What Microsoft’s new app says about the digitalization of sustainability

Energy

There is no shortage of early-stage startups developing software applications to support carbon accounting and emissions management — there’s even one, Sinai Technologies, working on analytics to help businesses set an internal price on carbon.  

As corporate interest in integrating and managing sustainability metrics intensifies, however, the category is attracting the notice of much more established enterprise software players.

Salesforce was the first to jump in publicly two years ago when it turned its homegrown reporting platform into an offering called the Sustainability Cloud. Now, two other formidable companies are staking their claim.

The first, ServiceNow, which helps the likes of Airbus, MGM and Wayfair manage internal processes and workflows, announced an integrated ESG platform in mid-October. The application is already integrated with two other software platforms that should be familiar to sustainability professionals: EcoVadis, which helps companies keep tabs on ESG practices among their supplier networks; and Watershed, a carbon measurement, reporting and reduction tool used by companies including Airbnb, Doordash, Stripe, Spotify and Sweetgreen. ServiceNow is also partnering with the Value Reporting Foundation, which controls the SASB framework, as well as the Global Reporting Initiative.

And today, the world’s largest software company Microsoft officially enters the mix with a public preview edition of Microsoft Cloud for Sustainability. Like Salesforce, the company is building on processes developed internally to support its own corporate sustainability strategy and reporting to create a product that will be sold to other companies interested in taking the same sorts of steps.

MIcrosoft’s sustainability strategy is one many other tech companies look to for inspiration — it was among the first to set an internal price on carbon, in order to invest in renewable energy initiatives. The company has also been a leader in aggressive support for carbon removal projects, rather than just initiatives focused on emissions avoidance. 

Microsoft Cloud for Sustainability

The application can calculate and report on Scope 1, 2 and 3 emissions by using data gathered automatically from connections to other enterprise business applications, such as energy management systems. The promise is near real-time visibility into these metrics, something that is virtually impossible with the highly manual processes many sustainability teams use currently.

“Organizations need a system of record that enables them to see their emissions today and understand if their actions are working,” said Kees Hertogh, general manager for global industry product marketing at Microsoft, during a briefing last week about the new product along with updated about the company’s renewable energy, water and sustainability data centers strategy.

“It should provide the ongoing intelligence and actual insights to guide further reduction. It’s not just about meeting regulatory requirements for reporting. Consumers, lenders and investors are already rewarding organizations who are leading in sustainability.”

Hertogh said the application has the potential to become a new system of record that sits alongside other mission-critical business systems. “Armed with the right data, organizations can predict trends and proactively make changes to hit their sustainability targets,” he said.

In a demonstration of the software, Microsoft product manager Robin Smith showed how a fictitious global coffee company might use the application to track the impact of products, business divisions, factories or facilities and track progress against specific business objectives. A dashboard shows the status of initiatives; for example, it could designate an activity as “on track” or “at risk” against a commitment. The data is imported from other operational systems — such as the database used to manage information about energy purchased from utilities or fuel providers.

An early customer for the Microsoft Cloud for Sustainability is Mexican food company Grupo Bimbo. “We feel strongly that organizations around the world must unite towards a common goal — the health and well-being of our planet,” said Raul Obregon, the company’s chief information and transformation officer, in a statement. “In order to reach that common goal, solutions that foster a standard in measurement and make it easier to record global data and help us achieve net-zero carbon emissions, like Microsoft Cloud for Sustainability, are vital.”

Microsoft hasn’t shared pricing information for the software, but it will be represented by the more than 64,000 business partners, developers and service providers that sell Microsoft products. That’s sure to raise the visibility of carbon accounting and ESG software tools with chief information officers and IT teams, who haven’t typically been central to emissions and ESG data gathering exercises.

Animation for Google Cloud Carbon Footprint

More granular data about cloud computing operations

Aside from its new business application, Microsoft and two of its biggest rivals in cloud computing — Amazon Web Services and Google — are scrambling to distinguish their respective services through a wide range of initiatives including clean energy sourcing arrangements for their data centers, sophisticated electronic waste management practices and software that provides companies with the ability to more closely measure and report the impact of their own business applications.

In mid-October, Google began offering a product called Carbon Footprint to every cloud services customer — allowing them to track the “gross carbon emissions” associated with the electricity of their usage. It developed the dashboard in collaboration with customers including Etsy, HSBC, L’Oreal, Salesforce and Twitter. 

“The capability to measure and to understand the environmental footprint of our public cloud usages is among the key axes of our sustainable tech roadmap,” noted Hervé Dumas, sustainability IT director at L’Oreal, in a statement. 

“With Google Cloud Carbon Footprint, we are now able to directly follow the impact of our sustainable infrastructure approach and architecture principles,” Dumas said. “Beauty tech is a strategic ambition for L’Oréal: the ambition to invent the beauty of the future while becoming the company of the future… Sustainable tech is an imperative and a very important step towards this ambition of creating responsible beauty for our consumers, and sustainable-by-design tech services for our employees.” (By the way, this is the first time I have seen a title of this nature, but I think it’s a role that cannot be over-appreciated.)

It should provide the ongoing intelligence and actual insights to guide further reductions. It’s not just about meeting regulatory requirements for reporting.

The Google Cloud team’s commitment goes beyond just tracking, however. The updates also include resources for helping companies identify potential areas of reduction in their IT operations (for example, idle servers or applications that could be shut down, reducing emissions). And the company is adding its Earth Engine satellite imagery to its Google Cloud platform, so businesses can get a better sense of their climate risks. For example, it could be used for commodity sourcing or land management. (That feature is available in a preview edition.)

One day later, Microsoft announced the commercial availability of a similar resource, the Microsoft Emissions Impact Dashboard. Aside from measuring existing computing workloads, the tool also lets would-be customers estimate the emissions savings impact of moving existing applications to Microsoft’s cloud services.

Amazon has been less public about similar tools, although it has been vocal about making its cloud computing resources available to climate scientists and researchers through the Amazon Sustainability Data Initiative.

All three companies also have been focused on contracting enormous amounts of renewable energy to power their massive data centers.

According to the deal tracker published by the Renewable Energy Buyers Alliance, Amazon was the biggest corporate procurer of clean power in 2020 with slightly more than 3.1 gigawatts of contracts announced last year. Google was second with additions of slightly more than 1 GW. Considered in aggregate, over time, both companies along with Microsoft are in the top five. 

In the briefing last week, Microsoft disclosed that it signed new power purchase agreements for 5.8 GW of renewable energy in 10 countries over the last 12 months. The company is also trumpeting what amounts to a commitment to provide around-the-clock renewable energy to its data centers through its 100/100/0 commitment. Put more simply, Microsoft is adding to its 100 percent renewable energy supply pledge by 2025, “committing to have 100 percent of our electricity consumption, 100 percent of the time, matched by zero carbon energy purchases by 2030.” And Google made a similar pledge two years ago.

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