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Microsoft Cloud for Sustainability: Generative AI, Scope 3 Data Capabilities for ESG Reporting Coming Soon

January 31, 2024 by Joe Panettieri

Microsoft Cloud for Sustainability will gain generative AI (artificial intelligence) capabilities for ESG (environmental, social and governance) reporting as part of a software update that's expected sometime between April 2024 and September 2024, the company has disclosed.

First, the big picture: Microsoft Cloud for Sustainability involves a "growing set of ESG capabilities from Microsoft and our global partners, empowering organizations to accelerate sustainability progress and business growth," the company asserts.

Key offerings include Microsoft Sustainability Manager, a tool that "unifies data to help you monitor and manage your environmental sustainability performance," the company says.

Microsoft Cloud for Sustainability: Copilot, Scope 3 Reporting Capabilities

As part of the Microsoft Cloud for Industry strategy, a 2024 release wave 1 will include multiple sustainability enhancements, according to a blog from the software company.

Judson Althoff, executive VP and chief commercial officer, Microsoft
Judson Althoff, executive VP and chief commercial officer, Microsoft

Key enhancements in the release, according to the company, will include:

We expect more details may emerge on February 13, 2024, when Executive VP Judson Althoff is scheduled to present during a Microsoft AI for Sustainability virtual event. Key speakers on the event also will include:

Microsoft Cloud for Sustainability: Why Technology Partners Should Care

The Microsoft Cloud for Sustainability enhancements could help partners and customers to more easily address compliance mandates worldwide.

For example: Under the European Union's Corporate Sustainability Reporting Directive (CSRD), roughly 50,000 companies are subject to mandatory sustainability reporting. The figure includes non-EU companies that have subsidiaries operating within the EU or are listed on EU regulated markets, KPMG notes. For companies with the year-ending December 2024, the first CSRD reports will be due in 2025.

Meanwhile, U.S. technology partners need help ramping on up sustainability know-how. Among the proof points: When it comes to sustainability expertise, U.S.-based partners trail their counterparts in Europe and Asia-Pacific, according to research from Canalys.

Amid that backdrop, Microsoft and rival ESG software developers have been working to ensure their platforms support Scope 1, Scope 2 and Scope 3 reporting. At the same time, Microsoft has been ramping up its sustainability partner ecosystem.

Definition: What Are Scope 1, 2 and 3 Emissions?

Melanie Nakagawa, chief sustainability officer, Microsoft
Melanie Nakagawa, chief sustainability officer, Microsoft

According to our Sustainability Glossary:

  • Scope 1 involves emissions from sources that an organization owns or controls directly – for example from burning fuel in our fleet of vehicles.
  • Scope 2 involves emissions that a company causes indirectly when the energy it purchases and uses is produced. For example, if a company has a fleet electric vehicles, then the emissions from the generation of the electricity they're powered by would fall into this category, according to National Grid.
  • Scope 3 involves emissions up and down a company's value chain.

Related: Here is Microsoft's overall sustainability strategy, led by Chief Sustainability Officer Melanie Nakagawa.

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