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Microsoft (MSFT) Partners KLM to Reduce Air Travel Emissions

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Microsoft (MSFT - Free Report) and the Netherlands-based KLM recently inked a Letter of Intent with focus on reducing carbon footprint by development of sustainable air travel practices.

Per the terms of Corporate BioFuel Program from KLM, Microsoft will buy Sustainable Aviation Fuel (SAF) to make the flights taken by the tech giant’s employees’ eco-friendly. The deal specifically covers Microsoft employees taking flights on KLM and Delta Air Lines connecting the Netherlands and the United States.

Notably, KLM has ventured into SAF vertical since 2009. Moreover, SAF strategically addresses growing concerns over curbing airline emissions and campaigns to reduce flight trips. On large scale utilization, SAF is touted to reduce carbon dioxide emissions by 80% when compared to fossil fuels, considering the entire lifecycle.

Microsoft is leaving no stone unturned to reduce carbon footprint across its own supply chain with such small, thoughtful and effective changes.

Per Eric Bailey, Microsoft’s Global Travel Director, the company’s employee travel since 2012 is carbon neutral. Moreover, the tech-giant encourages use of enterprise collaborative solutions including Teams, to counter flight trips and reduce carbon emissions.

The latest deal is in sync with Microsoft’s strategy to promote the usage of renewable energy in a bid to keep costs under control while reducing carbon emission. In fact, by 2030, Microsoft intends to reduce operational carbon emissions by 75%.

Strategic Investments in Renewables Hold Promise

Microsoft is one of the many notable companies that are undertaking significant investments in renewable energy. In fact, reports suggest that Microsoft’s cloud platform Azure “has been carbon-neutral since 2012.”

Moreover, the company has completed quite a few large-scale corporate PPAs to buy renewable energy. Notably, the company has directly purchased new solar and wind energy of more than 1.6 gigawatts and “reduced emissions by 15.6 million tons of carbon dioxide equivalent.”

We note that dependence on renewable resources to cut down on operating costs is just another way to be more competitive and profitable, and Microsoft’s decision to do so augurs well for the company in the long run.

Other companies like Apple, Alphabet, Amazon (AMZN - Free Report) and Walmart, among others, are also seeking to reduce carbon footprint by deploying renewable energy on a larger scale. Notably, Apple and Alphabet’s Google have achieved 100% renewables target and are powered by green energy. Amazon Web Services (AWS) exceeded 50% dependency on renewable energy in 2018, and has plans to hit the target of 100% in the days ahead.

Wrapping Up

Microsoft intends to achieve 70% dependency on renewable energy by 2023 for its data center power requirements and has been operating “100% carbon-neutral” since 2012.

Notably, the company has set an ambitious target to fuel 100% of its global energy needs through renewable resources like solar, geothermal & wind power, biogas and hydro power. We believe the ongoing initiatives will aid Microsoft to realize its green goals.

The latest deal focusing on employee impact on environment is in sync with its goals and highlights the company’s commitment to greener and sustainable environment. These initiatives are expected to enhance the company’s brand value.

Zacks Rank

Microsoft currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Five9 (FIVN - Free Report) and Paylocity Holding Corporation (PCTY - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Five9 and Paylocity is currently pegged at 10% and 20%, respectively.

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