Microsoft reported a 25% year-on-year increase in carbon emissions for its 2025 financial year, driven primarily by the rapid expansion of AI data center infrastructure. The disclosure comes from the company's 2026 Environmental Sustainability Report, which tracks progress against a 2020 baseline. The rise highlights the tension between AI growth and corporate climate goals, as data center energy demand continues to climb. The report also notes a change in how Microsoft accounts for renewable energy certificates, which affects reported emissions figures. On the positive side, Microsoft says it has made progress in expanding its renewable energy portfolio and improving water use efficiency. The numbers underscore the real world challenge of decarbonizing the grid while scaling compute intensive AI workloads.
