Getting to carbon negative It is critical that companies take a rigorous approach to achieving net zero. This begins with recording and reporting emissions with better data collection and automation, reducing emissions as much as possible, replacing electricity consumption with renewables, and removing the remaining emissions. In January 2020, Microsoft announced its intention to be carbon negative, which will see us cut our greenhouse gas (GHG) emissions across our operations to nearly zero and by over half by 2030 across our value chain with improv ements in energy efficiency, replacing with renewa ble energy for Scope 2, and removing the remainder of emissions. We will also remove the equivalent amount of our historical carbon emissions by 2050. Implement ing these commitments is a journey. At Microsoft, we have come to see this as a “5-R Journey” that begins with recording and reporting emissions with better data collection and automation, then reducing as much as possi ble with that data-informed roadmap first, then replacin g fossil fuels in our electricity consumption with renewables, and finally removing what remains. Our total com pany emissions (market-based) in 2021 were approximately 14 million mtCO 2 . Of this total, about 120,000 mtCO 2 were Scope 1 emissions at Microsoft datacenters and campuses. Taking into account our renewable energy purchases, our Scope 2 emissions were approximately 160,000 mtCO 2 . The bulk of our emissions—more than 97 percent—are in Scope 3, which includes emissions from our supply chain, the lifecycle of our hardware products and devices, travel, and other indirect sources. While our com bined Scope 1 and 2 emissions decreased this year, we did see an increase in Scope 3 emissions, driven mainly by the growth of our cloud services business and an increase in sales and usage of our devices. >5 0 % We are committed to cutting our GHG emissions by over half by 2030 across our value chain, removing the residual emissions, and removing the equivalent amount of our historical carbon emissions by 2050. It is critical that companies take a rigorous approach to achieving net zero. We have come to see this as a “5-R Journey”. 20