Microsoft Tells Suppliers to Go Green to Meet Its 2030 Goals

In a bid to drastically reduce emissions outside its direct control, Microsoft is urging its suppliers to take initiative.

The company acknowledges that a staggering 97% of its total carbon footprint is attributed to Scope 3 emissions, which include emissions from suppliers, partners and the utilisation of its products.

An overwhelming majority of these emissions, nearly three-quarters, originate from two main categories: purchased goods and services and capital goods.

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

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

Singapore summit puts suppliers on the front foot

In May, the inaugural Microsoft Global Supplier Sustainability Summit was held in Singapore, where suppliers from across Asia and other regions convened.

The summit aimed to evaluate progress, exchange strategies and chart a course for sustained emissions reductions.
This event underscored the technological collaboration necessary for meaningful decarbonisation in the supply chain.

"Microsoft is not doing this work because decarbonisation is easy; we are doing it because it is necessary," said Will Hudson, Microsoft’s Director of Energy & Sustainability Policy, in opening remarks.

To meet its ambitious carbon-negative target by 2030, Microsoft must first achieve near-zero Scope 1 and Scope 2 emissions.

Simultaneously, it plans to considerably slash its Scope 3 emissions and remove more carbon than is emitted.

Scope 3 encompasses a broad range of emissions, from those embedded in hardware and infrastructure to emissions generated when customers utilise Microsoft products.

An emerging concern is the rise of indirect emissions by 30.9% since 2020, driven largely by data centre expansions designed to accommodate the burgeoning demand for cloud services and AI technologies.

These expansions entail materials, servers, and components that contribute to the carbon footprint.

Understanding where emissions are most prevalent, Microsoft has pinpointed key emissions “hotspots” within its supply chain.

Manufacturing sectors, particularly those involved in semiconductor and electronic part production, are noted for their carbon intensity.

This includes the creation of displays and printed circuit boards, which heavily impacts carbon emissions due to their material needs, energy consumption and manufacturing processes.

Additionally, contract manufacturing involving assembly and testing adds significantly to the carbon emissions load.

Electricity: The clearest path to impact

A key theme at the summit was the shift toward cleaner electricity.

For many suppliers, transitioning to clean energy represents a straightforward means to slash emissions.

However, the challenge lies in the regional availability of carbon-free electricity (CFE).

Microsoft’s updated 2024 Supplier Code of Conduct now mandates that suppliers transition to 100% CFE for products and services supplied to Microsoft by 2030.

This energy must also be generated in the same region it is consumed, which will spur the addition of new CFE generation capacity, hence reducing reliance on fossil fuels.

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

Further leveraging technology, Microsoft is deploying its US$1bn Climate Innovation Fund to support technologies that facilitate carbon reduction and removal.

Investments include companies like LineVision, which utilises AI technology to enhance the existing capacity of transmission lines, accommodating more renewable energy resources without necessitating new infrastructure.

AI also plays a crucial role within Microsoft's supply chain, where it aids in the intricate task of emissions tracking.

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

Currently, 70% of Microsoft’s product carbon footprints are calculated using primary data from suppliers, compared to an industry average of just 20%. 

This has freed Microsoft’s sustainability teams to focus less on gathering data and more on acting on it — finding efficiency opportunities and helping suppliers get access to clean energy.

Tackling Scope 3 emissions with urgency

Despite technological advancements, the journey toward impactful Scope 3 emission reduction is uneven.

According to Microsoft’s 2024 sustainability report, there has been a 6.3% reduction in Scope 1 and 2 emissions since 2020.

Nonetheless, Scope 3 emissions have continued to rise, impacted heavily by data centre development and the associated embodied carbon.

In response, Microsoft has initiated an enterprise-wide action plan encompassing more than 80 targeted actions aimed at reducing Scope 3 emissions.

These actions include transitioning high-volume suppliers to clean electricity and leveraging digital tools for precise emissions measurement.

The strategy is based on enhancing measurement techniques, creating more efficient data centres, forming partnerships around innovative technologies like low-carbon materials and encouraging more sustainable procurement processes.

Through these efforts, Microsoft acknowledges the indispensable role of suppliers in meeting its climate objectives, stressing that it cannot achieve its 2030 target.