Microsoft Discourages Corporate Travel by Raising Own Carbon Fee 600 Percent

Traveling for business is about to become a much more costly affair for employees at Microsoft — but it’s nothing to do with hotel rates or air fares. It’s because the internal penalty the technology giant charges itself, based on the carbon emissions that its travel generates, is set to increase by 567 percent later this year.

Microsoft is taking what it calls “aggressive measures” to cut down the amount of Scope 3 emissions it produces, with business travel falling under this category.

It currently charges a business travel fee of $15 per metric ton of carbon dioxide equivalent (or “mtCO2e”), but from July 2022 it goes up to $100 per metric ton. That money gets set aside for the company to invest in areas that will help it become a greener company.

“We are restructuring and increasing our internal carbon fee to help incentivize more aggressive measures to reduce Scope 3 emissions and better match the underlying cost of carbon abatement,” the company said.

Overall, Microsoft wants to become a “carbon negative, water positive, zero waste company” by 2030, and by collecting more money with this boosted carbon tax, it said it can also better support the purchase of sustainable aviation fuel. Growing numbers of companies are looking to slash their carbon footprint, and Scope 3 emissions often represent the majority of an organization’s total greenhouse gas emissions. They can surpass Scope 1 or 2 emissions, which emerge from building facilities, or are calculated based on electricity consumption.

Going by the Microsoft update, it’s just the start. “To meet our FY30 goals in an increasingly competitive market, we will continue to increase the annual fee at an accelerated rate, which will also help promote energy efficiency and design changes that utilize low carbon materials,” it said in the blog post.

Is Microsoft being unfair towards the travel industry? Probably not, according to one expert. While the move is designed to dissuade staff from traveling, more importantly it encourages airlines and hotels to offer greener options.

“The hike in their internal charge for business travel serves to change company behavior towards less or lower-carbon travel and accommodation options, and finance emission reduction efforts,” said Tom Wood, carbon accounting lead at Emitwise.

“Far from ‘greenwashing’ this initiative is preparing Microsoft for the future where business travel, and other emissions generating activities, will cost a lot more as governments levy carbon taxes. Big business and their investors are looking at initiatives like this from Microsoft as an essential means to reduce their climate-related financial risks,” he added.

Bill Gates famously divided opinion when he predicted the number of business trips would halve in the future. But perhaps he has a point regarding the company he co-founded.