Microsoft’s latest environmental report details how the company’s expanding AI infrastructure is increasing its environmental footprint and creating tension with earlier climate commitments.
Key findings
The report shows several environmental indicators rising. Microsoft’s total greenhouse gas emissions increased by 25%, driven in part by growth in digital infrastructure—especially AI—and by changes in the company’s electricity procurement approach.
A core data-center water-use efficiency metric improved by 25% relative to a 2022 baseline, putting Microsoft on a path toward a 40% improvement goal by 2030.
Energy procurement and reported emissions
Microsoft reported that emissions associated with purchased electricity rose 945% between 2024 and 2025, while its electricity consumption grew 24%. The company attributes much of this near-term rise in reported emissions to a deliberate shift away from counting renewable energy certificates tied to existing projects, which may not spur new clean energy capacity.
Instead, Microsoft says it is prioritizing procurement and investments that help finance new carbon-free electricity generation. Melanie Nakagawa, Microsoft Chief Sustainability Officer, acknowledged the near-term increase in reported emissions, saying the decision should ‘‘create greater long-term environmental value because it actually helps expand carbon-free electricity capacity and generation on the grids that we need it to be in.’’
Renewable matching and gas-fired data centers
Microsoft reiterated that it purchased enough renewable electricity to match 100% of its annual electricity consumption—an achievement the company announced earlier this year. However, the company is also developing at least two data centers that will rely on natural gas for power in Texas and West Virginia.
Asked about those projects, Nakagawa said Microsoft is trying to balance climate goals with reliability and the need to bring power online quickly as AI demand accelerates. She noted Microsoft already has several gigawatts of carbon-free electricity in Texas while exploring ‘‘solutions that help address near-term reliability and speed-to-power challenges in regions where grid constraints may limit the pace of development.’’ A company spokesperson added that Microsoft is ‘‘exploring a variety of options for mitigating the emissions associated with these plants.’’
Water stewardship milestone
For the first time, Microsoft reported that, on a global basis, it returned more water to watersheds than it withdrew last year. Water used to cool data centers can be consumed or returned to local waterways after use; although Microsoft’s water withdrawals and water consumption have increased alongside AI growth, its replenishment efforts have grown at an even faster pace.
Nakagawa emphasized the larger aim of replenishing water within the same watersheds where it is withdrawn, and described the global net replenishment as ‘‘a proof point that we have capabilities to deliver replenishment projects at scale.’’
Industry context
The report also underscores that Amazon, Google, Microsoft and Meta account for roughly two-thirds of the data-center power capacity among the top 15 facilities tracked by financial firm Jefferies. As a result, the environmental strategies of these companies increasingly shape the sector’s overall footprint.
Bottom line
After three annual environmental reports from major tech firms, a clearer pattern is emerging: AI expansion is outpacing many sustainability plans put in place earlier this decade. Microsoft reports progress in water efficiency and renewable procurement strategy, but rising emissions and energy use highlight the challenge of aligning rapid AI-driven growth with long-term climate commitments.
