Microsoft has been accused of greenwashing due to its close links with fossil fuel companies.

In a filing with the US Securities and Exchange Commission from the non-profit As You Sow, Microsoft is accused of hypocrisy for styling itself as a “first mover” on climate change while targeting fossil fuels as the most significant growth opportunity for artificial intelligence (AI), machine learning and cloud computing services.

Citing a report from the Atlantic, the non-profit highlights that Microsoft’s partnerships with the fossil fuel sector “could represent a market opportunity of $35 billion to $75 billion annually in the coming years.”

In addition, Microsoft has “sought to market AI to companies such as ExxonMobil and Chevron as a powerful tool for finding and developing new oil and gas reserves and maximizing their production—all while publicly committing to reduce emissions dramatically.”

This is despite the tech giant's assurances that it would only seek advanced technology partnerships with energy companies publicly committing to net zero carbon targets.

However, the company “lacks a credible external standard used to evaluate the net zero claims of its partners,” the filing claims.

The filing also asserts that Microsoft is “selectively reporting on the climate-positive applications of advanced technologies while omitting the climate-related risks of deploying advanced technologies to increase the extraction of fossil fuels.”

Responding to a request to comment, a Microsoft spokesperson told DCD: "Microsoft recognizes the world’s need to both quickly develop access to more energy and to achieve an energy transition that achieves a net zero carbon economy by 2050. We published a set of Energy Principles in 2022 specifically designed to guide the company’s work addressing this challenge. The additional reporting requested in this proposal is unnecessary given Microsoft’s existing disclosure of our approach to working with customers in the energy sector."

DCD has reached out to As You Sow for comment.

In its latest Environmental Sustainability Report, Microsoft disclosed a nearly 30 percent rise in CO2 emissions since 2020, marking a setback to its pledge to reach carbon neutrality by 2030. This uptick in emissions comes despite the tech giant’s ambitious sustainability goals to reduce its environmental footprint over the long term.

As a result, it is at increased risk of reputational damage due to allegations of greenwashing. As You Sow argues, to alleviate these concerns, Microsoft must identify “the risks associated with these technologies, reporting them to shareholders, and even offering solutions that would limit associated harms.” Doing so would increase transparency and provide investors with the requisite information about the firm's exposure to material climate related risks.

Microsoft isn't the only technology giant that has been accused of greenwashing. For example, despite its extensive deal count in securing renewable energy supply, Google admitted that its operations last year resulted in a 13 percent increase in greenhouse gas and can no longer claim to be carbon neutral.

In addition, Amazon has claimed that by “purchasing additional environmental attributes (such as renewable energy credits) to signal our support for renewable energy,” it is hitting clean energy targets.

However, the ‘Amazon Employees for Climate Justice’ calculated that 78 percent of the energy Amazon consumes in the US still comes from “non renewable sources.” The group contends, "The reality on the ground is that its data centers are driving up demand for fossil fuels.”

Data center firms remain one of the largest procurers of renewable energy worldwide, investing billions into clean energy technologies. However, with the massive increase in power demand expected over the rest of the decade, fossil fuels will remain a crucial part of the energy mix for data center firms.

A recent report by S&P Global supports this in stating that demand for natural gas to support data centers in the US could reach up to three billion cubic feet per day (bcf/d) and as high as six bcf/d by 2030 if natural gas assumes a larger share.