Microsoft is at the fore-front of a growing number of companies that are using a new form of business accounting known as “carbon pricing.” Each quarter, the price of carbon is factored into profit-loss calculations, along with a self-imposed tax on energy.
There are currently more than 430 companies participating in their own carbon pricing programs, a large increase over the 150 companies that were involved last year. These policies are partially an acknowledgement of the future risk posed by new carbon legislation.
As they pursue early adoption of these environmentally friendly policies, companies like Microsoft are taking the resulting tax proceeds to install renewable energy sources, including wind farms and solar panels.
The recent U.S. visit of Pope Francis has already been marked by frequent calls to action on climate change, a sentiment that President Obama shares. So far, no climate legislation has been passed by Congress, the last attempt being the Waxman-Markey Bill in 2009. That law would have imposed a cap-and-trade system in which carbon credits would be bought and sold by companies depending on their carbon emission levels.
Microsoft has made drastic improvements to its carbon footprint in the past three years, reducing carbon dioxide emissions by over 8 million tons. Through reductions in energy usage, it has been able to save over $10 million over the same period.
The director of environmental sustainability at Microsoft, Tamara DiCaprio, commented on the new program’s impact, “When we started talking about carbon emissions not in metric tons, but in terms of dollar amount, the business people could understand it. We’re all speaking the same language now: What is the cost to my group?” DiCaprio’s previous experience trading commodities for Merrill Lynch has her well-suited for her current role.
Depending on the amount of energy consumed by each business unit at the company, DiCaprio plans to offset the total energy usage through improvements in efficiency and renewable energy projects. These could range from more efficient lighting, to better controls for HVAC systems. The total cost of those investments is then equally divided among the business units based on their usage.
Companies like Microsoft are now doing what governments have so far been unable to accomplish, and as the United Nations Climate Change Conference in Paris approaches this December, even major oil and gas firms in Europe have voiced their support for a carbon tax.