Microsoft Faces Sustainability Challenges Amid AI Growth, Reaffirms Commitment to Climate Goals

The rapid expansion of artificial intelligence (AI) has presented significant challenges for Microsoft in achieving its ambitious sustainability targets, including its goal to become carbon negative by 2030. Chief Sustainability Officer Melanie Nakagawa acknowledged that “the moon has gotten further away,” referencing the increased difficulty in meeting these objectives.

In a blog post addressing Microsoft’s progress, Nakagawa emphasized the company’s continued commitment to its climate goals while noting that AI, despite its sustainability challenges, will also play a crucial role in developing solutions to achieve these ambitions.

“Already, we are seeing AI make a positive impact on the planet, and in the coming years, this technology will begin to rapidly accelerate climate solutions at a scale we’ve not yet seen,” Nakagawa stated.

Microsoft set its moonshot sustainability goals in 2020, committing to becoming carbon negative, water positive, and zero waste by 2030, as well as to protecting more land than it uses. However, the company’s environmental sustainability report from last year revealed that Scope 3 emissions, which constitute the majority of its carbon footprint, had increased by more than 30% since 2020. This rise was largely driven by the expansion of data centers needed to meet growing AI computing demands.

In response, Microsoft has introduced initiatives aimed at reducing its value chain emissions, including requiring key suppliers to use 100% carbon-free electricity and establishing a supplier decarbonization team focused on cloud and AI operations.

Nakagawa also highlighted Microsoft’s sustainability achievements, including its position as one of the world’s largest carbon-free energy buyers, with a 34 GW renewable energy portfolio across 24 countries, and the expansion of its water replenishment portfolio to 90 projects in over 40 locations. Additionally, the company has improved the repairability of its hardware products and surpassed its land protection goal by over 40%.

Despite these successes, Nakagawa acknowledged the difficulties ahead, stating, “We know that our work is far from over, and that the path ahead has gotten harder. The world is not on track to meet critical climate goals, and we see many of these challenges reflected in our own journey.”

Microsoft has also adjusted its climate strategy by shifting the use of its internal carbon fee, which was introduced in 2012 and extended to Scope 3 emissions in 2020. Instead of purchasing unbundled renewable energy certificates, the company is now directing funds toward long-term investments in carbon reduction, carbon removal, and clean electricity procurement.

“We are proud to continue making decisions that drive positive environmental impact in the market and deliver high-integrity investments. We remain resolute in our commitment to our climate goals and to empowering others with the technology needed to build a more sustainable future,” Nakagawa said.

Nakagawa joined Microsoft as Chief Sustainability Officer in early 2023, following her tenure as Special Assistant to the President and Senior Director for Climate and Energy on the National Security Council in the Biden administration, where she played a key role in international climate policy and energy initiatives.