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2020 Environmental Sustainability Report A Year of Action Overview Carbon Water Waste Ecosystems Appendix 2 Contents Overview Carbon negative Water positive Zero waste Ecosystems Appendix Foreword 4 Our approach 14 Our approach 32 Our approach 45 Our approach 58 A – Commitments 70 How we work 5 Getting to carbon negative 17 Getting to water positive 35 Getting to zero waste 48 Taking responsibility for our 60 A – Partnerships 71 land footprint Our seven principles 5 Reducing Scope 1 and 2 17 Reducing our water 35 Driving innovation: Digital 51 A – How we report 72 emissions footprint tools for circularity Driving innovation: Building 61 Defining focus areas 6 B – Our environmental data 73 the Planetary Computer Reducing Scope 3 19 Replenishing water 37 Enabling systems change 53 Putting sustainability into 7 C – Materiality 82 emissions Enabling systems change 63 practice Improving access to water 37 Key learnings 55 D – Governance 85 Removing carbon 21 Key learnings 67 2021 Outlook 8 Driving innovation: 38 What’s next? 56 E – Policy 91 Driving innovation: Digital 22 Digitizing water What’s next? 68 2020 Progress 11 tools for carbon reduction F – Assurance 95 Enabling systems change 40 About this report 12 Enabling systems change 24 Key learnings 42 Key learnings 29 What’s next? 43 What’s next? 30 Links throughout the document For the best experience, we recommend to further information Carbon negative Water positive Zero waste Ecosystems using the free software Adobe Reader, or iBooks if viewing on an Apple mobile Link to web pages device. Interactive functionality may be limited when viewed in a web browser. Link to downloads This report is part of the Microsoft CSR Find out more elsewhere 1.3M 20 60K 10 metric tons of carbon water replenishment metric tons of waste diverted petabytes of environmental and sustainability reporting suite. Access in this document removal procured projects funded to date from landfills data now available all our reports at: Find out more here Overview Carbon Water Waste Ecosystems Appendix 3 Xxxxxx Contents Foreword4 4 How we work5 5 Overview Our seven principles5 5 Defining focus areas 6 6 Putting sustainability 7 into practice 2021 Outlook8 8 2020 Progress 11 About this report 12 Overview Carbon Water Waste Ecosystems Appendix 4 Foreword Over the past year, we built on this pledge by Microsoft can’t solve the world’s environmental announcing a series of commitments to be water “We believe that by challenges alone, but we can play a significant role in Letter from positive by 2030, zero waste by 2030, and to protect focusing on all the ways driving a broader societal transformation if we use our ecosystems by developing a Planetary Computer. positions of influence and our technologies to effectively we can drive change, we bring others along with us on our sustainability journey. Brad Smith When we set out on our carbon negative journey a year ago, we knew the climate crisis was urgent and can make an outsized 3. What should we do? required immediate attention. No one had yet realized This is what we focused most on in 2020. It required that the world would be facing a global pandemic and impact on climate change. In January 2020 we announced building a new sustainability vision and strategy for long-term shutdown just a few months later. Over the We, and other organizations Microsoft through a series of industry-leading a bold commitment and detailed past year, we’ve addressed both. COVID-19 is the crisis commitments to be a carbon negative, water positive, of the year, addressing climate change is the crisis of who are serious about plan to be carbon negative zero waste company by 2030, and to develop a new the decade. by 2030 and to remove from an environmentally Planetary Computer to better monitor, model, the environment all the carbon We grounded our sustainability strategy and and manage the world’s ecosystems. We’re making a commitments in the belief that technology can help sustainable future, bold bet to address climate change and the world the company emitted since its solve the world’s biggest challenges. We began by need to pull all levers will need to too. To help do that, we want to founding by 2050. asking three simple questions: become the world’s leading technology provider of influence we have.” of sustainable solutions. 1. Are we doing enough? The answer was simple: No. Microsoft has focused Brad Smith, President 2020 Report on sustainability for more than a decade, and we are In Microsoft’s first annual sustainability report, proud of our achievements. But those of us who can we look back at how and why we made our afford to move faster and go further should do so. commitments, details about them, Using technology, we can do just that, including progress to date, and key lessons we minimizing the environmental impact of our own have learned. We intend to not only operations and ensuring the resilience of our share our successes, but also share infrastructure to climate change. Importantly, we can our challenges. That is why, in each extend beyond our walls to help build the broader section, we’ve also included solutions the world requires. additional information and resources to help others accelerate their 2. Can we make a difference? progress towards a prosperous, just, We believe that by focusing on all the ways we can drive and environmentally stable future. change, we can make an outsized impact on climate 2050 change. We, and other organizations that are serious Microsoft will remove from about an environmentally sustainable future, need to the environment all the pull all levers of influence we have—our operations and carbon the company has Brad Smith, President as a customer, supplier, investor, employer, policy emitted since its founding advocate, and partner in innovation to customers, by 2050. organizations, and institutions around the world. Overview Carbon Water Waste Ecosystems Appendix 5 How we work Taking a Our seven principles principled approach Whenever Microsoft takes on a new and complex societal issue, we strive first to learn and then to define a principled approach to guide our 1 3 5 7 Investing in efforts. In 2020, we did the same Grounding in science Ensuring effective Enlisting our new solutions and math. transparency. employees. with environmental sustainability. and technology. 4 6 2 Empowering Using our voice on Taking responsibility customers and climate-related public for our footprint. partners around policy issues. the world. Overview Carbon Water Waste Ecosystems Appendix 6 How we work (continued) Defining focus areas vestmen tion, in ts, polic ova y, co We focus on four areas—carbon, water, waste, inn lle ld: cti or ve and ecosystems—where we can scale by minimizing W ac e ti the negative impacts of our operations and h on T ners: tech part nolog maximizing the positive impacts of our technology. and y, e rs na e bl om em While we start with our operations, our strategy st ommunities, s e u s, c upp n C ion ly t expands beyond our four walls by ensuring those at ch er a changes also benefit the communities in which p in o , e t: m f s we operate and flow into our product strategy. o m Ca p s te r l o s b o r y o y c s e i n Through technology adoption by customers o e c s M E and partners, we can drive positive impact across the globe, accelerated by our investments, engagement in policy, and 4 commitment to innovation. programs W a r s e te at W Overview Carbon Water Waste Ecosystems Appendix 7 How we work (continued) Driving global impact AI for Earth Putting sustainability into practice We also have programs that extend across all five We believe that there is a massive opportunity for the We support each of our four focus areas with five strategic pillars. They are: pillars to drive global impact, including investment technology sector to improve the way we manage the and climate science. Earth’s natural resources. In 2017, we launched Microsoft’s AI for Earth program to put cloud and AI Climate Innovation Fund (CIF) Operations technology into the hands of the world’s leading CIF will invest $1 billion over four years to help scale up ecologists and conservation technologists, and We will take responsibility for our carbon, existing climate technologies and invest in new organizations around the world that are working to water, waste, and land footprints across technologies that currently don’t exist or are too niche s C protect our planet. The program increases access to the way our products and facilities are em a for broad adoption. This work also supports Microsoft st rb AI technologies through grants, provides education sourced, manufactured, operated, and y P o sustainability commitments in carbon, water, waste, and s rod n on cloud and AI to increase collaboration through o ns uc managed at end-of-life, including our c io ts ecosystems. As we consider investments, we prioritize E t a our community, and fuels innovation through research supply chain. a n those that: r and strategic partnerships. So far, we’ve empowered e d p s over 700 organizations in more than 100 countries O e • Provide measurable climate impact in our four areas Products and services r v of focus. around the world working on game-changing We will develop new technology and i c environmental innovations. services driven by data, AI, and digital e • Bring additional capital to underfunded markets s technology to power environmental where the capital need for climate solutions is not Find out sustainability.