Charge our business groups and invest funds to do

charge our business groups, and invest funds to do social
and environmental good.”
126
Microsoft also requires its business practices to have
a positive impact on the communities it serves and so
adopted an internal carbon fee to help drive responsible
business decisions that encompass both: “While the fee
makes good business sense, it also makes good people
sense.”
127
Funds generated from the fee go beyond
reducing Microsoft’s environmental impact to investing
in citizenship projects that result in low-carbon fuel
supplies, ecosystem protection, and sustainable commu-
nities. The fee was also instituted to drive a corporate
culture change that raises awareness of the impact of
business operations on the environment. The company
also recognizes and responds to external stakeholders
(investors, non-governmental organizations) looking for
companies to demonstrate responsibility by reducing its
carbon footprint, and accounting and reporting on those
actions in a transparent way.
To gain internal buy-in for a carbon fee, the envi-
ronmental sustainability group discussed it with the
company’s senior management and key business groups,
including the finance division. According to Microsoft,
the resulting carbon fee provided the financial justifica-
tion to prioritize investments in energy efficiency and
sustainability projects that could save money, reduce
its environmental footprint, and make a positive social
impact on communities. It was the strong alignment of
the carbon fee with Microsoft’s business strategy that
garnered the buy-in from key internal stakeholders and
received “the engagement and attention of really smart
people in the company that Microsoft would have not got
otherwise.”
128
Microsoft’s carbon fee program is evaluated annually
to reflect the total investment strategy to maintain and
eventually go beyond Microsoft’s carbon neutrality goal.
Between 2012 and 2016, the internal carbon fee ranged
from $5
–
$10 per metric ton. The same price is applied
companywide across 12 business units in more than 100
countries. 129 The fee is administered by a cross-depart-
mental group of representatives from the corporate
finance department and environmental sustainability
team. The group establishes the carbon price and
identifies potential projects to fund with the revenue
generated. The carbon fee is determined in two steps:
First, a carbon price is calculated each year by
estimating the amount of money Microsoft will need
to spend on environmental initiatives (e.g., purchase
of green power for its datacenters, cost of electricity
consumption by datacenters) to maintain its carbon
neutrality goal. That level of investment is divided by the
total amount of Microsoft’s projected annual average
greenhouse gas emissions. The denominator or projected
annual emissions is the projected amount of energy that
each business unit (office space, data centers, or business
air travel) consumes every quarter. Those kilowatt-hours
and gallons of fuel are converted into metric tons of
carbon. The resulting formula is:
Price on carbon ($/tCO
2
e) = yearly funding required for