Microsoft Corp. is pledging to eliminate its carbon emissions and invest $1 billion as part of a wider climate commitment, raising the stakes in the corporate race to show greater awareness of environmental concerns.
The software company said Thursday that it would become "carbon negative" by 2030--taking more carbon out of the air than its operations and those of its supply chain produce. This goes a step beyond promises made by some of its high-profile Silicon Valley rivals.
By 2050, Microsoft said, it plans to eliminate all emissions it has produced since its founding in 1975.
Companies are increasingly feeling pressure to take action on emissions. A growing number of investors want to see changes, as do many consumers and employees, said Dickon Pinner, global head of McKinsey & Co.'s sustainability practice. "Sooner or later, regulators will react and capital will react, so it is just a good business decision if you have some confidence where this is heading," he said.
In the past couple of years, companies as varied as cosmetics maker L'Oréal SA, pharmaceutical firm Novo Nordisk A/S and candy maker Mars Inc. have all pledged emissions cuts, according to CDP, an international nonprofit organization that presses companies to disclose their environmental impact.
Companies also face calls to use fewer fossil fuels in plastics and packaging. On Thursday, Nestlé SA, the world's largest food company, pledged to cut its use of plastic made from fossil fuels by one-third in five years, a particularly significant challenge for the food industry. It also said it would invest as much as two billion Swiss francs ($2.07 billion) to find more recycled material.
Microsoft's climate announcement is among the most ambitious yet by a large company. It said it has been carbon neutral since 2012, in part by purchasing what are known as offsets, which finance projects that absorb carbon dioxide, such as forest preservation. It plans to have 100% renewable energy running its facilities by 2025 and completely electrify its campus vehicle fleet by 2030.
"One of the conclusions we've come to is that this is an area where neutrality simply is not enough, and we need to be more ambitious," Microsoft President Brad Smith said this week.
Mr. Smith said the Xbox game system is one of Microsoft's biggest carbon-footprint contributors. The environmental pledge, he said, will drive efforts such as making the devices more energy-efficient.
Microsoft isn't a major manufacturer, which makes tackling emissions easier than for companies more focused on manufacturing. Microsoft said its operations and suppliers would emit 16 million metric tons of carbon in 2020. Dow Chemical Co., by contrast, has to account for about 113.5 million metric tons.
Companies pledging to take more carbon out of the air than they put in are rare. Software maker Intuit Inc. said in September it would take such a step by 2030. CDP says only two companies in its database have pledged to reduce emissions in a verifiable manner to reach a net-zero level: Swedish property developer Castellum AB and German professional-services firm Sustainable AG.
This "is at the vanguard of corporate climate action," said Sue Reid, vice president of energy and climate at Ceres, a nonprofit that urges investors and companies to set sustainability goals. "There are a small number of companies that have gone beyond net zero."
Amazon.com Inc. said last year that it would add a fleet of 100,000 electric delivery vehicles in a drive to be carbon neutral by 2040. That requires Amazon to have no net release of carbon dioxide into the atmosphere by either offsetting emissions through actions such as planting trees or by fully eliminating emissions.
Amazon expects 80% of its energy use to come from renewable sources by 2024, up from 40% at the time of its environmental pledge.
To become carbon negative across all its operations, Microsoft plans to use technologies that remove carbon and store it for long periods underground, in the soil or in a biosphere. That pledge could prove difficult, because much of this technology is still maturing and it is unclear whether it is scalable. Globally, there is only capacity to capture and store 40 million metric tons in a variety of industrial and experimental projects.
Julio Friedmann, a research scholar at Columbia University's Center for Global Energy Policy who was an Energy Department official in the Obama administration, said companies investing in carbon-negative technology could have a competitive advantage in years to come if future policies require companies to limit their emissions.
"The thing I find most exciting about what Microsoft is trying to do here is that the future is made one brick at a time, and they're going to buy the first bricks. They're going to help create an industry by procurement," he said.
Microsoft said it would provide $1 billion to its new Climate Innovation Fund over the next four years to back development of carbon-removal technology.
A day before Microsoft announced its pledge, scientists at the National Aeronautics and Space Administration and the National Oceanic and Atmospheric Administration, which independently track world temperatures, said 2019 was the second-warmest year on record. An accumulation of greenhouse gases, such as carbon dioxide, in the atmosphere has contributed to warming temperatures and the changing climate.
The environmental commitments are only the latest area where tech companies are competing to say they are addressing a range of societal ills. Microsoft said last year that it would spend $500 million on new housing in the Seattle area, around its Redmond, Wash., headquarters. Alphabet Inc.'s Google followed with a $1 billion commitment to housing in the San Francisco Bay Area. Apple Inc. in November committed $2.5 billion to affordable housing in California.
But Microsoft's environmental stance has faced criticism over the company's links to the oil-and-gas industry. Over the past year, Microsoft has struck deals with Exxon Mobil Corp., Chevron Corp. and Schlumberger Ltd. to move their data to the cloud.
Microsoft, like many tech companies, is having to contend with a more activist workforce pushing for a more progressive position across environmental, social and political issues. Microsoft employees have criticized the company's courting of the oil-and-gas industry to adopt its cloud-computing service, Azure.
In response to some of those energy deals, a group of Microsoft employee activists said, via Twitter, "It's no longer possible for us to ignore Microsoft's complicity in the climate crisis." Microsoft declined to comment on the tweet.
Saabira Chaudhuri contributed to this article.