How we work Make it central to the business while making it relevant at business group levels Set the tone from the top Hold everyone accountable for progress and a governance structure to track progress in real time Take steps to accelerate markets, ecosystems, and global progress Scale strategy to achieve ambitions by using the “whole of the business” Set ambitions based on the science Report on everything, not just progress Microsoft’s commitments to become carbon negative, water positive, and zero waste by 2030 while building a Planetary Computer are well known. To guide the progress across the company on those goals, we have changed the way our sustainability strategy and accountabilities are set and how progress is evaluated. In the interest of transparency and also to help other organizations get started, we are sharing how we work first, prior to our commitments and progress on them—sustainable digital transformations require both strategic frameworks and cultural buy-in to be successful. Set ambitions based on the science The best available science and policy indicate that every organization needs to do even more in far less time than previously thought. As we saw the science in 2019, it was clear that our carbon neutral goal was not what the world needed—the world needs to reach net zero by or before 2050. That meant we needed to set goals aligned to the science and language of the science, and we needed to be more ambitious. In 2020, we made a series of environmental sustainability commitments, including being carbon negative, water positive, and zero waste by 2030. Scale strategy to achieve ambitions by using the “whole of the business” At Microsoft, we think about the positions of influence that we can use. We start by taking accountability for our operations as a company, but we expand this significantly as we think about the different roles that we play as a customer, supplier, investor, employer, policy advocate, and partner in innovation to customers, organizations, and institutions around the world. The challenge is to find where our organization can have the most impact across our positions of influence. Microsoft looked at our commitments based on our operation a l footprint across carbon, water, waste, and ecosystems, the technology that we provide to our customers and partners to power their sustainability initiatives, and larger influence that we can have on the world with research, investments, strategic partnerships, and policy and advocacy. Set the tone from the top Sustainability is no longer just a corporate social responsibility (CSR) function or a way to mitigate risk—it must be mainstreamed into every part of the business. That starts with making sustainability part of the brand commitment and embraced by all leaders. At the heart of our culture is the understanding that for Microsoft to do well, we need the world to do well and that we are a company that pursues profit by solving the problems of people and the planet. This belief is deeply held by the leadership of Microsoft—the CEO, CFO, and President—the entire company sees the commitment and it sets the tone across the company that sustainability is at the core of our business. Make it central to the business while making it relevant at business group levels Corporate commitments give your company a north star, but you need to embed the strategy and build operational commitments across your business. At Microsoft, we knew we needed a way to implement and execute on our strategy across the entire company, in every business group. For each focus area (carbon, water, waste, and ecosystems), we set commitments in each business group and developed roadmaps to reach these commitments. We are also committed to enabling our suppliers with capacity-building tools and resources, as well as sustainable supply chain financing. How we work 7