How we work (continued) Hold everyone accountable for progress and a governance structure to track progress in real time Governance and accountability are critical to ensuring alignment and prioritization across your business. At Microsoft, we hold our business groups accountable for their carbon emissions via an internal carbon fee of $15 per metric ton. In January 2021, we expanded the carbon fee so that it includes Scope 3 emissions from our supply and value chain, in addition to Scope 1 and Scope 2. We set measurements and scorecards for each business group’s sustainability commitments across the company and review progress twice a year. We have established a Climate Council that includes senior business leaders from every business group to provide sustainability advice, collaborate, drive alignment, prioritize resources and funding, and review progress on our commitments. We also tie a portion of our executive incentive plan to our carbon reduction goals. Take steps to accelerate markets, ecosystems, and global progress If the world is going to meet net zero goals by 2050, companies need to use their entire ecosystem and all of their positions of influence. In addition to taking accountability for our operational footprint across carbon, water, waste, and ecosystems, Microsoft is deploying capital, supporting innovation, and advocating for larger policy change. We led the largest corporate carbon removal RFP last year, spending our dollars to drive the carbon removal market forward and to address our own needs. Our $1 billion Climate Innovation Fund is investing in organizations across our areas of commitment to build a larger, more robust ecosystem of effective companies and solutions. Our sponsorship at COP26 and numerous engagements with governments at the city, regional, state, and national levels are aimed at creating policy environments that further accelerate the impact of this work and the transition to net zero. Report on everything, not just progress Transparency is both embedded in each step and a specific commitment. In this report, as well as other white papers, methodology papers, and speaking engagements, Microsoft is committed to sharing our learnings with the world. When things go well, we will share that as well as the playbooks to follow to achieve similar results outside our organization. And if things go less well, we will share that too so we can all learn and grow together. We are also delivering innovative technology and services to help our customers and partners power environmental sustainability. And we go beyond that with our biggest bets in policy, investment, catalytic partnerships, and research and development. Sustainable digital transformations require both strategic frameworks and cultural buy-in to be successful. 8