CSR reports are, by their nature, focused inward. At their best, they describe a company’s environmental, social and governance (ESG) challenges and accomplishments, which for many large global companies are substantial. But CTRL+F for “we” and you’ll realize quickly how repetitive this game can be. A laundry list of accomplishments can read as tone-deaf when compared to the crises happening outside the door. If the last year has taught us one thing, it’s that the big issues are interconnected. Global connectivity laid the groundwork for COVID-19 to spread rapidly and also contributes to the climate crisis. Longstanding systematic racism and racial violence fueled social unrest after George Floyd’s murder, but economic insecurity and cabin fever from the pandemic added fuel to the fire. Systemic change is the key to addressing climate change, and systems thinking is the only way to get us there.
That’s why I was so inspired to read the opening to Microsoft’s recent 2020 Environmental Sustainability Report. While the report, like all good CSR reports, covers progress on goals, the framing of Microsoft’s approach to the challenges is different from any other CSR report I’ve seen in recent years. The 2021 outlook from Chief Environmental Officer Lucas Joppa opens with, “For Microsoft to do well, we need the world to do well.” Many companies share a similar recognition and sentiment. Microsoft explains its theory of social change, and how the IT giant will move the levers it has at its disposal to make this change possible.
The creation of these six enabling conditions begins with the urgency of the problem:
We have a limited amount of time to accomplish what will be the most significant behavioral and technological societal transformation in modern human history. By 2030, society must be well on its way to mitigating and adapting to rapidly changing climates, ensuring resilient water supplies, reducing the amount of waste we generate, and reversing the ongoing and catastrophic degradation of ecosystems while halting the extinction of species. That is why this must be a decade of ambition paired with action. At Microsoft we appreciate the urgency, responsibility, risks, and opportunities ahead.
In order to address the challenges and achieve its carbon negative, water positive, and zero waste goals, and truly meet this urgent moment, Microsoft recognizes that a set of “enabling conditions” must occur outside its scope for Microsoft to achieve the high goals it has set. These are:
1. Risk Recognition A company can’t accurately address climate risk if there isn’t a solid body of data to make comprehensive risk assessment possible.
Microsoft calls for a widely adopted and comprehensive risk framework will need to be in place by 2030 to ensure every business can fully integrate environmental risk at the core of their corporate governance process.
2. Standards Setting Without a common way to measure and track carbon across industries and across companies, we can not accurately measure our progress. Microsoft sounds almost exasperated here:
If we can’t do basic math on carbon numbers from different sources because they were created using different methods, then how will we be able to track progress on emissions reductions and carbon removal, or incentivize suppliers or customers to improve their impact?
Microsoft calls for common sustainability units and methods of measurement across carbon, water, and waste.
3. Data Digitization Sustainability data is all-too-often collected and shared in a piecemeal way.
Microsoft calls for digital monitoring and recording of carbon emissions, water consumption, waste generation so that accurate date on the status quo can be reviewed and acted upon.
4. Innovation investment The scale and scope and speed by which we must draw down carbon require investment in new technology. While funding is beginning to flow for carbon reductions, mitigation and capture, there is little agreement on the framework that should guide these investments. That makes investments piecemeal and solutions one-off, when an integrated approach is required.
Microsoft calls for “a well-structured and accepted framework that aligns investment vehicles along an appropriate risk-tolerance spectrum, targeted on the most impactful areas.”
5. Market Maturation Microsoft describes the current carbon offset and carbon removal markets as “opaque and poorly understood.”
Microsoft calls for: Carbon offset and removal, water replenishment, and ecosystem service markets to grow rapidly and streamline in order to support the incoming demand and instill customer confidence.
6. Policy Progression Policy progression is the key to converting the individual efforts of well-meaning corporations and citizens into systemic change. “We cannot depend on the leaders to bring up the laggards,” explains Microsoft, “that is what government action must do.”
Microsoft calls for: a comprehensive comprehensive and globally coordinated policy regime that limits emissions in line with a 1.5ºC future by 2030.
In addition to stating these conditions and working to meet its commitment to be carbon negative by 2030, Microsoft has committed to work globally to help create the conditions for systemic change outlined above. Now that’s a global citizen.