Upping the stakes on its environmental goals, Microsoft
Corp. last May announced an objective to become carbon-neutral by the end of
June 2013. As part of that quest, Microsoft last year began charging its
business units a carbon fee for emissions from all air travel, data centers,
software development labs and offices.
The undisclosed fee, administered through corporate finance,
is designed to encourage "business groups to be financially responsible
for the cost of offsetting their carbon emissions," according to Microsoft's
2012 "citizenship report."
The fees will help the company "build an investment
fund that can be used for a variety of renewable energy and offset projects,"
in turn helping to enable carbon-neutrality.
Four months after implementing the new fee, Microsoft senior
travel manager for strategy and technology Eric Bailey said it "had been
very positively received" by company travelers. Microsoft hasn't disclosed
the estimated cost of offsetting its air travel emissions, but Bailey said "it's
in the millions" of dollars.
Internally, the company has established a price for carbon, "reflecting
true cost accounting that will provide a new perspective on the cost of
emissions," according to the plan's architect, Microsoft senior director
of environmental sustainability Tamara "TJ" DiCaprio.
The full cost of air travel, according to DiCaprio, "includes
not only the price we pay the airlines for the airplane ticket, but also the
price we pay to offset the carbon emissions associated with the flight. By
embedding the cost of carbon in our financial systems, we have a direct way to
measure and drive behavior change in a companywide, systems-based way. When a
potential emissions-reduction project costs less than the fee for the carbon
that would otherwise be emitted, it encourages responsible—and
Microsoft for years has tracked its carbon output, Bailey
said, and in 2007 joined the Carbon Disclosure Project, a U.K.-based
organization dedicated to disclosing and reducing corporate emissions. "I've
been working with our sustainability team for quite a while," he said. "As
a company, we think it's the right thing to do. We're trying to create
incentives to reduce energy. One way to do that—whether you call it a carbon
tax or fee—is to make different stakeholders and cost centers pay. Everybody
has to pay."
The new goal was set after Microsoft met a 2009 objective to
reduce by the end of its 2012 fiscal year on June 30, 2012, carbon emissions
per unit of revenue by 30 percent from 2007 levels. In a 2012 company white
paper entitled "Becoming Carbon Neutral," DiCaprio explained that
Microsoft had "reduced emissions associated with our business offices and
air travel" since 2009. "However, during that time we have also
accelerated the shift in our business strategy to cloud computing and invested
more than $3 billion to build facilities and networks globally to support this
strategy. This has significantly increased our use of electricity and therefore
our gross carbon emissions. To counteract the carbon impact of this change to
our business model, we adopted a multi-pronged strategy, including increasing
our investments in high-quality, externally verifiable renewable energy and
[PROFILE_1]A reduction in air travel spurred by the dip in the global
economy helped employees achieve the 2009 goal, Bailey said, but they also are
becoming more aware of the consequences of their decisions.
To achieve the company's carbon-neutral goals, Microsoft
officials had to "increase our employees' awareness of environment issues
and engage them directly in sustainability work." As part of that initiative,
it named environmental sustainability leads in each country or region,
recruited volunteers to serve as sustainability champions to encourage good
choices, established education campaigns and introduced quarterly awards for
efforts that make a "significant contribution to reducing the
environmental impact," including $1,000 donations to the environmental
charity of each winner's choice.
"This commitment will apply to our internal operations
across more than 100 countries associated with our data centers, software
development labs, offices and air travel," according to the Microsoft
blog. "We will quantify the carbon impact of our operations and drive
responsible business decisions around energy use and air travel by setting an
internal price on carbon, measuring our actual emissions and then charging the
teams responsible for those emissions. … Beginning in fiscal 2013, all business
groups will build the price of carbon into their budgets. These groups will be
able to limit their carbon liability by using less energy—either through
efficiency or directly sourcing renewable energy and reducing air travel."
DiCaprio wrote that the company was "evaluating a
target based on air travel miles per employee. … Our policy is that air travel
should be considered a last option for meetings with colleagues and partners."
According to Microsoft's travel policy, "Microsoft
expects employees and managers to carefully evaluate the business benefit of
traveling before incurring travel expenses; to consider the impact on the
environment before booking travel. The average business trip generates more
than 2,200 pounds (or more than 1 metric ton) of carbon. Employees are
encouraged to examine low-cost alternatives, such as using [Microsoft messaging
service] Lync. For a richer and more lifelike virtual meeting experience, Microsoft
has also invested in telepresence rooms in major business hubs such as Seattle;
Reading, [U.K.]; Beijing and Hyderabad. These rooms can provide the feel of a
face-to-face meeting without the cost and time lost due to travel. There is no
cost to the business user to use telepresence rooms."
Since 2007, DiCaprio said, increased use of the "collaboration
products and operational control measures have helped us reduce our carbon
footprint from air travel by more than 30,000 metric tons." The company
uses several of its own collaboration tools built into Office, SharePoint and
But company employees also continue to travel, with last
year's companywide air tab totaling more than $231 million, according to
company officials. For 2011, Microsoft reported Scope 3 emissions—those
generated by company activity, but from sources controlled by others—of 40,848
metric tons of CO2, less than in 2010 and slightly more than in 2009.
The "track and tax" system is designed on three
pillars, according to DiCaprio's white paper:
• "Be lean: setting targets to drive more efficiency
with the energy consumed in data centers, labs and offices as well as to reduce
use of air travel. Technology will play an important role in both how we
achieve those targets and how we measure our progress along the way
• "Be green: purchasing more renewable energy and
establishing goals to reduce waste and water use
• "Be accountable: quantifying the carbon impact of
operations and driving responsible business decisions around energy use and air
travel by setting an internal price on carbon, measuring our emissions, and
charging a carbon fee to the teams responsible for those emissions."
While employees' choices regarding air travel and
conferencing have been affected, Bailey said he thus far has been unable to
significantly influence suppliers to use lower-carbon-footprint planes on
Microsoft's frequently traveled routes. "We're like 2 percent of total
volume" on most flights, he said.
This report originally
appeared in the February 2013 issue of Travel