Microsoft’s latest sustainability report, published recently, showcases the stark challenges the tech giant faces in reconciling rapid data-center growth with its ambitious climate goals.
Since 2020, Microsoft’s carbon emissions have surged by approximately 23.4%, driven largely by the rapid expansion of its global data center infrastructure. This buildout is essential to accommodate the company’s booming cloud services and intensifying push into artificial intelligence. Paradoxically, achieving the necessary clean electricity supply isn’t proving the main obstacle—rather, the crux of the problem lies in constructing these centers, amid intense reliance on carbon-intensive materials such as steel, cement, and semiconductor chips.
Microsoft acknowledges the fundamental hurdles it faces, particularly within what are termed Scope 3 emissions—indirect emissions that occur beyond the company’s direct operational control. Scope 3 emissions, which encompass components such as raw materials, logistics, and purchased goods, comprise over 97% of the total carbon footprint reported by Microsoft for fiscal year 2024.
According to a company spokesperson, the most significant contributors to its Scope 3 burden are capital goods and purchased services, collectively constituting roughly three-quarters of all carbon emissions. At the heart of this issue is the construction phase of data centers, where emissions-intensive materials heavily dominate the production supply chain: Steel largely derives from blast furnaces powered by fossil fuels, and concrete relies on processes generating substantial carbon dioxide emissions. Although Microsoft is actively investing in startups exploring sustainable innovations in steel and cement production, significant results from these efforts aren’t expected soon enough to affect near-term goals.
Computer chips, another essential component within data centers, further exacerbate Microsoft’s carbon challenges. The production of these semiconductors involves substances with significant global warming potential. One notable example is hexafluoroethane, a chemical utilized extensively in chip manufacture which can be over 9,200 times more potent as a greenhouse gas than carbon dioxide.
Geography compounds the difficulty of procuring carbon-free electricity. Many data centers aren’t conveniently located to harness abundant renewable sources, forcing Microsoft to seek remote energy solutions and buy power from potentially distant clean-energy supplies. “Our electricity consumption has grown faster than the grids where we operate have decarbonized,” a Microsoft spokesperson explained.
Despite these formidable challenges, Microsoft’s most recent emissions figures indicate modest improvement over the previous year, suggesting that the company’s efforts to reduce the impacts from new data-center constructions are beginning to take effect. Yet, significant hurdles remain on the path to achieving its publicly stated goals. By 2030, Microsoft maintains it will remove more carbon emissions than it directly or indirectly produces. To reach this goal, the firm estimates it must slash current emission levels by over half—simultaneously enhancing its capacity to remove carbon dioxide from the atmosphere.
The company has already taken significant steps, recently becoming a leading buyer and investor in major renewable energy projects, expanding its zero-carbon electricity portfolio to a capacity of 34 gigawatts. Additionally, Microsoft has secured substantial carbon-removal contracts intended to eliminate millions of metric tons of carbon emissions.
Nevertheless, with 2030 quickly approaching, Microsoft’s accelerated growth in AI and cloud services, while commercially lucrative, has undeniably complicated its pursuit of ambitious sustainability objectives.
