Microsoft attributed much of the increase to the continued expansion of its data center footprint needed to support AI workloads. The company also said reported emissions were affected by a policy change made last year, when it stopped purchasing unbundled, short-term renewable energy certificates. Instead, Microsoft said it is directing investment toward projects that add new sources of clean electricity to power grids.
The report acknowledged the growing challenge of balancing AI infrastructure growth with the company’s climate commitments. “While AI infrastructure is driving demand for energy, water, land, and materials, sustainability solutions are not scaling fast enough to meet demand,” Microsoft wrote.
Microsoft President Brad Smith and Chief Sustainability Officer Melanie Nakagawa said the gap between AI infrastructure growth and available sustainability solutions has become increasingly apparent, while maintaining that the company remains committed to its long-term environmental targets. “We continue to really be focused around carbon negativity by 2030,” Nakagawa said.
The company’s latest disclosures show how its energy profile is changing. Scope 2 emissions, which are associated with purchased electricity, accounted for 13% of Microsoft’s total emissions footprint, compared with roughly 2% in the previous fiscal year, reflecting the larger role electricity consumption now plays across its operations and supply chain.
Despite the higher emissions, Microsoft pointed to several areas where it made progress. The company said it matched 100% of its annual global electricity consumption with renewable energy, replenished more than 14 million cubic meters of fresh water globally—exceeding the amount it withdrew for the first time—and achieved a 92% reuse and recycling rate for decommissioned cloud servers for the second consecutive year. Microsoft also said it now has 40 gigawatts of clean power purchase agreements across 26 countries, including 19 gigawatts already online.
The report marks the second consecutive reporting cycle in which Microsoft’s emissions have increased as demand for AI infrastructure continues to grow, leaving the company with a shorter timeline to meet its 2030 carbon-negative commitment.
Microsoft is not the only hyperscale technology company facing rising emissions alongside expanding AI investments. Google reported a 25% increase in supply chain emissions in its own 2026 sustainability report, while Amazon disclosed a 16% rise, highlighting similar pressures across the industry as companies rapidly build new computing capacity.
This analysis is based on reporting from Yahoo Finance.
Image courtesy of Karen Ducey/The Seattle Times/TNS.
This article was generated with AI assistance and reviewed for accuracy and quality.
