Eager to Know How American Corporations Will Adapt to Climate Change? Head to the West Coast to Find out as Microsoft Reveals Ambitious Plans
Microsoft President Brad Smith, Chief Financial Officer Amy Hood and CEO Satya Nadella. Photo by Brian Smale
“No one company can solve this macro challenge alone, but as a global technology company we have a particular responsibility to do our part. That’s why today, we’re announcing an ambitious new plan to help address the sustainability of our planet. Today we’re making the commitment that by 2030, Microsoft will be carbon negative.”
Under the leadership of CEO Satya Nadella, Microsoft has removed extraneous and less profitable ventures, while boosting its cloud computing and enterprise services, increasing the company’s profits substantially and poised to deliver $10 billion a quarter in profits as of last year. The company enjoys tremendous profitability through smart decision making, but its decision to lead so boldly in terms of addressing climate change takes the company from being a Wall Street favorite to a visionary company.
Microsoft has laid out a clear, direct plan of bold action to combat climate change and reduce carbon on its website. The tech giant has set a high bar that affects its entire operation. By 2025 for example, the company intends to shift its entire energy supply 100 percent to renewable energy, purchasing only renewable energy for all of its energy sources that power its data centers, buildings and campuses.
Image via Microsoft
The Seattle-based company has three primary steps for its Carbon Negative plan. The first step involves reducing carbon emissions and working with its entire supply chain, which includes Scope 3 emissions, to reduce their overall carbon footprint from operations to use of products and all pathways to products.
The second step involves using Microsoft technology to assist both its customers and suppliers to reduce their own footprint along with a $1 billion fund to “accelerate the global development of carbon reduction, capture and removal technologies.”
The third and final step is to actually “remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975” by 2050.
Microsoft has already led the way in encouraging all of its businesses to reduce carbon reductions by offering internal pricing. The company can take this further now along its full supply chain. In addition to the company’s own powerful leadership in the area, Microsoft has also called for public policy changes to support efforts that reduce and remove carbon from the atmosphere.
Will Other Companies Follow Suit?
Some naysayers and skeptics believe that until all companies play by the same rules, it is not yet competitive enough or lucrative enough for Microsoft to lead the technology industry by adopting renewable energy throughout its various businesses and that pollution is still “worth money.”
Microsoft’s leadership in this area despite such recalcitrance demonstrates its ingenuity, intelligence and the powerful recognition that something has to be done and soon or the entire capitalist model is at risk. Instead of worrying about being competitive for short-term gain, Microsoft has clearly demonstrated its commitment to its long-term vision and that the company is more interested in creating and cooperating, instead of just competing for its own sake. By doing this, the company makes the playing field more fair, but also ensures its own future with healthier options.
Apple has already demonstrated its commitment to renewable energy by powering its HQ and all of its offices using renewable energy. The company also has been innovating in terms of its supply chain, particularly through the manufacturing of aluminum.
Larry Fink’s Letter: A Fundamental Reshaping of Finance
In January, Larry Fink, the well known investor and CEO of BlackRock, the world's largest asset manager, with $7.4 trillion in assets under management at the end of Q4 in 2019, shared his insight in his annual letter to CEOs who are leading BlackRock’s portfolio of companies, where he called for action on climate in a letter he aptly called A Fundamental Reshaping of Finance.
“We don’t yet know which predictions about the climate will be most accurate, nor what effects we have failed to consider. But there is no denying the direction we are heading. Every government, company, and shareholder must confront climate change.”
Fink’s letter clearly demonstrates a shift in positioning by the investment company, its acceptance of climate change as a looming reality and the importance for more disclosures, proxy voting on climate concerns and divesting BlackRock from its fossil fuel investments such as coal. Fink also stays on point, sharing that the purpose of any enterprise is to create real value.
BlackRock’s influence despite its size is limited as its team functions more as coaches and advisors than actually altering client portfolios. The company manages index funds that can be bought and sold to rebalance, but never exit holdings. Despite its limitations, the letter is noteworthy for its acknowledgement of climate change risks and adapting business investments to adapt to these risks, as well as his discussion of the necessity of government policy that supports action on climate change.
Microsoft Leading by Example
The question that remains then is what shape will government policy take on? Will government take action led by the markets or vice-versa? Taking action requires demonstrating a plan for policy and putting that policy into practice. Regardless of who leads, action is now underway, which definitely is a win-win for the country, and possibly, the world as a whole as these changes reverberate across the planet.
