the residual emissions, and removing the equivalentamount of our historical carbon emissions by 2050.

Implementing these commitments is a journey.
At Microsoft, we have come to see this as a “5-R Journey”
that begins with recording and reporting emissions with
better data collection and automation, then reducing as
much as possible with that data-informed roadmap first,
then replacing fossil fuels in our electricity consumption
with renewables, and finally removing what remains.
Our total company emissions (market-based) in 2021
were approximately 14 million mtCO2. Of this total,
about 120,000 mtCO2 were Scope 1 emissions at
Microsoft datacenters and campuses. Taking into
account our renewable energy purchases, our Scope 2
emissions were approximately 160,000 mtCO2. The bulkof our emissions—more than 97 percent—are in Scope 3,
which includes emissions from our supply chain, thelifecycle of our hardware products and devices, travel,and other indirect sources.
While our combined Scope 1 and 2 emissions
decreased this year, we did see an increase in Scope 3
emissions, driven mainly by the growth of our cloudservices business and an increase in sales and usageof our devices.

It is critical that companies take a rigorous approach to achieving net zero. We have come to see this as a “5-R Journey”.

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AppendixGetting to carbon negative (continued)
Reducing Scope 1 and 2 emissions
across our operations
In each building at every campus and datacenter,sustainability is a key priority for Microsoft across allphases of a project—from site selection to designand construction to operations and decommissioning.
By the middle of the decade, we are committed toreducing our Scope 1 and 2 emissions to near zero.

Reducing carbon emissions
with efficiency solutions
Ensuring our campuses and datacenters are energy
efficient is a key first step in reducing our emissions.
We are changing the way we build and operate facilities,
using all-electric efficient system designs like the useof geothermal energy and thermal energy recovery,
and improving the efficiency of our cloud.

Scopes explained
Scope 1
Direct emissions createdby your activities
Examples include the exhaust that comesfrom the vehicles on your campus, natural gasthat your buildings directly consume, and thegenerators you might run.

Scope 2

Indirect emissions fromthe consumption of theelectricity or heat you use
Examples include energy sources that power
your office buildings or your home.

Scope 3

Indirect emissions from allother activities in whichyou΄re engaged
This is by far the largest category of emissions
and covers all parts of your value chain (upstream
and downstream). Upstream examples include
supply chain, materials in buildings, businesstravel, and manufacturing. Downstream examples
include the electricity customers consume using
your products.
Scope 3 measurement poses a significant
opportunity for improvement.

Building for Zero Carbon and LEED certifications
We are pursuing Zero Carbon certification for
our Silicon Valley campus and Redmond campus
modernization project with International Living
Futures Institute. We have committed to certifying our
Microsoft datacenters and major offices to LEED Goldor Platinum—with a focus on the categories of energy
and atmosphere, water efficiency, materials and waste,location and transportation, sustainable sites, and indoor
environmental conditions. Four of our datacenters
are LEED Gold certified and 74 projects are going
through certification.
Deploying AI to improve energy efficiency
Microsoft is using Bonsai, a low-code AI platform that ispart of the Autonomous Systems suite from Microsoft,
to improve the efficiency of its Redmond campus chiller
plants. These chiller plants provide the air conditioning
within an HVAC system and typically represent a
substantial portion of the energy footprint of buildings.
We have seen a 12 percent increase in median efficiency
based on energy estimates and plan to implement Bonsai
in the 12 remaining chiller plants this fiscal year. In thepast, energy conservation measures (ECM) projects took
more than 12 months. Bonsai enabled us to build a modeland test recommendations in two to four weeks withcomparable results.
Designing and operating highly efficient datacenters
All future datacenters will be LEED Gold certified withemphasis on water and energy conservation. All lighting
is high-efficiency LED with motion detection to minimize
use of space light. Cooling systems are integrated withthe servers, providing cooling only when the servers
require it.

Avoiding emissions with kinetic energy for
backup power
At the Bengaluru Cosmo office site, we installed anuninterruptible power supply (UPS) with flywheel to store
kinetic energy to provide backup power without theneed for lead acid batteries typically used in conventional
UPS. The UPS flywheel has the additional benefit of
avoiding thousands of metric tons of carbon emissions
over its 20-year lifecycle and avoiding 1,500 lead acidbatteries treated as hazardous waste at end-of-life.
Increasing carbon awareness and lowering carbon
in cloud operations
We are piloting new approaches that lower the carbon
footprint of our code as well as large-scale workloads for
Microsoft and our customers’ benefit. We piloted a newfeature called Start/Stop VMs, which can automaticallyturn off VMs during idle hours. Our engineers havealso created more transparency inside Azure Machine
Learning, displaying resource metrics (including GPU
energy, utilization, and computational cost) to help datapractitioners assess and mitigate the hidden costs of
their machine learning workloads, and partnered with
the Allen Institute for AI to develop a set of best practices
and tools in this space. We developed the Carbon Aware
Core, which helps schedule workloads in times andregions with the lowest carbon footprint, which is being
piloted by Microsoft 365 and Microsoft Research and will
be provided as an open-source toolkit through the Green
Software Foundation. Engineers are also testing anddeploying novel approaches like Kubernetes Scheduler
to take advantage of grid-level fluctuations in carbon
intensity to minimize carbon.

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AppendixGetting to carbon negative (continued)
Transitioning to 100 percent renewable energy
By 2025, we expect to power our datacenters andfacilities with 100 percent additional, new renewableenergy generation that matches our electricity
consumption on an annual basis.
Already, we’ve contracted for more than 8 GW ofrenewable energy. In addition to these purchases,
we’re using our campuses as living laboratories forenergy innovation.
See our full approach to renewable energy on thenext page.
On-site zero carbon energy solutions
We have installed on-site renewables at select campuses
as well. At our Silicon Valley campus, a solar panel
system will offset energy consumption up to 15 percent.
Our Beijing and Shanghai Zizhu campuses have madesimilar efforts, installing photovoltaic (PV) solar panels
on empty roof space in FY20 which are expected togenerate 15,450 MWh of electricity over the next
25 years to power the campus. LinkedIn’s new campus in
Omaha features an on-site solar array over the parking
structure. The system has an estimated annual output
of approximately 750,000 kWh/year of electricity,equivalent to about 15 percent of all site energy usage,and is being integrated with on-site battery storage tohelp reduce peak demand and address any intermittent
excess solar generation produced by the array.

Harnessing thermal energy to halve energy
consumption on campus
In 2021, we unveiled our plans for a new, hyper-efficient
thermal energy center for our Puget Sound campus,
which utilizes geothermal wells to heat and cool ourbuildings—resulting in a 50 percent reduction in energy
usage compared to the typical utility plant. In our Silicon
Valley campus, thermal energy storage tanks will support
the closed loop water system that provides all heating
and cooling needs for the campus.

Removing fossil fuels from our campuses
and datacenters
We are leaving no stones unturned in our quest to reachnet zero. We are eliminating our dependency on diesel
fuel at our datacenters, electrifying our campus fleet,and moving to all electric kitchens.
Eliminating diesel fuel in datacenters
Cloud providers around the world rely on diesel-powered
generators for backup power to support continuous
datacenter operations. Microsoft has committed to bediesel-free by 2030. Innovations include the following.
Renewable fuels: Our datacenter region in Sweden
will be one of Microsoft’s first sites to use lower-carbon
renewable fuel for backup power. The datacenter’s
generators run on Preem Evolution Diesel Plus, theworld’s first Nordic Eco-labelled fuel, which contains atleast 50 percent renewable raw material, and nearly anequivalent reduction in net carbon dioxide emissions
compared with standard fossil diesel blends. This solution
is being expanded to other datacenters across the world
with other suppliers.

Batteries as backup power: We are assessing thelong-term feasibility of deploying large batteries as
backup power for critical infrastructure via our strategic
collaboration with TOTAL and are continuing researchand development in this area. We are also implementing
an extended battery solution for datacenters that
operate on highly reliable grids. Our Swedish campuses
are slated to pilot a battery energy storage system (BESS)
solution to remove reliance on generators.

1,800
We are committed
to electrifying
our global campus
vehicle fleetof 1,800 vehicles
by 2030.

Hydrogen fuel cells: We are also piloting hydrogenfuel cells as viable green energy for backup power atour datacenters. We announced a worldwide first in
2020—hydrogen fuel cells powering a row of datacenter
servers for 48 consecutive hours. This successful pilot
provided a proof of concept for supporting backup
power needs that could be implemented once batteries
reach their capacity. Our primary power supply to an
operating datacenter is now a hydrogen fuel cell.
Electrifying our fleet
We are committed to fully electrifying our global campus
operations vehicle fleet of over 1,800 vehicles by 2030.
Since announcing this target, we have spent the lastyear developing regionally specific implementation
strategies, analyzing the vehicles, and determining theinfrastructure needed to support operations. In the
coming year, we will launch a series of pilots appropriate
to each region to keep us on track to goal.
Powering all electric kitchens with renewable energy
In our Puget Sound campus modernization project,
we have removed natural gas from campus, including
cooking over 15,000 meals a day with only renewableelectricity. LinkedIn’s updated design and build
guidelines call for all-electric kitchens powered byrenewable energy, designed to cook over 5,000 meals
a day on clean power.

Electrifying our global campus operations vehicle fleet.

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AppendixGetting to carbon negative (continued)
Feature story

100/100/0:
a new
approach tocarbon-freeenergyOur commitment is that by 2030,
100 percent of Microsoft’s energy
supply, 100 percent of the time, will
come from carbon-free resources.
This commitment completes the link
between carbon-free resources andour facilities in both space and time.

Hourly renewable supply and demand matching strategies can help lay the groundwork for a decarbonized grid.

A path to carbon negative via energy
The vast majority of Microsoft’s direct carbon emissions
footprint comes from electricity, and as such, our workon carbon reduction has centered on using less of it,
while at the same time ensuring we support the
adoption of more carbon-free energy in the grids
where we operate. While our goal has remained
consistent—to get to an energy supply that is entirely
carbon-free—our approach has evolved as the supplyof renewable energy has increased, markets havematured, and data has become more granular.

A journey towards 100 percent
Our initial commitment, set in 2012, was to cover
100 percent of our energy consumption with renewableenergy certificates (RECs). We achieved our goal thatsame year by purchasing enough RECs to cover ourannual energy consumption. However, a REC purchaseis not always a direct contract with new renewablegeneration and does not always mean that the
renewable generation is on the same grid as where
we are consuming electrons. Put simply, pursuing“unbundled” RECs de-linked energy production andconsumption in both geography and time, reducing
the overall impact.
Recognizing the importance of linking our renewablepurchases to new impactful and additional renewableenergy projects, Microsoft began engaging in
renewable energy procurement through power purchaseagreements (PPAs). PPAs are a direct contractual
relationship between a purchaser and a supplier for
new renewable energy via a project or several projects;
that is, the execution of the PPA provides the necessary
revenue stream for new renewable energy projects to
be built. The direct contract establishes greater investor
confidence in renewable projects and paves the way formore renewable generation on the grid.

We formalized our commitment to procuring energy
from new impactful renewable energy projects in 2016
and updated it in 2020. In 2016, Microsoft announced acommitment to increasing proportion of PPA purchases,
on a path towards 100 percent renewable energy.
We pledged to procure enough renewable energy tooffset 50 percent of our energy consumption by 2018
and 60 percent in the next decade, and further specified
that we’d aim to secure new renewable energy in thegeography where our offices and datacenters are,bringing a stronger geographic connection between ourcontracted renewables and our electricity consumption.
In 2020, as part of our carbon negative announcements,
we committed to bring our commitment up to 100
percent by 2025. Like our earlier commitments, this wason an annual basis, requiring us to sign renewable energy
offtake agreements to cover our energy needs; simply put,
we will match every electron we consume on an annual
basis with renewable energy.

Moving beyond 100 percent to 100/100/0
While we are proud of this progress, the global shift to
net zero carbon energy is not happening quickly enough.
The International Energy Agency (IEA) suggests thatthe path to net zero emissions is very narrow and will
require the deployment of all available clean energy
technologies between now and 2030. For solar power,
it is equivalent to installing the world’s largest solar
4park roughly every day. This reality is due to the factthat most electrons flowing onto grids today comefrom carbon-intensive sources, requiring large-scale
replacement to meet our energy needs. Currently,
energy storage is not deployed at scale, and the grid
infrastructure of today is old and inadequate to meet
the balancing needs of new renewable energy resources
and the integration of net zero carbon resources, nor
to the increasing consumption demands of a rapidly
electrifying society.

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AppendixGetting to carbon negative (continued)
That is why we set a new 100/100/0 goal in 2021.
Our commitment is that by 2030, 100 percent ofMicrosoft’s energy supply, 100 percent of the time,
will come from zero carbon resources on grids where
we operate. The 100/100/0 commitment completes
the link between zero carbon resources and ourfacilities in both space and time.
Our 100/100/0 commitment provides a vision androadmap to pair our operational goals with our
research, technologies, and investments to drive
global change. We are bringing new research tobear, including a white paper authored by RMI
that highlights the potential for hourly energy
monitoring tools to provide transparency into supply
and demand for zero carbon energy. The paper
illustrates that hourly renewable supply and demandmatching strategies can help lay the groundwork fora decarbonized grid.
The impact of our 100/100/0 commitment will besignificant. Matching zero carbon resources in both
space and time will reduce Microsoft’s emissions tozero at all times and also bring benefits to the broader
grid since the zero carbon resources we contract
for will also be available to serve the grid when ourconsumption is lower or zero carbon energy output ishigher. Moreover, we will be driving early deploymentof advanced resources like hydrogen and longduration storage to fill in the gaps when renewableenergy sources are not generating. And finally, theenergy transition will affect all and needs to benefit
all, which is why we have built climate equity into ourpurchasing commitments.

Our impact to date
Our renewable and zero carbon commitments to dateare having real-world impact. Microsoft is one of thelargest purchasers of renewable energy in the world.
Across 2020 and the first part of 2021, Microsoft signed

new purchase agreements for approximately 6 GW ofrenewable energy across 10 countries around the globe.
This includes over 35 individual deals, with 15 of thosedeals in Europe spanning Denmark, Sweden, Spain, theUnited Kingdom, and Ireland. This latest procurement
brings our operating and contracted renewable energy
projects to 7.8 GW globally and we are positioned tocontinue to grow our renewable resource portfolio.
In addition to these PPAs, Microsoft partnered with Volt
Energy, the only national African American owned solar
development company, for a 250-MW portfolio of solar
projects with the intent to create new opportunities forunder-resourced communities and to help support amore diverse renewable energy industry. This builds on
our progress on our community purchasing and skilling
work with Sol Systems, which began a year ago.

“Every net zero scenario shares acommon, and essential, element: a
massive increase in electrification.
Electricity holds the promise of
wiping out vast sections of the global
emissions portfolio, but this only
happens if the electrons supplying
the electricity are generated fromzero carbon energy sources.”
Dr. Lucas Joppa
Chief Environmental Officer

We’re also taking our learnings from our operational
work and building new products to help accelerate
global decarbonization. For example, our research led
to the co-creation and adoption of the first commercial
round-the-clock hourly energy-matching solution with
our utility partner Vattenfall. Building on this work,
we’re announcing a new around-the-clock pilot in the
Netherlands with energy provider Eneco and FlexiDAO,
a technology supplier, which will match one of our
Amsterdam datacenter’s hourly energy consumption
with the Dutch offshore windfarm Borssele.
We know that our actions alone will not decarbonize thegrids, but we are committed to taking ambitious action
to drive market demand signals that will influence thespeed and scale at which the transformation happens.
As Microsoft builds the tools and markets to meet our
zero carbon commitments, we are mindful of the needfor products, purchases, and policy that will enable acarbon-free energy system for all.
Our Sweden datacenter will be fully supplied with hourly energy consumption with an offshore windfarm.

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AppendixGetting to carbon negative (continued)
Reducing Scope 3 emissions
We are committed to reducing our Scope 3 emissions
by more than half by 2030. While we do not have directcontrol over most emissions in the Scope 3 category
because they are generated by third parties, they
represent more than 97 percent of our total emissions.
Our carbon negative commitment includes reducing
these emissions and removing what we cannot reduce,
which we do through a reduction strategy in campuses
and datacenters, rethinking the design of our devices,and engaging with our supply chain. This year, we saw
an increase in Scope 3 emissions, driven mainly by thegrowth of our cloud services business and an increasein the sales and usage of our devices.

We are committed to reducing our
Scope 3 emissions by more thanhalf by 2030. We will achieve thisthrough reduction strategies incampuses and datacenters,
rethinking design of our devices,and engaging with our supply chain.

Campuses and datacenters
Changing the way we work begins with measuring our
impact on the planet. This includes looking at embodied
carbon in each material that goes into our buildings,
as well as the future of how we work, travel, and think
about events.

Designing embodied carbon out
of our buildings
We’re committed to reducing not just operational
carbon but also embodied carbon—the carbon emitted
during the manufacture and transport of building
materials—which accounts for at least 11 percent of
global emissions and has historically been harder totrack and reduce. We have taken a number of steps
to address and lower our carbon footprint.

Our Silicon Valley campus includes the largest mass timber building in the United States.
Data-driven decision-making and emissions tracking

Understanding construction emissions to reduce themMicrosoft partnered with other industry leaders tocreate a new open-source, Azure-hosted tool, theEmbodied Carbon in Construction Calculator (EC3), totrack the embodied carbon of the raw building materials.
We used the EC3 tool in designing 17 new buildings(3 million square feet) in our Puget Sound campus
modernization project, where we are on track to reduce
embodied carbon emissions by at least 30 percent.
We are now using the EC3 tool around the world in both
our campuses and our datacenters to track and reduce
embodied carbon and have found opportunities toreduce concrete and steel embodied carbon by 30 to 60
5percent in our datacenters.

Microsoft and our general contractors are creatinga baseline for construction process emissions, which
include transportation of materials to the construction
site and construction installation. To date, there has
been little data and no established, industry-consistentmethodology for creating a baseline, making it difficultfor design teams to know if their emissions are better orworse than a typical construction project. We piloted thetracking of construction activity emissions in our Puget
Sound campus modernization project, starting with thedemolition phase (including site excavation), as well as
how much water we used.

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AppendixGetting to carbon negative (continued)
Leading the way on low-carbon building materials
We are innovating and investing in low-carbon building
materials across our global campuses and datacenterswith the aim to achieve net zero embodied carbon,
including the following.
Mass timber: At our Silicon Valley campus, we are usingmass timber, resulting in the largest mass timber buildingin the United States. In addition to using this lower
carbon building material, we elected to keep two of theexisting buildings on the site, providing 36 percent of the
new campus footprint and accounting for a 28.6 percent
5
reduction in total embodied carbon. With two floorsof mass timber, the embodied carbon savings increases
to approximately 36 percent with an estimated total
5of 372 kg CO2e per square meter. With over 345,000
square feet, or 2,400 tons, of 100 percent Forest
Stewardship Council (FSC) certified mass timber, thewood reflects biophilic principles and a reduced carbon
mission. We continue to incorporate mass timber on our
campuses and are now testing the suitability of masstimber in datacenter environments and investigatingsites to pilot these new materials.
Cement: Cement accounts for approximately 8 percent
of global emissions. We are testing and piloting lowGHG cement innovations like CarbonCure to reducethe carbon footprint of our buildings. LinkedIn is using
low-carbon and carbon-sequestering concrete mixes
for our new Silicon Valley headquarters and is now using
these materials in our LinkedIn Dublin campus. In our
datacenters, we are reducing how much cement we use
by utilizing longer 56-day cure times in lieu of typical
28-day cure times. We are also specifying the use of
cement replacement products such as fly ash and slagthat reduce the carbon footprint of concrete.

Low-carbon materials: We also completed researchon low-carbon materials in collaboration with Carbon
Leadership Forum (CLF), a nonprofit industry academicorganization at the University of Washington.
The research explores six low-carbon materials—earthenslabs, non-Portland cement concrete slabs, algae-grownbricks/panels, mycelium (mushroom) structural tubes,
purpose-grown fiber, and agricultural waste panels—that can help reduce carbon emissions and change theclimate profile of building constructions. We are piloting
the use of these materials for our datacenters.

This year, we became a founding member in SABA.

We are innovating and investing in
low-carbon building materials acrossour global campuses and datacenterswith the aim to achieve net zeroembodied carbon.

Rethinking how we travel
Although emissions related to business travel
represented less than 5 percent of our total emissions,
we know that we can have a larger impact with ourinvestments and partnerships. We have made two
investments in SAF with airline partners KLM and
Alaska. This year, we expanded this work by becoming
a founding member in the Sustainable Aviation Buyers

Alliance (SABA) and participating in the World Economic
Forum’s “Clean Skies for Tomorrow.” We are actively
supporting the development of an SAF certificate which
will set GHG accounting standards for the use of SAF to
reduce emissions by both customers and airlines in the
future. We are also looking to reduce emissions in otherareas where our learnings in SAF can be applied, fromfreight and logistics to the fuel used in our datacenter
backup generators.

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AppendixGetting to carbon negative (continued)
DevicesOver the past year, devices became even more essential
as they kept us connected, working, and learning
through the pandemic. This year, higher-than-anticipateddemand translated to higher sales and greater usage,
which caused our absolute emissions to grow. We arecommitted to reducing the carbon intensity of ourdevices and our efforts have also grown this year.
We have made significant investments to expand ourdata-driven lifecycle assessment (LCA) and telemetry
approach to better measure, inform, and prioritize top
reduction opportunities to reduce our device carbon
intensity across the full lifecycle of our devices.
These efforts include carbon-conscious design, reducing
supply chain emissions, innovating energy-efficient
hardware and software in use, and enabling productrepairability, reusability, and recyclability. This will allow
us to deliver the best product experience with lower
carbon intensity, while also partnering with our users tominimize carbon footprint when using our products.

Building a data-driven platform forproduct design
In 2020, we began working on a platform to allow
engineers to make real-time design and material
selection decisions based on carbon impact, a key
enabler in modeling and reducing our future device
emissions. To generate our device carbon footprints,
we conduct LCAs in accordance with ISO 14040 and
ISO 14044 which enable us to estimate emissions frommanufacturing our devices down to the individualcomponent level. Further, we are upgrading our audit
management sourcing tool to ensure supplier carbon
reduction initiatives are fully reflected in these productcarbon footprints. We pair this with improved productusage and distribution data. For example, the mostrecent iterations of the Xbox Series X|S have improved
our awareness of full ecosystem energy usage fromconsoles, information which is critical to future energy
efficiency improvements and emissions reductions.
These investments allow us more control over our
product emissions across their full lifecycle.

Experimenting with lower carbon design
As informed by our LCAs, a significant lever in productdevelopment is the engineering of low-carbon design
alternatives, such as using recycled materials anddesigning for a smaller manufacturing footprint.
Reduced waste
We designed our Surface Laptop Studio to allow for“stamping,” a lower-waste manufacturing techniquethat reduced our aluminum scrap rate for the product’sbase by at least 25 percent, a key contributor to an
overall product carbon reduction of 30 percent versus
6
its predecessor, the Surface Book 3 13”.
MetalsWe are developing opportunities to reuse manufacturing
scrap in aluminum production, allowing us to use lowercarbon, 100 percent post-industrial recycled closed
loop aluminum for future Surface computer housings.
For neodymium in magnets, a rare earth material, we arealso exploring post-industrial scrap as a manufacturing
feedstock, enabling us to produce 100 percent recycled
neodymium in magnets for future products.
Circuit boards

Sustainable Product Lifecycle

Product
designRawmaterials
sourcing

Product
manufacturing

Packaginganddistribution

Repair, refurbishment, and recycling

In our labs, we are working to engineer a lower-carbon
and reduced-waste flax-based wiring board andexperimenting with 3D printing; we have started to
explore 100 percent post-industrial recycled tin in oursoldering paste; and we are aiming to reduce overallmaterials needed through new spacing guidelines thatcan shrink our circuit boards in size by up to 25 percent.

Productuse
End-of-life

30%

Reduction in total carbon
emissions of 30 percent
for Surface Laptop Studioversus its predecessor,
Surface Book 3 13”.

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AppendixGetting to carbon negative (continued)

17%

Total energy
consumption for
the Surface Pro 8 is
17 percent smaller
than Pro 7.

>80%

Energy-saving mode
can reduce Xbox powerusage in standby modeby over 80 percent.

Reducing the footprint of distribution
Microsoft is an active member in the Global Logistics
Emissions Council (GLEC), an industry collaboration
through Smart Freight Centre, committing to
reducing logistics emissions through sustainable
freight initiatives. Microsoft uses this framework to
calculate and measure the carbon impact of its Scope 3
7transportation emissions.
For shipping, we have an intelligent platform to measure
our emissions impact down to individual shipments,
and a carbon emissions budget has been developed
utilizing the same methodology. In our distribution
network, this year we finished a complete conversion of
our primary distribution center in Europe to 100 percent
renewable energy. This facility now generates 1.3 million
kWh from solar energy and avoids 690 mtCO2 annually.
Through FY22 we will plan to convert our US distribution
centers to 100 percent renewable energy through solar
panel installations and using green renewable sources.
We are also building more sustainable shipping options,such as the delivery option launched in December 2021 to
avoid higher-carbon air freight, to give customers a choiceof more sustainable options when ordering from Microsoft.

Boosting efficiency of devices in use
Surface Pro 8 running Windows 11.

For Microsoft devices, energy efficiency is a balance ofhardware and software innovation. This year, overall
device and console use phase emissions grew as a resultof higher sales and usage from customers reliant onthese products during the pandemic. That being said,
several of our newest products launched in 2021 were
designed to be the most energy efficient devices in theirproduct lines, including the Surface Pro 8 and Surface
Laptop 4 running Windows 11. The most recent iterationsof the Xbox Series X|S have improved our awareness offull ecosystem energy usage from consoles, information
which is critical to future energy efficiency improvements
and emissions reductions.

Software design can also increase efficiency. We arefocused on offering low-emissions usage options such as
Energy-saving mode on Xbox, which can reduce powerusage during standby mode from 15 W down to 0.5–2 W,
as well as Xbox Cloud Gaming, which will be powered by
Azure datacenters running on 100% renewable energy
by 2025. With the release of energy-saving mode, we
are updating the initial bootup experience for users toprovide clear messaging to enable user understandingof power modes, while encouraging them to implement
energy-saving mode on their consoles. This will bepaired with a reduction in idle and shutdown timers tocontinue to improve power consumption during console
idle periods.

Providing transparency for customers
To increase transparency for customers and stakeholders,
we publish LCA results for our Xbox consoles and Surface
devices. The LCA results are contained in our Ecoprofiles,
along with information about the product’s material
composition, energy consumption, packaging, ecolabels,
product recycling, and other environmental attributes.
We have also developed a new, dynamic way forcommercial customers to gain insight into thecarbon footprint of their entire Surface device fleets.
The Microsoft Surface Emissions Estimator enables sellers
to work with customers and estimate the carbon impactof the Surface devices and key accessories they purchasefrom us.

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AppendixGetting to carbon negative (continued)
Supply chain
In July 2020, Microsoft added additional sustainability
requirements to its Supplier Code of Conduct to support
the company’s bold carbon ambitions. This new language
requires suppliers to disclose their own carbon footprints
and develop plans to reduce them. Microsoft has spent
the past year rolling out these requirements to a subset
of its suppliers and building a program to support them.

Engaging with suppliers on
reduction roadmaps
In July 2021, 87 percent of Microsoft’s in-scope suppliers
reported their emissions to CDP, up 12 percent from2020. Following the closure of the CDP cycle, we worked
with suppliers to build action plans of emission reduction
activities leading up to 2030. This included educational
webinars and one-on-one meetings with suppliers todive into their individual footprints and discuss relevant
reduction levers. Microsoft also provided suppliers withresources to aid in their reduction efforts. We continue tobelieve that for Microsoft to reach our reduction goals,
collaboration with suppliers is fundamental and we lookforward to continuing the journey together.

In 2021, we released a set of in-depth
capacity-building tools and resources
to help our suppliers report their
GHG emissions, develop clean energy
strategies, and reduce their energyrelated emissions.

Providing new tools and training for
supplier reporting
When Microsoft rolled out emission reporting andreduction requirements in our Supplier Code of Conduct,
the top feedback from suppliers was the need for simple
yet comprehensive resources to walk them through thecarbon accounting process. In response, we released a
set of in-depth capacity-building tools and resources,developed in partnership with ENGIE Impact, WSP, and
CDP to help companies, and particularly our suppliers,
report their GHG emissions, develop clean energy
strategies, and reduce their energy-related emissions.
In September 2021, LinkedIn released a new course,
Fundamentals of Sustainable Supply Chain Management,
to help organizations and professionals more effectively
engage with their suppliers.

Building new forms of financing for suppliers
Based on our engagements with suppliers, we knew
more technical resources were necessary but insufficient
to drive change. Our suppliers need access to newforms of finance to invest in new solutions. This year,
we launched a new partnership with the International
Finance Corporation (IFC), a member of the World Bank
Group. IFC will work with designated Microsoft suppliersin emerging markets, starting in Asia, to identify
technical solutions reducing GHG emissions, provide
implementation assistance, and offer financing solutions
to help them make investments in more efficient andlow-carbon operations.

Reimagining circularity in our supply chain
We have taken a first-of-a-kind approach towards
designing and implementing Circular Centers inour datacenter campuses, aligning our end-of-life
dispositioning processes with an integrated plan acrossthe entire supply chain. From sustainable design at
the start of an asset lifecycle to sustainable sourcing,

manufacturing, delivery, and use, towards a diversified
approach after decommissioning, this integrated
plan ensures that assets are dispositioned to optimize
value, security, compliance, and sustainability. Over the
past year, we have engaged with new suppliers who
are able to remanufacture assets and components,
effectively enabling new lifecycles for our assets.
We have successfully demonstrated takeback/buyback
models with our original asset suppliers, closing theloop on assets and enabling suppliers to repurpose orreuse assets and components, resulting in significant
sustainability outcomes for emissions reduction andmaterial recovery. Our Circular Center program will
enable 90 percent reuse of datacenter computing
assets, significantly contributing to our goal of reducing
emissions by more than 50 percent by 2030. In FY21, ouroverall reuse of assets was 78 percent.

Using lifecycle assessments for targeted
hardware improvements
As we outline in Chapter 4 of our Responsible Sourcing
2021 Report, we are executing an ambitious plan toempower all strategic device suppliers to commit toscience-based carbon reduction activities specificallytargeted to reduce emissions associated with hardware
manufacturing. We have used LCAs to prioritize suppliercategories that contribute the greatest emissions as wellas the types of actions suppliers can take to make thebiggest shifts in decarbonization, including powering
their operations with renewable energy, increasing
process and energy efficiencies, and reducing material
use and waste onsite.
To learn more, see Chapter 4 of the
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AppendixGetting to carbon negative (continued)
Removing carbon

Carbon removal projects

In January 2021, Microsoft announced that we had madethe world’s largest purchase of carbon removal in history.
Our focus on removals instead of avoided emissions
offsets is aligned to our carbon negative commitment but
is also motivated by what climate science tells us is needed
to reach net zero—specifically the IPCC’s projection thatthe planet could need as much as 10 gigatons of carbon
dioxide removal by mid-century, depending on the scale
and pace of decarbonization. With our purchases as wellas our investments, we are working to help build this newmarket with integrity and quality.

In our first year, we chose projects that will help meet our commitment while
supporting innovation in the market, including the following.

It hasn’t been easy. As we documented in our September
2021 Nature article, high-quality carbon removal is scarcefor three reasons. First, there is not a clear common
definition of net zero and the role that removals play innet zero goals. Second, removals are not well accounted
for in the practice of carbon measurement, which itself
is still evolving. And third, the removal market is very
young, especially for truly permanent carbon removal,
which is prohibitively expensive.
We know that we’re among the early entities to do
homework on this topic, and that’s why we are committed
to sharing lessons learned, as documented in our 2021
white paper and high-quality removal criteria. We are
actively working with our Climate Innovation Fund toinvest in promising carbon removal companies. We havecontributed comments to policy frameworks that set thestandards for carbon removal, such as a carbon removal
certification program by the European Commission, andefforts by the United States federal government (boththe Department of Agriculture and the Department ofEnergy) to specify high-quality removal. And we continue
to evolve our own removal portfolio mix to be a balanceof low-durability and high-durability volumes.

Community-based reforestation
Taking Root’s CommuniTree reforestation in Nicaragua—the largest such project in the country—partners
with farming families to help develop sustainable
livelihoods by growing native tree species on marginal
farmland. The United Nations and the European Union
have used this project as a model for reforestation.

BiocharWe invested in a portfolio from Puro.earth Oy,
including from Carbon Cycle, Carbofex, and ECHO2,
small operations in Germany, Finland, and Australia
that use biomass residue (for example, wood chips
and forest waste) to sequester carbon dioxide inbiochar for use in soil amendment and other products.

Direct air capture
We are actively working with our Climate Innovation
Fund to invest in promising carbon removal companies
and projects. Climeworks’ Orca direct air capture
plant in Iceland removes carbon dioxide from theatmosphere and stores it permanently undergroundusing a mineralization technology developed by the
Icelandic company Carbfix.
Our FY22 aspiration was even larger, aiming for1.5 million mtCO2. We launched a new request for
proposals in July 2021, seeking the highest qualityof projects on the market, both nature-based andengineered. We are on a path to fulfilling that goal,with 1.1 million mtCO2 contracted to date in FY22.

1.1M
mtCO2

removal contracted todate in FY22.

Looking ahead, we know that the market needs toimprove the quality of carbon removal accounting,and that we need to have a clearer line of sight toaffordable supply. That’s why in 2021 we undertook
the following projects.
• In partnership with Carbon Direct, we published ourcarbon dioxide removal guidance. These criteria are
our minimal viable specifications for the most common
project types that we will consider for procurement.
We will continue to expand on our criteria as themarket adapts and see this as part of our market
development work.
• We funded research by CarbonPlan to produce theirlessons learned and analysis from a systematic reviewof 14 protocols for soil carbon offsets for buyers fromprojects in the voluntary market today.
• We commissioned a report from Lawrence Livermore
National Laboratory on likely carbon removal supply
and cost projections for 2030, which will be available in
Q1 of 2022.
• We collaborated with researchers from the Universityof Vermont, University of Minnesota, Concordia
University, and Simon Fraser University to develop and
explore the climate implications of temporary carbon
storage in nature as a means to inform our carbon
removal strategies.
• We co-founded the Business Alliance for Scaling
Climate Solutions and the carbon removal workgroupof the World Economic Forum’s Alliance of CEO
Climate Leaders.

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Drivingtransformation
Microsoft and our partners have been
investing in technologies across every
industry and region to help companies
face new and shifting market conditions.
The rapid pace of this transformation
has the potential to change the world
for the better.

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Appendix

The world’s climate experts agree that people,
companies, industries, and nations must take urgent
action to reduce carbon emissions. Reducing carbon
emissions and addressing environmental equity
require collective measures to understand and mitigate
environmental impacts.
Organizations need to be able to record theirenvironmental footprint, report to stakeholders, reduce
their resource usage, remove their footprint throughcarbon offsets or recycling, and replace high-footprint
resources with low-footprint ones.

Product
Microsoft is leading new product innovations for the
benefit of our planet. With new offerings ranging
from providing transparency on the footprint ofour devices and services, to digital supply chainsthat improve business processes and reduce carbon
footprints, to IoT sensors streaming real-time telemetry
for predictive analytics, there is no shortage ofexamples of how technology can enable ambitious
sustainability outcomes.

The Microsoft Cloud for Sustainability enables companies to record, report, and reduce emissions.

Microsoft Cloudfor Sustainability
Microsoft launched the Microsoft Cloud for
Sustainability in July 2021. The Microsoft Cloud for
Sustainability provides comprehensive, integrated,
and automated sustainability management fororganizations at any stage of the sustainability
journey. It is designed to streamline the process fororganizations to collect data, analyze data, and turndata into insights. Companies can more effectively
record, report, and reduce emissions on a path to net
zero, and we plan to support water and waste tracking
in the future. Since the announcement, we’ve brought
the Microsoft Cloud for Sustainability into a publicpreview period, with several customers using it to guidetheir sustainability strategies. Microsoft is also serving
as “customer one,” shaping product requirements
and beginning to adopt this for our own
emissions reporting.

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Appendix

Driving transformation (continued)
Delivering transparency on
Microsoft product emissions
While the Microsoft Cloud for Sustainability may be
the first standalone sustainability-focused product at
Microsoft, it’s not our first work on emissions tracking
and reporting. For more than two years, we havepioneered tools and features to provide a close to realtime view of our products’ footprint, and we continue todeliver more transparency to customers.
The Emissions Impact Dashboard provides customers
with transparency into their carbon emissions resulting
from their cloud usage, making Microsoft the only cloudprovider to provide full transparency to customers
across all three scopes of emissions. Using AI andadvanced analytics, the Emissions Impact Dashboard
shows reduction trends for customer cloud usage overtime, providing the ability to forecast cloud emissions
and simplify carbon reporting. It uses consistent andaccurate carbon accounting to quantify the impact ofMicrosoft cloud services on customers’ environmental
footprint and can compile the information into reports
for voluntary or statutory reporting requirements.
This solution became generally available in Q3 2021.
Find out more on the
Emissions Impact Dashboard

The Microsoft Surface Emissions Estimator is a new,dynamic way for commercial customers to gain insight
into the carbon footprint of their entire Surface device
fleets. The Estimator uses state-of-the-art carbon
assessment technologies to enable customers to get
more accurate estimations of the carbon impact of
the Surface devices they purchase from us. Taking thecustomer on a journey through a Surface product’s
lifecycle, the Estimator provides a visual indication of

improvements over previous product models, highlights
some of the changes made to reduce carbon emissions,and estimates carbon reductions associated with
deployments of new Surface models. Customers canlearn more about the impact of Surface productson their Scope 2 and 3 emissions from the Microsoft
support team, who started to use the Estimator toprovide reports to commercial customers in late 2021.

Providing solutions for specific sustainability
challenges

The Microsoft Teams Carbon Avoidance Screen posts
a remote meeting summary of avoided carbon based on
the distance between the organizer and the participant.
The goal is to encourage people to use Teams’ remotecapabilities rather than travel for meetings. This will pilot
with a few select customers in 2022.

Microsoft is accelerating sustainability through Smart
Places, with IoT and AI to optimize the way buildings,
campuses, and cities consume and deliver resources
and create efficiencies. Based on Azure IoT, Smart Places
include data-driven technologies for monitoring andmanaging carbon, water, and waste in buildings to turninefficiencies into opportunities to reduce environmental
impact. Organizations can optimize energy management
and reduce carbon emissions by using predictive
monitoring to help manage equipment performanceand energy consumption and to explore grid-interactive
efficient buildings and infrastructure.

For Windows energy usage, we are co-innovating withthird parties to help inform customers about the carbon
footprint associated with their computing. One partner,
elow (formerly CSN Energy), was able to reduce
use-phase carbon emissions up to 6 percent through a
co-innovated elow Carbon App by providing guidance
to users to charge their computers based on the realtime carbon intensity of the electric grid. Another, AVOB,
provides more accurate energy consumption data to
office workstations as well as automated mechanisms
to optimize energy consumption, enabling up to a 50
percent reduction in energy usage while increasing
performance and computer lifespan.
Reflective of the innovation we continually pursue,
some of these tools have more advanced methodologies
than Microsoft currently uses for its corporatecarbon disclosure.

We have found new opportunities to use Microsoft
solutions to more sustainably manage operations.
We started with our own operations and are expanding
their use beyond our direct business activities.
Managing buildings and spaces

Providing visibility across supply chain
Microsoft Dynamics 365 Supply Chain Insights breaks
down data silos by connecting and taking inputs fromenterprise resource planning and supply chain systems
across an organization. Using industry data models andAI-powered weather and environmental risk signals from
Bing and third-party sources, operations can get a betterview of climate-related risk to build a more resilient
supply chain.

For more than two years, we havepioneered tools and features toprovide a close to real-time viewof our products’ footprint, andwe continue to deliver moretransparency to customers.

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Driving transformation (continued)
Customers and partners
Matching the supply and demand of carbon
sequestration with AI and machine learning
Project Acorn, developed by Rabobank, is a global,transparent, and technology-enabled marketplace andecosystem for carbon sequestration. The proposition
facilitates agroforestry projects among smallholder
farmers in developing countries that sequester carbon
in biomass through tree growth; the carbon removal
units that result from this represent actual sequestration.
To make small-size projects on an individual farmer level
economically viable, Project Acorn uses remote sensing
technologies, including the analysis of satellite imagery
by specialized partners. The architectural design was
built on a Dynamics 365 platform and uses customized
Azure functionality.

Optimizing offshore wind turbines with AI
Algo Engines and Microsoft helped Ørsted, theworld leader in offshore wind energy, to optimize theperformance of more than 1,300 turbines on its windfarms, enabling it to fully phase out coal by 2023 andincrease offshore wind capacity to 15 GW (enough for
30 million people) by 2025. Ørsted uses Microsoft Azure
AI to determine where new turbines should be deployed.
Previously, the computations for the foundations alone
took weeks. With the cloud, that time is reduced to fourto eight hours. The company also uses drones to inspectequipment and predictive maintenance to ensure all8equipment is running at peak performance.

1,300

Microsoft helpedØrsted optimize theperformance of morethan 1,300 turbines,
enabling it to fully
phase out coal by 2023
and increase offshore
wind capacity to 15 GW
by 2025.

Targeting carbon neutrality with
Azure Digital Twins
Vasakronan, Sweden’s largest real estate company,
manages a real estate portfolio worth SEK170 billion(USD19.6 billion). To reduce operating costs for its
commercial properties, the company has adopted
ProptechOS, an Azure IoT-based solution that unlocks
the potential of connected, intelligent properties.
By adding Azure Digital Twins to this solution, in 2021
the company has saved upwards of 6 million krona(USD700,000) in energy consumption cost alone.
By focusing on sustainability improvements, equallyimportant to tenants, the company has experienced
higher incomes through increased occupancy while8
simultaneously driving higher asset values.

Enabling building decarbonization with AI
Nomad Go used the Co-Innovation Labs, recently
launched by Sony Semiconductor Solutions Corporationand Microsoft, to build a version of its building
decarbonization solution using Azure Cognitive Services
for computer vision with Sony’s IMX500 intelligent vision
sensor. Nomad Go’s platform anonymously counts thenumber of people within a space (such as conference
rooms or open areas), and then uses the real-timedata to precisely heat, cool, and ventilate rooms only
when occupied. This replaces set schedules, standard in
most commercial buildings, which condition rooms for
12 hours or more a day, even when no one is in the space.
The Nomad Go solution significantly reduces energy
8
usage and greenhouse emissions by up to 38 percent.

Improving service efficiency withremote assistance
Mercedes-Benz USA chose Microsoft Dynamics 365
Remote Assist and HoloLens 2 technologies to improve
service technician efficiency, reduce time to diagnose,and lower the cost and environmental impact of servicerelated travel. With Dynamics 365 Remote Assist and
HoloLens 2, problems are typically resolved remotely
without having to wait for a Field Service Engineer tovisit the dealer. Travel has been cut by up to 40 percent,8
significantly lowering their carbon footprint.

Vasakronan uses an Azure IoT-based solution for connected, intelligent properties.

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Enabling
systems change
We know that our action alone will
not address the climate crisis. We arefocused on new ways to harness thepower of technology, partnerships,
investments, and policy to drive impact
at scale and pace to help the world get
to carbon zero.

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Appendix

Reducing the energy impact of AI

At Microsoft we know that our action alone will not
address the climate crisis, so we must help develop
the markets for carbon abatement approaches. This isa partnership between our operational sustainability
program, Climate Innovation Fund, and Microsoft
Research to ensure that we are not only procuring
and funding the technologies we need to meet ourcommitments, but also investing in the companies
that provide them—and supporting research anddevelopment for pre-commercial solutions.

Research and development
Researchers at Microsoft tackle critical challenges thatwill shape the future of the world and the company.
Given the significance of sustainability challenges forour global future, research teams around the world aredeveloping new technologies and approaches to reducecarbon, use compute resources more efficiently, andbring AI to bear on problems from carbon emissions
modeling to improvements in renewable energy.

Improving reliability of carbon
removal projects
Afforestation (growth of net new trees) pulls carbon
from the atmosphere. Trees on farms can also improve
agricultural productivity and provide additional income
to farmers through the sale of carbon credits. Buyers ofsuch credits, however, want to ensure that the farmer isproperly incentivized to safeguard tree growth over time.
Using the lens of contract theory, Microsoft researchshows how to calculate the optimal stream of payments
over time to ensure incentive alignment. This research
can be applied to enlarge the supply of carbon reduction
credits, especially outside the developed world.

Trees on farms can provide additional
income to farmers through the sale ofcarbon credits. Using contract theory,
Microsoft research shows how to
calculate the optimal stream of
payments to ensure farmers areproperly incentivized to safeguard
tree growth over time.

Many AI tasks, like predicting the next word a person
will type, rely on machine learning with neural networks,
also known as deep learning. These neural networks
can unlock new sustainability solutions, but also
can consume a lot of energy. In a new effort, we arebuilding tools for AI developers to predict the energy
consumption of a neural network before deployment,so that more compute- and energy-efficient networks
can be designed upfront. We have progressed on othertechniques enabling more efficient networks, including
factorizable neural operators (FNO), a compression
technique that affords reductions in compute andmemory requirements. Applied to large-scale language
models such as BERT, FNO reduced memory usageby 80 percent and prediction time by 50 percent,with less than a 5 percent reduction in accuracy.
Further improvements may be achieved by combining
FNO with other model compression methods, suchas distillation and quantization. Collaborating withresearchers at NVIDIA, we’ve developed a new method
to find neural networks that satisfy hardware constraints,
such as low power consumption for mobile devices.
This highly efficient method can find high-performingarchitectures in minutes, enabling carbon savings
compared to previous methods. We also advanced AI
systems research to explicitly optimize for server power
reduction, in addition to capacity efficiency; this work
has resulted in a multi-GWh/year reduction of power
consumption for Azure and Microsoft 365.

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Enabling systems change (continued)
Predicting the efficacy of carbon
reduction strategies

Solving solar manufacturing problems
before they start

By using deep learning methods, we have predictedcarbon reduction and other climate-related outcomeswith much faster turnaround times, and similar or better
predictive accuracy, than using traditional physicalsimulation models. For example, with the University ofTokyo, we developed a neural network-based modelthat can simulate physical and chemical processes criticalto carbon storage, such as the formation of hydrates
that can fill cracks between sand and rocks under theocean floor, thus playing a critical role in ensuring safer
thousand-year storage of carbon. With this model, wewere able to accurately predict hydrate formation 1,000
times faster than with numerical models. With Tsinghua
University, we developed a neural network-based
atmosphere simulator that estimates carbon and otherpollutant emissions with better accuracy than widelyused numerical atmosphere models, while using only
1 percent of the computational cost. For simulationsof the behavior of fluids in the atmosphere to better
understand the diffusion of pollutants and the global
warming effect, we invented a neural network-basedmodel to solve the necessary partial differential
equations, delivering accuracy on par with traditional
numerical solvers while delivering results 50 to 100
8times faster.

Satisfying the growing global demand for renewableenergy requires reducing costs and better integrating
renewables into electricity and transportation grids.
In collaboration with one of India’s largest solar panel
manufacturers, Microsoft researchers developed amachine learning-based computer vision system that
can accurately detect and classify defects in solar panelsas they are being manufactured. By fixing defects in realtime, solar panel manufacturers can achieve higher yieldand lower production costs, and solar energy operators
can produce more energy per panel.

Supporting new carbon reduction roadmaps
Carbon Insights is a visualization and analysis platformthat provides carbon neutralization roadmaps forresearchers, policy audiences, and other sustainability
decision-makers. Dashboards and maps combine local
detail with global consistency to show daily carbon
emission sources, sinks, and flux with near-global
coverage. The tool is based on data aggregated from
Tsinghua University research and public datasets.
It provides strategic insights for challenges such asprioritizing local emissions reductions or estimating
impacts on economic growth.

Deep learning to predict carbon reduction and other climate-related outcomes.

1%

We developed aneural networkbased atmospheresimulator that estimatescarbon and otherpollutant emissions
with better accuracy
than widely usednumerical atmospheremodels, while using
only 1 percent of thecomputational cost.

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Appendix

Enabling systems change (continued)
Funding innovation
To achieve net zero emissions globally, we must
reduce carbon emissions across every sector andscale carbon markets as much as possible, as soon
as possible. From the outset, the Climate Innovation
Fund (CIF) has identified and prioritized investment
in sectors that have the largest carbon reduction andremoval potential globally and where Microsoft’s
carbon footprint is greatest. We also make strategic
philanthropic investments, like our $100 million donation
to Breakthrough Energy’s Catalyst initiative, to help
accelerate and scale new carbon solutions.
Our initial CIF investments included innovations inmarket-enabling technologies such as climate impact
certification, forest carbon analytics, and carbon
transformation, plus industry-specific carbon reduction
via sustainable fuels, distributed energy integration, andsupply chain optimization technologies. Additionally, we
have made investment commitments in carbon reduction
solutions for global communities in emerging economies,
including India and Africa, as well as clean energy accesssolutions for communities in the United States.

New CIF investments in 2021 include:
Market-enabling
Climate impact certification
SustainCERT is a software-enabled carbon emissions
accounting and verification platform reimagining afuture where issuance of high-quality carbon credits
and other impact claims becomes scalable with integrity.
SustainCERT has certified over 1,200 projects around8
the world.
AI-enabled forest carbon exchanges
NCX (formerly SilviaTerra) is a science-driven forest
carbon marketplace delivering large-scale, immediate
impact for climate and communities. By using highintegrity data to generate carbon credits that connect
corporations to family forests, NCX is democratizing
access to markets while enabling real climate action.
In 2021, nearly 2,500 participating landowners with
4.3 million forested acres committed to defer their
8timber harvest.
Transformation to low-carbon materials
Twelve is a carbon transformation company turning
carbon dioxide into valuable materials and products.
Its solution offers a pathway to replace fossil-derived
carbon in essential products ranging from detergents
to automotive parts. In 2021, Twelve produced theworld’s first jet fuel made from CO2 using electrolysis.
The CIF investment is supporting the scale-up of
Twelve’s system to industrial scale.

With NCX’s science-driven forest
carbon marketplace, nearly 2,500
participating landowners with
4.3 million forested acres committed
to defer their timber harvest in 2021.

Industry decarbonization
Sustainable fuels
LanzaJet is a sustainable fuels technology company
and producer dedicated to decarbonizing hard-toabate sectors, such as aviation. LanzaJet is constructing
a renewable fuels plant in Georgia called Freedom Pines
Fuels that will produce 10 million gallons of SAF andrenewable diesel per year from sustainable ethanol,
8including from waste-based feedstocks.
Distributed energy resources
AutoGrid delivers a suite of distributed energy
applications that allow utilities and energy service
providers to deliver clean, flexible power. In 2021,
AutoGrid enabled a set of unified demand responseand distributed energy resource programs totaling
165 MW in Texas, enabling peak plant flexibility for
8both grid resilience and renewable integration.
Solar performance assurance
Omnidian provides solar system performance
management for residential, commercial, and industrial
clean energy generation. Omnidian’s network of assets
include 326 MW*, with incremental production from
Omnidian’s services resulting in 14,090 mtCO2 avoided
in 2020. (*These figures do not include Omnidian’s
8systems under backup management.)

Emerging economies
Green growth in India
Eversource Capital’s Green Growth Equity Fund iscommitted to accelerating India’s rapidly growing
climate innovation sectors, spanning electric mobility,
renewable power, and circular economy solutions.
To date, Eversource Capital’s portfolio companies havegenerated 330 MWh of renewable power, resulting
8
in 290,000 mtCO2 avoided.

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Appendix

Enabling systems change (continued)
Other 2021 investments include:• Just Climate, a global, climate-led investment businessfocused on scaling capital towards the most impactful
climate solutions.
• Buoyant Ventures, a venture capital fund focusedon digital solutions for climate risk.
• Carbon Direct Fund, a growth equity fund dedicatedto investing in high-growth carbon removal andutilization technology leaders.
• Earthshot Ventures, a climate technology venture
capital fund, spun out of Elemental Excelerator thatbuilds on their global network of customers, investors,
corporations, and policymakers. Earthshot Ventures
invests in hardware and software technologies inenergy, mobility, food, industry, and carbon.
• Energy Impact Partners Elevate Future Fund,a venture capital fund focused on creating a morediverse founder community and inclusive venture
capital ecosystem within the broader energy transition.

Carbon savings from the deploymentof smart thermostats across
SmartRent’s portfolio in 2020 were
55,000 MWh of energy, 5.5 million
gallons of gasoline equivalent, anda net carbon savings of 68,000 mtCO2.8

Saving energy with smart home automation

Addressing air pollution and climate inequities

Energy Impact Partners (EIP) Fund II participatedin SmartRent’s $60 million Series C funding round.
SmartRent is a smart home automation platform
which provides property managers with visibility
and control over assets and delivers a smart home
experience to residents in the United States andCanada. Environmental savings from the deploymentof smart thermostats across its portfolio in 2020 were
estimated to be 55,000 MWh of energy, 5.5 million
gallons of gasoline equivalent, and carbon savings
8of 68,000 mtCO2.

In September 2021, The Proceedings of the National
Academy of Sciences published a study that found that
Hispanic and Black people in the San Francisco Bay Area
experienced up to 30 percent higher air pollution than
average. Drawing from Aclima’s mobile measurements,
the authors including UT Austin, UC Berkeley, andAclima scientists found that substantial disparities
arise from regional and local differences in pollution.
These findings show that combining hyperlocal air
pollution data with demographic data is an important
way to identify disproportionate impacts that go unseen
using traditional methods and can help decision-makers
target emission reduction and mitigation efforts where
8
they are needed most.
Learn more
about CIF here

• Energy Impact Partners Frontier Fund, a venture
capital fund which invests in emerging technologies
providing solutions for the deep decarbonization ofasset-intensive industries.

Impact from our 2020 investments include:
Supporting clean energy in Asia
Via the Southeast Asia Clean Energy Facility (SEACEF), we
invested in Xurya, a clean energy company committed
to accelerating the rooftop solar market in Indonesia.
It executed the first wave of projects with 16.5 megawatts
peak (MWp) in operation and 16.6 MWp under contract
for construction as of November 2021, up from
0.8 MWp installed at the time of SEACEF’s investment.
In the 12 months following SEACEF’s investment, Xurya
8
produced 6,765 MWh resulting in 5,800 mtCO2 avoided.

Aclima’s mobile measurements can help decision-makers target emission reduction and mitigation efforts.

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Enabling systems change (continued)
Investing in AI

Estimating mangrovelow-res image
biomass and carbon storage
with remote sensing
and machine learning

Through our AI for Earth program, we are supporting
startups and nonprofits capitalizing on the cloud, data,
and AI to accelerate the pace of innovation in carbon.

Mapping forest carbon potential down
to individual trees

The University of California San Diego is using
remote sensing technology and machine learning tobetter characterize mangroves, guide managementof the habitat, and curb mangrove deforestation
by increasing the availability of reliable data on
mangrove coverage and extent. The Aburto Lab
and Engineers for Exploration are developinga methodology that uses machine learning toautomatically distinguish and quantify Mexico’s
mangroves from drone and satellite imagery,resulting in an improved understanding of how
mangrove distribution changes through time, as
well as the ability to estimate mangrove biomass
and calculate the carbon storage.

The University of Maryland is applying machine learningalgorithms on airborne lidar data, collected over theentire state of Maryland, to identify individual trees
to measure forest carbon storage, thereby reducing
uncertainties in current carbon monitoring prototypes
used for measurement, reporting, and verification
purposes in forest management and climate initiatives.

Calculating carbon stocks with
AI-based monitoring
Jejak.in is applying AI to automatically classify and label
photos captured by drone cameras and satellites in the
Citarum Watershed area in West Java, Indonesia, fora more effective and efficient method to identify trees
and vegetation, as well as calculate carbon stocks inthe area. This will be used to help monitor the successof conservation programs and make better decisions
about future programs.

Machine learning to automatically distinguish and quantify Mexico’s mangroves from drone and satellite imagery.

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Appendix

Enabling systems change (continued)
Driving collective action
Getting to net zero is going to take more thaninvestments, technology, and commitments. We’ll
need to use all those together in sectoral and multistakeholder organizations that drive full ecosystemchange. Microsoft participates in many of these
efforts and spearheads work across several, including
the following.

Transform to Net Zero
Transform to Net Zero (TONZ) is a cross-sector initiative
to accelerate the transition to a net zero global economy.
The group’s 2025 goal is for all Fortune Global 1000
companies to have targets backed up by transformationplans to achieve net zero no later than 2050. TONZ’sstrategy is to achieve this through enabling business
transformation, taking collective action, and driving
systemic change. This includes a focus on demonstrating
the transformation of members’ own businesses
and inspiring transformation in other companies.
Since its initial launch in late 2020, TONZ has released
a position paper and action plan to define the group’s
position on net zero goals and their implementation,
formed decarbonization approaches across key supply
chain areas, and published two research reportson the building blocks of net zero and key sectoral
challenges. In Q3 2021, TONZ published the first of aset of transformation guides to share lessons learned
from TONZ companies on net zero implementation
across procurement, net zero goalsetting, andpolicy engagement.
See TONZ Position Paper
and Action Plan here

Business Alliance to Scale Climate Solutions(BASCS)
Launched in 2021, BASCS aims to bridge the gap inclimate finance by providing a central platform forbusinesses and experts to meet, learn, discuss, andact together. As a founding member of the alliance,
Microsoft is sharing our resources and experiences
as an early adopter of climate solutions, as well as aninvestor providing catalytic capital for nascent andfirst-of-a-kind climate solutions.

Carbon Removal Climate Action Group
Microsoft co-founded the Carbon Removal Climate
Action Group of the World Economic Forum (WEF)
CEO Climate Leaders Alliance to help raise corporateawareness about the importance of carbon removal.
The alliance will also create a due diligence platform anda joint purchasing strategy for carbon removal.

Sustainable Aviation Fuel Buyers Alliance(SABA)In April 2021, Microsoft was announced as one of
the founding members of SABA. Led by RMI and theEnvironmental Defense Fund (EDF), SABA will workto accelerate the path to net zero aviation by driving
investment in SAF, catalyzing SAF production andtechnological innovation, and supporting member
engagement in policy-making efforts.

Playing for the Planet
Our gaming business has partnered with the United
Nations Environment Programme on the Playing for thePlanet initiative. Its goals are to reduce the impact of thegaming ecosystem on the environment through bettercarbon accounting and educating gamers everywhereon sustainable causes. For example, the Minecraft Builda Better World Initiative delivers in-game content about
the need to protect and conserve, and matching funds tocharitable organizations focused on conservation.

2025

TONZ’s 2025 goal isfor all Fortune Global
1000 companies to havetargets backed up by
transformation plans toachieve net zero no later
than 2050.

Green activations in games
Mojang have already established themselves in thegaming community as world leaders in social outreachand education. Minecraft: Education Edition has reachedmillions of students with build challenges to create
sustainable cities of the future, and with curriculumaligned lesson plans on climate and environmental
themes. Mojang is committed to continued innovationin sustainability with new projects including the
UNESCO Global Build Challenge, Climate Futures inpartnership with Met Office, and the Sustainable City
Map. By integrating green activations in games andsupporting the global environmental agenda throughinitiatives ranging from planting millions of trees toreducing plastic in their products, we believe Xbox canhave significant impact in improving the world.

Green Software Foundation
Microsoft launched the Green Software Foundationin May 2021 alongside Accenture, ThoughtWorks, and
GitHub to create green software industry standards, drive
awareness, grow advocacy, and accelerate innovation
to enable developers to reduce the carbon emissions of
the software platforms that they build. The foundation
has grown to 20 members and over 350 individual
contributors collaborating on standards, innovation,and education. The first version of the Software Carbon
Intensity (SCI) standard, a methodology for scoring
software applications, was released in December 2021.

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Enabling systems change (continued)
Advocating for net zero
Future climate-related risks would be reduced by the
upscaling and acceleration of far-reaching, multilevel, and cross-sectoral climate mitigation and byboth incremental and transformational adaptation.
Those efforts must be guided by policy that accelerates
carbon reduction and removal opportunities. Over the
past year Microsoft deepened its policy advocacy on
carbon and sharpened its focus on net zero goals,
energy grid decarbonization, measurement, and markets
in the United States and European Union throughdirect lobbying, engagement, and groups such as the
Climate Leadership Council, CERES BICEP Network,
Advanced Energy Economy, Climate and Clean Energy
Solutions, and the Renewable Energy Buyers Alliance.
Microsoft initiatives include the following.

Net zero policies
Microsoft is encouraging countries to make net zerocarbon-aligned national commitments and develop
effective implementation plans. Microsoft advocated for
the United States’ reentry to the Paris Climate Agreement
which occurred in January 2021 and for a national US
climate target to cut emissions by 50 percent by 2030.
We also voiced Microsoft support of the European
Commission’s ”Fit for 55” package, a set of legislative
initiatives that will set the framework for the whole EU
to achieve the binding target of reducing GHG emissions
by at least 55 percent by 2030 (based on 1990 levels).

Grid decarbonization
Microsoft advocated for strong climate and clean
energy provisions in the 2021 US budget reconciliationand infrastructure bills including new siting authority
for transmission lines, support for innovativetechnologies and projects that remove carbon dioxide,
modernizing the grid, accelerating clean energy, andstrengthening resilience to the impacts of a changing

climate. Microsoft actively engages in decarbonizationand grid modernization policy efforts in Arizona,
Texas, Illinois, and Virginia, and encouraged FERC toissue policy guidance on how to incorporate statedetermined carbon prices in wholesale electricity
markets. In Europe, Microsoft engages actively with
the European institutions advocating for robust clean
energy rules and sustainability metrics for datacentersand submitted comments in February to the European
Commission Public Consultations on the revisions of
the Renewable Energy Directive and Energy Efficiency
Directive. Microsoft engaged with the UK government
and energy regulator to inform the “Digitalising the UKenergy system for net zero” strategy published in Julyand its implementation.

be used to support decarbonization, focused on the
EU Carbon Border Adjustment Mechanisms (CBAM),
as part of advancing the conversation around common
standards for carbon measurement and accounting.

Carbon-related markets
Microsoft is advocating a range of policies to help
carbon-related markets mature, including carbon
pricing and research and development (R&D).
Microsoft supported the Washington State Climate
Commitment Act, approved in May, which sets a cap on
emissions and establishes a robust carbon pricing

and investment program. Microsoft advocated forincreased US R&D in key technologies such as energy
storage and direct air capture, which was included in
the 2020 Energy Act and the bipartisan infrastructure
package. Microsoft is advancing the development ofcarbon removal markets and consistent, high-quality
carbon removal standards through comments to the
US Department of Agriculture and by joining the Carbon
Capture Coalition. In August, Microsoft submitted a
response to the European Commission Carbon Removal
Certification Mechanism survey to advocate for common
standards for carbon removal quality and to provide
input into the design of a future legislative framework.

Carbon measurement
Microsoft is advocating for common accounting
and public disclosure of carbon and climate-related
information. In June, Microsoft submitted comments
to the US Securities Exchange Commission in supportof the development and adoption of disclosure rulesthat will provide material, decision-useful information
for investors. In September, Microsoft filed an aligned
response to the UK Financial Conduct Authority’s
consultation on Carbon Measurement and provided
information to the US Department of Defense on
climate change disclosure practices to support
implementation of the Executive Order on Climate
Related Financial Disclosure. In March, Microsoft joined
the European Green Digital Coalition, supported by theEuropean Commission, with the goals of developing
standardized, credible, and comparable methodologies
for calculating the net impact of green digital solutions
in different sectors, and accelerating the contributionof digital technology to our collective 2030 goals.
Microsoft supported a new academic report byCambridge Institute for Sustainability Leadership (CISL),
exploring how trade and trade-related policies could

Microsoft is advocating for common accounting and public disclosure of carbon and climate-related information.

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Appendix

Key trends

1

Carbon removal demand is hot—and durable
supply is short.

Progress on carbon reduction will be “lumpy”
as carbon data and measurement improves.
As Microsoft and the world mature in carbon
accounting, we will continue to get betterat understanding how our decisions reduce,or sometimes increase, carbon emissions.
For example, some of the data used to estimate
hardware emissions within certain categories
of Scope 3 is drawn from industry-average“secondary” data rather than directly fromsuppliers. This data may not be reflectiveof recent supplier activity, which may cause
fluctuations in emissions as primary data fromsuppliers is introduced.

Carbon removal still lacks common standards
needed to scale.
Projects don’t consistently account for durability,
additionality, and leakage. To scale the market
in the long term, we need the enabling
infrastructure to measure, monitor, and verify
carbon removal quality now, and we need clear
guidelines under the Paris Agreement about how
to reconcile corporate and country-level actions.
See Microsoft Carbon Removal - Lessons From an
Early Corporate Purchase to learn more.

Carbon removal is a seller’s market. The pipeline
is short for surging demand, and corporate
buyers need more project development.
Climate change is further complicating this, as
wildfires erode the forest carbon purchases we’ve
made and we, as well as other purchasers, needexpanded credit buffers to ensure credits we pay
for are removing carbon from the atmosphere.

2

FY21 was a year of progress and learning for Microsoft on our journey to carbon negative.

3

4

Climate change is a global issue whose impacts
are felt locally.
Displacing incumbent technologies andspurring innovation needs to be supported
in all geographies to address the uneven
distribution of those impacts—both positive
and negative—around the world.

5

Small percentages of our emissions require big
efforts to address.
For example, diesel fuel accounts for less than
1 percent of Microsoft’s overall emissions.
But finding solutions to reduce reliance on
traditional diesel fuels, which power the backup
infrastructure that supports our datacenters, will
require significant innovation and investmentby those with a much greater stake and reward
than Microsoft alone. This same scenario plays
out for electrifying our fleet and transitioning to
induction cooktops.

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2

3

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Appendix

Develop the markets
Longer-term purchasing contracts send a
firm demand signal for developers, creating
a business case for them to help build plants.

4

Drive quality
Microsoft is dedicated to continuing being apioneer in addressing the climate crisis headon. We will continue to help ensure project
quality in the market and drive for moreaccurate carbon accounting.

Innovate in renewable energy
and carbon reduction
We expect to focus on further innovations
in renewable energy, carbon reduction, andcarbon-free materials. For example, by using
machine learning to forecast electricity load,
we can enable grid-interactive datacentercomponents, such as batteries for backup power,
to participate in ancillary energy markets andstabilize an electric grid with a higher penetrationof renewable energy sources. We’ll conduct new
research to inform the technical and businesspossibilities of co-locating datacenters with
offshore wind farms and investigating thefeasibility of using supercritical carbon dioxide(sCO2) as a coolant for immersion of servers
within the datacenter.

5

6

Pilot diesel-free backup power
We are innovating and piloting other backup
power sources in our datacenter regions, which
could in the future provide viable replacements
for generators. Batteries already supply shortterm backup power needs, filling the roughly
30-second gap between a potential outage on
the grid and the time it takes to power up the
diesel generators. In the future, batteries witha longer duration could replace the role diesel
generators play today.

Reduce embodied carbon
We are continually evaluating design changes
and developing new specifications to facilitate
deep embodied carbon reductions in our campus
and datacenter designs. We are analyzing boththe optimal use of conventional materials, such asconcrete and steel, and pursuing more ambitious
opportunities with emerging alternative
materials that carry significantly less embodied
carbon. We are also developing solutions to helporganizations reduce and manage emissions andenergy consumption, such as through Azure IoT
solutions for energy and sustainability.

Continue to invest
in carbon removal
We continue to pursue new opportunities tofund high integrity, engineered carbon removal
projects. We are also investing in digital tools toscale nature-based carbon removal solutions,such as soil carbon sequestration technologies.

7

8

Decarbonize our supply chain
We will continue refining emission reductionplans with suppliers and ensuring that they
have the resources they need to make these
reductions with a goal of having the aggregate
reductions meet Microsoft’s Scope 3 commitment.
We will continue to embed sustainability
into procurement processes and reset goals,
metrics, and incentives to support carbon
reduction targets.

Enable product carbon
comparability
In Microsoft’s commentary to the Securities
Exchange Commission climate disclosure, we
predicted, “Individual consumers will have theability to choose among competing products
based on relative carbon emissions, as they dotoday when it comes to the nutritional content
of food products.” While many companies reporttheir products’ carbon footprints using wellestablished methodologies, these footprints
are not currently comparable due to divergent,
non-standard, and proprietary data andassumptions. Microsoft is exploring how to
enable new methodologies and standards
for comparable product labels that could be
used across industries and administered byindependent certification or regulatory bodies.

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Appendix

Resources
Capacity-building tools and resources
Developed in partnership with ENGIE Impact, WSP,
and CDP to help companies, and our suppliers, reporttheir GHG emissions, develop clean energy strategies,
and reduce their energy-related emissions.

Microsoft is committed to sharing
our progress, challenges, learnings,
and best practices throughout oursustainability journey.

Find out
more here

Carbon removal program website
Microsoft’s carbon removal program webpage thathouses content about the program’s ambitions andprovides resources about our request for proposals.
Find out
more here

Criteria for high quality carbon removal

Reducing embodied carbon in construction

Microsoft’s minimal viable project type criteria for
procurement considerations.

A white paper with an inside look into how Microsoft
is reducing emissions during the construction of newbuildings and datacenters.

Find out
more here

Carbon dioxide removal guidanceMicrosoft’s request for proposals (RFP) guidanceon project requirements, rules of engagement,
and expectations.
Find out
more here

A buyer’s guide to soil carbon offsets
A Microsoft-funded independent analysis of thesoil projects on the voluntary carbon market andassessment based on four key criteria.

Find out
more here

Principles of Sustainable
Software Engineering
A Microsoft Learn course on the competencies
needed to define, build, and run sustainablesoftware applications.
Find out
more here

Find out
more here

We are committed to becoming a carbon negative company by 2030 and helping others on their journeys.

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Appendix“Getting ahead of the world’s
water crisis will require a
reduction in the amountof water used to operate
economies and societies,
as well as a transformationin the way we manage ourwater systems.”
Brad Smith, President and Vice Chair

Contents
Our approach

45

Getting to water positive

48

Reducing our water footprint

48

Replenishing water

50

Improving access to water

52

Driving transformation

53

Enabling systems change

55

Key trends

58

What’s next?

59

Resources60

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Our approach

A commitment
to a water
positive future

The context
The scientific consensus is clear: water security andour capacity to safeguard sustainable access to quality
freshwater resources is increasingly at risk. There is a
global increase in water demand that follows population
growth, economic development, and changing
consumption patterns. Research by WRI projects that by
2030, there will be a 56 percent deficit in water supply
relative to demand if no actions are taken to alleviate this.
At present, about 25 percent of the global population
lives in countries that suffer from water stress, and one inten people lack access to safe drinking water.
We are committed to becoming a water positive
company by 2030. We will do this by continuing ourwater stewardship work across our operations, buildingon the steps taken to reduce the water consumption in
our datacenters and campuses over the past decade.
In addition to reductions, we aim to become water
positive through expanding access to clean water andreplenishment projects.

Our commitment: water positive by 2030
Replenishing more water
than we use by 2030

Empowering our customers
and partners

We will reduce the water intensity of our direct
operations and replenish in water-stressed regions
where we work.

We will continue to develop solutions to help customers
and partners understand water-related risks.

Reducing water use indatacenter operations

Investing in the future of water

We will reduce water waste in our datacenter
operations by 95 percent by 2024.

We will work with companies around the world to drive
innovation and adoption of water technologies.

Increasing access to water

Influencing policy

We will provide more than 1.5 million people withaccess to clean water and sanitation services by 2030.

We will use our voice at the local, national, and global
levels to increase water access and availability, improve
quality, and ensure the integration of water into
climate strategies.

Digitizing water data

Driving collective action

We will use our technology to generate actionableinsights, increase awareness of water issues, andoptimize water replenishment.

We will partner with others to drive collective action
to increase access and reduce water stress.

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Our approach (continued)
Our progress

1.3M cubic meters

116 grantees

In FY21, Microsoft invested in replenishment
projects that are expected to generate over
1.3 million cubic meters of volumetric benefits,
bringing us to 21 replenishment projects to datein nine water basins across the globe.

Through AI for Earth, Microsoft has supported
116 projects that create data-driven solutions
supporting water resources monitoring, modeling,
and management centered around water.

670M liters ofwater benefit

U.S. Water Prize

Our programs with Water.org account for over9
670 million liters of water benefit per year inareas facing water scarcity and climate challenges
that overlap with our business operations instrategic locations.

In 2021, Microsoft was awarded the
U.S. Water Prize for Outstanding Private Sector
Organization for adopting our water positive
program and committing to being water
positive by 2030.

Water access for>95,000 people

Democratizing
access to water data

Through our partnership with Water.org,
10
we provided more than 95,000 people
with access to safe water or sanitation.

Microsoft, in collaboration with BlackRock and WRI
India, supported the Wave2Web Hackathon to help
develop new datasets on water stress in emerging
markets and improve predictive modeling for better
planning of water resources and risk preparedness
in cities.
A year of progress and impact to get to water positive by 2030.

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Appendix

Our approach (continued)
Water Table 1

Water Table 2

Replenishing more water than we use on our journey to become water positive by 2030

Delivering on our commitment to enable the provision of water and sanitation services to
1.5 million people in seven water-stressed countries by 2030

In FY21, our contracted water replenishment amounted to 45 percent of our global water consumption
across our operations.

Water replenishment

Water consumption

FY17

1,912,934

FY18

FY19

3,945,783

Base
year

FY20

3,966,639

Current
year

FY21

4M

3M

FY21
current
year

96,906331,081

1,952,710

4,477,865

5M

95,13003,325,664

In FY21, we provided 95,130 people with water access across India and Indonesia. From the program’s inception
through calendar year 2021, we have provided 242,988 people with water access in Mexico, India, and Indonesia.

Water
positiveby 2030

2,020,747

2M

1M

0
Water m3

1M

2M

3M

4M

India

3,038

A company iswater positive
5M when it replenishes
more water than it
consumes each year.

Indonesia

92,092
Population provided
with water access in FY21

a. Reported water replenishment volumes represent total contracted water replenishment projects for each fiscal year.
Reported water replenishment volumes may be adjusted once individual projects are completed and volumes verified.

a. Reported values represent data reviewed and validated by water.org.

Overview

CarbonWater

Getting towater positive
To meet our commitment to being
water positive by 2030, we will reduce
our water footprint across our direct
operations, while replenishing andincreasing water access in waterstressed regions where we work.

Waste

Ecosystems

48

Appendix

Reducing our water footprint
We are taking new approaches to water collection,
treatment, reuse, and reduction at our campuses anddatacenters across the globe. This includes efficiency
measures as well as fit-for-purpose water usage
design—we are focused on using the right type ofwater in the right context from campus to datacenters to
device manufacturing. Key efforts include the following.

Using less, reusing more, and recycling water
across our datacenters
Microsoft is using the Smart Water Navigator, which
we developed with Ecolab, in our datacenters toprioritize and manage incoming water quality sources
like recycled water. In San Antonio, Texas, we havesignificantly reduced the datacenter’s potable water
usage, which will now be used to supply water to homes,
providing economic as well as environmental benefits.
We deployed sensors in our Quincy, Washington
datacenter location, where we’re using the data on
real-time water quality to drive operational insights
and adjustments to maintenance and water chemistry.
Across our operations, we’re testing new techniques, likeraising supply air temperatures and harvesting waterfrom our rooftops, to further reduce water consumption.

Using the right type of water in the right context in datacenters.

Keeping datacenters cool using air
Across our global datacenter fleet, outside air is ourprimary method of cooling for an average of ninemonths of the year. External temperatures and humidity
play a key role in determining when additional coolingis required—and when required, we utilize an adiabatic
cooling system to reduce air temperature by evaporatingwater in its presence. Adiabatic cooling, along withhigher temperature operations, significantly reduces
power and water usage when comparing to mechanicalwater-based cooling systems. At our new datacenterregion in Arizona, which opened in June 2020, we use
zero water for cooling for more than half the year, taking
advantage of adiabatic cooling. We are also partneringwith First Solar to provide solar energy rather than
traditional electricity generation, which will reduce power
plant cooling water.

Zero
water

At our new datacenterregion in Arizona,
we use zero waterfor cooling for morethan half the year,
taking advantage ofadiabatic cooling.

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AppendixGetting to water positive (continued)
Pioneering research and implementationof liquid immersion cooling to reduce water

Recycling water in our campuses
Our Herzliya, Israel site’s landscaping also uses 100 percentof the air conditioning condensate water for its irrigationand cooling towers, resulting in an estimated savings ofover 3 million liters annually. Our LinkedIn headquarters
in California is planning to utilize municipal recycledwater for landscaping and internal plumbing, thus saving
30 million liters of potable water each year.

In 2021, Microsoft was the first cloud provider to run
two-phased liquid immersion cooling in a production
environment, demonstrating viability for broader use
in our datacenters. We are using liquid immersion in a
production environment, which involves placing servers
in a tub of inert fluid that boils at 50°C, which removes
the heat generated by the chips, servers, and power
supplies, and condenses the fluid in coils at the top of
the rack. This “rains” back in the tank. Because of theelevated operating temperature, this type of cooling
does not require use of evaporated water. Our latest
testing addresses the concept of overclocking, whichis to operate chip components beyond theirpre-defined voltage, thermal, and power design limits
to further improve performance. Our tests foundthat some chipsets show an increased performanceby 20 percent with liquid cooling. This may also havebenefits beyond reduction of water use, as this approach
can allow for datacenter rack designs that create
increased capacity per square foot in a datacenter.

Raising the temperature while
maintaining quality
We’re investigating and piloting turning up the heat inour datacenters. The higher server inlet temperatures
will reduce cooling hours and water use. If the pilot is
successful, we expect to be fully implemented by 2025,
which has the potential to eliminate water use for coolingin regions like Amsterdam and Dublin, while reducing
water use in dry regions like Arizona and Wyoming.

Testing new generation techniques
Our Herzliya, Israel site utilizes Watergen’s technology to
produce fresh drinking water from the humidity in the air,producing an estimated 237,000 liters annually, based oncompany calculations. In Hyderabad, India, we’re piloting
air-to-water generators that will capture the moisturein humid air, purify it, and produce safe drinking water.
These generator plants will help offset 4 million liters ofground water extraction per year, based on company
calculations, in this water-stressed region, where water
scarcity is an ongoing crisis that is expected to worsen.

Reducing water in device textiles

4M liters

In Hyderabad, India, we’re piloting
air-to-water generators to help
offset 4 million liters of groundwater extraction per year.

Fit-for-purpose water design in our Hyderabad campus.

Building net zero campus in California
In 2021, our new Silicon Valley campus officially opened.
It is now operating as the first technology campus witha net zero water certification as not a drop of water
for more than 2,000 employees, 15 acres of landscape,and 643,000 square feet of built space will come frommunicipal sources, beyond drinking fountains and sinks.

Microsoft uses textiles in our computer palm rests andtype covers, and the textile industry is one of the biggest
consumers of water. Each of the various manufacturingphases, including yarn processing, greige production,and the dyeing finish process requires a significant
amount of water. To reduce water, we removed thedyeing process on our CLARINO fabric by switching
to a solution dye technique which reduces water
consumption by 20 percent. This is a completely solventfree, environmentally friendly manufacturing choice thatis used in three of our products currently in production
across the HoloLens and Surface type cover lines.

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AppendixGetting to water positive (continued)
Replenishing water
As part of our commitment to be water positive by 2030,
we will replenish more water than we consume, focusing
on high water-stressed regions. We will achieve this goalby investing in water projects that protect watersheds,
restore wetlands, and improve infrastructure. In addition
to generating volumetric water benefits, many projects
offer a wide range of additional co-benefits.
When sourcing water replenishment projects, weconsider contextual conditions of the watershed andaim to invest in projects that align with site-specificwater assessments and have local stakeholder support.
We have invested in 21 projects to date in nine waterbasins across the globe. In FY21, Microsoft invested inprojects that are expected to generate over 1.3 million
cubic meters of volumetric benefits. Progress towards
our commitment is made possible due to several
strategic partnerships with non-governmentalorganizations, such as Bonneville Environmental
Foundation (BEF), the Water Resilience Coalition (WRC),the Nature Conservancy, and implementation partners,
including Trout Unlimited, Ducks Unlimited, National
Audubon Society, and WaterAid. We also participate
in the California Water Action Collaborative, a networkof over 25 organizations learning together, collectively
developing projects, and advancing innovative solutions
to improve water security and resilience across California.

1.3M

In FY21, Microsoft
invested inreplenishment projects
that are expected togenerate over 1.3 million
cubic meters ofvolumetric benefits.

Reversing environmental degradation in the Sierra Nevada and Cascade mountain ranges.
Given the nascent water replenishment project market,
we make investments at least a fiscal year before a
project delivers volumetric benefits. We are still able to
make estimates on volumetric benefits, just as we do withrenewable energy projects upon signing even though
the project has yet to be built. We are taking new steps
to validate these estimates. In FY21, 10 of Microsoft’s
replenishment project investments underwent a thirdparty quantification to verify and update the initial
volumetric benefit estimates using the Volumetric Water
Benefit Accounting (VWBA) guidance. We will continue
to use the VWBA guidance to quantify volumetric water
benefits when contracting with a replenishment partner.

Many projects are already delivering volumetric,
ecosystem, and community benefits, such as
the following.

Restoring the East Creek meadow
Microsoft has invested in a project to restore theEast Creek meadow and reverse environmental
degradation caused by disconnection of the channels
in California’s Sierra Nevada and southern Cascade
Mountain ranges from the meadows and floodplains
below. September 2021 groundwater levels indicatethat the meadow is beginning to retain groundwater
during the dry season, even with reduced precipitationand late-season contributions from snowpack runoff.
The restoration has also contributed to fire resiliency—within two months of the Dixie fire, native species
were re-sprouting in the burned areas due to residual
soil moisture.

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AppendixGetting to water positive (continued)
Groundwater recharge and water securityin Phoenix

Drought contingency planning with
the Colorado River Indian Tribes

Microsoft and Gila River Water Storage are recharging
and replenishing groundwater levels in the cities
of Goodyear and El Mirage, Arizona, to balance a
portion of Microsoft’s future water use, contributing
an estimated additional 610,000 cubic meters.
Microsoft is also collaborating with The Nature
Conservancy to support water conservation in the
Verde River Basin in Arizona through projects such as
piping irrigation ditches to efficiently water farmland
and leave more water in the Verde River.

Under the Drought Contingency Plan, Arizona is seeking
to help stabilize water levels in Lake Mead and reducethe impact and severity of shortage declarations in
Nevada, Arizona, and Southern California by financiallycompensating the Colorado River Indian Tribes (CRIT)

for water saved. Microsoft has contributed funds tocompensate the CRIT for their water rights to the
Colorado River through a lease for system conservation
and water supply benefits. In exchange for monetarycompensation, the CRIT have pledged to forgo irrigationwater deliveries and fallow approximately 10,000 acresof farmland, leaving significant volumes in Lake Meadover the next few years.

Restoration in the Columbia Basin
Microsoft supported three water restoration projects
in the Columbia River Basin near Quincy, Washington.
One of the projects benefits the Roaring Creek byimproving habitat for fish listed under the Endangered
Species Act, including Upper Columbia Steelhead,spring Chinook, bull trout, lamprey, and cutthroat trout.
The second project is focused on relocation of beavers
to watersheds where natural beaver dam building
helps to promote fish passage, improves water quality,
increases groundwater storage, and mitigates flooding.
The third project improves water use efficiency on
farm and irrigation delivery infrastructure to help local
agricultural producers adapt to changing growing
conditions while also supporting rivers and local fish.

Stabilizing lake levels in Lake Mead to reduce water shortage.

We will replenish more water thanwe consume, focusing on highwater-stressed regions and investingin water projects that protect
watersheds, restore wetlands,
and improve infrastructure.

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Appendix52

Getting to water positive (continued)
Improving access to waterWith 1.1 billion people in the world without accessto clean water, it’s not enough to simply reduce andreplenish—we need to improve people’s access to safe,
clean water. Our goal is to provide access to safe drinking
water and improved sanitation solutions for 1.5 million
people while accounting for 25 billion liters of net
positive water impact in high-stress watersheds where
we also operate, namely India, Indonesia, and Mexico,by 2030.

Progressing towards our goal with Water.org
In 2020, we began our work with Water.org to help
people living in underserved communities gain lasting
and reliable access to safe drinking water and improved
sanitation solutions. This includes household taps
and toilets, piped connections, rainwater harvesting,water storage, purification, and community filtration.
In FY21, we helped more than 95,000 people in India
10and Indonesia and expect to reach at least 840,000
people by September 2023. Nearly all the beneficiaries
are women and live below the poverty line. These
programs account for over 670 million liters of water
benefit per year in areas facing water scarcity and climate
challenges that overlap with our business operations in
9strategic locations.

95,000Affordable water and sanitation loans in India for piped water in homes.

Through ourpartnership with
Water.org, we provided
more than 95,000 people
with access to safe
water or sanitation.

670M

Programs run throughWater.org account forover 670 million litersof water benefit per year.

Providing safe water andimproved sanitation in India
In Rasulpur Aul Kendrapara, houses are made of thatch, mud,and concrete, and rarely have water or sanitation connections.
Rehana and her daughter used to walk up to six hours a day to getwater for cooking, laundry, and baths from an unreliable hand-pumpmanaged by the government. On days it was unavailable,

they collected water from the river or purchased it from a vendor,
paying high prices for water in time and money. Families like
Rehana’s find the small water and sanitation loans offered by
Water.org’s partners in India to be affordable, practical solutions totheir family’s water and sanitation needs. Rehana learned that she
could make affordable payments to establish a water connection
and was approved for a loan to construct a piped water connection
from the municipal water line to her home. Now the family enjoys
access to safe water and improved sanitation at home.

Overview

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Drivingtransformation
We believe that Microsoft’s mostimportant contribution to water
reduction will come not from ourown work alone, but by helping
our customers, partners, and suppliers
around the world reduce their water
footprints through our learnings
and with the power of data, AI,and digital technology.

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53

Appendix

We are not a particularly large consumer of water today,
but we are learning from our work in our own operations.
We are taking these lessons learned, new approaches,
and innovative partnerships and bringing them to ourglobal customer base, where we believe we can have atransformative impact.
As it so often does, the pathway to progress begins withdata. Water data is often segmented and siloed, bothwithin an organization and across multiple organizations
operating in the same watershed, which makes managing
a shared resource particularly challenging. Water data
often lacks context, meaning it is provided without anunderstanding of underlying conditions in the area.

This makes it difficult for any single organization to assess
its impact on a water basin, which in turn complicatesor obscures the most impactful intervention to address
water issues in that area. In addition, water data often
suffers from discontinuities, where data collection isinterrupted due to equipment failure or lack of fundingfor observational networks.
The digitization of water data is about making water datacredible, transparent, useful, and actionable. It includes
the Internet of Things (IoT), cloud platforms, businessintelligence, and AI. We are bringing new solutions toorganizations to better manage water consumption
and risk.

Product
Azure IoT Central government
application templates
Water Consumption Monitoring application templateWith this tool, available today, organizations canremotely monitor and control water flow and valvepressure, manage alerts, and set up device commands
to reduce water costs and waste.
Download application
template here

Water Quality Monitoring application template
Organizations need to also understand the quality of
their water, a key stressor on water availability. With thissolution, organizations can monitor water quality to
improve health outcomes and environmental impact.
Download application
template here

Azure-based risk management product
Smart Water Navigator
Developed by Ecolab and running on Azure,organizations can identify water risks, set meaningfulcontext-based water goals, and leverage response tools
to help companies implement sustainable water practices
with this free platform from Ecolab.

We are digitizing water data to make it credible, transparent, useful, and actionable.

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Appendix

Driving transformation (continued)
Customers and partners
Assessing global flood risk and water reserves
Deltares, a world leader in water and subsurface withexpertise in flood risk forecasting and ecosystemmonitoring, used Azure and the Microsoft PlanetaryComputer to generate two global multi-decade datasets:a Global Flood Risk dataset to assess the risk of flooding,in particular the impact in coastal areas subject to sea
level rise, and a Global Water Reservoirs dataset todetermine water availability for up to 3,000 reservoirs
around the world for both drinking water and hydropower planning. Both datasets help organizations
to relate changing water conditions to humanity,
infrastructure, and environments.

Reducing water usage in facilities withthe cloudEnova, a joint venture between Majid Al Futtaim
and Veolia, is an integrated energy and facilities
management provider offering comprehensive services
and performance-based solutions to its clients to help
achieve their financial, operational, and environmental
targets. Powered by over 4,500 employees and a strong,scalable, and secure cloud infrastructure on Azure, Enova
has achieved total savings of 320 million kWh of energy,
5 million cubic meters of water, and 210,000 tons of CO2
emissions. In 2021, Enova adopted a new business model
involving ICONICS and other tools supported by Azure
cloud services and over 320 customized fault and ECM
rules. Covering 28 medium to large sites, this resulted
in an additional 2 percent of energy savings and 17–25
8
percent improvement in staff efficiency.

Enabling modeling of global water supply
and demand

Smart metering with Anglian Water is saving almost 3 million liters of water every day.

Microsoft is working with WRI to provide partners withaccess to the latest Coupled Model Intercomparison
Project Phase 6 (CMIP6) global climate projections, aswell as socioeconomic development projections basedon IPCC scenarios, on Microsoft Azure. Partners are now
able to model global water supply and demand with
CMIP6 data and scenarios for the first time.

Forecasting real-time water availability
in reservoirs
With WRI and BlackRock, Microsoft sponsored a global
hackathon challenge, Wave2Web. The organizations
worked together to develop new datasets on water
stress in emerging markets, inviting students and young
professionals to develop predictive modeling to forecast
water availability in reservoirs near Bengaluru, India.
The Wave2Web hackathon included 2,130 participants
across 293 teams globally. Twenty-five shortlisted teams
received hands-on support to develop unique, forwardlooking solutions. The three winners showcased their
prototypes in front of state and national stakeholders
at an online town hall conducted in October 2021.
The Commissioner of the Karnataka State Natural
Disaster Management Center plans to continue
working with the winning teams to explore applicationsof the prototypes as well as other opportunities forcollaboration to solve the growing water challenges
faced by Bengaluru.

Water smart metering withthe cloud and AI
Anglian Water supplies more than 6 million customers
with water and water recycling services in the UK. It is
working to efficiently manage water supplies and raisecustomer awareness of water conservation. A key partof its strategy is smart metering, which it is rollingout across its entire region by 2030. Using Azure,
Anglian built a robust system for customer-side
smart
metering, as well as monitoring and analysis of its
network. It also uses AI to understand the behavior ofreservoirs through each day, each season, and varying
meteorological conditions. Since the smart metering
program went live, customers have been able to findand fix around 40,000 leaks in their homes, saving
8
almost 3 million liters of water every day.

Overview

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Enabling
systems change
We are focused on new ways to harness
the power of technology, partnerships,
investments, and policy to drive impact
at scale and pace to help the world
more effectively address water
availability and accessibility.

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55

Appendix

To reach a water positive future, the world will need new
partnerships, solutions, and markets. That is why we go
beyond our operations and even our products to makedirect investments in the future of water, from R&D toactual funding investments in promising technologies
that have the potential to scale rapidly and globally.

Research and development
Researchers at Microsoft tackle critical challenges thatwill shape the future of the world and the company.
Given the significance of sustainability challenges forour global future, research teams around the world aredeveloping new technologies and approaches to ensure
water efficiency.

Funding innovation via CIF
The Climate Innovation Fund (CIF) invests in thedevelopment and deployment of new technologies,
processes, and production changes that can improvethe condition and sustainability of our water resources.
Our investment into Emerald Technology Ventures’Global Water Impact Fund invested in Sofi Filtration iscurrently serving early to expansion-stage companies
globally to drive critical innovation and its adoption in
the water space.

Azure Verified Telemetry for IoT
Our research on Dependable IoT is enabling water
positivity for Microsoft and other companies bydeveloping the capability to ensure the accuracy of
sensors used to monitor water leaks, quality, and efficient
usage. With the incorporation of this capability into
Azure Verified Telemetry for IoT, we are partnering with
FluxGen, a sustainability startup in India that develops
AI and IoT-based water management solutions to makeindustries water positive. The partnership is through theMicrosoft-Accenture Amplify program and Microsoft
Research India’s Center for Societal Impact throughCloud and AI.

To reach a water positive future, the world will need new partnerships, solutions, and markets.

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Appendix

Enabling systems change (continued)
Investing in AI
Through our AI for Earth program, Microsoft is putting
AI tools into the hands of individuals and organizations
working on the frontlines of environmental challenges,
including water. To date, 116 AI for Earth grantees haveworked on water-related projects.

116

Providing scientifically informed estimates of the impact of extreme drought events on drinking water availability.

To date, 116 AI for Earth
grantees have worked onwater-related projects.

Remote sensing to assess agricultural
water demand
Government agencies in Egypt face difficult decisions
when allocating water for agriculture and civilian use.
To help agencies, the Egyptian government developed
a proof of concept solution that uses satellite image
analysis deep learning to determine crop type and landarea boundaries of smallholder farms. The intelligent
visualization using ArcGIS detects field boundaries,
identifies crops, and provides water demand forecast
estimates for decision makers that results in moreaccurate allocations for sustainable agriculture and fairwater distribution for citizens.

AI and satellite imagery to track forest-related
water availability
Microsoft supported a forest and water management
project by Conservation Science Partners by providing
resources around AI, machine learning, and cloudcomputing on the Microsoft Azure platform. Using Azure,
Conservation Science Partners aggregates and analyzes
satellite imagery at high resolutions to better understandhow the forest cover across the western United Stateschanges from forest disturbance events and how thisinfluences water supply records. By linking the forest data towater flow rate data records from before and after a forest
disturbance, an analysis can provide insights for conservation
planning and adapting forest and water management tofuture climate change impacts. As a result, local communities,
regional organizations, and the federal government canbetter manage and protect these vital resources.

Machine learning to predict
regional water shortages
Recognizing that lower income and small communities
often face the largest barriers to safe and reliabledrinking water, Microsoft provided a grant to the
Leadership Counsel for Justice and Accountability
to support their work around secure water supplies.
The Leadership Counsel will assimilate data fromdisparate sources, using Azure resources to hostand deploy machine learning models and create adashboard that people can interact with on a server.
The dashboard will provide regulators, advocacy
groups, and the public with scientifically informed
estimates of the impact of extreme drought events on
drinking water availability. This contribution also allows
the Leadership Counsel to engage in wider community
outreach efforts, advocate for policy efforts that willprotect well water levels, and inform residents about thepotential impact of water conservation policy efforts.

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Appendix

Enabling systems change (continued)
Driving collective action
We partner with like-minded companies and leading
scientific organizations to develop and deliver research,guidance, and implementation roadmaps that enable allbusinesses to solve water challenges.

CEO Water Mandate and Water
Resilience Coalition
Acknowledging the importance of collective action andcollaboration to solve shared water challenges, Microsoft
has endorsed the United Nations Global Compact CEO
Water Mandate, an initiative in co-Secretariat with the
Pacific Institute, since 2018. In 2020, Microsoft and six
other companies, together with the UN Global Compact
CEO Water Mandate, spearheaded the establishment of
the industry-driven Water Resilience Coalition (WRC).
Microsoft serves as a Coalition leader and has pledged
its commitment to collective action, net positive water
impact, resilient value chain, and global leadership.
We are committed to working with the Water Resilience
Coalition and its more than 30 members to makeprogress against the WRC’s 2030 roadmap for collective
action. Microsoft is also advancing the development oftools and resources to enable companies to step forward
by assessing and improving their water stewardship
actions in partnership with the CEO Water Mandate.

Nature-Based Solutions Tool is a web-based
tool developed to serve as a key starting point fororganizations looking to invest in nature-based solutions(NBS), and for those wishing to learn more about benefit
identification and accounting. The tool was developed
based on and in accordance with the published
Benefit Accounting of Nature-Based Solutions for
Watersheds Guide.

California Water Action Collaborative
Convened and facilitated by Ag Innovations, theCalifornia Water Action Collaborative (CWAC) is a
network for diverse stakeholders to come together
and pursue collective action projects that will improve
California’s water resilience for people, business,
agriculture, and nature.

Advocating for water
Governments play a fundamental role in ensuring theavailability of safe and clean drinking water, maintaining
and expanding water infrastructure, protecting criticalwater ecosystems, and responding to water crises. As aleading company committed to using its voice for policy,
Microsoft has engaged in the following activities.

Supporting WaterEurope
In 2020, Microsoft joined WaterEurope, the leading
association in Europe focused on technology andinnovation aspects of water, with a focus on digitalwater. We have called for the inclusion of water-related
topics in EU polices, such as water infrastructure into
the COVID-19 recovery packages.

Promoting US water infrastructure
and resilience
Microsoft advocated for clean energy and environmental
provisions in the US Infrastructure Investment and Jobs
Act, which commits over $8 billion for western water
infrastructure and significant funding for water-related
and other resilience efforts.

1,500

The Water Action Hub
platform connects 1,500
projects with 1,000 partnerorganizations worldwide.

Water Action Hub Platform 4.0 was first presented during
the 2021 World Water Week, was developed by the CEO
Water Mandate and made possible with support fromMicrosoft. This latest version of the hub connects morethan 1,500 projects with over 1,000 partner organizations
worldwide. It also helps direct users to water tools by
Ecolab, WWF, WRI, and other leading organizations.

Governments play a key role in ensuring the availability of safe and clean water.

$8B

The US Infrastructure
Investment and Jobs
Act commits over
$8 billion for westernwater infrastructure andsignificant funding forwater-related and otherresilience efforts.

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Appendix

Key trends

1

2

Water requires a collective approach.
Companies will not be successful in managing
water stress in regions where we operate if wetry to tackle challenges independently. It will bevital to partner with a wide range of stakeholders,
including NGOs, governments, customers, andcompetitors—particularly in high-stress locations
with a limited supply of replenishment projects.
Replenishment is more thana procurement exercise.
Project oversight and monitoring of projects
with multi-year benefits, and check-ins with
implementation partners are all important. It’s
also necessary to validate the total volumetricbenefit, additional co-benefits, and project
duration through third-party quantification.
Cultivating credible partners to identify the rightproject type for each unique location is critical,
particularly for locations with limited supply of
shelf-ready projects.

2021 was a year of progress and learning for Microsoft on our journey to water positive.

3

Better water data drives action.
Utility bills only provide some of the informationcompanies need to truly understand andmanage their risk and reduce their water use
and the data typically does not arrive for months
after the water was used. By installing sensors
across our datacenters, we have been able to
track our water use in real time, allowing us
to more effectively monitor our reductions
and identify opportunities for increased water
efficiency. As we improve the quality of data
across our operations, we have learned that thetrue cost of water is not aligned with its true
value. This misalignment makes it challenging
for companies to make the business case forwater-related investments. It is something weare grappling with and will continue to explore
across our operations.

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What’s next?

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Appendix

Replenish more water thanwe consume by 2030

3

We will continue to make progress against
our 2030 replenishment commitment.
We have prioritized our investments in highstress locations where we operate and workwith partners to identify the right type of
replenishment projects that align with the uniquechallenges in each location. We will continue toprioritize opportunities to partner with otherstakeholders, including companies
that operate in the same locations.

2

Enable access to drinking waterand sanitation
We will continue to work with Water.org to makeprogress against our accessibility commitment,
providing 1.5 million people with access toclean water by 2030. Our support thus far has
focused on Brazil, India, Indonesia, and Mexico,
and will expand to include China, Malaysia,
and South Africa. We will continue to explore
water, sanitation, and hygiene (WASH) solutions
that will provide people across the globe withaccess to clean water and continue to identify
opportunities to implement them.

4

Invest in partnerships
We will continue to invest in new and existing
partnerships that will enable Microsoft to makeprogress against our commitments and help
protect water resources for future generations.
Given the collective approach required to solve
shared water challenges, we will continue tobuild on partnerships like the Water Resilience
Coalition (WRC) that bring companies together
to pool funding and invest in solutions inlocations with extreme water stress. We will also
continue to support investments through our AI
for Earth fund that strengthen water data anddrive outcomes.

Increase water efficiencies across
our operations and identify
innovative solutions
To drive water use reductions in the short andlong term, increasing efficiency is critical andit must be paired with innovation to ensurebusinesses can continue to operate in an
unpredictable future with increasing water
challenges. As we identify innovative approaches
that work, we look forward to scaling these within
Microsoft and sharing them outside of our four
walls to further reduce pressure on the sharedwater resources we depend on.

5

Evaluate water impacts beyond
our operations
We recognize that water is a challenge notjust across our operational footprint, butalso across our value chain. We will continue
to explore ways we can support suppliers inunderstanding and managing their water risks.
We also recognize that water and energy areinterlinked. Energy is required to pump andtransport water and similarly water is required
to produce electricity. We will continue tostrengthen our understanding of the ways
our energy procurement decisions can affectwater resources.

6

Identify technology adoption
opportunities for water
We will use the investment from our Climate
Innovation Fund into Emerald Technology
Ventures to identify technology adoption
opportunities for emerging water technologies
that can help Microsoft achieve our water
positive commitment and support our customers.

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Resources
How Microsoft plans to become water
positive by 2030 video
Get inspired by our strategy.
Find out
more here

Microsoft is committed to sharing
our progress, challenges, learnings,
and best practices throughout oursustainability journey.

Water Action Hub 4.0
Identify organizations to partner with in specificbasins and use a wide range of tools and case studies.
A new tool allows companies to evaluate their water
management maturity and compare progressagainst peers.
Find out
more here

Volumetric Water Benefit Accounting(VWBA)
This guidance document provides corporate water
stewardship practitioners with a standardized approachand set of indicators to quantify and communicate
the volumetric water benefits and complementary
indicators of water stewardship activities.
Find out
more here

Water Risk Monetizer
Use this free tool, built by Microsoft and Ecolab,
to assess the true value of water and risk exposure
you face.
Find out
more here

WRI Aqueduct Tool
Use this tool to understand the local water stressand scarcity concerns where you operate.
Find out
more here

Water quality monitoring tutorial
Learn how to create a water quality
monitoring application in Azure IoT.
Find out
more here

Water consumption monitoring tutorial
Learn how to create a water consumption
monitoring application in Azure IoT.
Find out
more here

We are committed to becoming a water positive company by 2030 and helping other companies on their journeys.

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Zero waste

61

Appendix“We hope that our circular
economy investments andapproaches will inspire thebroader sector in the same
way as our carbon negative
goal. Everyone must do
their part.”
Dr. Lucas Joppa, Chief Environmental Officer

Contents
Our approach

62

Getting to zero waste

65

Driving transformation

69

Enabling systems change

71

Key trends

74

What’s next?

75

Resources77

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Appendix

Our approach

Our commitment
to a zerowaste future

The context
Every year, people consume 100 billion tons of materials,
and in 2020 only 8.6 percent of those materials werecycled back into the economy after use, according to the2021 Circularity Gap Report. Linear systems and existing
infrastructure are not adequate to maintain, collect, andredistribute materials effectively for a global circular
economy. As a result, waste, including plastics, e-waste,
and food waste, pollutes our land, clogs our waterways,
depletes natural resources, and contaminates the air
we breathe.
We recognize the urgent need to protect the world’s
biodiversity and ecosystems, give equal access to a safeand healthy environment, reduce carbon emissions
associated with the creation and end-of-life of thesematerials, and meet the needs of a growing population.
As a company that makes and manufactures devices,
as well as uses manufactured goods in our campuses,
datacenters, and operations, we have an obligation to
responsibly source materials and an opportunity to build
a more circular approach into our work and the world.
To reach our commitment to become a zero wastecompany by 2030, we are taking an increasingly circularapproach to materials management to reduce waste
and carbon emissions. Our strategy goes beyond waste
diversion as we work across our value chain beginningwith design and material selection. Wherever possible,
we reduce the amount of materials needed.
We responsibly source materials for our operations,products, and packaging. We are increasing the use ofrecycled content, selecting recyclable or compostablematerials, reducing hazardous substances, and designingout waste. We keep products and materials in use longer
through reuse, repair, and recycling programs.

Our commitment: zero waste by 2030 across our
direct waste footprint
Increasing reuse of servers andcomponents through Circular Centers

Driving to zero waste operations

By 2025, 90 percent of servers and components
within our regional datacenter networks will
be reused.

We will achieve 90 percent diversion of operational
waste at datacenters and campuses and 75 percent
diversion for all construction and deconstruction
projects by 2030.

Eliminating single-use plastic

Transforming waste accounting

By 2025, we will eliminate single-use plastics inall Microsoft primary product packaging and all
IT asset packaging in our datacenters.

We will continue to improve waste data accounting
to ensure accuracy, auditability, and reporting.

Making fully recyclable products
and packaging

Investing in the future of circularity

We will design Surface devices, Xbox products andaccessories, and all Microsoft product packaging to
be 100 percent recyclable in OECD countries by 2030.

We will partner with companies around the world
to drive circular economy innovation and adoptionof technologies to reduce waste and reuse materials
and products.

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Appendix

Our approach (continued)
Our progress

Circular Centers

18% reduction

We have planned five Circular Centers, with
Amsterdam open, construction underway
in Boydton, Virginia, and three more to be
added in Dublin, Chicago, and Singapore
in 2022. This has projected savings of$100 million per year once fully scaled andwill enable 90 percent reuse by 2025.

We reduced single-use plastics in our
Microsoft product packaging by 18 percent
or from 5.7 percent to 4.7 percent by weight(on average) of plastic per package in FY21.

>15,200
metric tons

>90% recyclable

In FY21, we diverted more than 15,200 metrictons of solid waste otherwise headed tolandfills and incinerators across our direct
operational footprint.

We achieved a 97 percent recyclable
Xbox Series X and S, and a 93 percent
recyclable metal Surface Laptop 4,
in Organization for Economic Cooperation
and Development (OECD) countries per
the UL methodology ECVP 2789.

Zero Waste
datacenters
Four datacenters are Zero Waste certified,with new certifications for the San Antonio,
Texas and Quincy, Washington datacentersand renewed certifications for our Boydton,
Virginia and Dublin, Ireland locations.

Zero Waste
campusroadmaps
Eleven campuses now have customized
roadmaps to achieve zero waste by 2030.
Our Puget Sound campus has been Zero
Waste certified since 2016.

Transformed
Recycled waste
waste accounting materials

Invested in
Rheaply

We transformed our waste accounting using
Microsoft technology, including PowerApps,
Dynamics 365, and Power BI, increasing ourcollection of actual waste data and providing
greater visibility into waste types.

We invested in circular economy startup
Rheaply to help companies measurecarbon emissions savings from reuse
and fuel the circular economy.

We introduced two new accessories that are
made in part from recycled waste materials:
several new Xbox Wireless Controllers, built
using over 30 percent post-consumer recycled(PCR) materials; and the Ocean Plastic Mouse,
which has a plastic shell made with 20 percent
recycled ocean plastic.

A year of progress and impact to get to zero waste by 2030.

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Appendix

Our approach (continued)
Waste Table 1

Waste Table 2

Working towards our target to divert 90 percent of operational solid waste from landfills andincinerators across our owned datacenters and campuses

Ensuring 90 percent of servers and components for all cloud hardware will be reused by 2025

In FY21, our diversion rate remained nearly flat from FY20, and we diverted more than 12,600 metric tons of wastefrom being landfilled or incinerated. Employees working from home was one of the main drivers of the decreaseof over 44.4 percent in total waste generated.

Diverted:A

Not diverted: D

ReusedB

Recycled

Incinerated

E

Landfilled

C

The main drivers of our reuse percentage are the functional equipment that is remarketed (either whole orparted-out), or materials that could be reused after the recycling process. In FY21, a reduction in the volume
of decommissioned assets and increase in the volume of recyclable material in the mix contributed to theoverall reduction in the reuse percentage. Expansion of our Circular Centers program and investments in systems
and policy changes will further enable us to achieve our 90 percent reuse target of servers and components by 2025.

Composted

ReusedReuse rate

Diversion rate
FY19

Base
year

B

A

FY20

A

Current
FY21
year

A

0%

C

B

C

B

20%

40%

C

60%

85%

D

E

77.7%

D

E

79.4%

Base
year

D

E

78.4%

Current
FY21
year

80%

90%
Targeta. Waste generation values and classifications have been updated for FY19 and FY20 to beconsistent with data collection and estimation methodology improvements established in
FY21. As we continue improving our waste accounting, our reported values may change.

100%

FY19

87%
76%

FY20

0%

20%

40%

60%

80%

90%

100%

Targeta. Our program and supplier data quality has consistently improved over the years. Access to moreaccurate data has helped us update our methodology for percentage reuse calculation. For consistency,
previously reported years have been updated to reflect latest methodology applied to FY21.

Overview

CarbonWater

Getting tozero waste
To meet our commitment to being
zero waste by 2030, we are reducing,reusing, and diverting waste in our
campuses and datacenters. We arealso focused on keeping our products
and packaging in use longer by
designing for circularity.

Waste

Ecosystems

65

Appendix

Campuses and datacenters
Our operations are a considerable part of our waste
footprint. Getting to zero waste requires more ambitious
efforts to reduce as much waste as we can, reuseproducts to extend use life, and recycle or compost
wherever possible, as well as thinking through everythingfrom visitor badges to server racks with circularity
in mind.

Building a circular cloudAt Microsoft, we have taken a first-of-a-kind approach
towards designing and implementing circularity into
our cloud, aligning our end-of-life dispositioning
processes with an integrated plan across the entire
supply chain. It starts with sustainable design andresponsible sourcing of an asset. We use our assets aslong as we can effectively, then reuse what we can toextend hardware life. After decommissioning, we movetowards a diversified approach, ensuring that assets aredispositioned to optimize value, security, compliance,and sustainability. Over the past year, we engaged new
suppliers who are able to remanufacture assets andcomponents, effectively enabling new lifecycles for ourassets. We have successfully demonstrated takeback/buyback models with our original asset suppliers, closing
the loop on assets and enabling suppliers to repurpose orreuse assets and components, returning higher financial
benefits as well as significant sustainability outcomes forcarbon emissions reduction and material recovery.
We have built Circular Centers inside our large datacenter
campuses to intercept and process all decommissioned
assets. These include an intelligent disposition androuting system using Azure SQL, Power BI, andEmbedded Power Apps integrated with Dynamics
365, which determines the optimal route for every
component, creating a plan for every part, extending
useful lifecycles well beyond the datacenter, andengaging our upstream and downstream suppliers.

Reusing datacenter hardware via Circular Centers.
The Circular Centers are also a significant contributor
to our spares program, using harvested components
from decommissioned assets to repair cloud hardware.
Increasingly, such approaches are creating more value
and enabling greater resilience across our supply chain.
Our circular cloud will enable 90 percent reuse of
datacenter hardware by 2025, significantly contributing
to our goal of achieving zero waste datacenters by 2030
and goal of more than 50 percent emissions reduction
by 2030.

Reusing cloud hardware via Circular Centers
A critical piece of achieving our zero waste goal ismanaging e-waste from our growing datacenters.
Last year, we piloted a new approach to asset reuseby building a Circular Center within our Amsterdam
datacenter campus, which represents 7 percent of ourserver capacity globally. We process decommissioned
cloud hardware to service strategic routes, secondary
markets, and suppliers, using intelligent routing softwarein combination with Dynamics 365.

90%

Our circular cloud will
enable 90 percent reuseof datacenter hardwareby 2025.

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AppendixGetting to zero waste (continued)
Over the past year, our Amsterdam Circular Center model
has achieved 83 percent reuse and 17 percent recyclingof cloud hardware. Based on the success of the pilot,
we’re expanding to five additional campuses in the US(Boydton, Chicago, Quincy), EMEA (Dublin), and APAC(Singapore) regions, and extending this model to mostof our cloud computing assets. This program should
achieve 90 percent reuse by 2025 with projected savingsof approximately $100 million each year, once scaled.
We also seized opportunities to become more resilient,build better ties with communities, and increase
collaboration with upstream and downstream partners.
We’re bridging the skills divide in our datacenter
communities by supporting technical training programs
at community colleges, vocational schools, andother education institutions. This work depends on
decommissioned and excess datacenter equipment
to facilitate the “hands-on” labs called Datacenter
Academies in datacenter communities.

Zero waste datacenters75%

Our goal is 75 percent
construction anddeconstruction waste
diversion for all projects.

90%

Our goal is
90 percent waste
diversion for campus
projects over 75,000
square feet.

Zero waste campuses
We’ve created a roadmap for key zero waste initiatives foreach campus and committed to Zero Waste certifications
by 2030 for all Microsoft campuses. LinkedIn’s new
campus in Omaha opened in 2021 with a focus on zerowaste, which led to the team utilizing reclaimed wood
wherever possible, including tabletops, lockers, andstairs. 52 percent of the wood on the project is reclaimed
and the remaining 48 percent is FSC certified.

Construction waste diversion
Microsoft has a goal of 75 percent construction waste
diversion for all projects and 90 percent for campus
projects over 75,000 square feet. To reach these goals,
Microsoft and LinkedIn are refining RFIs for vendors,
standardizing waste tracking and reporting, andestablishing a decommissioning partner to ensure that
our used furniture and materials are reused. Our Puget
Sound campus modernization project included
deconstructing 12 existing buildings.

We found multiple reuse opportunities, including using
concrete waste for temporary roads and fill for the newcampus, and recycling ceiling and carpet tiles into newtiles. Our Puget Sound project is currently achieving over
90 percent diversion.

Reducing waste in campuses
Last year, we began the rollout of recyclable paper visitor
badges to Microsoft sites globally, which will help avoid
seven tons of plastic waste annually. Additionally, we’reestablishing new programs to reduce food waste, othersingle-use plastics, and virgin finite materials. Across Asia,
sites like Singapore are utilizing sustainable meal boxes
to cut down on waste generation. Similarly in Japan,
a new reusable cup initiative launched in July 2020 has
completely phased out disposable cups and is estimatedto potentially save 960,000 paper cups annually.
Our Istanbul site is using solar powered compost tanks
to reduce waste by 1,000 kg each month.

Microsoft has a goal to achieve 90 percent diversion of
datacenter operational waste by 2030. To reach this goal,
we’re working closely with our waste haulers to optimize
waste diversion programs across our global datacenter
portfolio. We’re also partnering with third-party industry
experts to investigate options for hard-to-recycle
materials, such as air filters used in our datacenters.
Exploring innovative partnerships and solutions to
reduce waste and transition to a circular economy are
key strategies for achieving our 2030 goal. In FY21, we
achieved Zero Waste certifications for our San Antonio,
Texas and Quincy, Washington datacenters and renewedcertifications for our Boydton, Virginia and Dublin,
Ireland locations.

Our Puget Sound modernization project is currently achieving over 90 percent construction waste diversion.

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AppendixGetting to zero waste (continued)
DevicesZero waste for our devices and packaging means taking acircular economy approach to design out waste and keepmaterials in use longer. We are extending the lifespan ofour devices through programs like “Design for Repair”;
we are designing our devices and packaging to use fewer
materials and to be increasingly recyclable; and we aresupporting reuse, repair, refurbishment, and recycling
infrastructure to ensure that Microsoft devices are kept in
use longer. We’re also increasing use of recycled material
in our own devices, accessories, and packaging.

Shifting to recycled materials
Ocean plastics
In October 2021, we launched the Ocean Plastic Mouse
which has a shell made with 20 percent recycled ocean
plastic, the first consumer electronics application of thismaterial. Going beyond just ocean-bound plastic, whichis plastic that is collected within 50 km from shorelines,
each mouse contains resin made from recycledwater bottles taken directly out of oceans, beaches,
and waterways.
The launch of the Ocean Plastic Mouse is a small step on
our longer journey to use innovative recycled materials.
The resin is now available for others to use in theirown products to help address the global challenge ofocean plastic.

Post-consumer recycled plastic
Over the past year, we have used more post-consumer
recycled (PCR) plastics in our products, including Surface
power supply units, Surface devices, Xbox consoles andcontrollers, and PC accessories.
With the new Electric Volt and Daystrike Camo Special
Edition controllers, we incorporated 30 percent PCR
resins into the external housing and 50 percent PCR
in the internal midframe for the first time in any Xbox
hardware. Following in their footsteps came the Aqua
Shift controller, four variations of the Space Jam New
Legacy controllers, and our Xbox Design Lab series ofcontrollers. These controllers contain a portion of resins
made from recycled materials like automotive headlightcovers, plastic water jugs, and CDs. Our testing shows
the materials provide the same controller durability andperformance gamers have come to expect. With there-launch of our Xbox Design Labs, we have incorporated
the same PCR resins into 75 percent of all Xbox Design
Lab controllers.

Zero waste for our devices andpackaging means taking a circular
economy approach to design
out waste and keep materials
in use longer.

Post-industrial recycled materials
We are developing opportunities to reuse manufacturing
scrap in aluminum production, allowing us to use lowercarbon, 100 percent post-industrial recycled closed loop
aluminum for future Surface computer housings. For our
neodymium magnets, a rare earth material, we arealso exploring post-industrial scrap as a manufacturing
feedstock, which would enable us to produce 100 percent
recycled neodymium in magnets for future products.
Repurposed inventory
Textiles at Microsoft are normally used on Surface
palm rests and type covers. However, given the uniquechallenge of the COVID-19 pandemic, we experimented
with scrap Alcantara fabric and repurposed it into
a product engineered to be a reusable, premium,and comfortable three-layer face covering forMicrosoft employees.

Starting in late 2021, Xbox Series S became our first
console to incorporate PCR resins into the manufacturingof the body and various internal components. To date,
we have incorporated approximately 28 percent PCR
into the product’s overall design without compromisingquality or durability. We are now investigating ways
to incorporate more PCR into the design along with
reducing wall thickness to utilize less material overall.

The Ocean Plastic Mouse is the first consumer electronics application of recycled ocean plastic.

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AppendixGetting to zero waste (continued)
Reducing waste in production

Designing for recyclability

Responsible end-of-life

Traditionally, many materials used in the production ofdevices are made using industry-standard computer
numerical control (CNC) manufacturing. With CNC,
the shape of the product component is cut out of alarge block of raw materials after which the excess is
discarded. To reduce waste in production, we havestarted to introduce material “stamping” techniques inour manufacturing which instead mold the raw materials
to the desired end shape. For our new Surface Laptop
Studio, stamping reduced our manufacturing aluminum
scrap rate for the product’s base by at least 25 percent.

Sustainable packaging

We have focused on enabling responsible endof-life with our devices, processes, and materials.
To ensure products are kept in use longer, Microsoft
and our partners work to repurpose or recycle useddevices through several programs while encouraging
consumers to engage with recycling programs intheir own communities. Examples include Microsoft’s
Devices Trade-In Program, our Microsoft Authorized
Refurbisher Program (MAR), and our voluntary mailback
recycling program.

Enabling repair
Repairability and serviceability can extend the lifespan ofour devices. In 2021, our Design for Repair engineering
program helped launch the Surface Pro 8, the Surface
Laptop Studio, and Surface Laptop SE, which areconsidered to be some of the most repairable devices intheir product lines with replaceable displays, batteries,
keyboards, and more. We have also established agrowing Authorized Service Provider (ASP) network to
expand customer repairs across countries including theUnited States, Canada, Australia, Germany, and France.
We recently partnered with iFixit to offer service tools
for Surface devices to iFixit Pro independent repairers,
Microsoft Authorized Service Providers, Microsoft
Experience Centers, and Microsoft Commercial
customers which can be purchased directly from
iFixit. Our goal is to continue to expand safe, secure,and sustainable repair options for our Surface andXbox devices.
Microsoft has also committed to hiring an independent
consultant to conduct a study on the sustainability
benefits of repairable Surface and Xbox devices,
including impacts on carbon emissions and waste.
Microsoft will publicly post a summary of our findings
on our website by May 2022.

As we make progress on our 100 percent recyclable
packaging goal for all devices by 2030, our Ocean Plastic
Mouse and new Surface Slim Pen, available in 2021, arethe first of our products to ship in 100 percent recyclable
and plastic-free packaging. The Ocean Plastic Mouse
packaging is comprised of 20 percent wood fiber, which issustainably forested, and 80 percent Bagasse fiber, a fastgrowing and highly regenerative bio-renewable material.
The packaging for our holiday 2021 Surface products—
such as Surface Duo 2 and Surface Pro 8—are 99 percent
recyclable on average. And, starting with our Surface
Laptop 4 packaging launched in April 2021, all of our new
packaging is made with 100 percent sustainably forested
content as certified by the Forest Stewardship Council(FSC). We also eliminated a single-use plastic product,
converting our Xbox gift cards from plastic to paperboard,
reducing over 500,000 kg of plastic annually.

100%

Packaging for Ocean Plastic Mouse andSurface Slim Pen are 100 percent recyclable.

500,000 kg
We eliminated a single-use plastic
product, reducing over 500,000 kgof plastic annually.

Recyclable devices
Driven in large part by both materials selection anddesigning for disassembly—a natural byproduct ofdesigning for repair—we produced a Surface Laptop
4 (metal version) that is 93 percent recyclable in OECD
countries by UL standard ECVP 2789. Our Xbox Series X andS were also found to be 97 percent recyclable as a part ofMicrosoft expanding its recyclability commitment to also
include Xbox and Xbox accessories.
Complex flame retardants, additives, and polymer grades
used in consumer electronics make recycling of many
plastics at end-of-life difficult. Microsoft is collaboratingwith suppliers in the industry to explore a closed loop supply
chain for these difficult-to-recycle materials. Using end-oflife plastic material from Xbox consoles, PC accessories, andmore, we’ve created a new closed-loop recycled resin thatis being evaluated for use in upcoming products.

75%

of all Xbox Design Lab controllers now
utilize post-consumer recycled plastic.

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Drivingtransformation
We believe that Microsoft’s mostimportant contribution to waste
reduction will come not from ourown work alone, but by helping ourcustomers, partners, and suppliers
around the world reduce their waste
footprints through our learnings
and with the power of data, AI, anddigital technology.

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69

Appendix

Implementing a circular model that minimizes waste
requires interventions up and down the value chain—innovative design, materials, service business models,reuse and redistribution processes, collection, processing,and more.

Collecting e-waste for responsible recycling in India.

To achieve multiple uses for a material, many of theselevers need to be used at once and require coordination
with a diverse set of stakeholders. Technology can play arole in bringing data transparency of material flows andconnectivity for business and consumer engagements.
We believe that Microsoft’s most important contribution
to waste reduction will not come from our own work
alone, but by helping our customers, partners, andsuppliers around the world reduce their waste footprint
through our learning and with the power of data, AI,and digital technology.
That said, our own operations are our best laboratory
for innovation. In FY21, we invested to digitize waste
data across the company and identified opportunities toimprove data collection. We used Microsoft technology
to track and report on materials and waste, developing
PowerApps for facility managers, APIs to directly connect
with recycling vendors, Dynamics 365 to aggregate bulk
data, and the Power BI platform to visualize data acrossportfolios. We now have more consistent, high-quality
data about the amount of waste, the type and quality,
where it is generated, and where it goes, informing
strategy to achieve our targets.

Customers and partners
We are dedicated to using our technology to help
customers, partners, and suppliers around the world
reduce their waste footprints through our learnings andwith the power of data, AI, and digital technology.

Tackling India’s e-wastewith a secure cloudStartup Karo Sambhav is taking on the seemingly
impossible task of formalizing India’s e-waste
economy.
Roughly 7,200 tons of e-waste
lands in India’s capital
city from across the country and abroad every day.
When a team collects a waste shipment from anaggregator, its members upload photographs anddetails into an app. This information is hosted securely
on Microsoft Azure. Karo Sambhav is operating in
28 states and three union territories in the country
today. It had engaged with more than 500 companies
and government institutions, 22,700 schools, 5,000
informal sector aggregators, and 800 repair shops as ofDecember 2020 and was able to collect and send about
8
12,000 metric tons of e-waste
for responsible recycling.

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Appendix

Driving transformation (continued)
Blockchain to power the plastic
reduction ecosystem
Plastic Credit Exchange (PCX), a nonprofit organization
with origins in the Philippines, partnered with Microsoft
to develop a blockchain-protected credit registry
for the first global nonprofit plastic offset program,effectively reducing the flow of plastic waste into ourlandfills and oceans. PCX has built a wide ecosystemof partners to facilitate the recovery, transport, andprocessing of post-consumer plastic waste, seeking
out the most environmentally recommended solutions
available. The company undergoes verification via athird-party audit using its Plastic Pollution Reduction
Standard and results are made public through an
online registry. PCX now uses a Microsoft Azure-based
blockchain solution to provide confidence, traceability,
and transparency within its ecosystem. By the end of2021, PCX is projected to have enabled the removalof approximately 37 million kilograms of plastic waste
10
from the environment.

Waste and recycling digital transformation
Australian businesses export around 6,700 consignmentsof waste each year. As of January 2021, the Australian
Department of Agriculture, Water, and the Environment(DAWE) requires that any business that wants to export
waste glass must apply for a license. Working with
Atturra and Microsoft, DAWE created a digital platformusing Dynamics 365 to streamline the application
process for both exporters and department personnel
while keeping data secure and private. The system also
provides detailed national-level data on exports of waste
in near-real time, improving Australia’s understanding of
the evolving circular economy and providing an evidencebase for future policies.

Creating a more sustainable fashion
supply chain
H&M Group is on a mission to lead the charge towards
a more sustainable fashion future. As part of its efforts,
in March 2020 the Group launched Treadler, a B2B service
that offers access to H&M Group’s supply chain to other

BeachBot uses AI to spot cigarette butts, pluck them out, and dispose of them in a safe bin.

fashion brands across the industry. Treadler’s clients
will have the necessary data to make more sustainableproduct development, sourcing, production, andlogistics decisions. From selecting materials to choosing
suppliers and factories, these sustainable choices canbe traced across the H&M Group’s global supply chain
and put towards global sustainability goals for theentire fashion industry. Microsoft supported Treadlerin the development of its technology infrastructure
and backbone. To ensure deployment was fast, Treadler
was supported by the Microsoft team to help guidea successful and efficient implementation. Treadler isalso rolling out a dashboard that will help clients better
consider manufacturing impacts as they place orders,and provide information about the sustainability
performance to make even more informed decisions
about sustainability.

Cleaner beaches with AI and robots
Every year, 4.5 trillion cigarette butts end up in theenvironment. When water touches discarded cigarettebutts, the filters leach more than 30 chemicals that arehighly toxic to aquatic organisms. TechTics is working
on a solution to resolve this environmental and social
issue with technology. It has built a mobile beachcleaning machine called BeachBot, which uses AI withthe help of Azure infrastructure and Microsoft Trove tospot cigarette butts, pick them up, and dispose of themin a safe bin. The beach rover’s AI system is trained torecognize cigarette butts, based on photos submitted via
Trove by the public. This responsible approach to AI helps
contributors to the project feel like they are part of alarger community tackling cleanup in their environments.

37M

By the end of 2021, PCX
is projected to haveenabled the removalof approximately
37 million kilogramsof plastic waste fromthe environment.

Overview

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Enabling
systems change
We are focused on new ways toharness the power of technology,
partnerships, and investments to drive
impact at scale and pace to help theworld more effectively transform toa circular economy.

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Circular materials management requires all stakeholders
to participate in the transition from discarding materials
to reusing them. Appropriate infrastructure andtechnology are important factors needed to actualize
this vision while minimizing environmental impact.
To enable and accelerate the circular economy, the worldmust consider what materials are used, how goods are
manufactured, how products are used and reused, how
and where materials are collected at end-of-life, and how
they are brought back into the supply chain.

Funding innovation via CIF
The Climate Innovation Fund (CIF) invests in technologies
and processes that can reduce the amount of waste
generated by repurposing waste into other usable
materials and products and enabling the continuous safeuse of natural resources.
In 2021, we invested in Rheaply, a technology-enabled
platform that brings together companies, government,
educational institutions, and more to generate increased
visibility and circularity of physical assets. Rheaply allows
for transfers of materials that may otherwise go to waste
and is building insights around waste diversion andembodied carbon emissions saved on the platform.

In FY21, we kicked off an internal pilot with Rheaply
to better understand the opportunity for creating aninternal hardware reuse program. We aim to extend
the life of internal hardware turned in for recycling,creating a standardized, scalable, traceable, and circular
program for our assets prior to responsibly recycling.
We are also seeing impact from our 2020 Closed Loop
Partners fund investments, including the following
developments in their portfolio.
Turning waste into clean energy
HomeBiogas (HBG), based in Israel, is a leader indeveloping affordable, simple-to-use biogas systems,
enabling people and businesses around the globe to turntheir own organic waste into renewable energy and liquid
fertilizer on site. A typical household can save six tons of
CO2 emissions a year with the entry-level biogas system.
HBG serves over 10,000 households across more than
100 countries. The company has improved the circularityof the products themselves—lengthening the shelf life
to over 15 years, and making the materials used for thedigester 100 percent recyclable. Closed Loop Partners,
an early investor of HBG, currently represents the largest
ownership stake in the company, which currently trades8on the Tel Aviv Stock Exchange.
Providing a model for circular economy infrastructure

Circular materials management requires the transition from discarding materials to reusing them.

Balcones Resources, the largest privately held recycling
company in Texas, became the Closed Loop Leadership
Fund’s inaugural investment in October 2019. As part of
Balcones’ growth strategy to build best-in-class recycling
operations across the southern United States, thecompany closed a bolt-on acquisition of Single Stream
Recyclers (SSR) in 2020. SSR is the first AI-powered
recycling company in the United States. Balcones’s facility
in Austin, Texas processed 136,000 tons of high-quality
recyclable materials in 2020, including 80,000 tons ofpaper, more than 20,000 tons of glass, and at least 4,000
8
tons of plastics.

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Enabling systems change (continued)
Investing in AI

Using AI and robotics to accelerate the world’s transition to the circular economy.

Through our AI for Earth program, we are supporting
startups and nonprofits using cloud, data, and AI toaccelerate the pace of innovation in waste, including
the following projects.

Using AI to study the sustainability of housing
demolitions and relocations
The University of Connecticut is applying AI to detect
construction changes between the years of 2014, 2017,and 2020 in Shanghai, China. The purpose is to find out
whether demolition and relocation has led to substantial
waste of resources.

Seeing trash and targeting local actions
using AI
Let’s Do It Foundation has developed an AI algorithm
for detecting trash in geolocated images. Today, thealgorithm is surveying images all over the world, locating
waste on a global scale so that a network of cleanup
teams and local municipalities can target the mostaffected locations.

Revolutionizing the waste
management industry
Recycleye uses AI and robotics to revolutionize the waste
management industry, accelerating the world’s transition to thecircular economy. In 2021, Recycleye scaled from research anddevelopment to commercialization with strategic and technicalsupport from Microsoft. The company brings greater transparency

to the waste management industry by detecting materials on a waste
management facility’s conveyor belts to deploy automated sorting.
Their operating system is built on Microsoft Azure, ensuring data
and model security, as well as scale. To train the Recycleye Visioncomputer vision solution, millions of images and data points havebeen collected from waste facilities. As Recycleye’s datasets continue
to grow, the company can easily scale up its Azure resources in linewith requirements.

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Appendix

Enabling systems change (continued)
Driving collective action
Transitioning to a global circular economy takes anecosystem of aligned partners. We seek transformational
partnerships that help develop and deliver research,guidance, and implementation roadmaps that enable
the circular economy.
Collaborating as a Partner to the Ellen
MacArthur Foundation
In July 2021, we advanced our relationship with theEllen MacArthur Foundation from Member to Partner,
elevating opportunities for Microsoft employees to learn
and engage on topics of the circular economy throughcommunity platforms, workshops, events, courses,
and collaborative projects.

Driving standards with the Capital Equipment Coalition
North America
In January 2021, Microsoft became a founding memberof the Capital Equipment Coalition North America
alongside DLL, GE Digital, Philips, and SAP and in
partnership with the U.S. Chamber of Commerce
Foundation and the Platform for Accelerating the Circular
Economy (PACE). We joined the Coalition to support thecapital equipment industry’s acceleration to a closed
loop model that preserves and recovers the value ofmaterials across a product’s lifecycle, leading to reduced
waste and carbon emissions. As a group, we’re working
towards circularity standards and methodology thatmeasures the environmental impacts of “X as a Service”
models compared to traditional ownership models.

10

Microsoft iscollaborating with
10 other companies totest circular packaging
solutions to replacestretch wrap packaging.

Leading on packaging innovation
In January 2021, Microsoft kicked off a project withmembers of the Ellen MacArthur Foundation Network(including Aquafil, BASF, Berry Global, CHEP/Brambles,
Cisco, the Estée Lauder Companies, Flex, Mainetti, Mondi,
and SCG) to create a circular packaging solution to
replace the existing linear path plastic-based stretch wrapthat is used to stabilize and protect products in transit.
This cross-sectoral group is researching and piloting
three different pathways to eliminate single-use stretch
wrap used in a linear path: replacing stretch plastic witha compostable film, implementing reusable materials forsecuring pallets, and improving the recovery of singleuse, linear plastic-based film for higher value and closed
loop recycling solutions. The pilots and results will be
detailed in a white paper to be published in Q2 of 2022.

Delivering research, guidance, and roadmaps that enable the circular economy.

Designing new solutions with CircularElectronics Partnership
An alliance of international organizations and theirmember companies, the Circular Electronics Partnershipis committed to driving a coordinated transition
towards a sustainable and economically viable circularindustry by creating alignment, avoiding duplication,and stimulating ambitious circular action across theelectronics value chain. The Partnership builds off thecollaboration that produced A New Vision for CircularElectronics and convenes seven global organizations
and their respective members: the Global Electronics
Council (GEC), the Global Enabling Sustainability Initiative(GeSI), International Telecommunications Union (ITU),
Platform for Accelerating the Circular Economy (PACE),
Responsible Business Alliance (RBA), World BusinessCouncil for Sustainable Development (WBCSD), andWorld Economic Forum (WEF). The partnership is thefirst time that experts, business leaders, and internationalorganizations will co-design solutions around thecircular electronics industry and will establish a network
to elevate the action and ambition of the industry in acoordinated way.

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Key trends

1

2

Circularity supports decarbonization pathways.
Implementing circularity activities like purchasing
recycled materials, offering a service model, or
keeping materials in use longer can reduce theembodied carbon of materials. Circularity plays
a key role in reaching our carbon negative
commitment to reduce our Scope 3 emissions
by half by 2030.

FY21 was a year of progress and learning for Microsoft on our journey to zero waste.

Waste data tools optimize quality and time.
In FY21, we invested to digitize waste data acrossthe company. We now have more consistent,
higher-quality data about the amount of waste,
its type and quality, where it is generated, andwhere it goes. As we implemented waste data
tools across the entire company, we saved timecollecting and reporting this data from ourcross-company sustainability managers
to executive leadership, to customers andregulatory bodies.

Equity and economy are equally importantin a circular economy.
To date, the primary focus of a circular economy
has been on the “economy” aspect. Equity isequally as important, and we need to focus ona just transition for every person, organization,and community. The world must address thedisproportionate effects of upstream resource
extraction and downstream waste management
and pollution. It is critical to develop a strategy
that ensures under-represented and underresourced communities are not left behind in
the transition to a circular economy.

Circularity still lacks common standards
needed to scale.
Circular economy initiatives do not share astandard method of measurement acrossindustries or product types and may not always
accurately represent environmental impact.
To scale implementation in the long term, weneed the enabling infrastructure to measure,monitor, and verify material origin and flows.

3

4

5

Zero waste roadmaps need sitelevel adaptability.
Planning for waste interventions must be
considered throughout the value chain and by
location. Upstream decisions like procurement
and use of materials affect downstream
management and processing of materials
as eventual waste. Location also affects zerowaste implementation, and a certain degree ofcustomization can ensure alignment to global
efforts while contextualizing the program for
local realities. While there are best practices
that can be shared and replicated on a global
scale, there are unique characteristics for each
campus, such as its local infrastructure, size, or
dining services. Creating a localized approach tozero waste drives local ownership and program
effectiveness, while also laddering up to a
global target.

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Appendix

Continue towards zero waste
by 2030

3

We will scale programs such as our CircularCenters and the elimination of single-use plastics
from packaging for Microsoft products andwithin our supply chain. Across the company,
we are using baseline data to inform annual
roadmaps that will result in meaningfulenvironmental outcomes for our employees,
consumers, and the diverse communities inwhich we operate.

2

Build circularity into our contracts
We will work upstream to develop better
materials, including recycled materials, andensure contracts are in place to support circular
processes. We are also contracting with suppliers
to engage in reverse logistics models and takeback programs for waste reduction and reuseof packaging materials. From downstream
waste haulers, we are contractually requestingdata transparency, optimization of services,and waste sorting education to promote zerowaste outcomes.

Use our voice to align waste
and circularity standards

5

We will help to drive standardization acrosscircularity standards within the Capital
Equipment Coalition and use our voice tocoalesce industries towards a set of principles
to promote circular economy progress. There isan opportunity for cross-industry collaboration
for waste and circularity data standards, including
a framework for capturing reliable and consistent
data and methodologies.

4

Implement circularity to reduce
embodied carbon
We are continually exploring design changes,
material selection, and business processes tofacilitate deep embodied carbon reductions
across our operations and products. We are
analyzing the optimal use of conventional
materials, such as concrete and steel, andpursuing more ambitious opportunities withemerging alternative materials that carrysignificantly less embodied carbon.

6

Advance waste data tools
Building on our FY21 work to transform ourwaste accounting, we will continue to improve
our waste data tools so they more accurately
model business activity. The ability to forecast
environmental impacts will drive upstream
sustainable decision-making that minimizes
waste and associated carbon emissions. It will
also help us understand the environmental
impacts of circularity practices like reuse, repair,redistribution, and recycling. We are exploring
the best methods to account for this, such asmeasuring the per-year and absolute carbon
footprint of a product.

Increase employee engagement
In FY22, as new recycling initiatives are deployedat the Circular Centers, we are focused on
further iterating operational procedures andtraining for zero waste practices. We are alsobuilding design guidelines for engineers thatdefine principles for circular, low-carbon hardware.

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7

Expand our circular strategy
in devices
Our work around recycled content, repairability,
recyclability, and material efficiency continues togrow. Our framework for circularity will accountfor each phase of the device lifecycle and alignwith leading industry reporting standards andforthcoming circularity legislation. We will
also continue expanding programs, such as
the Microsoft mailback program, to ensure
consumers around the world have access to aneasy, convenient, and free service for returning
their Microsoft branded devices and packaging
for reuse, refurbishment, or recycling. By theend of FY22, Microsoft plans to implement the
mailback program in 40 countries.

8

Scale the circular cloud
We are deploying new Circular Centers in Dublin,
Chicago, and Singapore by July 2022. We alsoplan to launch a Circular Center in Quincy,
Washington in 2022, followed by Sweden in
2025. Working with our internal and external
partners, we will develop new dispositions
that maximize reuse and minimize waste.
In addition, we are exploring additional circularity
functionality, such as harvesting for spares andwarranty reuse, scaling buyback to network
hardware, and providing recycling support—
all of which can be performed at the CircularCenters. We are also working with our logistics
packaging partners to reduce single-use plastic
in packaging and transition to recyclable andcompostable packaging.

We are focused on further iterating operational procedures and training for zero waste practices.

76

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Resources
How circular centers will help Microsoft
achieve zero waste by 2030 video
Get inspired by our first-of-a-kind approach towards
designing and implementing circularity into our cloud.

Microsoft is committed to sharing
our progress, challenges, learnings,
and best practices throughout oursustainability journey.

Find out
more here

Microsoft Circular Centers | Azure Videos |Channel 9 (msdn.com)
Learn more about circularity and our Circular Centers.
Find out
more here

Achieving Operational Zero Waste

Capital Equipment Coalition North America

An inside look into Microsoft’s operational zerowaste journey.

Learn more at the U.S. Chamber Foundation’s open
forum to reduce the environmental footprint of
the capital equipment sector through goal setting,information-sharing, and collaboration.

Find out
more here

Global end-of-life programs for devices,
batteries, and packaging
Find out where and how to recycle your Microsoft
devices, courtesy of Microsoft.
Find out
more here

IT asset disposition guide
Learn about IT asset disposition options for customers
migrating to Microsoft Azure.
Find out
more here

Find out
more here

Ellen MacArthur Foundation
Find out more about the circular economy andthe vision for an economic system that’s betterfor the people and the environment.
Find out
more here

Rheaply Asset Exchange Manager(AxM) Platform
Learn about Rheaply’s resource management
and exchange platform to resource assets,
services, and expertise.
Find out
more here

We are committed to becoming a zero waste company by 2030 and helping other companies on their journeys.

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Appendix“Only when we have amassive amount of planetarydata and compute at asimilar scale can we begin
to answer one of the mostcomplex questions ever
posed—how do we manage
natural resources equitably
and sustainably for aprosperous and climatestable future?”
Dr. Lucas Joppa, Chief Environmental Officer

Contents
Our approach

79

Taking responsibility for
our land footprint

81

Driving transformation

82

Enabling systems change84

Key trends

87

What’s next?

88

Resources89

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Our approach

A commitment
to protect moreland than weuse and build
a PlanetaryComputer

The context
Healthy ecosystems are critical for a healthy planet—environmental sustainability can’t exist without
ecosystem sustainability. Unhealthy ecosystems, createdor exacerbated by climate change and biodiversity
collapse, threaten our entire civilization. And yet,according to the latest United Nations Intergovernmental
Science Policy Platform on Biodiversity and Ecosystem
Services (IPBES-8) study, the health of ecosystems on
which we and all other species depend is deteriorating
more rapidly than previously thought. Put simply, weare eroding the very foundations of our economies,
livelihoods, food security, health, and quality oflife worldwide.
Microsoft recognizes that ecosystems are the threadthat connects all our sustainability commitments.
Ecosystems are where we invest in carbon sequestration
projects that help us achieve carbon negativity, they are
the watersheds we commit to protect and replenish,
and they are where waste is ultimately diverted. We needa strong, efficient, scalable way to monitor, understand,measure, and ultimately manage the impact of ouractions or inactions on ecosystems—both globallyand locally.
In the past year, Microsoft has made considerable
progress towards its leading ecosystem commitments
of protecting more land than we use and delivering
our Planetary Computer to provide access to the world’s
critical environmental datasets and to function as acomputing platform that enables partners to measure,monitor, model, and manage healthy ecosystems.

Our commitment: protect more land than we use by 2025
and build a Planetary Computer
Building a Planetary Computer
We will aggregate environmental data from aroundthe world and put it to work through computing
and machine learning in a new Planetary Computer.

Taking responsibility for
our land footprint
We will take responsibility for the ecosystem
impacts of our direct operations by protecting
more land than we use by 2025.

Using our voice on ecosystem-related
public policy issues

Empowering partners and customers
around the world

We will support and advocate for public policy
initiatives that measure and manage ecosystems
at the national and global scale.

We will use the Planetary Computer to develop
and deploy the digital technology that helps ourpartners and customers with environmental
decision-making in their organizational activities.

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Our approach (continued)
Ecosystems Chart 1

Our progress

Achieving our target of protecting more land than we use by 2025

850+ grants

In FY21, we contracted to protect more than 17,000
acres of land. This puts us on a path to exceed ourcommitment to protect more land than we use by
more than 5,000 acres.

Since its inception in 2017, our AI for Earth program
has provided more than 850 grants to organizations
working in 110 countries around the world, granting
more than $20 million in Azure credits.

>500 PlanetaryComputer users

Delivered
new PlanetaryComputerapplications

The Planetary Computer private preview released
as planned in April 2021, with more than 500 users
signed up and using the APIs and scalable compute.

24 petabytes
of data
We have made available 24 petabytes of datawith more than 30 key environmental and Earthobservation datasets to Azure in consistent,
analysis-ready format that is freely available
for use by anyone.

We partnered with subject matter experts to use
the power of the Planetary Computer to develop a
growing set of applications that enable data-driven
decision-making for the environment, ranging fromconservation planning and forest risks to land coverand classification.

FY21

17,26818,00016,000acres

14,000of total land contracted to protect in FY21(150 percent of land use)

12,00010,0008,000
6,000

Microsoft land use footprint is

11,000

acres

4,000
2,000

(100 percent of land use)0

Acres of land

>17,000 acres

In FY21, we contracted to protect more than 17,200 acres, which is 50 percent more than the land we use to operate.

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Protecting ecosystems

Takingresponsibility
for our land
footprint
Microsoft directly operates onapproximately 11,000 acres of landaround the world, and we recognizethat our own land footprint has an
impact on ecosystems.

We have made a commitment to permanently protect
more land than we use by 2025. We are also looking atways for our datacenters to integrate and give back to
the natural environment.
Since making this commitment in April 2020, we
identified two leading land protection organizations,
the National Fish and Wildlife Foundation (NFWF) within
the United States and The Nature Conservancy (TNC)
globally, to partner with to achieve our commitment toprotect more land than we use. We used a data-informed
approach to identify ecosystems most at risk, using TNC’s
last chance ecosystem framework and NFWF’s nationallandscape conservation framework. We also prioritize
projects that have the support and involvement of local
and indigenous populations.
In FY21, we contracted for projects that will help protect
more than 17,000 acres of land, including the following

Giving back to the natural environment
As we expand our operational footprint with new
datacenters, our approach includes work to findways for our datacenters to give back to the naturalenvironment. Understanding how we can provide thesame (or better) performance as an intact ecosystemstarts with understanding how an ecosystem performs
on its own. We have begun assessment of ecosystem
performance in 12 datacenter regions, to be completed
by end of 2021. Through this research, we are quantifying
ecosystem performance in terms of services including
water quantity and quality, air, carbon, climate, soil
health, human health and wellbeing, and biodiversity.
The goal is to renew and revitalize the surroundingarea—resulting in mutual, regenerative value for the
local community and environment.

We measure this in percentages of intact ecosystems,
meaning the higher the percentage, the more effective
we are at meeting nature’s benchmark for the area.
The findings are helping to inform one of our firstprojects in North Holland, which is part of our
Amsterdam datacenter region. Around the datacenters,
we will construct lowland forested areas as well as
forested wetlands, which are highly saturated with waterand vegetation suited for water filtration to naturally
process storm water and runoff. Modeled results fromthese different approaches suggest that ecosystem
performance can be restored to as much as 75 percent(where we are able to successfully recreate 75 percentof the function of the untouched ecosystem).

5,000

TNC Belize Maya Forest Project
We contributed to the purchase of the Maya Forest
land, one of the largest remaining tropical forests in theAmericas outside of the Amazon. The approximately
236,000 acres secures a vital wildlife corridor in Central
America’s dwindling forests. This area is critical for theprotection of iconic wildlife species, such as jaguars andocelots, and preserves a significant living carbon reserve.

We will exceed ourcommitment to protect
more land than we use bycontracting for more land
protection, putting us onpath to exceed our goal by
50 percent.

NFWF Western Big Game Migration Program
We contributed to the purchase of permanentconservation easements in Montana, Colorado, New
Mexico, and Nevada that will protect the migration
corridors for species of greatest conservation need,including mule deer, elk, bighorn sheep, and moose.
This effort also allows apex predators to thrive,
including mountain lions, grizzly bears, and Canadalynx. Providing contiguous protected lands is crucial
for enabling the successful migration of these wideranging species.

The Maya Forest land is one of the largest remaining tropical forests in the Americas
outside of the Amazon.

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Drivingtransformation
We believe that Microsoft’s mostimportant contribution to protecting
ecosystems and biodiversity isdelivering the Planetary Computer,which provides access to the world’s
critical environmental datasets, AI,and digital technology.

Ecosystems

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Our land footprint is relatively small, which is why
we also focus on using our technology to support
ecosystem health.
We believe that our biggest contribution to theprotection of ecosystems is to identify, invest in, andorchestrate a coherent cloud infrastructure that brings
together all relevant stakeholders and offers best-inclass science-driven tools, AI, digital catalogs of species,
distributed computing frameworks, and global satellite
images. We make these tools cloud-native, bring ourbusiness partners to deploy them to be used, andbuild trust by making visible the science roots and theprovenance of the data, while creating best practices for
deployment by deploying ourselves first. We are also
embracing open source, identifying critical petabytes
of satellite images being collected and released as open
data, including the Copernicus satellite programs andtools like Marxan.

Product
In April 2021, we released the Planetary Computer, whichenables global-scale environmental monitoring by
combining petabytes of data and spatial analysis tools
to power sustainability applications. It is a platform thatlets users build on the power of the cloud to accelerateenvironmental sustainability and Earth science.
The Planetary Computer consists of four
major components:• The Data Catalog, which includes more than
24 petabytes of data about Earth systems, hosted
on Azure and made available to users for free.
• APIs that allow users to search for the data they needacross space and time. Instead of sifting throughmillions of files, we index content so any user can ask

directly for a type of data (for example, “give me alldata from these satellites for Kansas in summer 2020
when it was not cloudy and give me those times ona specific map projection of the average values”).
This vastly reduces the complexity of dealing withpetabytes of data.
• The Hub, a managed computing environmentthat allows scientists to process massive geospatial
datasets. To date, we have seamlessly deployed morethan 20,000 cluster node workers to support ouruser workloads.
• Applications, built by our network of partners,that put the Planetary Computer platform to workfor environmental sustainability, ranging fromconservation planning and forest risk management
to land cover classification.

The manifestation of this work is what we call thePlanetary Computer. This open-source solution includes
data catalogs, APIs, and applications to empower bothdata scientists and environmental scientists to craft
more effective and informed strategies to protect andrestore ecosystems.

The Sentinel-2 program provides global imagery in 13 spectral bands and a revisit time of five days.

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Driving transformation (continued)
The Planetary Computer uses open-source tools andsupports open standards. In fact, the foundation of thePlanetary Computer is the incredible ecosystem of tools
being developed in the open by our partners and themuch broader open-source community. For example, our
Hub builds on the work done by the Pangeo community
to put the tools of data science to work for the Earthscience community, and our API builds on the work doneby the STAC community to streamline and standardize
the cataloging and discovery of geospatial data.
The Planetary Computer API and Planetary Computer
Hub are currently in private preview, accepting a small
set of early users, with plans to go public in mid-2022.
All the datasets are available and can be accessed via
Azure Blob Storage. Datasets can be used by developers
working within or outside of our Planetary Computer
Hub. They can integrate each component in their existingprocesses or use the full Planetary Computer with one
single experience.

24 PB

We have madeavailable 24 petabytes
of data with morethan 30 key
environmental and Earthobservation datasets.

Customers and partners
We partnered with subject matter experts to use
the power of the Planetary Computer to develop
applications that enable data-driven decision-making
for the environment, including the following.

Global land cover maps
In June 2021, Esri published a new high-resolution 2020
Global Land Cover map for users around the world.
The 10-Meter Land Cover map is the collaborative resultof compute and Sentinel-2 data from the Microsoft
Planetary Computer and a novel deep learning AI
model developed by Impact Observatory. Highresolution, open, accurate, and timely land cover maps
are critical for decision-makers in many industry sectors
and developing nations, supporting a broad rangeof sustainability and conservation efforts. The data
is hosted in ArcGIS Living Atlas of the World and thePlanetary Computer.

Ecosystem mapping and monitoring
Protecting and managing land, oceans, and biodiversity.

Conservation Science Partners’ Analytics Lab uses thePlanetary Computer to better visualize ecosystemmonitoring projects and help make the findings moreintuitive and accessible. These mapping applications
assess wildlife habitat connectivity on working
landscapes, anthropogenic impacts to terrestrial
landscapes, and changes in forest structure over time.

Conservation planning with spatial data
The Nature Conservancy (TNC) is using the PlanetaryComputer to protect and manage land, oceans,
and freshwater biodiversity for nature and people.
In partnership with Microsoft, TNC is scaling impact andaccelerating conservation with Marxan, a world-leading
decision-support software for spatial conservation
planning. Microsoft and TNC are enabling more
equitable access to Marxan by bringing it to the cloudwith platform development support from Vizzuality.
Together we are helping people around the world makeevidence-based decisions more quickly, inclusively, andtransparently to protect the world’s biodiversity.

Risk assessments for forest-based
climate solutions
CarbonPlan is using the Planetary Computer to enable
more transparent and scientifically rigorous evaluationof forest-based climate solutions. By shining a lighton data from past and future carbon offset projects,
procurement programs can better understand theclimate risks of carbon credit purchases. Microsoft used
this application to visualize the climate risks of forest
carbon offsets to help us manage our carbon removal
purchasing program more effectively.

Carbon sequestration estimates forabove-ground stock
Chloris Geospatial uses the Planetary Computer togenerate their “above-ground carbon stock” noncommercial product, which gives anyone the ability
to analyze forest carbon globally.

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Enabling
systems change
We are focused on new ways to harness
the power of technology, partnerships,
investments, and policy to drive impact
at scale and pace to help the worldprotect ecosystems and biodiversity.

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Appendix

At Microsoft we know that our actions alone will not
be enough to protect ecosystems and biodiversity.
The world will need new partnerships, solutions,and policies that have the potential to scale rapidly
and globally.

Monitoring to be able to create more effective reforestation plans and monitor reforestation progress.

Investing in AI
To empower organizations working on environmental
challenges, we provide training and access to cloudand AI technologies. Since its inception in 2017, our AI
for Earth program has provided more than 850 grants
to organizations working in 110 countries around theworld. While initially these grants provided accessto Microsoft cloud services and additional training,
we’ve expanded the program to now include thePlanetary Computer. This past year, we also added
new partners that bring significant new capabilities tothe program. We partnered with the Group on Earth
Observations (GEO) Secretariat to better reach geospatial
researchers and practitioners working at the forefrontof environmental use cases. We launched the $1 million
GEO-Microsoft Planetary Computer grant program tosupport early adopters of the Planetary Computer toapply Earth observations to address environmental andsocietal challenges. We selected the first eight grantrecipients in September 2021 who all received access to
the NICFI Satellite Data Program on Azure and launcheda second request for proposals in October 2021 inpartnership with Planet Labs.

Deforestation prediction
We partnered with Vale and our Brazilian subsidiary
to build PrevisIA, a solution for NGO Imazon that
anticipates information on regions with a higher risk of
deforestation and wildfires in the Amazon Rainforest
through AI. The open platform analyzes various datasuch as topography, land cover, urban infrastructure,

official and unofficial roads, and socioeconomic
statistics to refine the deforestation risk model andidentify the different types of territories threatened
by deforestation in the Amazon Rainforest including
indigenous lands and conservation units. All theinformation is publicly disclosed at a control panel.
Public bodies, private companies, and civil society canplan and carry out preventive actions, combating andcontrolling deforestation.

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Enabling systems change (continued)
People-powered research, using open source and Azure technologies to lower the barriers to entry for scientific discovery.

Preventing illegal trade of shark andray products
We partnered with Conservation International and the
National Parks Board of Singapore to develop a mobile
application that helps identify shark and ray species using
technology such as computer vision and AI. This will
enable ground inspectors at national borders to rapidly
assess and identify shark and ray species and seize
products that are suspected to be illegal.

Protecting coastlines and shorelines
We partnered with the Qatar Environment and Energy
Research Institute (QEERI) to build a solution using
remote sensing technologies to detect coastal changes
and predict shorelines and water line evolution for
the next 10, 20, and 50 years. A change detection map
assesses the coastal hazards on urban infrastructure andpopulation, including the impact of seawater intrusion on
agricultural and food production in the north of Qatar.

Modeling release sites fordisease-fighting mosquitoes

Accelerating scientificdiscovery with crowdsourcing

Zooniverse is the world’s largest platform for peoplepowered research, using open source and Azure
technologies to lower the barriers to entry for scientificdiscovery. Researchers upload their images, videos, oraudio files—like camera trap images of wild animals
or satellite imagery of a star—and Zooniverse’s global
community of over 2 million volunteers tags, annotates,or transcribes the file to aid classification.

The World Mosquito Program (WMP) uses Azure tomodel human population distribution in dengueendemic areas to determine the best release locations fordisease-fighting mosquitoes to stop the spread of deadly
dengue fever. Through high-resolution satellite imagery,demographics, and climate data the model is trained
to provide accurate estimations of spatially-distributed
human population density. This allows WMP experts toeasily develop optimal release strategies for Wolbachia
mosquitoes. Research shows that Wolbachia cansustain itself in mosquito populations without continual
reapplication, making this a long-term, cost-effective
and self-sustaining approach with no adverse impact onnatural ecosystems.

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Enabling systems change (continued)
Driving collective action
Successful strategies, interventions, and approaches toimprove ecosystem health require a great deal of dataand collaboration across public and private sectors,
as well as civil society. We are taking an ecosystemapproach to ecosystems, creating or broadening our
relationships to provide more people with better accessto this critical information.
UN Biodiversity Lab
In 2021, we launched a new partnership with the UN
Biodiversity Lab to help connect remote observations,field data, and AI/machine learning tools. This work,
powered by the Planetary Computer, will enablecountries to develop richer environmental accounts
and drive better environmental decision-making.
GEO BON
Fostering global connections and collaboration willbe critical to address climate change. In the past year,
we broadened our work with the Group on Earth
Observations Biodiversity Observation Network(GEO BON) to connect with a global network ofscientists to enable a scalable approach to expanding
and accessing biodiversity information and insights.
CSIRO
We’re supporting CSIRO in Australia to establish a climate
intelligence platform that puts trusted and credible
climate risk science in the hands of businesses in Australia
and the Asia region and enables them to assess, disclose,
and manage their climate risks. In addition, together with
CSIRO and the University of Reading, we have developeda research partnership to improve our understanding
and assessment of climate change risk.

Radiant Earth
The Radiant Earth Foundation develops Earthobservation machine learning libraries and models
through an open-source hub to support global
missions like agriculture, conservation, and climatechange. We support Radiant Earth by co-building
some of the key software libraries, making it easy tobridge to and from the Planetary Computer. We arealso jointly running competitions to improve machinelearning models.

Successful strategies to improve ecosystem health require data and collaboration across public and private sectors.

OS-Climate
We continue to support the OS-Climate initiative,
which is accelerating the development of scenariobased predictive analytic tools and investment productsthat manage climate-related risk and finance climate
solutions across every geography, sector, and asset
class. Microsoft is a founding member, contributes
our expertise on climate risk and data, and provides
additional technology support for the developmentof new tools and approaches.
C4IR
In 2020, Microsoft joined the World Economic Forum’s
Center for the Fourth Industrial Revolution Networkfor ocean innovation and technology in Norway (C4IR
Ocean). Since then, we have expanded our work witha new project that has us working with C4IR Ocean todeliver a tracking application for maritime vessels toforecast GHG emissions from maritime transportation.
This information is made available through C4IR’s
Ocean Data Platform for regulators, finance institutions,and port and coastal authorities to enable datadriven decisions related to the environmental impact
of shipping.

Advocating for healthy ecosystems
and biodiversity
Governments play a unique and important role inmeasuring and managing ecosystems and biodiversity
as they collect and make publicly available massive
amounts of data critical to environmental science.
They also own billions of acres of public land thatthey can use to protect, manage, and restore criticalecosystems. And they establish and implement policies
governing the use and management of natural resourcesand ecosystems.

Advocating for policies that advancemeasuring and managing biodiversity
and ecosystems
Microsoft submitted comments to the USDA on ways
to advance climate-smart agriculture and forestry.

Microsoft is advocating for the US Congress topass the Growing Climate Solution Act to advanceclimate-smart agriculture and nature-based carbon
markets. In addition, Microsoft supported funding
in the Washington state budget to develop highquality nature-based carbon removal protocols.
Microsoft serves on the steering committee of the US
chapter of Trillion Trees and submitted one of the initialcorporate pledges. We have been working with theorganizers on ways to design the initiative in a way that
accelerates reforestation and meaningfully removes
carbon. In Europe, Microsoft supported and engaged
on the EU Biodiversity Strategy for 2030, that aims toincrease protected areas across the EU and to identify
new measures for managing and restoring ecosystems.
Microsoft also committed to support a new dedicated“European Biodiversity Partnership,” Biodiversa+, that willbring together science, policy, and practice, and support
data-driven research to stop the loss of biodiversity.

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Appendix

Key trends

1

The volume and variety of spatial data
continues to grow exponentially.
Whether it’s satellites in the sky or sensors
on the ground, data about the Earth is being
captured at higher resolutions, more often,
with a variety of data formats and purposes.
There is also a growing set of model output
and derived products which are large spatial
datasets themselves, valuable to a broad set ofuse cases. This creates a deluge of data waiting
to be unlocked for positive environmental
sustainability impact.

2

Data providers are eager to make theirdata more accessible for environmental
sustainability use cases.
The organizations that are producing spatial
data know what’s at stake for our ecosystems.
They want to see their data utilized to meet thesustainability challenges we are facing and work
together to enable users to utilize the data in acommon, interoperable manner.

3

Getting data to the cloud is the only way toscale the work of a broad range of users.
Data that exists in the cloud has a hugeadvantage over data that must be first
downloaded on a user’s system. Unless you
own a supercomputing system, there is no
way to download and compute over the vast
amount of data needed to scale the analyses
and operationalization of that data.

2021 was a year of progress and learning for Microsoft on our journey to delivering the Planetary Computer.

4

Finding and sharing data about the Earthremains a huge challenge.
Users need to search the vast amount of data
available to find the data they need and haveeasy access to data in the areas and times theycare about. Just because data is available does
not mean it is accessible. There is a growing effort
in the geospatial community to enable accessto cloud-hosted data through utilizing cloudoptimized formats and supplying APIs to searchthrough standards-based metadata.

5

Open data, open source, open science, andopen standards are critical to collaboration.
The scope of the problems facing our world
mean that no one organization or person
will be able to solve them. The easier it is forgovernments, academia, and industry to work
together, the faster we can all move in the same
direction. The best mechanism currently forthis collaboration is doing things in the open:
publishing open datasets, using and investingin open-source software, publishing open
science, and making data accessible throughopen standards.

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1

Make publishing and using spatial
data in the cloud simple
We are developing features in the PlanetaryComputer that will make it easy to push data to
the cloud and open access to some or all users.

2

Solve data access challenges
for science and operational
applications
Enabling efficient geospatial workflows on Azure
will unlock the power of the massive amountof data the world is collecting about our Earth
to monitor, model, and manage Earth’s natural
systems. The Planetary Computer will solve thecore data access problems for planetary scale
problems, ranging from scientific research toenterprise-grade applications, so that developers
building applications on top of it can focus onwhat makes their solutions unique.

3

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Appendix4

Support the growing ecosystemof applications powered by thePlanetary Computer
We will continue to grow our network ofpartners developing impactful environmental
sustainability applications using the data andservices of the Planetary Computer. This includes
investing in partners that use technologies like AI
to push the boundaries of what is possible andempower their users with the tools they needto make decisions to protect the ecosystems ofour planet.

5

Continue to invest and grow the
open-source ecosystem of tools
working with Earth science data
Microsoft will continue to support the opensource ecosystem of tools that we use to deploy
our services and that our users rely on to process,analyze, and operationalize the data of thePlanetary Computer.

Expand the catalog of datasets
hosted in the Planetary Computer
We are continuously identifying and onboarding
high-value, openly licensed datasets for broad
usage in the Planetary Computer. We are
improving our pipelines to reduce the latency
between data becoming available and being
findable and usable in users’ existing workflows.

We will target new domains like climate forecast and biodiversity observation data.

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Appendix

Resources
The Planetary Computer
Learn about how the Planetary Computer supports
sustainability decision-making with the power ofthe cloud.

Microsoft is committed to sharing
our progress, challenges, learnings,
and best practices throughout
our sustainability journey.

Find out
more here

The Planetary Computer Data Catalog
Explore the catalog of datasets available throughthe Planetary Computer API.
Find out
more here

AI for Earth technical resource

AI for Earth grants

Access the open-source tools, models, infrastructure,
data, and APIs from Microsoft engineering anddata science teams to support sustainability andenvironmental science.

Learn about the work of AI for Earth grantees
and learn more about the program.

Find out
more here

Find out
more here

AI for Earth partners
Learn about AI for Earth and Planetary Computer
partners and their work.
Find out
more here

We are committed to delivering the Planetary Computer and helping others protect ecosystems.

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AppendixContents
Appendix A:
How we report91

Appendix B:
Commitments

92

Partnerships

93

Memberships

93

Recognitions

94

EPEAT

95

Appendix C:
Endnotes

96

Appendix D:
Section 1: Our
environmental data

97

Independent accountant's
review report

112

Section 2: Additional
environmental indicators

113

Appendix E:
Policy117

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Appendix A

How wereportReporting standards
Our Reports Hub available at microsoft.com/
transparency provides a consolidated, comprehensive
view of our ESG reporting and data ranging from ourcarbon footprint to workforce demographics to political
donations. This Environmental Sustainability Report
is an important part of that overall set of disclosures.
For this and other reports, we inform our disclosure
strategies with careful consideration of commonly used
global standards such as sector-based materiality maps
provided by the Sustainable Accounting Standards
Board (SASB), the United Nations Guiding Principles on
Business and Human Rights Reporting Framework, andthe UN Sustainable Development Goals. We presented
greenhouse gas emissions in accordance with the GHG
Protocol and select environmental metrics that reference
the Global Reporting Initiative Standards (GRI). We havebeen reporting to CDP since 2010, consistently making
it to CDP Climate Change A-list and earning the highest
band of A and A- for CDP Water Security since 2016.
On climate-related issues, we are committed to fullyaligning with the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD).
Our commitment tosustainable development
Read our
TCFD report

Our policies and practices

ESG materiality

Forward-looking statements

We work to apply the power of technology to earn
and sustain the trust of the customers and partners
we empower and the communities in which we live
and work. This focus extends to our work to build asustainable future where everyone has access to thebenefits and opportunities that technology can bring.
It’s central to our mission to empower every person andorganization to achieve more, and it΄s why many of ouremployees come to work every day.

Our ESG reporting describes those topics which we
consider to be the most important to stakeholders
when evaluating environmental, social, and governanceissues at Microsoft. Therefore, ESG materiality in ourreporting does not directly correspond to the concept ofmateriality used in securities law.

This report includes estimates, projections, and other“forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995,
section 27A of the Securities Act of 1933, and section 21Eof the Securities Exchange Act of 1934. These forwardlooking statements generally are identified by thewords “believe,” “project,” “expect,” “anticipate,”“estimate,” “intend,” “strategy,” “future,” “opportunity,”“plan,” “may,” “should,” “will,” “would,” “will be,” “willcontinue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current
expectations and assumptions that are subject to risks
and uncertainties that may cause actual results to differ
materially. We describe risks and uncertainties that
could cause actual results and events to differ materiallyin our reports filed with the Securities and Exchange
Commission. We undertake no obligation to update orrevise publicly any forward-looking statements, whether
because of new information, future events, or otherwise.

Working together with stakeholders
We know that the decisions we make affect ouremployees, customers, partners, shareholders, suppliers,
and communities, and we take their voices into account.
Microsoft receives input from millions of people eachyear—from individual customers to policymakers
and global human rights specialists. We bring outside
perspectives into the company and inform our businessdecisions through a variety of feedback channels. We go
beyond formal channels, proactively engaging withkey stakeholders, advocacy groups, industry experts,
corporate social responsibility (CSR) rating agencies,
CSR-focused investors, and many others. We also share
our learnings and practices thereby generating industry
dialogue, informing public debate, and advancing
greater progress.

A listing of what we currently identify and categorize as
our top ESG issues can be found on our website. In 2020,
Microsoft conducted a materiality assessment focusedon environmental sustainability, which can be accessed inlast year's report.

GovernanceMicrosoft has made sustainability part of its business,
including embedding it deeply into its governancestructure. Our Board of Directors provides insight,
feedback, and oversight across a broad range ofenvironmental and social matters. In particular, theresponsibilities of the Board’s Regulatory and Public
Policy Committee include providing oversight andguidance to the Board and management about
the company’s policies and programs that relate tocorporate social responsibility, including the company’senvironmental sustainability strategy and commitments.
Microsoft’s management team understands thatsustainability performance is linked in myriad ways
to the company’s long-term financial performanceand growth that is sustainable in every sense of theword. We are committed to building and executing on
strategies to help foster a healthy planet and advance a
more inclusive economy that fosters additional growth
opportunities for everyone. Additional information about
our governance structure for sustainability can be foundin our TCFD report as well as our CDP responses.

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Appendix

Appendix B

Commitments
Our commitments 2020–2050
2030
Our history 2012–2019

2025

2012

2016

2017

2018

2019

100% carbon neutral

Zero waste campus
certification

AI for Earth launch

Supplier carbon
engagement in
China launched

Carbon fee raised
to $15Internal carbon
fee instituted

LEED Gold certification
for new datacenters

Net zero potable water
Silicon Valley
campus groundbreaking

Water replenishment
goal set

Operate with 100%
renewable energy
Find out
more here

2025
Protect more land
than Microsoft uses
Find out
more here

Become carbon
negative
Find out
more here

2030

2050

Become zero waste

Remove all
historical emissions

Find out
more here2030
Become water positive
Find out
more here

Find out
more here

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Appendix B (continued)
Partnerships
Founding member of Transform to Net Zero, whose
2025 goal is for all Fortune Global 1000 companies tohave targets backed up by transformation plans toachieve net zero no later than 2050.
Find out
more here

Founding member of Water Resilience Coalition, which
will provide tools and guidance for companies to assess
and improve water resilience.
Find out
more here

Founding member of LF Climate Finance Foundation
to help model climate risks.
Find out
more here

Partner with Center for the Fourth Industrial Revolution
Oceans (C4IR) to develop technology-based solutions
to improve ocean health.
Find out
more here

Partner with the Ellen MacArthur Foundation to engage
on topics of the circular economy through community
platforms and collaborative projects, including a pilot
of innovative circular packaging solutions for stretch
wrap film.
Find out
more here

Partner with Water.org to enable access to drinking
water and sanitation in seven stressed regions aroundthe globe.
Find out
more here

Memberships
Partner with the Alliance of CEO Climate Leaders (WEF)
Carbon Removal Climate Action Group to support
corporate assessment and scale-up of carbon
removal opportunities.
Find out
more here

Partner with Australia’s CSIRO to establish a climate
intelligence platform that puts trusted and credible
climate risk science in the hands of businesses
in Australia and the Asia region.
Find out
more here

Partner with the UN Biodiversity Lab 2.0, an initiativeof the United Nations Development Program (UNDP),
the United Nations Environment Program World
Conservation Monitoring Centre (UNEP-WCMC), andthe Secretariat of the UN Biodiversity Convention,
to help governments and others better understandand manage the environment.
Find out
more here

Partner with the Radiant Earth Foundation to bring
AI models and training data to the Microsoft PlanetaryComputer.
Find out
more here

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Appendix

Appendix B (continued)
Recognitions
2021 Green Power Leadership Award:
CRS International Market Development
Find out
more here

2021 EPA Green Power Leader:
U.S. Environmental Protection Agency (EPA)
Find out
more here

2021 Climate Leadership Award:
Organizational Leadership
Find out
more here

2021 UN Global Climate Action Award:
Climate Neutral Now
Find out
more here

World Environment Center 2021 Gold Medal:
Corporate Sustainability
Find out
more here

2021 The Just 100: For the fourth year in a row,
Microsoft took first place on The Just 100, a list by
Just Capital and Forbes to rank companies perceived
as “the best at doing right by America”.
Find out
more here

America΄s Most Responsible Companies 2021:
Microsoft was ranked third by Newsweek΄s assessmentof companies across leading ESG areas.
Find out
more here

U.S. Water Prize:
Awarded the U.S. Water Prize for Outstanding Private
Sector Organization celebrating Microsoft’s
achievements in the advancement of sustainable,
integrated, and inclusive solutions to water challenges.
Find out
more here#1 in Top 100 Most Conscious Brands of 2020:
Microsoft tops Wolff Olins and Hall & Partners’
inaugural list of the world’s 100 most conscious brands.
Find out
more here

2021 COTE Top Ten Award:
Microsoft Silicon Valley Campus was awarded COTE
Top Ten Plus designation for exemplary performancedata and post occupancy lessons.
Find out
more here

Compass Award at COP26:
Microsoft awarded for Environmental Leadership.
Find out
more here#1 in the 10 most innovative corporate social
responsibility companies of 2021:
Fast Company ranked Microsoft #1 for setting incredibly
ambitious long-term carbon neutrality goals.
Find out
more here#1 in EcoAct International Top 20 for 2021:
Microsoft was rated as the highest performing company
in demonstrating corporate leadership on climate
reporting across all indices within the DOW 30,
Euro STOXX 50, and FTSE 100.
Downloadhere

CDP A List 2021 for Climate and Water:
Named to the CDP A List for Climate Change
and Water Security.
Find out
more here

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Appendix B (continued)

EPEAT
EPEAT (Electronic Product Environmental Assessment
Tool) is the leading global Type-1 ecolabel for thetechnology sector, managed by the Global Electronics
Council (GEC). The program requires independent
verification of product and corporate eco-attributes
to ensure that the product meets the EPEAT criteria
as claimed. We apply EPEAT standards to our Surface
devices. Surface devices must meet specific sustainability
and lifecycle-based design and performance criteria toachieve the baseline tier, “Bronze” EPEAT registrationlevel. The achievement of additional optional criteria
results in a higher registration of “Silver” or “Gold” level.
We are continuously working to reach the highest
level of EPEAT registration level, “Gold”, for all our
devices. In late 2020, we achieved registration not justin the United States but also in Canada, and in 2021
we expanded our registration to most of Europe.
Following is a summary of our Surface computers on
the EPEAT registry.
These ratings are used by customers to makepurchasing decisions based on product and corporate
environmental and social attributes. We track progressagainst EPEAT targets across our Surface portfolio.
For more information, visit the EPEAT registry which
includes a listing of all registered devices including thecountries of registration and the EPEAT tier.

Product

US + Canada

Europe (27 countries)*

Product

US + Canada

Europe (27 countries)*

Surface Pro 8

Gold

Gold

Surface Laptop 3 13.5-inch,
metal palm rest

Gold

Gold

Surface Laptop Studio

Gold

Gold
Surface Laptop 3 15-inch,
Alcantara palm rest

Gold

Gold

Surface Laptop 3 15-inch,
metal palm rest

Gold

Gold

Surface Go 2Gold

Silver

Surface Book 3 15-inch

Gold

–

Surface Book 3 13.5-inch

Silver

–Surface Book 2 15-inch

Silver

–Surface Book 2 13.5-inch

Silver

–Surface Pro 6

Silver

–Surface Pro 5

Silver

–Surface Go

Silver

–Surface Pro X

Gold

Gold

Surface Go 3Gold

Silver

Surface Pro 7

Gold

Gold

Surface Pro 7+

Gold

Gold

Surface Laptop Go

Gold

Gold

Surface Laptop 4 13.5-inch,
Alcantara palm rest

Gold

Gold

Surface Laptop 4 13.5-inch,
metal palm rest

Gold

Gold

Surface Laptop 4 15-inch,
metal palm rest

Gold

Surface Laptop 3 13.5-inch,
Alcantara palm rest

Gold

Gold

Gold

* Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Latvia, Lithuania, Luxembourg, Malta,
Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
Sweden, Switzerland, United Kingdom.

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Appendix C
Endnotes
1 Scope 2 references in the report represent
market-based emissions.
2 Reported value represents contracted tons during
FY21 reporting year. This number might change
based on contract fulfillment.
3 Measurement is based on the device industry
best-practice life cycle methodology, which is not
currently reflected in Microsoft’s corporate disclosure.
4 Net Zero by 2050 – Analysis – IEA
5 Measurement is based on construction industry
best-practice life cycle methodology, which is not
currently reflected in Microsoft’s corporate disclosure.
Updates to Microsoft’s corporate disclosure
methodologies will be published annually.
6 This statistic is based on a life cycle methodology
for emissions reporting that Microsoft has not yet
adopted in its corporate disclosure.

7 Measurement is based on the Global Logistics
Emissions Council (GLEC) methodology, which is
not currently reflected in Microsoft’s corporate
disclosure. Updates to Microsoft’s corporate disclosure
methodologies will be published annually.
8 These numbers are self-reported by the organizationand have not been verified by Microsoft.
9 672 million liters per year is measured using theVolumetric Water Benefit Accounting methodwith WRI and Limnotech.
10 Total number of people reached confirmed
through independent third-party verification.
95,130 people reached in FY21. Countrylevel distribution: India—3,038 people andIndonesia—92,092 people.

96

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Appendix

Appendix D

Our environmental data
As part of Microsoft’s commitment to disclose
information about our environmental footprint, thefollowing sections are a compilation of environmental
metrics across greenhouse gas emissions, energy,
water, waste, and land.
Section 1 presents greenhouse gas emissions inaccordance with the GHG Protocol and selectenvironmental metrics that reference the Global
Reporting Initiative (GRI) Standards. Deloitte &Touche LLP performed a review engagement on
management’s assertion related to the specified
information presented in Section 1 of Appendix D
as of and for the fiscal year ended June 30, 2021 andincludes their review report. Information relating toperiods prior to the fiscal year ended June 30, 2021,
was not subject to Deloitte & Touche LLP's review
and, accordingly, Deloitte & Touche LLP does not
express a conclusion or any form of assurance onsuch information.
Section 2 presents additional environmental metrics
that show additional detail and breakdowns and was
not subject to Deloitte & Touche LLP’s review.
All reported values represent best available data at thetime of publication. Data is adjusted to incorporate
updated methodology, structural changes, and/or
accuracy improvements. Additional detail on thesechanges is included as footnotes where applicable.

Environmental data contents
Section 1: Our environmental data

1.1 Greenhouse gas emissions
Table 1
GHG emissions by Scope
Table 2
GHG emissions by type
Table 3
GHG emissions by region
Table 4 GHG emissions intensity
Table 5
Carbon offsets
1.2 Energy
Table 6
Energy consumption within the organization
Table 7
Energy intensity
1.3 Water
Table 8Water and effluents
1.4 Waste
Table 9Waste generated, diverted, and directed to disposal
1.5 Ecosystems
Table 10 Land protection
1.6 Management's assertion
1.7 Description of the company and inventory boundary
1.8 Information on metrics
1.9 Methodology and emission factors
1.10 Reporting criteria
1.11 Independent accountant's review report

98
99
99
100
100
101
101
102
103
103
104
104
104
105
110
112

Section 2: Additional environmental metrics
Table 11
Table 12
Table 13
Table 14
Table 15
Table 16
Table 17
Table 18

GHG —Scope
1 regional detail—
Other emissions
Other emissions normalized by revenue
Electricity consumption
Renewable energy consumption
Other energy consumption
Water withdrawal, consumption, and discharge detail
Verification/Assurance

113
114
114
114
115
115
116
116

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Appendix D (continued)

Section 1: Our
environmental data

1.1 Greenhouse gas (GHG) emissions
Table 1

GHG emissions by Scope (mtCO2e)
FY17

FY18

FY19

FY20

FY21

107,452

99,008

117,956

118,100

123,704

Location-Based

2,697,554

2,946,043

3,557,518

4,102,445

4,745,197

Market-Based

139,066

183,329

275,420

228,194

163,935

Subtotal emissions (Scope 1 + 2 market-based)

246,518

282,337

393,376

346,294

287,639

4,058,000

4,452,000

4,411,000

4,156,000

4,930,000

Scope 1
Scope 2

Scope 3
1,2,5

Category 1 – Purchased Goods & Services
1,2,5

1 The reported emissions for this category represent an estimate based on assumptions as
outlined in section 1.9 and have therefore been rounded.
2 The emissions calculations for these categories have been adjusted in the current year
to reflect improved availability of suppliers' reported emissions via CDP Supply Chain.
Previous years have been updated to reflect this change.
3 As the product life cycle assessments for Microsoft devices continue to be improved, theemissions calculations for these categories have been updated for improved accuracy.
Energy use assumptions have been updated to reflect our latest understanding of device
use via telemetry. In addition, minor error corrections were made. Previous years havebeen updated to reflect this change.
4 Market-based fuel- and energy-related emissions in FY17—FY20 have undergone achange in calculation methodology to improve accounting of electricity transmission
and distribution.

Category 2 – Capital Goods

2,185,000

2,340,000

2,962,000

4,179,000

540,000

550,000

650,000

770,000

810,000

1,4

250,000

220,000

270,000

310,000

310,000

52,00053,00096,000102,000

225,000

700

500

10,500

9,500

5,700

419,020

461,787

476,457

329,356

21,901

343,000

345,000

411,000

317,000

80,00085,00098,00057,00047,00045,0003,757,000

3,910,000

3,375,000

2,983,000

3,950,000

Category 3 – Fuel- and Energy-Related Activities (Location-Based)
Category 3 – Fuel- and Energy-Related Activities (Market-Based)
Category 4 – Upstream Transportation
Category 5 – Waste

1,2

1,6

Category 6 – Business Travel
1

Category 7 – Employee Commuting

1,3Category 9 – Downstream Transportation
1,3,5

Category 11 – Use of Sold Products

1,3

5 Overall increase in Scope 3 categories 1 and 2 emissions is driven mainly by the growthof Microsoft's cloud services business and device manufacturing. Increase in Scope 3
category 11 is driven by an increase in sales and usage of devices.

Category 12 – End of Life of Sold Products

6 As of FY21, waste emissions calculations include emissions for all waste streams, except
construction and deconstruction which is currently not reported and will be part of data
improvements going forward. This change due to improved data availability has been
retrospectively applied to FY20 and FY19, but not FY18 or FY17 because comprehensive
waste data was not available in those years.

Subtotal emissions (Scope 3 market-based)

7 Market-based emissions included in these values. Values rounded to nearest
thousand mtCO2e.

1,666,000
1

31,00018,00018,00017,00019,000

1

700

1,700

800

6,100

18,900

7

10,662,000

11,745,000

11,466,000

11,239,000 13,785,000

10,909,000

12,027,000

11,859,000

11,585,000 14,073,000

Category 13 – Downstream Leased Assets
7

Total emissions (Scope 1 + 2 + 3)

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Appendix D (continued)
Table 2

Table 3

GHG emissions by type

GHG emissions by region (mtCO2e)
FY17

(mt)
Scope 1
Scope 1 – CO2
Scope 1 – CH4
Scope 1 – N2O
Scope 1 – HFCs
9
Scope 1 – SF6

FY18

FY19

FY20

FY18

FY19

FY20

FY21

Asia

9,699

6,483

7,330

8,650

9,664

Europe, Middle East, Africa

44,873

41,276

57,95761,71969,251

Latin America

6,260

6,173

3,919

3,871

4,403

North America

46,62045,07648,75043,86040,386

Subtotal

107,452

99,008

117,956

118,100

123,704

Asia

439,035

528,277

691,772804,567

942,892

Europe, Middle East, Africa

399,194

519,058

681,743

860,858

866,689

Latin America

20,96823,45025,40315,707

16,204

North America

1,838,357

1,875,258

2,158,600

2,421,313

2,919,412

Subtotal

2,697,554

2,946,043

3,557,518

4,102,445

4,745,197

Asia

121,930

174,533

266,725

219,416

157,841

Europe, Middle East, Africa

14,460

7,301

7,463

7,376

5,353

Latin America

2,053

751

632

594

433

North America

623

744

600

808

308

139,066

183,329

275,420

228,194

163,935

Scope 1
82,4482
1
23

81,2632
1
17
0

95,6672
1
20
0

96,7002
119
094,2923
1
27
0

Scope 2 (Location-Based)
Scope 2 – CO2
Scope 2 – CH4
Scope 2 – N2O

2,684,866
64
37

2,929,720
188
39

3,537,892
222
47

4,079,782
271
53

4,720,190
318
57

Scope 2 (Market-Based)
Scope 2 – CO2
Scope 2 – CH4
Scope 2 – N2O

138,4113
2

182,31312
2273,90017
4

226,93315
3

163,3546
1(mtCO2e)
Scope 1
Scope 1 – CO2
Scope 1 – CH4
Scope 1 – N2O
Scope 1 – HFCs
Scope 1 – SF68

107,451
82,44845248
24,710–99,00981,26345
261
17,40832

117,956
95,66750
256
21,951
32

118,100
96,70053
236
21,07041

123,704
94,29263
150
29,17722

2,697,554
2,684,866
1,605
11,083139,066
138,41184571

2,946,043
2,929,720
4,700
11,623
183,329
182,313293
723

3,557,518
3,537,892
5,550
14,076
275,420
273,900
430
1,090

4,102,445
4,079,782
6,768
15,895228,194
226,933377
884

4,745,197
4,720,190
7,942
17,065
163,935
163,354150
431

Scope 2 (Location-Based)
Scope 2 – CO2
Scope 2 – CH4
Scope 2 – N2O
Scope 2 (Market-Based)
Scope 2 – CO2
Scope 2 – CH4
Scope 2 – N2O

FY17

FY21

8 In FY18 the estimating of SF6 leakage at datacenters began.

Scope 2 (Location-Based)

Scope 2 (Market-Based)

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Appendix D (continued)
Table 4

Table 5

GHG emissions intensity (mtCO2e/Revenue M$)

Carbon offsets (mtCO2e)
FY17

FY18

FY19

FY20

FY21

96,571

110,360

125,843

143,015

168,088

1.1

0.9

0.9

0.8

0.7

Scope 2 (Location-Based)

27.9

26.7

28.3

28.7

28.2

Scope 2 (Market-Based)

1.4

1.7

2.2

1.6

1.0

Scope 1 + 2 (Location-Based)

29.0

27.6

29.2

29.5

29.0

Scope 3 (Business Travel)

4.3

4.2

3.8

2.3

0.1

Revenue (M$)
Scope 1

FY17

FY18

FY19

FY20

FY21

GHG Emissions within Carbon Neutral
9,10
Boundary

573,871652,282

781,345612,927

292,106

Offsets Applied to Reporting Year573,871652,282

781,345612,927

292,106

–

–

–

–

–

Net GHG Emissions within
10
Carbon Neutral Boundary
11

Total Removal Offsets Contracted

1,391,187

9 Represents the values prior to historic recalculations due to acquisitions and methodology changes.
10 This data supports Microsoft's ongoing target to be carbon neutral every year from fiscal year 2013 onward. The boundary forthis carbon neutral commitment includes global Scope 1, Scope 2 Market-based, and Scope 3 business air travel. As progress
is made towards the carbon negative commitment, which includes purchasing removal offsets, the commitment to carbon
neutrality will also be maintained.
11 Values reported represent offsets contracted. Contracted removal values only include removal credits that have been
evaluated as compliant with Microsoft’s quality removal criteria. This number might change based on contract fulfillment.

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Appendix D (continued)
1.2 Energy

Table 7

Energy intensity (MWh/Revenue M$)

Table 6

Energy consumption within the organization (MWh)
FY17

FY18

FY19

FY20

FY21

6,756,779

7,781,383

9,249,361

10,757,166

13,481,863

362,408

358,760

439,589449,304

446,417Natural Gas

107,687

110,863

196,644

218,557

249,443

Crude Oil/Diesel

164,324

152,915

152,034

147,297

143,370

LPG/Propane/Jet Fuel

43,40250,37847,43740,4504,245

Gasoline

46,99644,60443,47443,00049,3596,394,370

7,422,624

8,809,772

10,307,861 13,035,446

6,344,700

7,357,636

8,744,834

10,244,377

12,969,393

Cooling (Chilled water)

30,121

52,77552,93751,02654,953

Hot water/Steam

19,54912,213

12,001

12,458

11,1006,104,758

7,357,636

8,744,834

10,244,377

12,969,393

6,104,340

7,357,235

8,744,247

10,244,059 12,969,246

On-Site Renewable Energy

418

400

587

318

147

Percentage of Renewable Electricity

96%

100%

100%

100%

100%

Total Energy Consumption12

Non-renewable fuel consumed

Electricity, heating, cooling, and steam
Electricity

13

Total Renewable Electricity Consumption
Renewable Energy Credits andPower Purchase Agreements

12 Only reported categories and values are applicable to Microsoft's energy consumption. Renewable fuels, electricity sold,heating sold, cooling sold, and steam sold categories are currently not applicable. In gigajoules, total energy consumption
equals 48,534,706 GJ, and total fuel consumed equals 1,607,101 GJ.
13 Reported values represent Microsoft's total renewable energy consumption expressed in MWh from on-site, renewable energy
credits, and power purchase agreements (PPAs). Specific to PPAs, in FY21 new agreements for approximately 5.8 gigawatts(GW) of capacity were signed, totaling more than 8 GW of renewable energy via PPAs or long-term contracts.

Electricity consumed within the organization (MWh)Revenue (M$)
Electricity Consumption Normalized by
Revenue (MWh/M$)

FY17

FY18

FY19

FY20

FY21

6,344,700

7,357,636

8,744,834

10,244,377

12,969,393

96,571

110,360

125,843

143,015

168,088

66

67

69

72

77

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Appendix D (continued)
1.3 Water
Table 8Water and effluents (megaliters)14
FY17

FY18

FY19

FY20

FY21

Total Water Withdrawals

5,148

6,719

7,505

7,618

7,657

Third-party water

5,040

6,586

7,367

7,513

7,600

Surface Water

91

104

104

89

41

Ground Water

17

29

34

16

16

3,236

3,393

3,559

3,651

3,179

3,236

3,393

3,559

3,651

3,179

1,913

3,326

3,946

3,967

4,478

15

15, 16

Total Water Discharges
Third-party water

Total Water Consumption

15

14 In FY18 the water data collection methodology was adjusted to include more accurate data center withdrawal estimates.
FY17 withdrawal estimates were not retroactively adjusted. 50% of the change from FY17 to FY18 is from the methodology
adjustment, and the other 50% is from organizational growth. For FY21 total water withdrawal from areas with water stresswas 1,698 ML (22%) and was primarily sourced from third-party water; total water discharge to areas with water stress was
915 ML (29%); and total water consumption from areas with water stress was 783 ML (17%). Water risk assessment conductedusing WRI’s Aqueduct tool and reported values consider high or extremely high baseline water stress.
15 Brackish surface water/seawater and produced water categories are not relevant to Microsoft since there is no withdrawal
or discharge of water from and to these sources. For withdrawals, data breakdown between ‘freshwater’ and ‘otherwater’ categories, and withdrawal sources is currently unavailable and will be part of data improvements going forward.
For consumption, gathering data around water storage will also be part of our future data improvements.
16 Only discharges to third-parties are relevant since water that is not consumed at Microsoft sites is discharged to local municipal
treatment plants. Discharges to surface water, groundwater, seawater and volume sent for use to other organizations are notapplicable. For discharges, data breakdown between ‘freshwater’ and ‘other water’ categories is currently unavailable and will
be part of data improvements going forward. Primary treatment of water is not relevant because there are no onsite water
treatment plants in Microsoft operations, as there is no requirement to conduct onsite primary treatment of discharge by any
environmental regulation or standard.

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Appendix D (continued)
1.4 Waste

1.5 Ecosystems

Table 9

Table 10
17

Waste generated, diverted, and directed to disposal (metric tons)

Land protection

FY17

FY18

FY19

FY20

FY21

23,87017,661

31,644

31,101

20,768

Reused

325

40

715

1,136

2,171

Recycled

14,9559,824

10,460

8,452

9,589

Composted

5,920

5,883

8,358

10,104

1,776

Subtotal

21,20015,747

19,533

19,691

13,536

2,044

1,599

11,713

10,848

6,957

626

316

398

562

275

2,671

1,915

12,111

11,410

7,232

2,188

1,405

14,534

9,469

1,750

Recycled

2,122

1,376

6,184

7,581

1,742

Reused

–

–

1,096

1,880

0

19

66

29

7,254

8

8

Diverted Subtotal

23,322

17,123

26,81329,152

15,278

Directed to Disposal Subtotal

2,737

1,944

19,365

11,418

7,240

Total waste generated

26,05919,066

46,17840,57022,518

Non-Hazardous

Diverted

Directed
to Disposal

Landfilled
Incinerated
Subtotal

Hazardous
Diverted
Directed to Disposal

Other

18

17 Starting in FY19, reported values encompass global data across Microsoft's direct waste footprint, including estimates where
needed, except for waste from construction and deconstruction and GitHub which is currently not reported and will be partof data improvements going forward. Waste generation values and classifications have been updated for FY19 and FY20 tobe consistent with data collection, reporting boundary, and estimation methodology improvements established in FY21.
Reported data back to FY19 was adjusted to represent waste streams only within Microsoft’s operational control boundary, andas such, properly exclude disposition of packaging from our sold products. Data for reuse or other diversion methods besides
recycling for hazardous waste, and other disposal operations besides landfilled and incineration for non-hazardous waste iscurrently not applicable and will be part of data improvements going forward if they become applicable. As waste accounting
continues to improve, reported values may change. Reported waste data is mainly directed for disposal offsite.
18 Incinerated category under non-hazardous includes incineration with and without energy recovery.
19 'Other' category under hazardous includes landfilled and incinerated with and without energy recovery waste.

FY21
Total size and country location of all habitat areas
selected for protection for which contributions
were madeUS: 4,998 acres

A description of partnerships for which contributions
were made that exist with third parties to protect
habitat areas

Since making this commitment in April 2020, Microsoft
identified two leading land protection organizations,
the National Fish and Wildlife Foundation (NFWF)
within the United States and The Nature Conservancy(TNC) globally, to partner with to achieve thecommitment to protect more land than we use. A
data-informed approach to identify ecosystems mostat risk was used, using TNC’s last chance ecosystemframework and NFWF’s national landscapeconservation framework.

Belize: 12,270 acres

Within each of the two partnerships the following
organizations will hold the conservation easement/
own the protected land:• The Nature Conservancy: Belize Maya Forest Trust• National Fish and Wildlife Foundation: Montana
Department of Fish, Wildlife, and Parks; New Mexico
Land Conservancy, Rocky Mountain Elk Foundation
for the US.
Total acres categorized by the status at the close of thereporting period as either (i) funded or (ii) protected

17,268 acres (funded)

Period in which funding occurred

As of the fiscal year ended June 30, 2021

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Appendix D (continued)
1.6 Management’s assertion

1.8 Information on metrics

Management of Microsoft Corporation is responsible
for the completeness, accuracy, and validity of thedisclosures included in this Section 1 of Appendix D.
Management is also responsible for the collection,
quantification, and presentation of the specified
information included in Section 1 of Appendix D andfor the selection or development of the criteria, which
management believes provides an objective basis formeasuring and reporting on the specified information.
Management of Microsoft Corporation asserts that the
specified information included in Section 1 of Appendix
D as of, and for the fiscal year ended June 30, 2021 ispresented in accordance with the criteria set forth in
Section 1.10, Reporting criteria.

Microsoft announced in January 2020 that they will becarbon negative by 2030 and by 2050 they will remove
from the atmosphere an equivalent amount of all the
carbon the company has emitted either directly or by
our electricity consumption since being founded in 1975.
This will be achieved by reducing Scope 3 emissions(market-based) by more than half; and by reducing Scope
1 and 2 (market-based) emissions to near zero by the
middle of the decade through energy efficiency workand reaching 100 percent renewable energy by 2025.
The baseline year is 2020, which was the year when theannouncement was made.

1.7 Description of the company
and inventory boundary
Microsoft’s environmental sustainability data, which
includes GHG emissions, energy, waste, water, andecosystem metrics, reported for FY21 has been
prepared following a fiscal year basis as the reporting
period covering the timeframe of July 1, 2020 toJune 30, 2021. The Corporate External & Legal Affairs(CELA) Sustainability team within Microsoft under theleadership of the Vice President and Chief Environmental
Officer holds the responsibility to monitor and reportsustainability environmental data.
For setting organizational boundaries and for corporate
reporting of GHG emissions, energy, waste, andwater metrics in Tables 1-9 above, Microsoft uses theoperational control approach. This includes global
wholly owned and partially owned subsidiaries overwhich Microsoft has management and operational
control, including Microsoft owned and leased realestate facilities.

Microsoft has a metrics recalculation policy forhistorical data (including base year) to ensure
consistency whenever year-over-year structuralchanges, methodological changes , or other accuracy
improvements are significant. Structural changes include
acquisitions and divestitures. Methodology changes
include changes in a calculation methodology or new
activity types. Accuracy improvements include thecorrection of significant errors or cumulative small errorsthat together are significant and/or updates to available
supplier reported data. Footnotes under each table will
highlight specific adjustments made.
Microsoft’s GHG inventory includes five of the seven
GHGs addressed by the Kyoto Protocol—carbon
dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), and sulfur hexafluoride(SF6). Microsoft does not currently use or emit
perfluorocarbons (PFCs) and nitrogen trifluoride (NF3).
The following is a more detailed list of activities includedin the GHG inventory:• Scope 1 direct GHG emissions from onsite fossil
fuel combustion (including natural gas, propane,
fuel oil, and diesel), executive air travel, groundtransportation (Microsoft owned and directly leased),hydrofluorocarbon (HFC) refrigerants, and SF6 used atsome facilities.
• Scope 2 indirect GHG emissions from purchased
electricity, chilled water, and steam. The locationbased method is based on average emission factors
for the electricity grids that provide electricity to ourdatacenters, buildings, and campuses. The marketbased method includes consideration of contractual
arrangements under which Microsoft procures powerfrom specific suppliers or sources, such as renewableenergy. In the market-based method, we also capture
the impact from direct renewable energy and thepurchase of unbundled energy attribute certificates(EACs).
• Scope 3 indirect GHG emissions for the following
categories identified as relevant for Microsoft:– Category 1 – Purchased Goods & Services– Category 2 – Capital Goods– Category 3 – Fuel- and Energy-Related Activities(Location-Based and Market-Based)– Category 4 – Upstream Transportation– Category 5 – Waste– Category 6 – Business Travel– Category 7 – Employee Commuting– Category 9 – Downstream Transportation– Category 11 – Use of Sold Products– Category 12 – End of Life of Sold Products– Category 13 – Downstream Leased Assets
Reported data for water, waste, and ecosystems support
the monitoring and tracking of our progress associatedwith the commitments under each program.

For carbon removal, the following Microsoft criteria
is used to select carbon removals that we contract:
Microsoft Criteria for High-Quality Carbon Dioxide
Removal. Both third-party certified and uncertified
tons are purchased in an effort to help develop themarket, and only certified tons are applied to thecarbon neutrality scope (Scope 1, Scope 2 marketbased, and business air travel). For the certified portion,
the following validation and verification bodies haveprovided the certification: Voluntary Carbon Standard(VCS), American Carbon Registry (ACR), Climate Action
Reserve (CAR), and California Air Resources Board (CARB).
The reported carbon removal contracted value total also
includes future tons that have not yet been delivered.
For renewable energy, the impact is captured fromon-site generation, renewable energy certificates(RECs) and from power purchase agreements (PPAs).
The purchases of RECs include: RECs (Green-e certified),guarantees of origin (GO), renewable energy guarantees
of origin (REGO), I-RECs, tradable instrument for
global renewables (TIGR), J-Credits, large scale energy
certificates (LGC) and PowerPlus. Microsoft procuresenough renewable energy to match 100% of its electricity
consumption. In the case that renewable energy is notprocured in the markets where they operate, enoughrenewable energy from nearby markets is purchased
to ensure we maintain the 100% renewable electricity
commitment is maintained.
Microsoft’s water inventory includes the withdrawal,
consumption, and discharge associated with assets under
its operational control. These volumes represent global
enterprise-wide operations including offices, datacenters,labs, and retail. This data supports progress tracking
against current Water Positive program commitments, aswell as future reporting against the newer commitment
announced in October 2021 of reducing water waste indatacenter operations by 95 percent by 2024.

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Appendix D (continued)
Similarly, the waste inventory includes the mass of waste
generated from operations within Microsoft’s operational
control that are landfilled, incinerated, recycled, reused,and composted for both non-hazardous and hazardous
categories. This waste inventory supports progress
tracking against the commitment of diverting 90% of
operational waste at datacenters and campuses.
Reported data for ecosystems includes the total area ofland that has been funded and protected based on thepresented definition in table 1.10 for reporting criteria.
Microsoft’s land protection commitment was establishedin FY20 therefore reported data for FY21 represents
progress for the first year.
Currently the waste inventory does not include wastefrom construction and deconstruction activities.
Reported operational waste does not include impact
from business group GitHub. Data across metrics
currently excludes impact from the ZeniMax acquisition
completed in March 2021. Both GitHub and ZeniMax
impacts are estimated to be under the significancethreshold and will be included in the next report.
These items are part of Microsoft’s continuous data
improvement activities and will be included andhighlighted accordingly in the next reporting cycle.

1.9 Methodology and emission factors
CarbonScope 1 and 2
Primary data is used to calculate emissions for both
Scope 1 and 2 emissions. Estimates are used where
primary data is not available. Activity data is collectedinternally and stored in an internally developed data
platform which then applies the corresponding emission
factors to calculate emissions. Microsoft uses the IPCC
Fourth Assessment when it comes to applying global
warming potential values.

Scope and source

Emission factor source

Scope 1 (all fuels)

EPA Emission Factor Hub. March 2018.

Scope 2
Electricity (US)Year 2019 eGRID Subregion Emission Factors: eGRID 2019, February 2021. For marketbased emissions the factors presented are used as needed. For regions whereresidual emission factors are available we have 100% renewable energy purchases,
therefore not currently applicable.

Scope 2
Electricity (international
unless otherwise sourced)

IEA (2021), Emission Factors

Scope 2
Electricity (Australia)

Year 2020 factors from “Table 46: Scope 2 and 3 emissions factors - consumptionof purchased electricity by end users”, emission factors for Scope 2. National
Greenhouse Gas Accounts (NGA) Factors, August, 2021.

Scope 2
Electricity (Brazil)

Year 2020 factors from the Brazilian Ministry of Science, Technology, Innovation
and Communication: Fator médio - Inventários corporativos.

Scope 2
Electricity (Canada)

National inventory report 1990-2019. Annex 13. Year 2019 factors. From 2021 release.

Scope 2
Electricity (India)

CO2: Baseline Carbon Dioxide Emission Database, Version 16.0. India Central
Electricity Authority. March 2021.
CH4/N2O: “CO2 Emissions from Fuel Combustion (2021 Edition).” IEA. Paris.

Scope 2
Electricity (UK)2021 Government GHG Conversion Factors for Company Reporting: Methodology
Paper for Emission Factors. Year 2019 factors from June 2021 release.

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Appendix

Appendix D (continued)
Scope 3
Microsoft calculates and reports Scope 3 emissions for
all relevant categories. The following table summarizes
which categories are relevant and a description of themethodology and emission factors used.
Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Purchased goods
and services

This category includes emissions from upstream purchasing of goods andservices, including direct and indirect goods. Microsoft uses its suppliers’
CDP Supply Chain responses to determine Scope 1, Scope 2, and upstream
Scope 3 emission factors (mtCO(mtCO2e/$ revenue). The latest available
responses are used, so this report's inventory considers 2021 submissions(i.e. 2020 data). Microsoft estimates emissions from CDP Supply Chain
respondents by multiplying the CDP-derived factor by the annual spend
with the supplier. All other spend is mapped to corresponding industry
sectors and then multiplied by cradle-to-gate emission factors by sector
from UK Defra’s “UK Defra, Table 13 – Indirect emissions from the supply
chain. March 2014”—updated per the latest inflation and currency
conversion rates. Corporate-wide expense data for all company divisions is
obtained from the finance department. Industry sectors already includedin Scope 1 and Scope 2 (such as electricity purchases) and other Scope 3
categories (such as capital goods) were removed to prevent double
counting. Global warming potentials (GWP) values are derived from theunderlying CDP Supply Chain-based responses and Defra data sources.

79* Represents the percentage of emissions calculated (by category) using data obtained from suppliers or value chain partners.

Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Capital goods

This category includes emissions from upstream purchasing of capital
goods, including server equipment and other long-term assets. Microsoft
uses its suppliers' CDP Supply Chain responses to determine Scope 1, Scope2, upstream Scope 3 emission factors (tCO2e/$ revenue). The latest
available responses are used, so this report’s inventory considers 2021
submissions (i.e. 2020 data). Microsoft estimates emissions from CDP
Supply Chain respondents by multiplying the CDP-derived factor by theannual spend with the supplier. All other spend is mapped tocorresponding industry sectors and then multiplied by cradle-to-gateemission factors by sector from UK Defra’s "UK Defra, Table 13 – Indirectemissions from the supply chain. March 2014"—updated per the latest
inflation and currency conversion rates. Corporate-wide expense data for
all company divisions is obtained from the finance department. Industry
sectors already included in Scope 1 and Scope 2 (such as electricity
purchases) and other Scope 3 categories were removed to prevent double
counting. GWP values are derived from the underlying CDP Supply
Chain-based responses and Defra data sources.

45

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Appendix D (continued)
Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Fuel-and-energyrelated activities (notincluded in Scope 1 or 2)

Starting in 2019, Microsoft has been reporting this category as calculatedusing the 'market-based' approach, which includes Microsoft’s
investment in renewable electricity. Fuel- and energy-related activities(not included in Scope 1 or 2) include three emission sources. First,
upstream emissions of purchased electricity were calculated bymultiplying electricity use by emission factors from lifecycle analysis tools
for the US and UK Defra 2015 Guidelines for non-US countries. Factors for
upstream emissions resulting from global renewable electricity
generation are from lifecycle assessment tools. Second, fuel consumption
was multiplied by emission factors from the GREET and Ecoinvent
lifecycle analysis tools. And third, transmission and distribution (T&D)
losses (by energy use type) were multiplied by emission factors from the
EPA’s eGRID2019 database for the United States and from IEA (2021)
emission factors for other countries. GWPs are from the IPCC Fourth
Assessment Report (AR4), 100-year average.

97

Waste generated
in operations

The waste figure represents emissions from waste disposed via
landfilling, incineration, recycling, and compost. Emissions from waste
are calculated using methodologies and emission factors from the EPA’s
Waste Reduction Model (WARM), version 15. This model bases its
emissions calculations on a lifecycle analysis, including emissions fromthe long-term decomposition of waste in a landfill or from upstream
sources/sinks. GWPs are from the IPCC Fourth Assessment Report (AR4),100-year average.

37

Business travel

64

This category includes emissions from upstream transportation of goods,
including all transportation of goods that Microsoft finances. Microsoft
uses its suppliers' CDP Supply Chain responses to determine Scope 1, Scope2, upstream Scope 3 emission factors (tCO2e/$ revenue). The latest
available responses are used, so this report’s inventory considers 2021
submissions (i.e. 2020 data). Microsoft estimates emissions from CDP
Supply Chain respondents by multiplying the CDP-derived factor by theannual spend with the supplier. All other spend is mapped tocorresponding industry sectors and then multiplied by cradle-to-gateemission factors by sector from UK Defra’s "UK Defra, Table 13 – Indirectemissions from the supply chain. March 2014"—updated per the latest
inflation and currency conversion rates. Corporate-wide expense data for
all company divisions is obtained from the finance department. Industry
sectors already included in Scope 1 and Scope 2 (such as electricity
purchases) and other Scope 3 categories were removed to prevent double
counting. GWP values are derived from the underlying CDP Supply
Chain-based responses and Defra data sources.

81

Historically, this category has included emissions from commercial air
travel only. FY20 (reporting year) was the first year that additional
business travel emissions sources were included, including hotel nightstays, rail travel, reimbursed mileage, rental cars, and taxi/rideshares. Forcommercial air and rail travel, Microsoft Corporate Travel provides flight/
ride-level airport codes and cabin class data. The airport/rail station
codes are used to calculate distances to determine whether the flights/
rides were short, medium, or long haul. Using the distance-based
method, flight distances and cabin class are used to calculate CO2eemissions, using the appropriate emission factors from: 2020 Guidelines
to Defra/DECC's GHG Conversion Factors for Company Reporting).
For hotel night stays, Microsoft's preferred hotel vendors provided
emissions per hotel night stay coefficients. For other hotel chains,emissions were estimated based on nights stayed and the emission
factors from the EPA's Greenhouse Gas Inventory Guidance: Indirect
Emissions from Events and Conferences (Dec 2018). For rental cars,
mileage, fuel, and emission data was provided from each rental car
company. For taxi/rideshare and reimbursed mileage, emissions were
estimated based on spend using emission factors from EPA Emission
Factor Hub. March 2018. GWPs are from the IPCC Fourth Assessment
Report (AR4), 100-year average.

Upstreamtransportationand distribution* Represents the percentage of emissions calculated (by category) using data obtained from suppliers or value chain partners.

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Appendix D (continued)
Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Scope 3 category

Emissions calculation methodology

Employee commutingThis category captures emissions from commuting by all employees andcontractors that work in Microsoft buildings. Microsoft conducted asurvey in May 2019 to capture detailed commuting habits from
employees and vendors at our Puget Sound campus, representing ~36%of global Microsoft headcount. The survey is typically conductedannually but was not performed in 2021. The results were scaled toestimate global commuting emissions for Microsoft. CO2 emission rates
for passenger vehicles (single occupancy vehicle [SOV] and carpool) arebased on fuel consumption and miles travelled. A weighted average fueleconomy using the 2012 EPA Fuel Economy Trends Report 1975–2012 wasderived, which provides combined fuel economy for cars and trucks byyear, and a set of car and truck age fractions provided by the Puget
Sound Regional Council. This data was used to develop a weighted
average fuel economy for the Puget Sound area. Emission factors arederived from the Inventory of US. Greenhouse Gas Emissions and Sinks:
1990–2010, Annex 2 (Methodology for estimating CO2 emissions fromfossil fuel combustion). CO2 rates per passenger mile are based onFederal Transit Administration, 2010 (Public Transportation’s Role in
Responding to Climate Change, US DOT, Federal Transit Administration,
January 2010). GWPs are from the IPCC Fourth Assessment Report (AR4),100-year average. As nearly all Microsoft employees worked from homeduring the COVID-19 pandemic, FY20 was the first year to include
emission impacts from telework. Telework energy consumption isassumed to include workstation/plug-load energy usage, additional
lighting and household cooling/heating consumption. 1 laptop,
2 monitors and 3 lightbulbs are assumed for each employee; otherassumptions include 8 work hours/day and 250 days/year using thedevices. Office/workspace floor area and cooling/heating intensity are
assumed based on EIA’s 2015 Residential Energy Consumption Survey(RECS) data. From these assumptions, a carbon emission intensity per
employee is calculated, and total emissions are calculated by multiplying
the intensity by number of employees during the period of remote work.

10

Upstream leased assets

Not relevant. Microsoft includes leased assets in our Scope 1 and Scope 2
emissions reporting boundary.

Downstream
transportationand distribution

Included in this category are the emissions from transporting andwarehousing of devices Microsoft sold (including, but not limited to,Xbox devices, Microsoft Surface devices, HoloLens, keyboards, mice, andother peripherals) from Microsoft manufacturing sites to retailers andcustomers. Calculations are based on standard assumptions of distance
between retailers and their distribution centers and warehousefloorspace from an MWPVL International analysis of Walmart’s
distribution center network. Assumptions about the energy intensity of
warehouses come from the US Energy Information Administration (EIA)’s
Commercial Buildings Energy Consumption Survey (2012). Emission
factors for shipping come from the GaBi database. GWPs are from the
IPCC Fourth Assessment Report (AR4), 100-year average.

Processing of soldproducts

Not relevant. Microsoft did not have any physical intermediate productsin the years reported.

Use of sold products

Included in this category is the lifetime electricity use of devices Microsoft
sold including, but not limited to, Xbox devices, Surface devices, HoloLens,
keyboards, mice, and other peripherals. Lifetime electricity use per device iscalculated based on standard product-use assumptions as included in our
ISO 14040– and ISO 14044–compliant lifecycle analyses. This year updates
to energy use assumptions that reflect latest understanding of device use
via telemetry data are also included. Assumptions on total lifetime expecteduse (years) are used. Sales geography for the products sold is used todetermine the electricity emission factor used to calculate emissions. GWPs
are from the IPCC Fourth Assessment Report (AR4), 100-year average.

0

End of life treatment ofsold products

Included in this category is the end-of-life treatment of devices Microsoft
sold during the reporting year including, but not limited to, Xbox devices,
Surface devices, HoloLens, keyboards, mice, and other peripherals.
End-of-life emissions for each product are based on modeling within our
ISO 14040– and ISO 14044–compliant lifecycle analyses. To generate an
estimate for this category, the model assumes that all devices are sent tolandfills at the end of their useful life. GWPs are from the IPCC Fourth
Assessment Report (AR4), 100-year average.

0* Represents the percentage of emissions calculated (by category) using data obtained from suppliers or value chain partners.

Supplier data
percentage*0

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Appendix D (continued)
Scope 3 category

Emissions calculation methodology

Supplier data
percentage*

Downstream leased
assetsEmissions associated with sublets are calculated using the intensities
derived from data collected for the primary leased space (for example,
kilowatt-hours/square foot [kWh/SF]) and prorated for the square
footage of the sublet space. In this way, it is assumed that the emissions
intensities of the leased spaces are the same as the overall buildings inwhich they reside. Estimated refrigerants are calculated using the same
methodology and intensity as used to calculate refrigerant intensities for
assets occupied by Microsoft. Electricity emission factors used are those
appropriate to each location, as utilized in our Scope 1 and Scope 2
location-based inventory. GWPs are from the IPCC Fourth Assessment
Report (AR4), 100-year average.

0

Franchises

Not relevant. Microsoft did not operate franchises in the years reported.

Investments

Not relevant for reported years. Joint ventures, actively managed
investments, and direct equity investments totaled less than 2 percent
of Microsoft’s market capitalization at the end of the reporting period.
Microsoft has not engaged in the long-term financing of projects
and the proceeds for each debt issuance have been for general
corporate purposes.

* Represents the percentage of emissions calculated (by category) using data obtained from suppliers or value chain partners.

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Appendix D (continued)
Water and Waste
Primary data is used to calculate water withdrawal,
discharge and consumption, and waste generation where
Microsoft operates. Estimates are used where primarydata is not available.
Water withdrawals are based on data from utility bills
from our largest sites and, in some cases, estimations.
An estimation methodology for sites where primary data
is unavailable that considers square footage, electricity
consumption, and cooling type is used. Where discharges
and consumption are not metered, amounts are estimatedannually as part of the global water inventory aggregation
process. Most of the sites do not have discharge meters.
A low water consumption at many of the sites is estimated,
unless there are specific water consuming activities present.
Where there is water consumption (such as for landscaping,evaporative coolers, cooling towers, settling ponds), it isestimated that discharge equals the difference between
withdrawals and consumption. Microsoft continues to workon improvements for water consumption data collection.
Operational waste mass is based on data from invoices
and/or vendor/third party reports. In the absence ofactual data, there is an extrapolation methodology.
Depending on the type of site, the methodology
uses capacity (MW) based coefficients by region or
attendance to extrapolate waste for those locations
where primary data is unavailable. This year’s
extrapolation represents an improved methodology,
previously capacity based coefficients by equipment
technology type and floorspace were used.
All extrapolated waste is assumed to be landfilled in cases
where the disposal or diversion method is unknown.
The extrapolation excludes e-waste and is conservativeby making landfilled the default assumption for
disposition method. Year-over-year, waste data continues
to improve in that there is a continuous increase in theamount of actual data used in the inventory.

1.10 Reporting criteria
The summary table below defines the criteria for eachspecified metric included in Section 1 of Appendix
D. Management is also responsible for the selection
or development of the criteria, which management
believes provide an objective basis for measuring andreporting on the specified information referenced in
the table below.
Area

Specified Information

Criteria

TablesCarbonThe Statement of GHG
EmissionsGreenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition) and the Greenhouse
Gas Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard published by the World
Resources Institute/World Business Council for Sustainable Development (collectively the “GHG Protocol”)

1, 2, 3, 4, 5

Energy consumption within
the organization

Disclosure 302-1: Energy consumption within the organization from the GRI Standard: 302 Energy 2016

Energy intensity

Disclosure 302-3: Energy intensity from the GRI Standard: 302 Energy 2016

6
7

Management's Criteria: Total renewable electricity consumption in megawatt hours and the percentage of
renewable electricity.
Renewable electricity is defined as energy sources that are capable of being replenished in a short time throughecological cycles or agricultural processes.

EnergyMicrosoft-specified indicator:
100% Renewableelectricity disclosure

The scope of renewable electricity includes renewable electricity the entity directly produced and renewableelectricity the entity purchased, if purchased through a renewable PPA that explicitly includes RECs or GOs, a
Green-e Energy Certified utility or supplier program, or other green power products that explicitly include RECs or
GOs, or for which Green-e Energy Certified RECs are paired with grid electricity.
- For any renewable electricity generated on-site, any RECs and GOs must be retained (that is, not sold) and retiredor cancelled on behalf of the entity in order for the entity to claim them as renewable energy.
- For renewable PPAs and green power products, the agreement must explicitly include and convey that RECsand GOs be retained or replaced and retired or cancelled on behalf of the entity in order for the entity to claim
them as renewable electricity.
- The renewable portion of the electricity grid mix that is outside of the control or influence of the entity is
excluded from the scope of renewable electricity.
The percentage renewable electricity is calculated as total renewable energy consumption in megawatt hours
divided by total electricity consumption (as disclosed in Disclosure 302-1(c)(i) Electricity consumption from the
GRI Standard: 302 Energy 2016).

6

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Appendix D (continued)
Area

Water

Waste

Ecosystems

Specified Information

Criteria

TablesWater withdrawal

Disclosure 303-3: Water withdrawal from the GRI Standard: 303 Water and Effluents 2018

8

Water discharge

Disclosure 303-4: Water discharge from the GRI Standard: 303 Water and Effluents 2018

8

Water consumption

Disclosure 303-5: Water consumption from the GRI Standard: 303 Water and Effluents 20188

Waste generated

Disclosure 306-3: Waste generated from the GRI Standard: 306 Waste 2020

9

Waste diverted from disposal

Disclosure 306-4: Waste diverted from disposal from the GRI Standard: 306 Waste 2020

9

Waste directed to disposal

Disclosure 306-5: Waste directed to disposal from the GRI Standard: 306 Waste 20209

Microsoft-specified indicator:

Management’s criteria:

Land Protection

At the close of the reporting period,a. The total size in acres and country location of all habitat areas selected for protection for which
contributions were made.
b. A description of partnerships for which contributions were made that exist with third parties
to protect habitat areas.
c. Total acres categorized by the status as either (i) funded or (ii) protected.
d. Period in which funding occurred.
Size of habitat areas is calculated as Microsoft’s contribution amount divided by the cost per acre of the habitat
protection project as determined by the partner organization. These amounts are net of overhead costs.
Funded is defined as where agreements have been signed and contributions have been made.
Protected is defined as areas that are legally designated as permanently protected by government regulation.

10

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Appendix D (continued)
1.11 INDEPENDENT ACCOUNTANT’S REVIEW REPORT

Deloitte & Touche LLP
Suite 3300
925 Fourth Avenue
Seattle, WA 98104-1126
USA

To the Board of Directors of Microsoft Corporation
We have reviewed management of Microsoft Corporation’s (the “Company”) assertion that the specified information included in Section 1 of Appendix D of the accompanying 2021 Environmental Sustainability
Report (“Appendix D”) as of and for the fiscal year ended June 30, 2021 is presented in accordance with the criteria set forth in Section 1.10, Reporting criteria in Appendix D. The Company’s management is
responsible for its assertion. Our responsibility is to express a conclusion on management’s assertion based on our review.
Our review was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA) in AT-C Section 105, Concepts Common to All Attestation
Engagements, and AT-C Section 210, Review Engagements. Those standards require that we plan and perform the review to obtain limited assurance about whether any material modifications should bemade to management’s assertion in order for it to be fairly stated. The procedures performed in a review vary in nature and timing from, and are substantially less in extent than, an examination, the objectiveof which is to obtain reasonable assurance about whether management’s assertion is fairly stated, in all material respects, in order to express an opinion. Accordingly, we do not express such an opinion.
Because of the limited nature of the engagement, the level of assurance obtained in a review is substantially lower than the assurance that would have been obtained had an examination been performed.
We believe that the review evidence obtained is sufficient and appropriate to provide a reasonable basis for our conclusion.
We are required to be independent and to meet our other ethical responsibilities in accordance with the Code of Professional Conduct issued by the AICPA. We applied the Statements on Quality Control
Standards established by the AICPA and, accordingly, maintain a comprehensive system of quality control.
The procedures we performed were based on our professional judgment. In performing our review, we performed analytical procedures and inquiries. For a selection of the specified information included inAppendix D, we performed tests of mathematical accuracy of computations, compared the specified information to underlying records, or observed the data collection process.
The preparation of the specified information included in Appendix D requires management to establish and interpret the criteria, make determinations as to the relevancy of information to be included, andmake estimates and assumptions that affect the reported information. Measurement of certain amounts includes estimates and assumptions that are subject to substantial inherent measurement uncertainty
resulting, for example, from accuracy and precision of conversion factors or estimation methodologies used by management. Obtaining sufficient, appropriate review evidence to support our conclusion does
not reduce the inherent uncertainty in the specified information included in Appendix D. The selection by management of different but acceptable measurement methods, input data, or assumptions, may
have resulted in materially different amounts or specified information being reported.
Information outside of the specified information included in Appendix D of the 2021 Environmental Sustainability Report was not subject to our review and, accordingly, we do not express a conclusion or any
form of assurance on such information. Further, any information relating to periods prior to the year-ended June 30, 2021 or information relating to forward looking statements, goals and progress against
goals, was not subject to our review and, accordingly, we do not express a conclusion or any form of assurance on such information.
Based on our review, we are not aware of any material modifications that should be made to management of Microsoft Corporation’s assertion that the specified information included in Section 1 of Appendix
D of the accompanying 2021 Environmental Sustainability Report as of and for the fiscal year ended June 30, 2021 is presented in accordance with the criteria set forth in Section 1.10, Reporting criteria in
Appendix D, in order for it to be fairly stated.

March 10, 2022

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Appendix

Appendix D (continued)

Section 2:
Additional
environmental
metrics

Table 11

GHG emissions—Scope 1 regional detail (mtCO2e)
FY17

FY18

FY19

FY20

FY21

Scope 1 – CO2

82,44881,263

95,667

96,70094,292

Scope 1 – CH4

45

45

50

53

63

CH4 Emissions – Asia

5

4

3

4

4

CH4 Emissions – Europe, Middle East, Africa

16

15

26

28

36

CH4 Emissions – Latin America

9

9

5

5

6

CH4 Emissions – North America

16

17

16

16

17

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Appendix D (continued)
Table 12

Table 13

Other emissions (metric tons)

Other emissions normalized by revenue (metric tons/M$)
FY17

FY18

FY19

FY20

FY21

223

209

215

202

284

NOx Emissions – Asia

13

6

7

7

NOx Emissions – Europe, Middle East, Africa

152

145

144

NOx Emissions – Latin America

25

24

NOx Emissions – North America

33

FY17

FY18

FY19

FY20

FY21

NOx Emissions

0.00230.00190.00170.00140.0017

7

SOx Emissions

0.000140.000110.000100.00009

0.00011137

226

CH4 Emissions

0.00050.00040.00040.00040.0004

16

16

35

34

49

41

16

Table 14

13

13

12

12

18

Electricity consumption (MWh)SOx Emissions – Asia

2

1

1

1

2

FY17

FY18

FY19

FY20

FY21

SOx Emissions – Europe, Middle East, Africa

7

7

7

7

11

6,344,700

7,357,636

8,744,834

10,244,377

12,969,393

SOx Emissions – Latin America

1

1

1

1

2

Electricity Consumed – Asia

682,713804,024

1,066,033

1,225,534

1,473,254

SOx Emissions – North America

3

3

4

4

4

Electricity Consumed – Europe, Middle East, Africa

971,073

1,265,961

1,654,384

2,102,486

2,801,332

199

184

185

170

248

Electricity Consumed – Latin America

90,929106,936

117,222

113,456

174,762

VOC Emissions – Asia

10

3

5

5

4

Electricity Consumed – North America

4,599,985

5,180,715

5,907,195

6,802,901

8,520,045

VOC Emissions – Europe, Middle East, Africa

148

141

133

124

208

204,937

–

–

–

–

VOC Emissions – Latin America

24

23

15

16

35

VOC Emissions – North America

17

16

32

26

2

17,391––––PM Emissions

7

7

8

8

11

Non-Renewable Electricity Purchased& Consumed – Europe, Middle East, Africa

CO Emissions

1,860

1,704

1,721

1,584

2,392

3,603

–

–

–

–

1

1

1

0

0

Non-Renewable Electricity Purchased& Consumed – Latin America
Non-Renewable Electricity Purchased& Consumed – North America

–

–

–

–

–

Non-Renewable Electricity by Source – Coal

42,746––––

Non-Renewable Electricity by Source – Petroleum

34,058––––

Non-Renewable Electricity by Source – Natural Gas

148,643

–

–

–

–

Non-Renewable Electricity by Source – Nuclear

484

–

–

–

–

NOx Emissions

SOx Emissions

VOC Emissions

Ozone Depleting Substances

Total Electricity Consumed

Non-Renewable Electricity Purchased& Consumed – Asia

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Appendix D (continued)
Table 15

Table 16

Renewable energy consumption (MWh)Other energy consumption (MWh)
FY17

FY18

FY19

FY20

FY21

FY17

FY18

FY19

FY20

FY21

Renewable Energy Purchased& Consumed – Asia

466,243804,024

1,066,033

1,225,534

1,473,254

Total Non-Renewable Energy Purchased& Consumed

412,078

423,748504,527

512,788

512,470

Renewable Energy Purchased& Consumed – Europe, Middle East, Africa

941,343

1,265,961

1,654,384

2,102,486

2,801,332

Non-Renewable Energy Purchased& Consumed – Asia

34,096

20,44021,97524,877

26,712

Renewable Energy Purchased& Consumed – Latin America

85,935

106,936

117,222

113,456

174,762

Non-Renewable Energy Purchased& Consumed – Europe, Middle East, Africa

187,087

177,234

266,221287,890324,329

Renewable Energy Purchased& Consumed – North America

4,611,239

5,180,715

5,907,195

6,802,901

8,520,045

Non-Renewable Energy Purchased& Consumed – Latin America

23,99623,23913,977

13,90615,151

Renewable Energy Purchased& Consumed – Wind5,974,762

6,919,601

7,742,416

8,588,040

10,761,621

Non-Renewable Energy Purchased& Consumed – North America

166,899

202,835

202,354

186,116

146,277

Renewable Energy Purchased& Consumed – Landfill Gas

–

–

–

–

–

Fuel and Energy related activities(Transmission and Distribution Losses)

510,000

600,000

730,000

850,000

750,000

Renewable Energy Purchased& Consumed – Biomass

61,02947,129

2,347

–

22

Downstream Leased Assets

1,700

4,100

1,900

19,50050,398Renewable Energy Purchased& Consumed – Hydro

33,174

186,434

309,873440,834

289,996

Renewable Energy Purchased& Consumed – Geothermal–

72,000461,586

409,511

1,069

Renewable Energy Purchased& Consumed – Solar

35,795

132,472

228,612805,992

1,916,686

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Appendix D (continued)
Table 17

Table 18
20

Water withdrawal, consumption, and discharge detail (megaliters)

Verification/Assurance

FY17

FY18

FY19

FY20

FY21

5,148

6,719

7,505

7,618

7,657

Water Withdrawals – Asia

973

1,244

1,482

1,533

1,841

Water Withdrawals – Europe, Middle East, Africa

711

851

1,116

1,434

1,170

Water Withdrawals – Latin America

93

115

114

109

179

Water Withdrawals – North America

3,372

4,509

4,793

4,543

4,467

For carbon and energy: World Resources Institute (WRI)/World Business Council for
Sustainable Development (WBCSD) Greenhouse Gas Protocol, Corporate Accounting andReporting Standard, revised edition, including Scope 2 Guidance amendment (Scope 1 & 2);
WRI/WBCSD Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting andReporting Standard (Scope 3)

1,913

3,326

3,946

3,967

4,478

For water: CDP Water Security Reporting Guidance

Water Consumption – Asia

422

617

824

933

1,129

Water Consumption – Europe, Middle East, Africa

190

383

524

698

614

Water Consumption – Latin America

27

66

71

73

125

Water Consumption – North America

1,275

2,259

2,527

2,262

2,610

Water Consumption - Third-party

1,885

3,292

3,913

3,940

4,469

Water Consumption – Surface water

25

30

30

25

4

Water Consumption – Ground water

3

4

3

2

5

3,236

3,393

3,559

3,651

3,179

Water Discharges – Asia

551

627

658

600

712

Water Discharges – Europe, Middle East, Africa

521

468

591

735

556

Water Discharges – Latin America

67

48

43

35

54

Water Discharges – North America

2,097

2,250

2,266

2,281

1,857

Total Water Withdrawal

Total Water Consumption

Total Water Discharges – Municipal Treatment

20 For more information on water data, please see Microsoft's CDP Water Security response at www.cdp.net.

FY17 – FY20

Data for this period of time was third party verified by APEX using a limited level ofassurance. Below please find the criteria used to measure the carbon, energy andwater information:

For all years, the scope of the verification included GHG emissions for Scope 1, Scope 2,
Scope 3 business air travel, total energy consumption, total electricity consumption, total
renewable electricity consumption, total offsets purchased, total water withdrawals, total
water consumption, and total water discharges. For FY19 and FY20, the rest of Scope 3
category emissions identified as relevant were also included. Latest data adjustments
highlighted in this report made to historic data were outside of the scope of these previous
years’ review.
FY21

Deloitte & Touche LLP performed a review engagement on management’s assertion that the
specified information included in Section 1 of Appendix D as of and for the fiscal year ended
June 30, 2021 is presented in accordance with the criteria set forth in Section 1.10, Reporting
criteria. Deloitte & Touche LLP’s review report is included in Section 1.11.
Information relating to periods prior to the fiscal year ended June 30, 2021, was not subject
to Deloitte & Touche LLP's review and, accordingly, Deloitte & Touche LLP does not express a
conclusion or any form of assurance on such information.

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Appendix

Appendix E

PolicyMicrosoft supports carbon, clean energy,
and sustainability policy efforts at thestate and national level in the UnitedStates, the European Union, andelsewhere. The table on pages 117-118
outlines key sustainability policy andadvocacy actions Microsoft has taken
since our last sustainability report. To see
historical policy and advocacy actions,please refer to the January 2021
Sustainability Report.

Date

MarketDescription

Dec-20US

Participated in a statement encouraging US Congress and the President-elect to work together to enact ambitious, durable, andbipartisan climate policies.

Jan-21US

Expressed public support for the US rejoining the Paris Climate Accord.

Feb-21Illinois

Signed onto letter supporting policy in Illinois accelerating a transition to 100 percent clean energy.

Feb-21EU

Filed submission supporting increased EU GHG emissions reduction target in the European Commission public consultation on the
Renewable Energy Directive.

Mar-21EU

Joined European Green Digital Coalition to demonstrate the role of digital technologies in advancing climate goals.

Mar-21EU

Joined letter supporting Green and Digital Transformation in the EU.

Mar-21EU

Filed comments to the EU Energy Efficiency Directive highlighting our work on energy efficiency, auditing, and management systems.

Mar-21

Arizona

Joined letter supporting Arizona’s 100 percent clean energy rules.

Apr-21

US

Submitted comments to the US Department of Agriculture on ways to advance climate smart agriculture, carbon removal, andforestry strategy.

Apr-21

Washington

Advocated for Washington state's Climate Commitment Act which sets a robust carbon price through a cap and invest program.

Apr-21

Texas

Joined letter supporting resilient energy grid policies in Texas and opposing policies that penalize renewable energy.

Apr-21

US

Advocated for ambitious climate targets for the US’s national determined contributions (NDCs).

Apr-21USEngaged and advocated for the US Growing Climate Solutions Act to advance high quality standards for nature-basedcarbon removal.

Overview

Carbon

Water

Waste

Ecosystems

118

Appendix

Appendix E (continued)

PolicyDate

MarketDescription

May-21

US

Filed comments to the Securities and Exchange Commission supporting the Commission's development and adoption of climate
disclosure rules.

May-21

US

Participated in US Congressional Climate Infrastructure Lobby Day to support robust domestic climate policy.

Jun-21

US

Supported clean energy and climate provisions in the US Infrastructure Investment and Jobs Act.

Jul-21EU

Issued statement in support of the European Commission’s Fit for 55 package.

Jul-21

US

Participated in US Congressional Lobby Day for robust climate and energy investment in the bipartisan infrastructure andreconciliation packages.

Aug-21EU

Submitted comments to European Commission in support of a carbon removal certification mechanism.

Sept-21UK

Filed response to UK Financial Conduct Authority (FCA) consultation on carbon accounting.

Sept-21US

Submitted comments to the US Department of Defense on sustainability and climate-related disclosure.

Oct-21

GlobalJoined business letter in support of strong government commitments to climate action by national governments around the world.

Oct-21

US

Issued public statement in support of strong climate and clean energy provisions in the US reconciliation and infrastructure bills.

Nov-21

GlobalSelected as a Principal Partner for COP26 in Glasgow.

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