As unprecedented heat waves sweep the globe, Microsoft President and Vice Chair Brad Smith says now is the right time for "literally everybody on planet Earth" to pursue climate action, and that means now is also a "critical time for all of our partners and customers to engage," he said during the company's Inspire event.

The reality of climate change and its anthropogenic nature are undeniable. "If you look at the trends, if you look at all the data, we're seeing the increase in carbon dioxide emissions raise the temperature of the planet, and that is literally putting the human habitability of the planet at risk," Smith explained.

And this won't be a problem just for future generations. "It is for here and now and for every business, every partner, every customer, every employee. It matters that people start to take action," he added.

"The first thing everybody should just think about is why it matters," he continued. Humanity currently releases 52 gigatons of greenhouse gases into the atmosphere each year, and "we've got to get that down to what we call net zero by the middle of the century," Smith urged. "What it means is you got to get 52 down to probably 10 or 12, and then remove from the environment every year 10 or 12 gigatons of carbon as well."

The first baby step this requires is measuring exactly what and how we're emitting. Climate action without measurement to prove if progress is or isn't being made "may not add up to anything more than sort of a false delusion," Smith explained.

A key piece of accurate measurement is transparency. "It's how we all hold ourselves accountable. And it's how we share what we're learning," Smith said.

Enterprises often check the sustainability transparency box by releasing annual environmental, social, and governance (ESG) reports that attempt to quantify environmental impacts through scope 1, scope 2, and scope 3 emissions.

Microsoft's second annual sustainability report "was, frankly, a mixture of good and bad news," Smith admitted. The company says it grew by 20% while reducing its scope 1 and scope 2 emissions by 70%, which represents the carbon emissions from Microsoft's operations and its direct use of fossil-fuel based electricity.

But the bad news, Smith said, is that the cloud giant's scope 3 emissions increased 23% from the previous year. Scope 3 refers to emissions resulting from activities further outside Microsoft's control like supply chain emissions and customers' use of its products.

Microsoft largely credits this scope 3 increase to "building data centers, buying servers, concrete, steel—all of that emits carbon," Smith said, noting its gaming business and the electricity gamers use as another major contributor to this emissions jump.

However, despite its transparency messaging and the rise in climate-focused investing, Microsoft did not present any information relating to its sustainability commitments or its measured impacts on the planet during its Q3 2022 earnings presentation. Investors also ignored Microsoft’s sustainability efforts, focusing on other topics such as supply chain constraints during the Q&A portion of the call.

Smith said Microsoft was able to learn from this scope 3 rise that it isn't easy to grow a business while shrinking emissions, especially scope 3.

And now, "we're doubling down. We have more goals and targets and actually accountability margins for our different businesses. We've increased our internal carbon fee," Smith said.

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 provider's broader goal to be a completely zero-waste company by 2030.

Another major step toward meaningful, large scale action is getting "everybody on the same page about what we call carbon math and carbon accounting," Smith explained. "In the same way that we have standardized, uniform rules for accounting for money, we need to have standardized, uniform rules for the accounting of carbon emissions," he urged.

And just like with financial results, the next step is automation because "the only way to measure something at scale is to automate it." He anticipates this will look like "an ecosystem that literally is as big as the planet that is directly connected to the sources of emissions" to automate data collection and reporting.

"That's what we're doing as a company. That's what we're doing with the cloud for sustainability," Smith said, citing the key role of Microsoft's partners and customers along the way.