Aiming at delivering the most sustainable, scalable, and reliable cloud for Azure customers, continued innovation in cloud hardware is a constant priority for Microsoft. This extends beyond server architecture and rack design to include intelligent provisioning, deployment, and ultimately, decommissioning of cloud computing hardware in datacenters.

As we look to deliver upon Microsoft’s commitments towards a net-zero carbon future, our cloud supply chain has integrated a zero-waste philosophy into every stage of the datacenter hardware lifecycle.

For this edition of our Hardware Innovation blog series, I’ve invited Paul Clark, GM, Cloud Engineering and Supply Chain Sustainability, and Anand Narasimhan, GM, Cloud Supply Chain Sustainability to share more about how Microsoft Circular Centers are extending the lifespan of our servers with the goal of increasing component reuse by up to 90 percent.

Microsoft team at the opening of the Circular Center in Boydton, Virginia. Pictured from left to right: David Beyer, Anand Narasimhan, Alex Bitiukov, Rani Borkar, Jeff Bertocci, Paul Clark, Kesava Viswanathan, Mo Cruz, Pedro Ramos.

In January of 2022, the Microsoft Cloud supply chain achieved significant milestones toward its goal of reusing 90 percent of its cloud computing hardware assets by 2025. We launched two additional Circular Centers, which process decommissioned cloud servers and hardware, sort, and intelligently channel the components and equipment to optimize reuse or repurpose.

Our pilot Circular Center opened in Amsterdam in 2020, and the new centers that went live this year are located at our datacenter campuses in Dublin, Ireland, and Boydton, Virginia. We plan to expand the program at Microsoft datacenters in Quincy, Washington; Chicago, Illinois; Singapore and additional sites over the next few years in Des Moines, Iowa; San Antonio, Texas; Cheyenne, Wyoming; Sydney, Australia; Sweden, and more.

Addressing e-waste is crucial for Microsoft. We have set industry-leading sustainability goals of being carbon negative and water positive by 2030 while ensuring zero waste across our direct operations, products, and packaging. Our cloud supply chain plays a critical role in achieving that target.

The Microsoft Cloud is powered by millions of servers and a range of networking and storage hardware spread across more than 60 datacenter regions across 140 countries. We expect continued expansion of datacenters over the next few years because of the rapid growth in demand for digital services, and are striving to decouple business growth from the impact on natural resources.

So far, the Amsterdam Circular Center has achieved 83 percent reuse and 17 percent recycle of critical parts while contributing to the goal of reducing carbon emissions by 145,000 metric tons CO2 equivalent. This innovative approach to addressing e-waste and the success of the pilot recently resulted in our being named a finalist in the 2022 Gartner Power of the Profession Supply Chain Awards in the Social Impact of the Year category.

Deep history, wide-ranging benefits

Since 2012, Microsoft business units have been charged an internal fee based on the emissions associated with their operations. In 2020, that internal carbon fee was extended to include all Scope 1, Scope 2, and Scope 3 emissions. Scope 1 includes direct emissions from operations that are under a company’s control. Scope 2 is indirect emissions, such as those produced by the generation of electricity that a company uses. Scope 3 is all emissions that a company is indirectly responsible for, up and down its value chain—which is the majority of an organization’s total greenhouse gas emissions.

Those internal fees are deposited into a fund that is then used to drive several of our sustainability initiatives, which incubated technology innovations such as the Circular Center program among many others.

The first Circular Center was launched in March 2020, and we saw in the first year that the center enabled us to react faster to supply chain shortages impacted by COVID-19, by using harvested parts with components from end-of-life assets.

Decommissioned servers processed by Circular Centers are also finding a second life in schools as a resource for skills training programs. We work closely with partners to find new opportunities for end-of-life parts and equipment—like a company in Asia that is repurposing used memory cards in electronic toys and gaming systems. Similarly, through collaboration with suppliers, customers, industry groups, regulators, and other organizations, we’re finding other opportunities to further reduce carbon emissions and waste across the supply chain. For example, we are working with our network device suppliers to evaluate returning network devices to them to maximize reuse.

Decommissioned servers to be processed by Microsoft Circular Center in Boydton, Virginia.

Plan for every part

Microsoft designs a growing portion of its own hardware portfolio, and we make sustainability considerations a key part of the entire Azure hardware design process—including energy efficiency, repairability, upgradability, durability, and an optimized disposition plan for every part and component.

To enact these principles at scale, we developed the Intelligent Disposition and Routing System (IDARS), which establishes and executes a zero-waste plan for every piece of our hardware assets. IDARS is an end-to-end planning system aiming to define the most sustainable path for every part at any point in its lifecycle across the entire supply chain from upstream suppliers to downstream options for circularity.

Paired with Microsoft Dynamics 365 Supply Chain Management and Microsoft Power Platform, IDARS uses AI and machine learning to process and sort a wide range of end-of-life assets, optimize routes for those assets, and provide Circular Center operators precise instructions on how to dispose of the asset. IDARS also ensures compliance and security of the Microsoft Cloud and customer data.

This technology, along with our close collaboration with both upstream and downstream partners, makes the Circular Center program one that we think could revolutionize circular models in the technology industry. We believe it could catalyze sustainable business models everywhere. Taking our learnings and best practices from working with suppliers and partners, we recently made a contribution on “Life Cycle Assessment (LCA) Guidelines for Cloud Providers” to the Open Compute Project (OCP), aiming to encourage the broader cloud hardware community to conduct LCAs to better understand and reduce their environmental impact.

Focusing on suppliers and Scope 3 emissions

As we scale our Circular Center efforts, we will be able to accelerate Microsoft’s progress towards its carbon reduction and broader sustainability goals. In our first year of operations, 7 percent of our servers that were decommissioned globally were routed to the pilot Circular Center in Amsterdam. Over the next 18 months, we expect to increase the decommissioned assets processed and repurposed through Circular Centers to more than 80 percent globally, putting us solidly on the path to our 90 percent goal.

One of the key factors to our success in reducing our Scope 3 emissions through this program—and in turn, our customers’ Scope 3 emissions—is our close collaboration with suppliers. Since 2020, Microsoft’s Supplier Code of Conduct has required that suppliers disclose greenhouse gas emissions as well as plans to reduce those emissions. That affects thousands of suppliers around the world; in fact, the cloud supply chain alone works with hundreds of suppliers, from hardware manufacturers to packaging suppliers to logistics providers.

Learn more

You can learn more about Microsoft’s progress towards our commitments on sustainability in the newly released 2021 Environmental Sustainability Report as well as take a deeper look at the global hardware supply chain that powers Microsoft Cloud.

• Learn more about Microsoft’s global infrastructure.
• Take a virtual tour of Microsoft’s datacenters.
• Discover career opportunities in Azure hardware with Microsoft.