Microsoft has announced robust financial results for the second quarter of 2024, demonstrating significant revenue growth and earnings. However, amidst its financial success, questions arise regarding the tech giant’s commitment to environmental sustainability and carbon emission reduction.
For the quarter ending in June 2024, Microsoft disclosed a revenue of $64.73 billion, reflecting a 15.2% year-over-year increase. Earnings per share (EPS) stood at $2.95, up from $2.69 in the corresponding period last year. The revenue surpassed the Zacks Consensus Estimate by 0.84%, while the EPS exceeded expectations by 1.72%. The company’s forecast for the first quarter revenue ranges between $63.8 billion and $64.8 billion.
The Intelligent Cloud segment, which includes Azure, generated $28.52 billion, marking a 19% increase. Despite falling slightly below the $28.68 billion consensus, Azure and other cloud services experienced a notable 29% growth, with AI services contributing 8 percentage points. In comparison, Google’s parent company, Alphabet, reported a 29% revenue increase from its cloud business, encompassing Workspace productivity software and Google Cloud Platform infrastructure.
Microsoft has set an ambitious target to achieve carbon negativity by 2030, aiming to remove more carbon dioxide from the atmosphere than it emits. By 2050, the company plans to offset all carbon dioxide emissions since its establishment in 1975. This commitment necessitates substantial innovation and collaboration, particularly in addressing complex emission challenges. Since establishing its sustainability goals four years ago, Microsoft has been a leader in climate change mitigation efforts, inspiring numerous other companies to commit to achieving net-zero emissions through technological advancements like AI, which enhance measurement, datacenter efficiency, and energy transmission.
Despite its financial achievements, Microsoft faces a significant environmental challenge in reducing Scope 1, 2, and 3 emissions. In the fiscal year 2023, the company’s total emissions increased by 29.1% compared to the 2020 baseline, attributed to ongoing investments in technology and infrastructure to support future innovations. Notably, over 96% of Microsoft’s total emissions stem from Scope 3 emissions, primarily originating from Purchased Goods and Services, Capital Goods, and the Use of Sold Products.
While Microsoft has successfully decreased Scope 1 and 2 emissions by 6% since 2020 through initiatives such as clean energy procurement and green tariff programs, Scope 3 emissions pose the most significant challenge. Addressing these emissions requires extensive collaboration across industries to achieve meaningful progress.
Microsoft’s journey towards carbon negativity is intertwined with global decarbonization efforts, emphasizing the importance of supporting carbon-free electricity infrastructure through procurement and investment. Recognizing the magnitude of this task, Microsoft has taken a pioneering approach by investing in carbon-free electricity to enhance the grids in its operational regions.
The company is actively working to diversify and expand the supply of impactful renewable energy and improve accessibility for all. By 2023, Microsoft had expanded its renewable energy portfolio to over 19.8 gigawatts across 21 countries, signing new power purchase agreements with various entities to advance its sustainability goals. Microsoft’s commitment to clean energy is evident in initiatives such as the Powerex 24×7 Clean Load Service, which delivers carbon-free hydro, solar, and wind power to its data centers year-round, supporting the company’s 100/100/0 goal.
Microsoft is also focusing on optimizing datacenter efficiency through initiatives like Power Usage Effectiveness (PUE) with a current design rating of 1.12, aiming for even lower values. Transitioning servers to low-power states has reduced energy consumption by up to 25%, contributing to a decrease in Scope 2 emissions. The company’s efforts to enhance resource utilization and server density have led to a 7% reduction in datacenter power infrastructure, while improvements in server utilization have resulted in a 1.5% reduction in hardware needs for Azure.
In line with its commitment to sustainability, Microsoft is advancing its fleet electrification efforts across its global campuses, with a goal of achieving a 100% electric fleet by 2030. The company is constructing an Electric Vehicle Fleet Facility at its Redmond headquarters to provide housing, charging, and maintenance services to support the transition to an all-electric fleet.
To address its unavoidable emissions, particularly Scope 3 emissions, Microsoft is dedicated to advancing carbon removal technologies. In the fiscal year 2023, the company accelerated procurement across various carbon removal pathways, leveraging long-term agreements to enhance the impact of large-scale projects. Microsoft aims to build a portfolio of over 5 million metric tons per year starting in 2030, while exploring innovative solutions like enhanced rock weathering.
Microsoft has secured contracts for 5,015,019 metric tons of carbon removal to be retired over the next 15 years, contributing towards its 2030 target. Notable projects include reforestation in the Amazon and a landmark bioenergy project with carbon capture and storage in partnership with Orsted. The company’s commitment to sustainability is further underscored by its recent agreements with BTG Pactual Timberland Investment Group and Indigo Ag for carbon removal credits, showcasing its dedication to environmental stewardship.
