Microsoft has just four more years to reach its ambitious goal of removing more planet-warming carbon that it produces. But the company’s annual sustainability report, released Thursday, shows it’s moving in the opposite direction, as its 2025 emissions spiked 25% over the previous year.

Despite the troubling increase, Microsoft leaders say they remain committed to the longer-term goal.

“We continue to really be focused around carbon negativity by 2030,” said Melanie Nakagawa, chief sustainability officer, in an interview with GeekWire.

The Redmond, Wash.-based company is the latest tech giant to fall further behind its climate targets as they invest billions of dollars in new, energy-hungry data centers to power the AI boom. Amazon’s carbon footprint jumped 16% last year, while Google’s greenhouse gas emissions swelled 18%.

The report also shows how much energy use drove that increase, with Microsoft’s total electricity consumption growing by 24% last year.

In total, Microsoft produced 20 million metric tons of carbon dioxide equivalent in 2025, which would have been roughly 34 million metric tons without carbon reducing initiatives including purchasing clean electricity and sustainable fuels, Xbox console efficiency and Surface device decarbonization. The reduced number puts the company’s footprint roughly on par with the total emissions of Panama or Lithuania.

In addition to data center expansion, Nakagawa said, the carbon increase was also driven by Microsoft’s decision to stop buying unbundled, short-term renewable energy certificates, or RECs — a mechanism companies can use to quickly lower their reported emissions for a given year. Microsoft is instead prioritizing longer-term initiatives with bigger impact, she said.

The challenge Microsoft wants to answer, she said, is how to take a “portfolio approach” that spans carbon dioxide removal, carbon-free electricity, sustainable materials, and fuels — addressing all of them together rather than in isolation.

Where Microsoft made gains

The annual report highlighted areas of success. That includes:

• Matching its electricity consumption worldwide with clean energy sources.
• For the first time, replenishing more fresh water globally than it withdrew, making important progress on its 2030 goal of being water positive across operations.
• Achieving 92% reuse and recycling of decommissioned cloud servers and components for the second consecutive year.
• Reaching a total of 40 gigawatts of clean power purchase agreements across 26 countries, with 19 gigawatts currently online. (Forty gigawatts is roughly enough power to serve 30-40 million typical U.S. homes at once.)

Scrutiny over recent moves

Microsoft’s sustainability disclosures come after a series of announcements and news reports that have raised concerns among climate advocates.

• Last month, Microsoft and Chevron announced an agreement to build a natural gas facility in Texas with a 2.67 gigawatt capacity, providing dedicated electricity to the tech company for 20 years.
• In May, Bloomberg reported that Microsoft was considering scaling down or scuttling a pledge to match its electricity use with carbon-free power around the clock by 2030.
• In April, the New York Times reported that Microsoft was pausing future purchases of carbon removal credits, after years as the market’s top buyer.

Nakagawa said the company has not canceled any removal projects, though she did not provide specifics about new purchases going forward. “We’re just continuing to take a hard look at each of the deals that are coming through,” she said, and looking for “credible opportunities to scale.”

Asked about Microsoft’s commitment to purchasing clean energy 24/7 — an approach that would eliminate reliance on coal- or gas-powered energy when wind and solar aren’t available — Nakagawa declined to confirm it. “We still are looking towards opportunities around carbon-free electricity,” while focusing on the 2030 carbon negative goals, she said.

As to the natural gas deal, the chief sustainability officer said Microsoft has also contracted to purchase 4.7 gigawatts of renewable power in Texas alone and that the company evaluates its energy investments as part of a broader mix.

Looking for efficiencies elsewhere

Even as data centers remain the prime driver of Microsoft’s rising energy use and emissions, the company points to other steps aimed at reducing the environmental footprint of the facilities.

That includes increasing the use of lower-carbon steel and concrete and incorporating mass timber into data center buildings. And In the past year, Microsoft has added a seventh Circular Center — one of several facilities worldwide where the company recycles and reuses electronics from data center operations.

Microsoft is also working with developers to use AI models more efficiently and build right-sized products. AI agents can review, test and improve code so it uses less energy when it runs, Nakagawa said.

“I definitely think there’s an opportunity here,” she said.

Editor’s note: A correction was made regarding Microsoft’s total energy use last year, replacing a data point on Scope 2 emission, and clarifying the steps taken to reduce its carbon emissions to 20 million metric tons of carbon dioxide equivalent.

Amazon’s carbon footprint jumped 16% last year after several years of little or no increase. The company emitted nearly 80.9 million metric tons of carbon dioxide equivalent in 2025. By comparison, that’s slightly higher than the nation of New Zealand’s emissions.

Amazon disclosed its climate-related data in its most comprehensive sustainability report to date, which includes a breakdown of its carbon sources, water use and other environmental impacts.

Not surprisingly, energy use showed the biggest rate of increase in the 2025 carbon tally as Amazon and other tech companies are working to rapidly expand their data center capacity to meet AI computing demand.

For the first time since 2019, the company also reported an uptick in its “carbon intensity” — a measure of how much carbon was emitted relative to each dollar of revenue. Amazon has promoted this metric as a sign that it can decouple its growth from its climate impacts.

Despite emissions moving in the wrong direction and ongoing data center-driven challenges, the Seattle-area company remains committed to its pledge of net-zero carbon emissions by 2040.

When it comes to that goal, “I remain confident and optimistic in the overarching vision and the long-term progress we continue to make toward it,” said Kara Hurst, Amazon’s chief sustainability officer, in the foreword to the company’s annual report.

The report highlights areas of success that include:

• Data center efficiency: Amazon’s data centers are 9% more efficient than the public cloud average and 30% more efficient than on-premises data centers at directing energy toward computing rather than cooling, lighting or overhead.
• Data center water use: Amazon is seven times more efficient in its water use than the industry average thanks to its use of air cooling at most sites, most of the year.
• 100% clean energy overall: For the third year running, Amazon matched its company-wide electricity use with an equivalent volume of purchased clean energy, although it technically still draws on fossil fuels for some of its energy.
• Electric vehicle fleet: It has the largest corporate EV fleet in North America, with more than 52,700 delivery vans worldwide. It’s halfway to meeting its 2030 goal of 100,000 EVs.

The company also reported improvements in reducing packaging and plastic use in delivered items; increasing use of low-carbon building materials in data center construction; and progress toward becoming water positive at its data centers, meaning it aims to replenish more water to communities than it uses.

The Amazon-backed Climate Pledge — an effort to get other organizations to commit to net-zero carbon emissions by 2040 — has grown to 656 signatories after adding 107 companies this year. It marks a notable increase at a time when companies are growing quieter about climate commitments, with some stepping back from earlier goals.

But the surge in data center investment shows little sign of slowing, which will keep complicating Amazon’s path to lower emissions. CEO Andy Jassy said Amazon expects to spend a record $200 billion in capital expenditures this year, including “AI, chips, robotics, and low-Earth orbit satellites.”

Not all reactions to that buildout have been positive — even within the company. Members of Amazon Employees for Climate Justice this month testified before the Seattle City Council in favor of data center requirements for renewable energy and labor protections, though Amazon doesn’t operate any data centers within city limits.

In response to the sustainability report, the employee group was critical of the increased emissions and accused the company of pressuring carbon accounting standards bodies — including the Greenhouse Gas Protocol and the Science-Based Targets Initiative — to adopt weaker rules.

More than 1,000 employees have signed an open letter drafted last year criticizing Amazon’s “warp-speed approach” to its AI development, the group added.

In the report, Amazon CSO Hurst acknowledged that AI-fueled advances could catalyze sustainability solutions or slow progress toward climate goals.

“But what alternative do we have,” she said, “but to continue to invest, learn, and move forward to try to solve one of the world’s most challenging issues?”

Editor’s note: Story updated at 11:56 a.m. with comment from Amazon Employees for Climate Justice.