Microsoft reported a surge 23% jump in scope 3 greenhouse gas emissions last year despite its ongoing efforts to reduce indirect supply chain emissions.

The cloud giant attributed much of the 23% increase in scope 3 emissions to the global expansion of Microsoft's data centers and growth in Xbox sales during the COVID-19 pandemic, Chief Environmental Officer Lucas Joppa wrote in the vendor's 2021 Environmental Sustainability Report. This means Microsoft is responsible for the carbon released from the electricity generated to power its devices and to produce the concrete and steel it uses in data center construction, the report explained.

This rise in emissions shows just how difficult it can be to control and reduce scope 3, Joppa said. Despite the daunting nature of the task, Microsoft claims it's working to limit indirect emissions during the design and manufacturing process and through collaborating with suppliers to encourage them to lower emissions.

Microsoft says it approaches scope 3 by applying circularity principles to materials management to reduce its waste and carbon emissions. By 2025, the cloud giant expects 90% of servers and components within its regional data center networks will be reused.

It seems to be making steady progress on this target — Microsoft says it was able to reuse 78% of cloud computing assets in fiscal year 2021. And during the next 18 months, "we expect to increase the decommissioned assets processed and repurposed through circular centers to more than 80% globally," Paul Clark and Anand Narasimham, who lead Microsoft's cloud supply chain sustainability, wrote in a blog.

This feeds into the vendor's broader goals to reduce emissions by more than 50% and to be a completely zero-waste company by 2030.

Part of the strategy to meet those targets is based on circular centers housed in Microsoft's data centers. Three of these centers are currently operational in Amsterdam, Dublin, and Virginia, and Microsoft plans to continue global expansion of the program throughout its data centers, Clark and  Narasimham explained.

Circular centers are funded through Microsoft's internal carbon tax, where business units within the company are charged a fee based on their carbon emissions. This incentivizes teams to be conscious of their carbon footprint, and the money collected funds sustainability initiatives like the Circular Center program.

Microsoft considers energy efficiency, repairability, upgradability, and durability of its products during the Azure hardware design process.

To scale these ideas, the vendor developed the Intelligent Disposition and Routing System (IDARS), a tool that "establishes and executes a zero-waste plan for every piece of our hardware assets," focusing on the most sustainable and circular path for every part, during any point in its lifecycle, and across any point in the supply chain, Clark and Narasimham wrote.

"IDARS uses AI and machine learning to process and sort a wide range of end-of-life assets, optimize routes for those assets, and provide Circular Center operators precise instructions on how to dispose of the asset" while prioritizing compliance and security of customer data, they explained.

This technology, paired with Microsoft's collaboration with supply chain partners, "could revolutionize circular models in the technology industry. We believe it could catalyze sustainable business models everywhere."