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Michelle Patron

Senior Director, Sustainability Policy


July 11, 2023
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Ep 95: Michelle Patron - Senior Director, Sustainability Policy, Microsoft
00:00 / 01:04

Michelle Brechtelsbauer [00:00:58] Today, we're here with Energy Impact Podcast. I'm here with our guest, Michelle Patron, who is the Senior Director for Sustainability Policy at Microsoft. Michelle, it is a pleasure to welcome you to EIP.

Michelle Patron [00:01:10] It's great to be here.

Michelle Brechtelsbauer [00:01:11] Excellent. Well, I'm super excited to get to know more about your really impressive background in policy, in shaping a lot of how the private sector and the public sectors can work together to achieve climate goals, and a lot of the really, really fascinating work you've been doing bringing in even new and advanced technology to solve some of the challenges that the private sector has seen in terms of decarbonization. But before we get into all of that, I'd love to just give you a platform to introduce yourself to our audience and go back to the beginning as to what really sparked your interests in policy and in sustainability.

Michelle Patron [00:01:47] Great. Well, once again, it really is a joy to be here. I have been working in sustainability and energy since I graduated college. And over the last 20 years, I really have had the opportunity, the fortune, to advance these issues from so many different vantage points and do it from around the world. I worked at a number of roles in government, a number of roles in the private sector, and in civil society.

Michelle Patron [00:02:11] And when I think back of what really motivated me to get started to this career path, I think of two important catalysts, and both of them were during college. The first was that I studied abroad in Latin America. I studied in the country of Chile. It's in the southern cone of South America. It's this skinny country, but it really spans from well up in the north, in the desert, to the tip of the continent. And I was struck just by how the natural resources in the environment of Chile, whether it was its forests or its rivers, were so braided with the history and the economy. And I came back to my senior year of college and said, "Okay, this is something I really want to pursue."

Michelle Patron [00:02:55] Which brings me to the second catalyst, which was the time at which I studied. I studied in the 1990s when there was so much hope and opportunity about countries coming together to solve these big environmental problems. I took a class on global environmental law, and we studied about the UN Framework Convention on Climate Change that had happened a few years earlier and the Kyoto Protocol that was being decided about how to ratchet up accountability across governments. We also studied about the how countries came together to solve the ozone problem. And so I said, "You know what? This is a career for me." And so, I set about doing that. And I'm really fortunate that I've had the chance to do it for the last 20 years.

Michelle Brechtelsbauer [00:03:43] Oh, that's fantastic. I know we can always say, looking back 30 years ago, how far we've come, but also how far we haven't come. Before we move on from that super optimistic and excited sense that you've described from when you were studying in Chile and then you got exposed to really the whole world coming together around a new topic, newly understood from the technical and science community but also to politicians, what was that like? How did you find your path and how did you decide that you wanted to go down this more international affairs route? Was it the energy challenges? Was it the natural environments you were exposed to in Chile? How did you decide how you were going to carve a pathway in what seemed at the time like a really new future?

Michelle Patron [00:04:40] Well, no career path is linear, and even though mine has always been in sustainability, it's definitely not linear. I left college and I went to go work for an NGO that was focused on environmental law. It was really focused and we were focused on trying to improve the record of the World Bank and to create institutions that would review policies through an environmental lens, review projects through the environmental lens, and hold some of these financial institutions accountable for these big projects. Well, it quickly became apparent that almost all of these projects were energy projects. So I said, "Okay, this is where it is. This is this intersection between the environment and the economy."

Michelle Patron [00:05:20] And so, I actually went back to to graduate school. I studied international relations with a focus in energy policy and also with economics. During my time in graduate school, I was I interned at the International Energy Agency. So, I had a chance to help collect data and do research on different countries and different trends. So that's where that piece in energy, I made that pivot to energy.

Michelle Patron [00:05:45] After I left graduate school, I went right into work for the U.S. Department of Energy. I worked in the Office of Policy and International Affairs. I worked under two secretaries and two different administrations, and my role was to help advance clean energy cooperation, energy security through different bilateral agreements and different programs. And then, the Department of Energy has a number of different offices around the world and embassies, and so I went to open the DOE office and be the energy attache at our embassy in Beijing, and so represent the different program offices of DOE in China. That was the Energy and Renewables office at the time, the EERE, Nuclear Energy Office, just so that we had a representation there.

Michelle Patron [00:06:32] I actually left government for about 10 years and I focused on energy markets and how to price risk, how to help customers and companies around the world be able to make both short-term and long-term planning about different political events, different regulatory events, and how to adjust their strategies. So, both commodity market research and consulting. I went back into the government, and that's when I was at the White House and National Security Council, meeting the energy and climate work that was happening in the lead up to the Paris Agreement. And that's what brought me to Microsoft.

Michelle Patron [00:07:15] So seven years ago, bringing that government experience, that sustainability experience to work for a large global company like Microsoft, a technology company, and helping craft the sustainability strategy there and building out the policy muscle and the policy function when it comes to energy and environmental issues.

Michelle Brechtelsbauer [00:07:33] Fantastic. So yeah, definitely not a linear career path at all, but also one that I think is obviously incredibly impressive, but really, I assume has set you up really well for the current role, having all that experience early on in multiple administrations or the Department of Energy. Multiple, I guess, secretaries in the Department of Energy, having the international experience with one of the largest economies in the world to look at not just the United States' perspective, but also a global perspective, the IEA. And then, yeah, just really getting into it on the private sector side and fully understanding that whole perspective as well before you went back into the NSC and then ultimately, to Microsoft.

Michelle Brechtelsbauer [00:08:16] I'm really curious if you could talk to us about your role at Microsoft and really how you leverage that background to define what sustainability policy means at Microsoft and how you've taken up that charge to be very transformative.

Michelle Patron [00:08:34] Yeah, so my role is as Senior Director of Global Sustainability at Microsoft. And what that entails is working with the global team, both in Seattle where we're headquartered and around the world, to track a number of different policies and regulations that impact our business and that impact our ability to achieve our sustainability goals, to be able to develop advocacy strategies and engagement strategies with different governments around the world, and then to plug into the different global and international flora that are driving progress in those issues.

Michelle Patron [00:09:07] To just bring it to life and give you a few examples, we're an increasingly large electricity consumer. We need to use a lot of electricity to power the data centers that make modern computing work. As more customers choose Microsoft, that means that our electricity load could grow, and so we need to make sure that we're doing that with 100% clean energy. And we'll talk about some of the other sustainability goals later, but that involves a lot of policy. So, what are the policies we need to be able to expand clean electricity into the grid, to modernize the grid, and to do it in an equitable way? That's just one example of a whole range of policies that we're focused on.

Michelle Brechtelsbauer [00:09:51] Fantastic. Do you personally focus on work for the whole global team, or are you more focused on one geography or another? And then if the latter, I'd love to understand how you think about those big challenges and solutions spaces that the company has and how you look across all of your operations to ensure that you're streamlining what you're doing for the priorities of the company across all these jurisdictions.

Michelle Patron [00:10:21] My role is global, and our commitments are global. Microsoft has made a commitment to be carbon negative by 2030 and to remove all the historic emissions that we put into the atmosphere since we were founded as a company. And so, the remit is global. Obviously, we're located in different places in the world and so the places where we have significant energy load is probably where we're doing the most work on electricity. We do a lot of work in the US, we do a lot of work in Europe. There are a number of other places that we're operating globally as well. And part of the idea is to create very, very concrete principles that apply everywhere but then can be flexible. There's no "one size fits all" to different jurisdictions where we operate.

Michelle Brechtelsbauer [00:11:08] Fantastic. So yeah, maybe if you could give me a bit more of a history of Microsoft. You mentioned the 2030 pledge or commitment to decarbonize. That's obviously the one that gets all the headlines, but I'd love to actually understand a bit more about the journey that the company has been on when it comes to how they got to that commitment, others they've made, and just how they internalized the concept of sustainability in their own operations globally.

Michelle Patron [00:11:36] We have been working at sustainability for quite a while, well before I joined the company in 2016. Microsoft set its first carbon target in 2009, and since then we've been ratcheting up the scope and expanding the ambition. So in 2012, we created a carbon fee to help us drive greater change, and then we had successive clean energy goals.

Michelle Patron [00:12:00] In 2020, we made a big moonshot, if you will, saying that we were going to be carbon negative by 2030, and then continuing to remove until we removed our historic emissions. And I think it's important to note that when we made that commitment in January, 2020, it was done by the CEO, Satya Nadella, by our CFO, Amy Hood, and by our Vice Chairman and President Brad Smith. They came out, they came to campus, and they made the announcement. They put the power of the company behind that announcement just to show how important it was for the company.

Michelle Patron [00:12:31] We also made a number of other sustainability commitments in 2020, which was to be net zero waste, to be water positive, and to protect as much land as we use. So, that's our commitment. We have a concrete plan of how we're going to do that. We can go by scope by scope if you like, but that's how we both drive progress, but then we figure out where in the world we need to be really leaning in on policy.

Michelle Brechtelsbauer [00:12:58] Yeah, that is one of the things I think is really the most interesting about Microsoft's commitment in particular, is that it goes well beyond just this, first of all kind of lofty statement, like, "We're going to decarbonize. There's going to be a year and a target, and that's really it." I've seen the plans you guys have put out there. They're very public. They're often also thought of as kind of a challenge to other players in the sector, which I think is so important to really hold up an example of what a company at the global scale of Microsoft can do and how other companies can follow suit.

Michelle Brechtelsbauer [00:13:30] But really that it goes beyond just energy and electricity as well. Water positivity is not even necessarily in the colloquial mainstream sustainability and climate speech just yet, but it's also so critical. The land piece, often thought of as one of these key pillars of decarbonization, but often gets looked at as a third or fourth step in terms of priority after energy and those types of things. And of course, the waste piece as well. So, it's really holistic. And I appreciate it because a lot of times you see the word sustainability and it's really confusing. What does that encompass? And please correct me if I'm wrong here, but definitely from the amount of policies and things that I've seen from this company in particular, they seem to be a broad definition of sustainability and one that really is thinking about the sustainability of future generations and not just of the company's operations. Again, also pointing to the idea that it's negative.

Michelle Brechtelsbauer [00:14:33] How close am I on the mark on that? And I'd love your reaction as to why you think also it's so important for companies like Microsoft to be leading the way on this?

Michelle Patron [00:14:48] Let me start with the second and then we can come back to the comments. I really appreciate the perspectives that you've been bringing from outside the building, if you will. Look, I mean, the science is telling us that we have to act. There's an urgency. And in order for us to keep the temperature rise within two degrees, we all need to get to net zero emissions by 2050. And it's going to take governments, it's going to take companies. It's going to take everybody working together. And as we discussed earlier, it's not only important to our company, it's fundamental to our business in order to make sure that we have this carbon-free electricity, in order to make sure that we have new technologies that reduce water, that reduce waste so that we can continue to operate in a sustainable way.

Michelle Patron [00:15:34] The strategy that we have really been taking when it comes to the four areas of sustainability is a three tier strategy. It's getting our house in order, it's helping drive the sustainability of our customers, and it's advancing the world's sustainability goals. And they're all interlinked as well. And as we are trying to achieve our own operational goals, we're trying to help others learn, to show what we might be getting right and what we're definitely not. And so, it's showing our work, because a lot of this is so new, and that's the only way that we're going to achieve both our own goals and the world's goals.

Michelle Patron [00:16:12] So for example, you mentioned about the negative, the carbon negative piece. I want to unpack that a little bit more. To get to carbon negative, we need to get our Scope 1, which is our direct operations, to near zero. And that's the emissions that come from your building or your own operations. We then also have to do the same two Scope 2, which is the electricity from operations. For us, that's our data centers and our buildings. So we have to get Scope 1 and Scope 2 to near zero.

Michelle Patron [00:16:40] We then need to get to Scope 3, which is our supply chain and value chain. So that's all of the components that go into making an Xbox or making servers that go into our data centers, as well as the value chain. So, the electricity that our customers use when they are playing Xbox. We need to reduce those emissions by 55%, and then we need to remove the rest. That's how we get to carbon negative. That's our 2030 game plan.

Michelle Patron [00:17:09] In order to get to some of those... Like we talked about electricity, we set a goal to be 100% renewable energy by 2025. So we have a robust procurement lever. We have a procurement team that goes out and purchases renewable energy around the world where we operate.

Michelle Brechtelsbauer [00:17:25] And on that piece, you guys are actually building new renewable energy projects, right?

Michelle Patron [00:17:34] Incremental. It's additional. Added to the grid, exactly. In FY22... So, we just had our annual report which came out which was our fiscal year '22. We purchased 13.5 gigawatts of clean electricity, so one of the largest renewable purchasers of the world. So that's one lever. We talked about the carbon price. That's another lever that we have. So we have a lot of different ways to achieve that goal of reduction.

Michelle Patron [00:17:59] Removal is something that sometimes is newer to people to get their head around. So what does that mean? It's literally taking carbon from the air and it's storing it. And you can store it in different ways. You could store it naturally, which is something that some people are familiar with in trees or in different natural storage deposits, or you can have engineered solutions like direct air capture which literally takes carbon from the air. It sucks it and then puts it into the ground for hundreds of years. And so, those are the engineered solutions that we're increasingly focused on to achieve our goal.

Michelle Patron [00:18:41] In 2020, when we announced our target, there was no carbon removal market. We had to go out and say, "Hey, let's do..." We had to do a request for procurement, an RFP, and had anyone in the world who thought that they had carbon removal that could satisfy this contract to submit their proposals. And what we've been doing is we've been showing our work. We've been demonstrating the projects that we've got. We write white papers on this so that we can help develop the market for carbon removal.

Michelle Patron [00:19:12] There's a huge policy angle which we could talk about as well, but this goes to your point about how what we're trying to do and the role of a company like Microsoft and many others as well is this is all new markets, these are all new areas. And just trying and innovating and demonstrating what works and where there are gaps so that we can build these markets faster in order to achieve our goal.

Michelle Brechtelsbauer [00:19:34] Yeah, I mean, what's really so interesting and I imagine from your perspective as well, coming from being inside government, is oftentimes when you have this gap, government often steps in to set policy that incentivizes companies to then say, "Okay, now I need to go get carbon negative solutions." And then, you kind of have the private sector solution come from that. But in this case, there has absolutely been a lot of government investment in CCUS and various types of technologies, but they are still at the earlier R&D stages. Some of it has gone towards commercialization, a lot of work even within ARPA-E, a lot of work within these X PRIZE-type challenges that you guys have also been active in. However, I think the idea that a private sector company is actually issuing its own RFP, that is groundbreaking in many ways as well because it's a leadership component. You're kind of taking a bet on a new technology. We'll get to some other really great new technologies that you're taking bets on as well.

Michelle Brechtelsbauer [00:20:39] But yeah, if you could just comment on that role that a company like Microsoft using other companies is taking on that is really complementary to the same type of role that a government might take on in terms of climate solutions and creating that market. I think that's really powerful and it doesn't happen every day.

Michelle Patron [00:21:01] So, it is. We used to have a very sequential process when it came to climate action. Probably a lot of other things when it comes to policy, right? Government sets policy, companies respond. Maybe companies protest. But there's like this back and forth. It's really simultaneous now. And that's what's been really interesting to watch. Let's take the carbon removal example. You had a tax credit, but the tax credit was only for CCUS. And then over the last year, I think as part of the Inflation Reduction Act in the US, you had this big updating modernization of that tax credit to really reflect carbon removal. And that was because of advocacy by a lot of companies who are active in this space and a lot of new tech that's active in this space demonstrating that there was both a demand, that there was a supply, but here are the technical lessons we've learned and how to scope it.

Michelle Patron [00:21:58] The same is going on right now in the European Union as they're developing a certification platform for what should qualify as carbon removal. So you're having that back and forth. And then, we are also seeing it at a global level as part of the Paris Agreement. They're still finalizing the playbook of how different markets, carbon markets are going to interact in Article 6. So there is a engagement that Microsoft and others are having to help inform based on our experience with carbon removal, what technologies are possible and how countries should think about engaging in the space and leveraging it for their own reductions or their own track for their Paris targets.

Michelle Brechtelsbauer [00:22:47] Yeah, well actually, those different tiers of government is another really fascinating aspect of this that, again, you only really get when you're dealing with larger corporations that have such a climate footprint, if you will, that they're looking to address globally. It's not just, "Okay, if the United States doesn't pass anything more than a tax credit, you're not incentivized." Well, you're also playing in the EU and you're also active in South America. And so, you have all of these different, I guess, opportunities to try different approaches to incentivize and support these types of policy or, I guess, actions that the company is looking to take and help everyone come along and say, "Well, they're doing it in the EU, so maybe we could do something similar to this that works well within the way that we think about it in Canada or we think about it in the United States." That is also really powerful, and I think having that kind of global perspective that your team does have to be able to learn those best practices and help educate, as you said, and inform various global actors, even at the international level as well within the IEA and the UN and Brussels is so important and it's really, really critical. I think that the CCUS work is also just such a great example of one of those critical technologies.

Michelle Brechtelsbauer [00:24:17] But I'd love to, actually, if you don't mind, also talk about some other really great technologies that Microsoft has started exploring and actually investing in for the future, specifically around energy technologies. So recently, I guess in the past month, your team was involved in signing a power purchase agreement with a fusion technology company. Could you tell us more about that and Microsoft's vision for how nuclear power could help address some of the global challenges that you're looking at in terms of decarbonization.

Michelle Patron [00:24:51] Absolutely. So in order to achieve that carbon-free electricity grid that we want, but also to expand the clean energy that's on the grid for all of the folks in the world... I mean, there are 800 million people in the world who still don't have access to electricity. We really need to do everything. And when we think about Microsoft, what are the levers of change that we have? We have billion dollar innovation fund and we're investing in a lot of different technologies to be able to get them from lab to market. We also have our procurement letter to be able to accelerate innovation and development in a number of next generation technologies.

Michelle Patron [00:25:31] So last month, we announced an agreement with Helion to purchase 50 megawatts of nuclear fusion. Alongside of that agreement, we've also built a geothermal plant on our campus. We've also been piloting hydrogen fuel cells for our data center. We have long duration storage on our data centers because it's going to take that diverse energy mix in order to achieve the carbon-free grid and to expand electricity in the way that Microsoft needs, in the way that our customers need, and in a way that the world needs.

Michelle Patron [00:26:08] This comes to me through the policy lens, and it goes back to those three areas of policy priorities for us. So what are the policies that we need to have a diverse mix that can both be resilient, can be flexible, reliable, and clean? The second is how do we update and improve the grid infrastructure so that we are able to deliver this electricity and how do we do it in an equitable way?

Michelle Brechtelsbauer [00:26:36] Yes. So sticking on some of those newer technologies... Geothermal, very place-based in terms of where it can support, but obviously global operations. There are certain countries where you're going to have much better geothermal assets than others, and investing in that makes complete sense. Fusion technology, many people have been thinking is decades away, but there are companies in the private sector that have taken various different approaches than the typical tokamak technology that are really exciting. And I know some people there, so I'm very excited to see that the PPA announcement there.

Michelle Brechtelsbauer [00:27:13] From the traditional geothermal to the more future looking tech like fusion, the scope is really broad because... Just Scope 1 emissions alone, Microsoft has an immense energy footprint. Data centers are heavily energy intensive. They require constant baseload power. That's those types of technologies or batteries supporting renewable technologies, and that's going to take... You can't just have one solution for all of those efforts. It makes complete sense that you're investing across the area, across the technology range, and then really diversifying that solution, ensuring that you're going to be able to make those commitments.

Michelle Brechtelsbauer [00:28:02] So yeah, it's really exciting to hear, but I'd love to actually pick up a bit more on the grid, because I think in your definition as you defined it earlier, that would be within the Scope 2? Correct me if I'm wrong, or Scope 3. But farther away from your own. You're thinking about how electricity is delivered to you and to the end user as well. So tell me, what is Microsoft thinking about in terms of grid infrastructure? That is a massive challenge, and I wouldn't expect a private sector company to be taking on something that big.

Michelle Patron [00:28:34] Yeah, so electricity hits both our Scope 2 and our Scope 3. Scope 2 is the electricity that powers our data center and our buildings. For any company, that's their electricity for their direct operation. And then in Scope 3, there's a lot of electricity as well because that's what our suppliers need to make the semiconductors or the servers or the pieces of the Xbox that go into them in addition to other industrial processes. And it's also what our customers use when they're playing Xbox. So, a big chunk of our emissions do come from electricity and this is why it's such a big focus for the company. There's only so much we can do by ourselves, and our lot is really with the rest of the world when it comes to greening the grid and in infrastructure.

Michelle Patron [00:29:20] Reflecting back on the last 20 years of working on this, what is interesting and optimistic for me about this space, besides climate and clean energy now being so mainstream, is that we're talking about transmission. When was the last time it was talked about in such a forum the way that it is right now? And it's definitely front of mind. And it's interconnection. It's all of the different pieces, because frankly, we really can't get the transition we want without that transmission.

Michelle Patron [00:29:55] The way that we're engaging, we're doing a lot of work when it comes to advocacy and regulatory work. We're pleased with the climate and energy provisions that were in the IIJA, the two recent bills. There's a bunch in transmission. We're engaging current trade associations at FERC on the interconnection piece. We're doing engagements in different states. Some of the transmission dockets come up, so that's an important lever. We're also engaging on this issue in many other places where we operate. It's really been a front burner issue in Europe over the past few months. And what's interesting is just how much in many other countries it really is such a high-level issue. The top policymakers get engaged, really to move the ball forward. And so seeing it finally be part of the political debate here in the United States and having a little bit of movement, but hopefully a lot more movement, is progress. And I think it's where we'll be spending a lot of our time in the months ahead.

Michelle Brechtelsbauer [00:30:56] So when you guys think about the challenge of transmission and interconnection and just the grid, I guess we'll call it, overall, where are you seeing the biggest challenge? I mean, are we talking in terms of the policy space, like local planning and permitting, consenting, streamlining of those processes? Looking at the long queues that you have for connecting new technologies or new projects to the grid that sometimes are actually infrastructure constraints, but in many times are actually just financial constraints that are causing that burden because people have essentially booked out to their place before those projects are even actually ready to be put on the grid. Or is it just pure infrastructure: "We need more capacity"? Where are you guys focusing your efforts if there is one area that certainly seems to be the top priority in terms of the challenge that you would look to solve?

Michelle Patron [00:31:57] Last year, we actually put out an electricity policy brief where we outlined the different areas and unpacked this particular issue. And so in that area, we're focused on prioritizing transmission planning and resourcing and accelerating the interconnection and the permitting process while also making sure we maintain the safeguards for environment and stakeholder engagement. So we have to figure a way that we accelerate this, but keep all of the considerations in the process. And then, how do we integrate new technologies that can allow us to utilize the existing transmission, that allow us to protect the grid, that allow us to better balance the grid?

Michelle Brechtelsbauer [00:32:39] Great. It's so fascinating. It's definitely an area that scares me often when you hear about these ten year long queues for clean energy projects. That can really make the financial case really hard for actually developing new clean power, let alone thinking about the new types of infrastructure and energy systems that we can build if we have that electricity available for the private sector, for industry to innovate with and to grow with. So it really is kind of that foundational piece. People say, "Oh, energy is when you turn on the light switch," but how you get it there, that's what's the huge challenge. So it's great to hear that you guys are really, truly thinking about that in terms of your initiatives.

Michelle Brechtelsbauer [00:33:25] Are there any other initiatives that are coming down the pipeline that you see as being really important to being able to achieve these net zero goals?

Michelle Patron [00:33:37] There's a lot of other work that we're doing that is important. I think something very front of mind for us is carbon reporting and sustainability accounting. When we set our goal in 2020, then we started to have to, "Okay, let's measure progress around our goal and let's pull all of this data together." And it became very apparent how complicated it was to account for carbon emissions and the other sustainability and how everybody was doing it differently. And so, there are three major challenges across companies and across geographies. We are not counting the same thing. So, the boundaries are different. We're not counting it in the same way. So, the methodology is different. And we don't have systems that allow us to easily compare and combine and collect data to be able to report.

Michelle Patron [00:34:23] And so, we've been engaging on this for quite a while. We've filed a number of comments with the SEC as they're considering a rule on carbon disclosure. And so, we want to be focused on making sure that it's robust and that is comparable and that it is consistent. We're also engaging with the European Union and we're also working with the ISSB, which is the International Sustainability Standards Body, which might be new for some of your listeners, but it's a part of the same group that created GAAP accounting several decades ago to help create a consistent way for financial accounting. Because that's really where we are. We are all going to be having to measure this in order to manage and to know where the real gaps are and how we're making progress. And so, this is just such a fundamental thing for every company to be focused on and for us to be advocating.

Michelle Patron [00:35:21] The other piece of this that you touched on is how we enable our customers' sustainability and the world's sustainability. So that's how we enable the world's sustainability, by our advocacy. How we enable our customers' sustainability is by creating solutions. And so, we have the Cloud for Sustainability, which is helping customers track their emissions, track their water so that they're able to do it internally and then eventually able to report to these different bodies.

Michelle Brechtelsbauer [00:35:52] So, that's all very well-needed, but what incentivizes, first of all, Microsoft to push for that type of oversight, if you will? And then, what types of organizations maybe don't exist yet that need to exist in order to have that global accountability that you're talking about?

Michelle Patron [00:36:19] I think this is the first step to achieving our targets. You can't manage what you can't measure. And if you can't measure it, you don't know where it is. I mean, when we created our plan... In order to be able to create our Scope 1, Scope 2, Scope 3 plan, we had to know where the emissions were, what were the biggest wedges, where you can make investments, and then to be able to track progress. So, this is pretty much the first building block to achieve any net zero goal, so that's why it's so important. And it's important for governments, it's important for institutions. It's what the Paris Agreement is based on. Let's set a target, let's show our progress on this target. And so that's where the urgency for this comes in.

Michelle Patron [00:36:58] I think that there's a lot of work that's happening. What we need is really better coordination of alignment and interoperability between regulations. You have the US that's developing theirs, you have Europe that's developing theirs. You could probably look... You know, in Australia, Japan, India, China... All of the different countries have some slice of regulation here or development of methodology, so how do we get much more interoperability so we're really optimizing for reporting and it's easier for companies and it's tied to what the environment is telling us?

Michelle Brechtelsbauer [00:37:34] Yeah, I think that's so needed. I don't know if you have an answer to my other question, but it truly sounds like there needs... I guess, is Microsoft advocating for a singular body? Maybe it's one of the ones you've already mentioned like the standards body. But to not just set the standards and approve of which methodologies, adhere to those standards, but to actually help with that accountability piece as well and really being that conduit for best practices and sharing information and ensuring that it's trustworthy information, et cetera, that section inspection piece as well. What are your thoughts on what that would look like? If it exists now in some pieces or if it's a new thing?

Michelle Patron [00:38:19] So, there is this ISSB that is creating a single methodology for countries to be able to snap to if they want. So, that is in train. And I think right now what's happening is we do an annual report... We just released our sustainability report. We show our work. It's there for the public, and that's the kind of accountability that we need. We're definitely held to account in the press and by our employees and by a lot of stakeholders, including our customers, and that makes us better at what we do. And I think that's what this whole process is about, showing your numbers so that you can not only report, but you can drive greater change.

Michelle Brechtelsbauer [00:39:01] Yeah, that's great. One of the things that we often talk to our guests about on this podcast is their vision of the future. And one of the really cool things that I think we can get at with that question for you is Microsoft's vision of the future that we're talking about here, the dates that we're talking about. There's a 2024 date, there's a 2028 date, there's a 2030 date, right? And it's 2023. So when we talk about the vision for the future that you personally have, that the company has, your team has... That's in just a few months. Seven months plus a few years. So I'd love to get your perspective on how you think about sustainability in the future, how you think about the work that you're doing today and how it's going to help transform this technology sector, and what those critical next steps are in the path towards achieving that future.

Michelle Patron [00:40:05] Absolutely. I think of this in two big buckets. I think the first is... And we touched on it. If we are really going to make progress on the world's goals and on our own goal, we have to double down on the work that we're doing on our supply chain and on Scope 3. So how do we really accelerate change? It's very hard because a lot of that is out of your direct control. But how do you incentivize? How can you work with the policymakers in the locations where your suppliers are located? How do you create more incentives for your suppliers and demonstrate the work there? And there's a lot of work that needs to be done among the suppliers in the tech space.

Michelle Patron [00:40:45] The second piece is how do we use technology? How do we use technology to accelerate our sustainability goals? This is probably the part of my job that I'm most excited about. Let me give you a few examples of parts of it that we have now. One is called Renewable Energy Watch, and it's a partnership between Microsoft and Planet, which is a satellite company, and the Nature Conservancy, which is an environmental NGO. And what it does is it takes satellite imagery and it matches that with artificial intelligence and allows us to have an atlas, a map of all utility, solar, and wind installations around the world. And what that enables the decision maker to do is to understand where the gaps are and to prioritize investment. And then also to the conversation we were just having, having the public hold us to account on how close countries are, how close the world is into to achieving the goal. So, there's a lot of opportunity. That's just one example. But how do we really leverage technology to accelerate and turbo boost our sustainability outcomes?

Michelle Brechtelsbauer [00:41:51] Now, I love that partnership. I've been very much involved with Earth observations in my past as well. And I think the more that we're able to marry these infrastructure assets like satellites and every other type of earth observation asset that we have, certainly funded by the government, but there's plenty as well in the private sector that are understanding, sure, taking pictures, know where things are. But we can track emissions, we can track water flows, droughts, weather patterns, people patterns, traffic patterns, so many things that are really critical that when you pair that with something like AI...

Michelle Brechtelsbauer [00:42:30] And then of course, you're able to power that with the clean processing power hopefully that Microsoft will be providing through its cloud infrastructure and data centers, that really starts to become a really powerful feedback loop on how we can understand what we are doing, what impacts we are making, and how we're actually able to measure some of the goals that we have. I love that Microsoft's part of that type of partnership and working with organizations that already have that track record of being able to be held accountable to the stakeholders they represent. And those NGOs are highly reputable, so it's really great to hear that.

Michelle Brechtelsbauer [00:43:14] But as we wrap up, if there is one key message that you, personally, through your career working across governments and working now at this highly impactful role at one of the largest companies in the world and really focused on sustainability, climate change, and driving that impact towards negative emissions... What would you say to this exact audience of your peers that is really excited to be on this journey with you?

Michelle Patron [00:43:46] So, three things. The first is it's going to take every part of the organizations that you're a part of to drive change. You've got to use all the tools in your toolbox. So if that's a government, that means procurement, that means using a tax code, the regulation. If you're a company, that means using the same thing. Procurement, it means using your operations, how you build solutions for your customers. So, it's going to take all of the tools.

Michelle Patron [00:44:11] The second is that first movers can really set the tone and the ambition. We saw that in the lead up to the Paris Agreement, where you had the US and China coming out with unexpected targets that really set the tone for other countries to come forward. You've seen that with companies, Microsoft making its targets announcement and other companies coming forward. But even the smaller companies that we've talked about today. If it's Climeworks, working with our carbon removal or some of the other newer technologies and able to really show what's possible and build around it.

Michelle Patron [00:44:47] And then, the third is that the time is now. The energy transition is happening. And it's really time for all of us to roll up our sleeves and move it along and move it along as fast as we can.

Michelle Brechtelsbauer [00:45:01] Well, fantastic. I love to hear that you're in delivery mode. That's exactly where I think we should all be as well. Well, thank you so much, Michelle. It's been a pleasure speaking with you. And I'm just so thrilled to have you on and share your message and your vision with everybody on Energy Impact. Thanks so much.

Michelle Patron [00:45:18] Thank you. It's been a pleasure to see you.

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