In January 2020, Microsoft announced a commitment to carbon negative operations by 2030, aiming to remove or neutralise greenhouse gas emissions through a variety of means including renewable energy sourcing and carbon capture and sequestration.
Within the particulars of this bold announcement were new obligations for Microsoft’s suppliers, namely:
By July of 2021, we will begin to implement new procurement processes and tools to enable and incentivize our suppliers to reduce their scope 1, 2, and 3 emissions. We will work with our suppliers to implement consistent and accurate reporting and pursue effective steps to make progress against scientifically based targets.
Language subsequently introduced into the Microsoft Supplier Code of Conduct required contracted suppliers to begin disclosing emissions data and reduction plans. The intent of these new requirements was to increase emissions visibility in the supply chain and improve Scope 3 data quality.
The Microsoft supplier sustainability programme continues to develop and is notable for its comprehensiveness and scale, potentially impacting 58,000 suppliers. Its rigorous requirements include third-party verification and a strong focus on public disclosure and transparency. We recently supported data centre specialists, Impact Data Solutions, part of Hexatronic Group AB, in preparing their emissions disclosures to Microsoft.
Here are our answers to key questions about the programme.
What are the Microsoft supplier emissions disclosure requirements?
Suppliers are required to submit their emissions disclosures online via a dedicated Microsoft Supplier Emissions Portal. As of 2024, the disclosure requirements were as follows:
- Total company emissions for the baseline year 2019 (the most recent “normal” year before COVID-19)
- Total company emissions for 2023 (the most recent complete year)
- Emissions to include Scope 1, Scope 2, and, at minimum, the following Scope 3 categories:
- 1. Purchased goods and services
- 6. Business travel
- 7. Employee commuting
- Annual revenue figures
- Third party assurance letter or consultant statement confirming 2019 and 2023 emissions
- 2023 service-level accounting (SLA) emissions
When is compliance required?
If you are an existing supplier and meet the spend thresholds or other parameters defined by Microsoft, the team at Microsoft will have been in touch with detailed information about disclosure. This year’s cycle began in June with a strict submission deadline of 31 July 2024.
If you are a new supplier to Microsoft, you’ll no doubt be contacted in due course about your obligations for next year.
What are the requirements for a third party assurance letter or consultant statement?
The Microsoft Supplier Code of Conduct (SCoC) requires supplier emissions data to be third party assured in one of two ways.
- Assurance letter — Emissions reports prepared in-house may be reviewed by an independent third party with sufficient competence and capabilities to assure the data in accordance with a suitable assurance standard. A letter summarising their findings and the standards used may be submitted as assurance.
- Consultant statement — A sufficiently competent and knowledgeable external consultancy may be engaged to provide advisory services and calculation support and prepare a summary statement of emissions.
Emissions that are solely self-reported do not meet these assurance requirements. Nor do calculations made using online revenue-based carbon footprint estimators or other software tools alone.
Microsoft requires this third party assurance in order to, in turn, demonstrate to their own auditors due diligence in obtaining correctly calculated data.
What is service-level accounting?
Microsoft’s SLA-level emissions calculation approach begins by identifying specific services provided to Microsoft and defining a reference unit other than spend, such as hours or FTE, to calculate the proportion of overall company emissions associated with the service. The intent of this approach is to focus on the relationship between emissions and resource usage in delivery of services, potentially surfacing opportunities for reduction and meaningful action.
How Grain can help
Grain can provide independent third party assurance for previously calculated emissions using our ISO 14064-3 verification process. We are deeply experienced in carbon footprinting and can prepare carbon emissions reports for current and historical years along with fully compliant consultant statements. We can also support organisations in identifying and calculating service-level emissions as per Microsoft’s service level accounting methodology. Get in touch!
