Microsoft reports 25% emissions rise but reaffirms 2030 carbon negative goal
Microsoft published its 2026 Environmental Sustainability Report, disclosing that its total greenhouse gas emissions rose 25% year on year in fiscal 2025 as the company expanded datacentre infrastructure to meet demand for artificial intelligence, while reaffirming its commitment to become carbon negative by 2030 and to remove the equivalent of all its historical emissions by 2050.
The report, which covers the fiscal year to 30 June 2025 and measures progress against a 2020 baseline, shows net emissions across Scopes 1, 2 and 3 of roughly 20.3 million tonnes of CO2 equivalent, up from about 16.2 million tonnes the previous year and approaching 58% above the 2020 baseline. Gross emissions before accounting for contracted carbon removal were around 34 million tonnes. Indirect Scope 3 emissions remained the dominant share of the footprint at close to 86%, reflecting the carbon embedded in construction materials, hardware supply chains and purchased goods and services associated with the company’s rapid infrastructure build-out.
In the report’s foreword, vice chair and president Brad Smith and chief sustainability officer Melanie Nakagawa said the company’s sustainability work is entering a new phase shaped by the AI transition, and that the increase is forcing sharper questions about where Microsoft needs to move faster or rethink its approach. The company attributed the rise primarily to datacentre expansion, and also to its decision to stop purchasing unbundled short-term renewable energy certificates, a mechanism that can lower reported emissions without necessarily adding new clean generation to grids. Microsoft said it is prioritising longer-term measures instead, spanning carbon-free electricity procurement, carbon dioxide removal, sustainable fuels, lower-carbon construction materials and hardware efficiency.
The company reported that it met its target of matching 100% of annual global electricity consumption with renewable energy in fiscal 2025, and confirmed it remains committed to its water positive and zero waste goals for 2030 alongside carbon negativity. For carbon markets, the report matters chiefly because Microsoft is by a wide margin the largest corporate buyer of durable carbon removal, and its procurement programme has underpinned final investment decisions at first-of-a-kind bioenergy with carbon capture and storage and direct air capture projects in Europe and North America. The company signalled that large-scale removal purchasing remains a core pillar of its strategy for neutralising residual emissions on the path to 2030, alongside supplier decarbonisation requirements and clean energy contracting.
The disclosure will sharpen debate about whether voluntary corporate demand can continue to anchor the carbon removal market during a period in which overall buyer diversification remains limited, and it sets a benchmark ahead of sustainability disclosures expected from other hyperscale cloud operators facing similar AI-driven load growth.
