Trending: After-party at Jeff Bezos’ D.C. mansion attracts Bill Gates, Ivanka Trump and other notable guests
Microsoft President Brad Smith speaks at Bloomberg’s Sustainable Business Summit in Seattle on Thursday. (GeekWire photo / Taylor Soper)

Microsoft is known for plenty of innovative services and products, but perhaps one lesser-known idea out of the Redmond tech giant is its internal carbon tax.

Back in 2012, the company implemented a carbon fee across all of its business units, even going as far to create a new line item in financial statements. The fee was based on projected carbon emissions from each part of the company — everything from carbon use in buildings to transportation.

“We were one of the first companies to do this,” Microsoft President Brad Smith said today at Bloomberg’s Sustainable Business Summit in Seattle. “We wanted to encourage our own business units to make improvements to their own electrical efficiency and their own carbon efficiency.”

Smith said the tax produces about $30 million a year that goes into a common fund Microsoft uses to spend on more energy improvements. The idea has spread to hundreds of other companies.

“It gets people to focus,” Smith said of the tax. “Suddenly people see a line item on their budget and they start to think about how they can reduce that cost, and apply for some of the [tax money].”

In 2015, Microsoft said the tax helped save $10 million in annual energy costs while reducing carbon emissions.

Sustainability is a big focus for Microsoft, which has been carbon neutral since 2012 and pledged to reduce its operational carbon emissions by 75 percent in the next 12 years. In December it pledged $50 million over five years for new program called AI for Earth, which aims to use artificial intelligence to tackle the world’s most pressing environmental issues.

Last year the company struck a deal with Puget Sound Energy that would allow the company to shift 80 percent of its energy use at the Redmond headquarters to renewable sources purchased wholesale from other providers. It has 60,000 employees who come to the campus each weekday; Microsoft also runs the state’s fifth-largest bus service.

“It gives us an incredible opportunity to experiment with technology to drive energy efficiency,” Smith said of the company’s campus.

This past March, Microsoft announced what it called “the single largest corporate purchase of solar energy ever in the United States,” buying 315 megawatts from two new solar projects in Virginia as part of its ongoing effort to power its global data centers with renewable energy. It wants to power 60 percent of its data centers with clean energy by 2020.

On Thursday the company released a report that found its cloud services to be up to 93 percent more energy efficient and 98 percent more carbon efficient than traditional enterprise data centers.

“In almost any situation, you will be a more energy efficient user of computing power if you move to cloud than if you run your own servers,” Smith said.

Microsoft continues to move forward with environment-related initiatives come as the federal government scales back its climate change regulations, including withdrawing from the 2015 Paris global agreement. The company sent a delegation to France this past December for a global climate summit where Smith announced the AI for Earth program.

“We’re not a company that believes we should speak out on every issue under the sun just because the team believes in a certain point of view,” Smith said on Thursday. “But when you think about how important not just sustainability of the planet is to all of us, but things like renewable energy, electrical efficiency — how important it is to our business as an operator of so many data centers — we felt comfortable saying that this issue on which we will stand.”

Like what you're reading? Subscribe to GeekWire's free newsletters to catch every headline


Job Listings on GeekWork

Find more jobs on GeekWork. Employers, post a job here.