Executive Summary

Goals

Microsoft is committed to on-going evaluation and improvement of their business practices and has established a goal to reduce company carbon emissions per unit of revenue by at least 30% compared with 2007 levels by 2012. They aim to achieve this goal by improving energy use in their buildings and operations, reducing air travel, and increasing their use of renewable energy.

Strategy

Microsoft Environmental Sustainability Strategy focuses on three core areas:

• Using information technology to improve energy efficiency: They are working to unlock technology’s potential to enable a more energy-efficient economy.
• Accelerating research breakthroughs: Microsoft are researching and developing technologies to help solve environmental challenges.
• Demonstrating responsible environmental leadership: The company is focused on incorporating sustainable practices into their operations and minimizing their own environmental footprint, while growing the business.

Staff Engagement

• Executive Communication: Steve Ballmer sent an e-mail to all 90,000 Microsoft employees laying out their environmental vision and commitment, encouraging employees to support the effort, and linking to an internal webcast with COO Kevin Turner, Chief Research and Strategy Officer Craig Mundie, and Chief Environmental Strategist Rob Bernard.
• Environmental Sustainability Leads/Ambassadors Program: Direct engagement program with their worldwide field and subsidiary representatives. ES leads are chosen and trained as responsible for driving sustainability goals (internally and externally) across their field organization. These goals include employee engagement, reducing the carbon footprint of their subsidiary, engaging with customers and government officials.
• Connector Bus Service for Employee Commute: This private bus service provides employees with a commute service from the Puget Sound region to the Microsoft Redmond campus. It has reduced Microsoft's single occupant vehicle rate from 66% to 62% in one year. The Connector service is estimated to save approximately 6.5 million vehicle miles and 3000 metric tons in carbon emissions. This program was recognized by the Washington State Governor’s Commute Smart Awards in 2008 with the Outstanding New Program Award. The 53-vehicle, Wi-Fi-equipped fleet provides about 3,000 rides per day, serving 8,650 employees per month. The number of routes was doubled in May 2008 and expanded again by 20% in October 2008 to include service to nine additional areas in Puget Sound.

Progress

Microsoft has initiated a number of programs to measure and reduce the impact their employees have on the environment. This includes Energy Efficiency of Buildings and Operations:

• Microsoft's new data centres consume 50% less energy for the same level of output from data centres built just 3 years ago. This is achieved by: Efficient design of data centres to allow for flexible configuration; Optimization of power and cooling requirements; Effective reporting and monitoring of server utilization, and proactive management of issues

• Newer Microsoft-owned buildings are designed to meet LEED green building standards and consume approximately 20% less energy than traditional buildings. As one example, at the new Microsoft campus in Hyderabad, India, double-glazed windows and sunshades reduce reliance on air conditioning, lights turn off automatically, and a reservoir recycles rainwater to irrigate the 48-acre campus and run energy-efficient, water-cooled AC units.

Reducing Travel: Microsoft is using its own technology to reduce the amount of corporate travel: Microsoft has created and funds its own free commute service called the Microsoft Connector for employees at their corporate headquarters.

Microsoft interview with Steve Lippman

Since 2008, Steve has been Director of Environmental Sustainability at Microsoft, serving on the company’s corporate Environmental Sustainability strategy team and leading Microsoft’s engagements with environmental NGOs and policymakers.

What do you think of the sustainability scorecards being produced?

I and many others have called the Wal-Mart Eco Index and their other sustainability work the most ambitious development in corporate sustainability over the past decade. With the Eco-Index, Wal-Mart is aiming to get all the environmental data for a product rolled up across the supply chain into one metric that consumers can consider. Wal-Mart is employing experts and universities to help them but it is a struggle to think about how to have a metric simple enough to be useful for customers that takes so much disparate data into account. I think it will take a long time to happen and metrics that allow comparisons within a specific sector may be the first place it gets traction.

What is your view of the score carding process?

From an internal perspective, the more a scorecard can be tied to areas your company are concerned with the better. The metrics need to grab management’s attention and relate to cost and quality to be effective. From an external perspective, scorecards need to provide information in a way that is meaningful to stakeholders. We’re working right now with a number of purchasing groups across Microsoft to see how we can drive consistency in what we report across the diverse set of suppliers in our supply chain.

Where do Microsoft sit on the carbon trading?

We have set a 30% normalised reduction goal from 2007 to 2012. Even though we've done great things with our efficiency, meeting this goal next year poses a real challenge because we set the goal just before a titanic shift in our business model in terms of cloud computing. We are now moving our customer’s data into our more efficient data centres. From a carbon reporting perspective, that means we are taking on some of what was their carbon footprint from computing energy use. From an accounting point of view our emissions go up, but we know from research we’ve supported Accenture and WSP Environmental with, the greater efficiency of cloud computing will reduce the net emissions of that computing load. Microsoft has been supportive of government frameworks to address climate change and have participated in the past several UN Climate Summits seeking to negotiate a post-Kyoto international climate agreement.

What are the overall carbon reductions you have managed to achieve?

We have consolidated our data centres into central, more efficient ones and we are continuing to push travel reduction and the use of our own technology for remote meetings.

In terms of how to engage employees in these efforts, we have a corporate environmental sustainability department as well as a number of environmental experts embedded within our product and operations groups. One challenge we’re tackling is to understand which messages will engage employees in our efforts and not just inform them of Microsoft’s work. Our employees have different jobs and locations so providing the specific information they need is a challenge.

It’s certainly easiest when an office culture supports sustainability, such as in the U.K. where many of the incentives are right for operating a sustainable business. For instance, the CRC regulations require action and transparency, major customers are asking for it, the employee workforce is very environmental sensitive, and there are strong external standards with public support like the Carbon Trust. We are certainly making good traction in other places but it is a constant effort to keep it moving forward without all those supporting influences.