Climate crises across the country — record heat waves, wildfires and flooding — have pushed climate to the forefront of corporate agendas. At the same time, companies are being held accountable for their actions to fix systemic racism at the community level. The two goals may seem distinct, but a new Microsoft renewable energy deal demonstrates that as the ESG industry develops, the environmental and social mandates shouldn’t stay in their siloes. Environmental injustice and racial injustice have always been connected in the real world, and should be in the realm of corporate ESG as well.
Microsoft announced in mid-July a solar energy partnership with Volt Energy, a Black-owned solar energy development firm, to supply Microsoft with 250 megawatts of solar power. It’s just one small power purchase agreement in the technology giant’s pledge of using 100% renewable energy by 2025, but it stands out not only for being done with a minority-led firm, but in being structured so that a portion of the profits are used to develop renewable energy sources in underserved communities across the United States.
The deal was Microsoft’s first utility-scale solar power purchase agreement with an African American energy solar development firm.
Big Tech’s climate commitment
Microsoft is already a leader in environmental initiatives from waste elimination to carbon removal, joining Big Tech peers Apple and Alphabet and more recently Amazon who are all heavily invested in climate technology, whether to power their own energy-intensive data centers or for transportation needs, as in the case of Amazon.
Microsoft’s overarching climate pledge goes one step further than most corporations though, promising to not just become carbon neutral but remove all the carbon from the environment that the company has emitted either directly, or by electrical consumption, since it was founded in 1975, by 2050.
“This is another example of them continuing to push the boundaries of what environmental leadership and leadership overall looks like for companies,” said Alison Omens, chief strategy officer at JUST Capital, ESG research specialist, which ranked Microsoft No. 1 among corporations in 2021, a position it has consistently held in the rankings. “Microsoft is doing a good job of thinking about the connection point between equity and environmental justice,” she said. “We cannot think about these things in silos.”
“They’re not in this for charity,” said Nathanael Greene, a senior renewable energy advocate at the National Resource Defense Council. “They’re in this to make money, so this tells us that renewable energy is winning in the marketplace.”
That marketplace increasingly needs to represent all of America, including long neglected rural and urban communities of color.
“Developing community-based, renewable energy projects and related initiatives take time, and we are focused on doing the work to help ensure we are successful,” said Noelle Walsh, corporate vice president of Microsoft’s cloud operations and innovation group.
Racial equity and climate justice
Following the death of George Floyd and the Black Lives Matter movement, discussions on racial inequities were ignited throughout corporations across the country. The larger history linking environmental justice and racial justice tracks a map of 20th-century environmental pollution that tended to be most acute near low-income communities and communities of color including majority Black, Native American, Latinx and Asian American areas, as well as an environmental non-profit movement that grew in size and scope but lacked diversity.
Microsoft and Volt Energy executives declined to provide details on projects being developed under the partnership, but bringing renewable energy sources to underserved communities signals an important step towards investing in the environment at the intersection of fighting racial inequities.
In the late 1960s, during the height of the Civil Rights Movement, growing concerns emerged around the inequity of environmental protection for communities of color across the U.S. In the 1980s, toxic solid waste sites were often located in low-income communities, often with majority Black, Native American, Latinx and Asian American residents, according to the U.S. Environmental Protection Agency.
Racial inequities like this persisted into the 1990s when an executive order was signed in 1994 by the Clinton Administration, dedicating federal funding to improve environmental and health conditions for minority and low-income communities.
“It is critically important that clean energy infrastructure and economic development investments are made in underserved minority and rural communities that have been disproportionally impacted by environmental injustices and lag behind in the health and financial benefits of the thriving clean energy economy,” said Volt Energy’s co-founder and CEO Gilbert Campbell in a statement at the time of the deal’s announcement. “It is equally important to provide access to the business and job creation benefits of the clean energy movement.”
The intersection of the environment and racial justice is an issue where leading ESG researchers and ESG investment activists are beginning to develop metrics. On Wednesday, shareholder advocacy group As You Sow released its first environmental racism scorecard for S&P 500 companies (Microsoft was No. 1). As You Sow views the metric as important in holding companies accountable for environmental harm even if they are making progress — and touting — diversity efforts, such as in hiring. The racial justice scorecard include indicators specifically focused on environmental racism through tracking of corporate environmental violations, fines, and penalties since 2015.
Scoring environmental harm
Andy Behar, CEO of As You Sow, said the new ESG metric stood out for a bad reason: the number of companies that ended up with a negative score when their progress on diversity was measured against their environmental harm.
“Environment violations, money paid in super fund sites, toxins dumped in communities of color … 39 of the S&P 500 don’t make it to zero,” he said. “We’ve never had a scorecard where we had to visualize negative numbers. It describes the situation really on the ground. They are doing more harm than they are able to make up for with positive hiring, donations to communities of color.”
Among those S&P 500 laggards are many oil and gas companies, as well as Warren Buffett’s Berkshire Hathaway, which is facing increased ESG scrutiny.
ExxonMobil scored a negative 23%, placing it last. One example cited by As You Sow was the section of Beaumont, Texas, where 95% of the residents are African American and an ExxonMobil refinery releases at least 135 toxic chemicals.
