Microsoft's 2026 Environmental Sustainability Report shows total greenhouse gas emissions hit 20.3 million metric tons of CO2 equivalent in fiscal year 2025, a 25% increase from the prior year. The jump is driven by rapid expansion of AI and cloud infrastructure, including new data centers that require large amounts of steel, cement, servers, and cooling systems. Scope 3 emissions from capital goods alone account for nearly 45% of the total footprint. Microsoft still aims to be carbon negative by 2030 and remove all historical emissions by 2050. The company is shifting away from buying renewable energy certificates that don't add new clean power to the grid. Instead, it is investing directly in carbon-free electricity projects. Microsoft is also testing green steel, lower-carbon concrete, and hybrid mass timber to cut embodied carbon in data centers by up to 35%. The IEA expects data center electricity demand to more than double by 2030, making this a sector-wide challenge.
