The global body for professional accountants

Microsoft has joined a long list of corporate giants by demonstrating its green credentials. Alex Miller explores some of the opportunities of such a move

green-credentials


Microsoft has announced plans to buy up all of the electricity produced by a Texas wind project to power one of its data centres, with construction expected to begin in early 2014.

The tech giant completed the purchase of renewable energy through a 20-year deal to buy all of the power produced by a 55-turbine wind farm in Texas called Keechi – the first time the company has completed a direct deal of this kind.

Microsoft's decision to use its corporate presence to push more renewable energy onto the grid is seen as an important step forward by analysts, with further announcements on its greening efforts expected during 2014.

‘For Microsoft, signing a long-term (power purchase agreement) for wind energy is a significant milestone in our commitment to carbon neutrality,’ wrote Microsoft environmental strategist Robert Bernard on the company’s Green blog. ‘It also underscores how the carbon fee is changing the way Microsoft does business globally. By placing a dollar value on a metric ton of carbon, Microsoft is building environmental sustainability into our long-term business planning and creating a blueprint for more purchases of renewable energy like this one.’

Greenhouse gas growth

Data centres are a large and growing source of greenhouse gas emissions, with the likes of Google having already made moves towards buying its electricity directly from windfarms.

Google’s clean energy investment portfolio – which has eclipsed £600m – includes projects in the US, Germany and South Africa.

‘We invest in these projects because they make business sense, because they help put more renewable energy on the grid and because they have a positive impact on the local economies where they operate,’ said Google corporate finance head Kojo Ako-Asare.

Stanford University research found that US data centres use approximately two percent of the electricity used by the entire country. Powering data centers with renewable energy sources like wind or solar is an obvious solution to global energy problems.

So far six big internet companies – Apple, Facebook, Google, Rackspace, Salesforce and Box – have committed to 100% renewable power for their data centres.

Microsoft, though not among them, committed in 2012 to be ‘carbon neutral’, imposing its own internal carbon marketplace. Proceeds from that carbon fee had helped to fund its purchase agreement with the Keechi project.

Opportunities

Legislation such as the Climate Change Act have been introduced, while FTSE350 companies and pension funds are now expected to have environmental credentials – while it is inevitable that this will be a requirement of all companies in the future.

The change towards green is also bringing opportunities in product development.

Within the financial services sector, for example, a number of companies have launched green mortgages and green car insurance, while other developments include climate change investment funds.

It is one of the few sectors where new funds are being launched every month. As we climb out of recession, the hottest topic on the planet is likely to be that of climate change.

Technology

Population growth and the impact of a warming planet will put increasing pressure on the earth’s resources. Technology that helps us to find new ways of producing energy will be in great demand – so will fresh water, timber and improvements in agriculture.

Companies that provide solutions to these issues will be in great demand and funds that invest in them are likely to do very well for their investors.

As well as consumer demand and the potential for cost savings through green opportunities, federal, state and local tax and utility incentives are likely to further improve the return-on-investment from energy efficiency and developments.

Last updated: 11 Aug 2015