Microsoft's Emissions Rose 25% in Fiscal 2025 as Data Center Growth and an End to Unbundled Certificates Hit Scope 2

Microsoft's total greenhouse gas emissions rose 25% in its 2025 fiscal year, to 20.29 million metric tons of CO2 equivalent from 16.21 million metric tons the year before, according to the company's 2026 Environmental Sustainability Report, released on Friday, July 10. The company said the increase was primarily driven by the expansion of its data center infrastructure and by its decision to stop using non-additional, unbundled renewable energy certificates. Scope 2 emissions, from purchased electricity, rose from about 2% of total emissions in fiscal 2024 to 13% in fiscal 2025, ESG Dive reported.

Unbundled renewable energy certificates, or RECs, are certificates purchased separately from the electricity they represent, often from existing wind or solar projects. Microsoft's move away from unbundled RECs in favor of power purchase agreements and other contracts tied to specific new projects makes its reported Scope 2 emissions more closely reflect the grid power it actually uses where it lacks direct clean energy contracts. Microsoft said its renewable portfolio now includes agreements for up to 40 GW of new renewable energy across 26 countries.

Microsoft estimated that its emissions would have exceeded 34 million metric tons without interventions including efficiency improvements, renewable energy purchases, sustainable aviation and marine fuel certificates and supply chain decarbonization work. In the report's foreword, Vice Chair and President Brad Smith and Chief Sustainability Officer Melanie Nakagawa wrote: "As we scale the physical infrastructure required to power the AI economy, our emissions are shaped by the impact of that growth and the actions we are taking to manage it." The company said AI is "driving demand for energy, water, land and materials," and that "sustainability solutions are not scaling fast enough to meet demand."

Microsoft has goals to become carbon negative, water positive and zero waste by 2030, and to remove all the carbon it has emitted since its founding by 2050. Scope 3 emissions, from the supply chain, including the manufacturing of servers and the construction of data centers, remain the largest part of Microsoft's footprint.