Overview Carbon Water Waste Ecosystems Appendix 89 Appendix D (continued) Key area Description of work Source location Metrics Metrics for • From July 2012, we began charging a fee based on the emissions associated with our operations. In FY19 Download assessment of (the reporting period), we applied the carbon fee to Scope 1, Scope 2, and Scope 3 business air travel emissions here across the company. As of FY21, the carbon fee will apply to all Scope 1, Scope 2, and Scope 3 emissions, with the and targets climate-related Scope 3 fee starting at a lower amount and increasing to meet the Scope 1, Scope 2, and Scope 3 business air risks and travel fee over time. Our internal carbon fee isn’t a “shadow fee” that is calculated but not charged. opportunities • Our fee is paid by each division in our business based on its carbon emissions, and the funds are used to pay for sustainability improvements. By charging business groups based on the emissions they generate, we help to drive efficiency initiatives and innovation across our business. The carbon fee affects investment decisions by providing an incentive, the financial justification, and in some cases the funds for climate-related energy and technology innovation. The fee also helps drive culture change by raising internal awareness of the environmental implications of our business and establishing an expectation for environmental and climate responsibility within the company. In FY19, the carbon fee fund was used to support investments in: - 8,741,807 MWh in renewable electricity globally (the US portion of which earned Microsoft the US EPA Green Power Partnership as the number two US purchaser). - Offset purchases in five countries to reduce more than 750,000 mtCO e, preserve forests, and grow the low-carbon economy in developing nations. 2 - Technology innovation projects that formed the basis of our AI for Earth program. - More than 50 internal emissions reduction and energy efficiency projects. Disclosure of • We annually disclose our Scope 1, 2, and 3 emissions as part of CDP and sustainability reporting. Download here GHG emissions • We also annually disclose our water consumption as part of our CDP and sustainability reporting. and risks • Through our Reporting Hub, we also disclose our annual data factsheets with environmental indicators covering: (1) greenhouse gas emissions (absolute values and normalized by revenue), (2) energy use, (3) carbon neutrality and greenhouse gas emissions balanced by carbon offsets, (4) water metrics including withdrawals, consumption, and discharge, (5) waste generation, and (6) electricity consumption.