Microsoft's 2026 sustainability report shows emissions up 25% on AI data-center growth

Microsoft’s 2026 Environmental Sustainability Report, published July 9, shows the company’s total greenhouse-gas emissions rose 25% over the prior year, a jump it attributed mainly to building out data centers for artificial intelligence.

The report covers Microsoft’s fiscal 2025 measured against a 2020 baseline, and it documents how quickly the AI buildout is outrunning the company’s own carbon-reduction commitments. The emissions are climbing even as Microsoft reaffirms those climate goals.

Scope 2 emissions — those tied to purchased electricity — grew to about 13% of Microsoft’s total footprint, up from roughly 2%. The company said the increase followed its decision to stop buying non-additional, unbundled renewable energy certificates and to invest directly in new carbon-free electricity projects instead.

Microsoft said it still matched 100% of its fiscal 2025 global electricity use with renewable energy purchases, and reported replenishing more than 14 million cubic meters more water than it withdrew, which it called a “water positive” milestone.

“Innovation at this scale must be matched by responsibility at the same scale,” wrote vice chair and president Brad Smith and chief sustainability officer Melanie Nakagawa in the report.

The figures are Microsoft’s own disclosure, and the 25% rise reflects the tension facing every large AI operator: the data centers that train and run models draw enormous power, much of it still tied to fossil-fuel grids. Microsoft frames the direct-investment shift as a more honest accounting than certificate purchases, though it also makes the near-term emissions numbers look worse.

Whether emissions keep climbing through fiscal 2026, or the new carbon-free electricity deals start to bend the curve, will test how compatible the AI buildout is with those commitments.