WHEREAS: Decarbonization of the energy system is required to stave off the most catastrophic consequences of climate change.1 Microsoft is widely seen as a global leader in reducing its contribution to climate change; it has set targets to reduce its near-term emissions in line with the Paris Agreement, uses 100 percent carbon-free energy sources, and projects it will be carbon-negative by 2030.2

Yet, despite Microsoft’s stated commitments, the Company develops advanced technology platforms – including Artificial Intelligence (“AI”), Machine Learning, Internet of Things, cloud computing, and High Performance Computing (collectively, “advanced technology”) – that facilitate new oil and gas production projects3 that are likely to “increas[e] emissions” and “slow[] the transition to low-carbon technologies.”4 These advanced technologies enable continued fossil fuel expansion even though new, long-lead oil and gas projects have been found incompatible with the Paris Agreement’s 1.5°C goal5. Such projects and their associated GHG emissions are not factored into Microsoft’s GHG emissions or reduction commitments.

Microsoft’s continued facilitation of new oil and gas extraction through advanced technology exposes it to material reputational, competitive, and operational risk. The development and deployment of advanced technology for the fossil fuel industry has caused outcry6, and has led to staff resignations7. A 2020 report assessing large technology companies found that Microsoft had the most contracts with oil and gas companies, while peers Google and Amazon had fewer ties.8

In 2020, Google announced that it would no longer “build custom A.I. and machine learning algorithms to facilitate upstream extraction in the oil and gas industry.”9 Microsoft has produced numerous reports on the responsible use of AI10 and AI-supported energy efficiency enhancements11, but unlike Google, Microsoft continues to deploy advanced technologies for fossil fuel applications. Indeed, Microsoft’s reporting on the climate-positive applications of advanced technologies, while ignoring the impact of new fossil fuel production, puts the Company at risk of accusations of greenwashing, which can have significant reputational or legal consequences12. It does so even while identifying the growing risks of climate change.13

By identifying the risks associated with these technologies, Microsoft can increase transparency to shareholders and provide decision-useful information.