Melanie Nakagawa, Chief Sustainability Officer at Microsoft

Microsoft's Sustainability Commitments

• Microsoft set ambitious sustainability commitments in 2020 to be carbon negative, water positive, and zero waste by 2030.
• Microsoft's sustainability goals include becoming carbon negative by 2030 and removing all the carbon from the atmosphere by 2050 that the company has emitted since its founding.
• Microsoft has a five-pillar strategy for becoming water positive, including reducing water use in operations, replenishing water to key basins, investing in water innovation and policy, and providing access to safe drinking water and sanitation.
• Microsoft is working towards becoming a zero-waste company through a circular economy approach and waste diversion across the value chain.

Microsoft's Approach to Sustainability

• Microsoft's approach to sustainability includes focusing on its own operations, helping customers on their sustainability journeys, and driving global sustainability through its climate innovation fund, policy enablement, and science and innovation.
• Microsoft uses an "invest to procure" strategy to scale markets and create demand for sustainable solutions.
• Examples of Microsoft's investments and partnerships include a 10-year contract with World Energy to offtake sustainable aviation fuel certificates, aiming to replace over 40 million gallons of fossil jet fuel, and a partnership with Alaska Airlines and 12.Making to fly renewable jet fuel made from captured carbon dioxide.
• Microsoft is also working to reduce its own footprint by innovating in data center design and operations, procuring more clean energy, and advocating for policies that support carbon-free power sources.

AI and Sustainability

• AI is playing an important role in sustainability, and Microsoft is exploring its use in areas such as energy efficiency, renewable energy, agriculture, and conservation.
• AI can be used to accelerate sustainability progress by analyzing large amounts of data, discovering sustainable solutions, and empowering the sustainability workforce.
• Microsoft is investing in AI solutions to address water replenishment, decongesting transmission lines, and developing long-duration battery storage and low-carbon concrete.
• Microsoft is working to build the AI skills and sustainability workforce by providing AI skills training and using large language models to make scientific reports more accessible.

Challenges and Opportunities in Sustainability

• Trade-offs companies face when advancing sustainability goals include low water technologies requiring more energy and siting data centers in areas with abundant clean energy.
• Microsoft sees the biggest technology gaps in hitting its renewable energy targets as supply in the market, long-duration battery storage, and transmission.
• Progress on ESG and climate tech is not linear, and there is currently a backlash against ESG with some companies pairing down their commitments.
• Microsoft believes companies should continue sharing their sustainability work even if they are not actively talking about it and that green hushing is a real phenomenon.
• The general ESG backlash is more pronounced in the US, while Europe continues to push for corporate sustainability reporting.
• Microsoft believes that sustainability and ESG issues are core to its success and continues to advocate for them.
• The political shifts can accelerate action on sustainability, as seen during the 2017-2020 period when climate tech investments surged.
• AI requires significant energy and water resources, which can have local environmental impacts.
• Microsoft is working to minimize resource use in AI operations by developing low water-consuming chips and using carbon-free energy sources.
• The company also emphasizes community engagement and programs to address local concerns about data center facilities.
• Microsoft recognizes the global sustainability potential of AI and seeks to balance near-term challenges with long-term opportunities.

Driving the Transition in Hard-to-Abate Sectors

• Convincing executives in industries with thinner margins and harder-to-abate emissions to prioritize sustainability requires a focus on the business case and potential regulatory risks.
• The mining sector can be incentivized to transition to capping methane and other mining components through regulatory environments.
• Some mining companies are investing heavily in hydrogen as they see a business model and an opportunity to convert their fleets at scale, reducing costs for the entire sector.
• Mining companies are becoming advocates for circularity due to the increasing difficulty in mining certain materials.
• Large companies like mining, cement, and steel face pressure to disclose their data due to regulatory requirements, which in turn affects their buyers who have made corporate commitments to reduce embodied carbon.
• New technologies are emerging that are cheaper and can be piloted at scale, making it easier for mining companies to adopt them.
• Invest-to-procure strategies can help close the gap for companies with tight margins by paying a green premium for products with green attributes.
• The combination of corporate commitments, policy, and technology is key to driving the transition in hard-to-abate sectors, but scaling these solutions is crucial.