Green Procurement Playbook 2025

Microsoft – embedding sustainability into supply chain operations Case study 4 Building on its 2030 commitments to be carbon negative, water positive and zero waste, Microsoft’s Windows and Devices business unit transformed its sourcing by integrating sustainability requirements into contracts, using internal carbon pricing leveraging data to trace environmental impact down to components. How? –Embedded sustainability across functions: Sustainability is not siloed at Microsoft, but is a shared responsibility across procurement, supply chain, engineering and finance. Each function has targets aligned with product milestones, including carbon and waste metrics. –Supplier requirements and segmentation: Carbon-free energy targets and waste reduction goals are embedded in supplier contracts. Microsoft segments its suppliers by impact (Tier 1, 1.5 and 2) to prioritize interventions and ensure progress where it matters most. –Internal carbon tax: Microsoft applies a quarterly updated internal carbon fee to all business units, creating a direct financial incentive to reduce emissions. The cost hits business unit margins, encouraging lower- carbon sourcing choices and efficiency. –Data and traceability: Two-thirds of Microsoft’s bill of materials is traceable to supplier- and component-level carbon data. The company must therefore precisely track scope 3 emissions and facilitate supplier-level accountability. –Supplier enablement and industry collaboration: Microsoft supports suppliers through training, validation tools and partnerships. For small suppliers, the company assists directly in tracking and reporting emissions. Impact Microsoft grew the number of suppliers using 100% carbon-free electricity from six to 89 in just two years and achieved over 90% waste diversion across 82 factories through its Zero Waste Program. Procurement teams use product-level carbon data to drive sourcing decisions. Sustainability is now a competitive advantage as commercial customers are increasingly embedding green requirements into RFPs. Microsoft tracks deal wins linked to sustainability in order to understand which procurement practices deliver the most value, so it can replicate success and continually refine its strategy. Green Procurement Playbook: The CPO’s Guide to Delivering Value for Business and Planet 34