Microsoft to link exec pay to environment goals

Microsoft to link exec pay to environment goals

Microsoft 2.jpg

Microsoft is to use its progress on sustainability goals as a factor in determining executive pay, starting in the next fiscal year.

The move was announced by company president Brad Smith in a 28 January blog post written to mark the one-year anniversary of the firm's "climate moonshot" project to further boost its environmental credentials.

It was one of three updates from Smith, who wrote: "We are committing to transparency by subjecting the data in our annual sustainability report to third-party review by the accounting firm Deloitte and to accountability by including progress on sustainability goals as a factor in determining executive pay, starting with our next fiscal year."

The post continued: "This will add to the practice we’ve had since 2016 to tie a portion of executives’ compensation to environmental, social and governance measures starting with diversity representation gains. Between now and July, the Compensation Committee of Microsoft’s board of directors will assess, review, and approve these changes. This will apply to the compensation of the members of the company’s senior leadership team, including CEO Satya Nadella."

In year one of the project, Microsoft – which has been carbon neutral since 2012 and aims to be carbon negative by 2030 – also reduced its carbon emissions by 6% and purchased the removal of 1.3 million metric tons of carbon from 15 suppliers across 26 projects around the world.


Cost of carbon

While praising the gains, Smith said that Microsoft's carbon removal achievements in 2020 were "both a giant leap and a modest step".

Referencing the 1.3 million metric tons, he wrote: "On the one hand, we believe this is the largest annual carbon removal purchase any company has ever made. It’s creating a new and dynamic economic market that the world needs. But compared to what we need to accomplish by 2030, it’s only an initial step. Using our moonshot analogy, I think of it this way – if our goal is to get to the moon by the end of this decade, this is the equivalent of sending an astronaut into orbit around the earth. It puts us on the right path, but we have a long journey ahead."

In removing the carbon, Microsoft worked with a 15 different suppliers and received proposals for 55 million tons worth of credits. These will be published to "boost transparency in the market".

Progressing this aim, Microsoft's climate fund is also investing in Climeworks, a Swiss firm that uses fans to capture CO2 for use elsewhere, for example by beverage companies and plastic manufacturers. The funds will also support Climeworks' Iceland project to pump carbon from the air into the earth.

Smith's post continued: "Clearly, closer trans-Atlantic cooperation is just the start. There is no issue that requires more consistent and broader multilateral collaboration than sustainability. And even in a world that is divided by so much, there is now hope on the horizon for the type of work that will bring every government to the table.

"A final lesson from our work this past year is that when it comes to the carbon crisis, knowledge is the ultimate power. We all have so much to keep learning. During the next three decades we will need technology breakthroughs on a par with those that propelled humanity to the moon a half century ago. This will require new investments and collaboration."