1.6 Management’s assertion Management of Microsoft Corporation is responsible for the completeness, accuracy, and validity of the disclosures included in this Section 1 of Appendix D. Management is also responsible for the collection, quantification, and presentation of the specified information included in Section 1 of Appendix D and for the selection or development of the criteria, which management believes provides an objective basis for measuring and reporting on the specified information. Management of Microsoft Corporation asserts that the specified information included in Section 1 of Appendix D as of, and for the fiscal year ended June 30, 2021 is presented in accordance with the criteria set forth in Section 1.10, Reporting criteria . 1.7 Description of the company and inventory boundary Microsoft’s environmental sustainability data, which includes GHG emissions, energy, waste, water, and ecosystem metrics, reported for FY21 has been prepared following a fiscal year basis as the reporting period covering the timeframe of July 1, 2020 to June 30, 2021. The Corporate External & Legal Affairs (CELA) Sustainability team within Microsoft under the leadership of the Vice President and Chief Environmental Officer holds the responsibility to monitor and report sustainability environmental data. For setting organizational boundaries and for corporate reporting of GHG emissions, energy, waste, and water metrics in Tables 1-9 above, Microsoft uses the operational control approach. This includes global wholly owned and partially owned subsidiaries over which Microsoft has management and operational control, including Microsoft owned and leased real estate facilities. Appendix D (continued) 1.8 Information on metrics Microsoft announced in January 2020 that they will be carbon negative by 2030 and by 2050 they will remove from the atmosphere an equivalent amount of all the carbon the company has emitted either directly or by our electricity consumption since being founded in 1975. This will be achieved by reducing Scope 3 emissions (market-based) by more than half; and by reducing Scope 1 and 2 (market-based) emissions to near zero by the middle of the decade through energy efficiency work and reaching 100 percent renewable energy by 2025. The baseline year is 2020, which was the year when the announcement was made. Microsoft has a metrics recalculation policy for historical data (including base year) to ensure consistency whenever year-over-year structural changes, methodological changes , or other accuracy improvements are significant. Structural changes include acquisitions and divestitures. Methodology changes include changes in a calculation methodology or new activity types. Accuracy improvements include the correction of significant errors or cumulative small errors that together are significant and/or updates to available supplier reported data. Footnotes under each table will highlight specific adjustments made. Microsoft’s GHG inventory includes five of the seven GHGs add ressed by the Kyoto Protocol—carbon dioxide (CO 2 ) , methane (CH 4 ) , nitrous oxide (N 2 O) , hydrofluorocarbons (HFCs), and sulfur hexafluoride (SF 6 ) . Microsoft does not currently use or emit perfluorocarbons (PFCs) and nitrogen trifluoride (NF 3 ) . The following is a more detailed list of activities included in the GHG in ventory: • Scope 1 direct GHG emissions from onsite fossil fuel combustion (including natural gas, propane, fuel oil, and diesel), executive air travel, ground transportation (Microsoft owned and directly leased), h ydrofluorocarbon (HFC) refrigerants, and S F 6 used at some facilities. • Sc ope 2 indirect GHG emissions from purchased electricity, chilled water, and steam. The location- based method is based on average emission factors for the electricity grids that provide electricity to our datacenters, buildings, and campuses. The market- based method includes consideration of contractual arrangements under which Microsoft procures power from specific suppliers or sources, such as renewable energy. In the market-based method, we also capture the impact from direct renewable energy and the purchase of unbundled energy attribute certificates (EACs). • Scope 3 indirect GHG emissions for the following categories identified as relevant for Microsoft: – Category 1 – Pu rchased Goods & Services – Category 2 – Ca pital Goods – Category 3 – Fu el- and Energy-Related Activities (Location-Based and Market-Based) – Category 4 – U pstream Transportation – Category 5 – Wa ste – Category 6 – Bu siness Travel – Category 7 – Em ployee Commuting – Category 9 – D ownstream Transportation – Category 11 – U se of Sold Products – Category 12 – E nd of Life of Sold Products – Category 13 – D ownstream Leased Assets Reported data for water, waste, and ecosystems support the monitoring and tracking of our progress associated with the commitments under each program. For carbon removal, the following Microsoft criteria is used to select carbon removals that we contract: Microsoft Criteria for High-Quality Carbon Dioxide Removal . Both third-party certified and uncertified t ons are purchased in an effort to help develop the market, and only certified tons are applied to the carbon neutrality scope (Scope 1, Scope 2 market- based, and business air travel). For the certified portion, the following validation and verification bodies have provided the certification: Voluntary Carbon Standard (VCS), American Carbon Registry (ACR), Climate Action Reserve (CAR), and California Air Resources Board (CARB). The reported carbon removal contracted value total also includes future tons that have not yet been delivered. For renewable energy, the impact is captured from on-site generation, renewable energy certificates (RECs) and from power purchase agreements (PPAs). The purchases of RECs include: RECs (Green-e certified), guarantees of origin (GO), renewable energy guarantees of origin (REGO), I-RECs, tradable instrument for global renewables (TIGR), J-Credits, large scale energy certificates (LGC) and PowerPlus. Microsoft procures enough renewable energy to match 100% of its electricity consumption. In the case that renewable energy is not procured in the markets where they operate, enough renewable energy from nearby markets is purchased to ensure we maintain the 100% renewable electricity commitment is maintained. Microsoft’s water inventory includes the withdrawal, consumption, and discharge associated with assets under its operational control. These volumes represent global enterprise-wide operations including offices, datacenters, labs, and retail. This data supports progress tracking against current Water Positive program commitments, as well as future reporting against the newer commitment announced in October 2021 of reducing water waste in datacenter operations by 95 percent by 2024. 104