Tuesday, 19 February 2013

Microsoft’s internal carbon pricing - update

MicrosoftBack in October, when Microsoft released its 2012 Citizenship Report, the company said that it had introduced an internal carbon fee based on renewable energy and carbon offset prices. The fee was implemented at the start of the company’s financial year in July 2012. It’s part of a move to increase accountability for environmental goals across the business. 

In a recent ‘interview’ in Microsoft’s green blog Tamara ‘TJ’ DiCaprio, Senior Director of Environmental Sustainability in the US and the architect of the scheme, gave more details and talked about progress to date.

The idea of the scheme is to charge a fee for the carbon associated with the use of electricity and for business air travel. So carbon is equated to a value and connects sustainability goals with long-term financial planning. The funds collected by the scheme are invested in additional efficiency, clean energy and carbon offset projects.

One example DiCaprio gave of where the fee kicks in is where a business group plans their operating costs of future business over five to seven years. The total cost now also includes the carbon fee associated with its lifetime energy consumption, to support a cloud service, for example.

According to DiCaprio the result has been ‘inspiring’, with teams forming to discuss how to drive efficiencies and further invest in more clean energy. As result, Microsoft is in the process of reviewing new long-term commitments to purchase renewable energy and invest in a variety of efficiency projects.

One additional factor has been the creation of energy efficiency grants, funded by the carbon fee, to promote efficiency across the company. Business groups can submit proposals for projects that support carbon reduction and increased efficiency, such as metering, lighting retrofits, energy management programmes and travel reduction. The grants came about because it became clear that directly supporting business group efforts would be much more effective than simply a punitive model.

Review:  This is a great initiative from Microsoft. One of the truisms of sustainable business is that you have to get the whole business involved and that’s clearly what the company has done. It seems to have started as a top down instruction to business groups, but, according to DiCaprio, has resulted in a great deal of employee involvement.

All the comments are positive, but I would be interested to know more about the challenges. Imposing an internal carbon fee across the business may be the way to focus minds, but it’s also likely to create some friction. I would be interested to know where the difficulties were and how they were overcome – it might be something that other companies can learn from.

But DiCaprio made one important point: “We don’t need to wait for legislation. We have the opportunity to take action now to help mitigate climate change by improving operational governance of our own organisations and setting an example for others to follow. As sustainability leaders, we can lead the change we are searching for today”. And that’s particularly important, since legislation isn’t getting us anywhere.

© The Green IT Review

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