July 19, 2023
Last month, Microsoft announced the launch of a series of new features on its sustainability platform. Microsoft Cloud for Sustainability, which launched in June of last year, now offers tools to help companies meet ESG reporting requirements and regulations, calculate Scope 3 emissions, and collect and manage a range of ESG data across different categories and sources. But what to make of it all?
This launch is good news. Big tech needs to drive big change if we are going to slow global warming and meet key climate goals. No doubt there’s some merit in investing in the development of futuristic ventures like the metaverse or the exploration of Mars. First and foremost, however, the priority for big tech — and indeed for all of us — has to be the future of our planet. Microsoft’s latest launch suggests it feels that way too.
Fundamentally, new tools like these offer a critical function on the path to a sustainable future: measurement. This is a hugely important point because, as Peter Drucker taught us all, you cannot manage what you do not measure.
Consider the real estate industry. Green certification frameworks such as LEED and BREEAM are not enough to drive lasting change in sustainability. A binary, broad-brush view of an asset’s certification status cannot provide a real time, accurate, or actionable account of a building’s health. We need a more detailed and dynamic model of measurement to drive change – particularly within the real estate industry. The market needs access to readily available, investment-grade ESG data.
ESG ratings and climate disclosures now demand companies identify their Scope 1, 2, and 3 emissions. Scope 1 are the easiest for a company to control – the direct emissions from their operations, such as burning fuel oil in a furnace. Scope 2 – the emissions related to the energy a company procures, such as for its electrical needs – are also relatively straightforward to identify. Scope 3 are the hardest: those not coming from a company’s actions or the assets it controls directly, but emissions created indirectly from those up and down its value chain.
Scope 3 emissions often account for over 70 percent of a business’s carbon footprint. Depending on the organization, a significant component of Scope 3 may derive from real estate.
For real estate owners, Scope 3 emissions will often come from tenant consumption, where the tenant controls the utilities among other operational aspects of the building. Landlords will still have to account for those emissions in order to meet reporting requirements. Inversely, corporate occupiers that lease space but do not control their utilities will also have to account for emissions.
Either way, actual measurement of the energy and derived carbon linked to real estate will be critical to reporting on Scope 3 emissions.
As the global leader in real estate ESG measurement with a Scope 3 solution for any building in the world (our asset level data product), we welcome Microsoft’s focus on actual measurement. The days of binary certification are over; detailed real-time data is what’s required to achieve a sustainable future across real estate and the planet at large. It’s encouraging to see Microsoft recognizing that too.