Overview Carbon Water Waste Ecosystems Appendix 10 2021 Outlook (continued) Innovation investment By 2030, we must be operating in a world where carbon We will act in accordance The coming years of action Not all solutions to our sustainability challenges are offset and removal, water replenishment, and ecosystem As you will see in the pages of this report, we have begun available today, and those that are available are often service markets can supply demand many orders of with what we think needs work on all six enabling conditions. Sometimes our early-stage, too expensive, or don’t currently scale. There magnitude greater than today and do so with to be done today to create actions may seem counterintuitive, and sometimes we is already a large and growing amount of capital starting transactional transparency and standard insurance and will be wrong. But over the next decade, our mentality to flow into the climate and sustainability markets to help indemnification guarantees. the world we need to be will stay the same—we will act in accordance with what with these issues, but little agreement on the framework Policy progression operating in by 2030. we think needs to be done today to create the world we that should guide these investments. This splinters the Policy action is the ultimate enabling condition to move need to be operating in by 2030. solutions market, makes it difficult to understand the world beyond the voluntary action of a few We are more convinced When we announced our carbon negative commitment investment gaps, and disempowers investors to quantify corporations, and into a world where this work is a year ago, we likened it to a moonshot—a grand goal both financial and environmental returns on investment. required of all organizations. We’ve seen a tremendous than ever that Microsoft, that will require exceptional organizational focus, an Attracting the amount of capital required and deploying amount of corporate action in the past several years. and the rest of the world, integration of innovation from multiple sectors, and a it optimally means that by 2030, most climate Yet still only around 5 percent of the world’s largest can’t-fail mentality. We know the work is monumental, investments will need to fit within a well-structured and companies represented by the Global Fortune 500 have is up to the task. for all of the reasons outlined previously. accepted climate investment framework that places the pledged to become net zero. We cannot depend on the If the past 12 months of the COVID-19 pandemic and large constellation of investment vehicles along an leaders to bring up the laggards—that is what vaccine development have taught us anything, it is a appropriate risk-tolerance spectrum while thoughtfully government action must do. reminder that the human species is capable of targeting the most impactful areas of innovation. By 2030, we need to be operating under a tremendous scientific and technological innovation Market maturation comprehensive and globally coordinated policy regime when faced with a crisis. Our climate crisis may be Meeting the world’s sustainability goals will require the that limits emissions in line with a 1.5ºC future, and playing out more slowly than COVID-19 has, but the procurement of new solutions, particularly in areas like holistically monitors and manages humanity΄s deposits potential impact on the global economy, livelihoods, carbon reduction and removal, and water replenishment, and withdrawals from the natural systems that support and human health is the same—and so, too, must be at levels many orders of magnitude greater than they our species. This must be done in a way that respects the the scale and speed of our response. exist today. If these markets don’t mature rapidly, they political sovereignty of nations around the world but As we enter 2021, we are more convinced than ever that will be overwhelmed by the demand that will be placed respects the cross-boundary nature of the Earth΄s life Microsoft, and the rest of the world, is up to the task. We on them in the coming years. Current sustainability support systems, and the need to equitably share these are committed to playing our part and look forward to markets, such as those for avoided emissions offsets or resources across cultures and communities. working with all of you to help accelerate the world’s carbon removal credits, are opaque and poorly transition to a more economically and environmentally understood by many current customers and most future sustainable future for us all. ones. Standard contracting templates, aggregating demand through buyers’ alliances, and well communicated pricing and delivery are all advances that will mature these markets and ready them for the onslaught of demand that will occur in the final years of this decade and beyond.