Washington D.C., July 14, 2021—IFC and Microsoft Corp. today announced a partnership to help the multinational technology company reduce carbon emissions in its supply chain by 50 percent by 2030.
The World Bank Group's private investment arm will work with designated Microsoft suppliers in emerging markets, primarily in Asia, to identify technical solutions and financing opportunities that can reduce greenhouse gas emissions in the production process.
Microsoft suppliers will draw on IFC's experience in working with complex international supply chains and its commitment to helping emerging market manufacturers achieve more efficient and environmentally-friendly practices.
This initiative is part of Microsoft's ambitious goal to reduce and ultimately remove its carbon footprint. Microsoft has already taken significant internal steps to reduce its direct environmental footprint. Last year, it began requiring its world-wide network of suppliers to disclose their greenhouse gas emissions as part of its Supplier Code of Conduct, creating a baseline for measuring its broader decarbonization efforts.
"Requiring emissions disclosure in our Supplier Code of Conduct has already increased transparency and helped us more effectively partner with our suppliers to reduce emissions. Now, our partnership with the IFC will further enable and encourage our suppliers to take on new emissions reduction projects within their own organizations," said Lucas Joppa, chief environmental officer at Microsoft. "In addition to our own environmental commitments, we are committed to empowering our suppliers, customers, and partners to reduce their carbon footprint."
For IFC, the partnership is a first in addressing supply chain issues in the consumer electronics field, and builds on IFC's ongoing work to address sustainability challenges within the supply chains of international brands in other industries. Interventions to reduce emissions in a multinational's supply chain are uniquely challenging because they require engagement with many small, independently controlled suppliers located in different parts of the world. Emissions by such suppliers are included in what is known as "Scope 3" emissions, as compared with Scope 1 and 2, which cover the direct and the electricity-related emissions from sources that are owned or controlled by the reporting entity. Scope 3 emissions can represent a substantial portion of the reporting company's total greenhouse gas emissions.
The business case for efficiency and sustainability in emerging markets is clear. IFC's partnership with Microsoft seeks to promote additional investments in sustainability among the wider consumer electronics industry, while demonstrating the financial and economic benefits from resource efficiency and renewable energy investments that can be realized at all levels of the supply chain.
"Adequately addressing the major risks of climate change requires a global approach," said Tomasz Telma, IFC Senior Director for Global Industry Manufacturing, Agribusiness and Services. "Microsoft's partnership with IFC recognizes the role that transforming intricate global supply chains can play in meaningfully achieving a company's sustainability goals. It also sets an example for other suppliers in the consumer electronics space, as well as emerging market manufacturers more broadly."
IFC plans to further accelerate its climate engagements with the private sector under the World Bank Group's recently announced Climate Change Action Plan 2021-2025. The Climate Change Action Plan 2021-2025 aims to mobilize record levels of financing to help emerging markets reduce emissions, strengthen climate resilience, and meet the goals of the Paris Agreement. IFC aims to fully align its own real sector operations with the goals of the Paris Agreement starting in July 2025.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.