Sustainability Videos & Lecture Series

Lauren Kuby: It's hosted by director, producer, and newly minted ASU Sustainability Professor Peter Byck. These Carbon Nation Conversations, they're climate change solution conversations that don't even care if you believe in climate change, right Peter?

Peter Byck: That's true.

Lauren Kuby: Peter is fresh—I don’t know if you saw Bill Maher, Real Time with Bill Maher on Friday, but Peter was the interviewee on Bill Maher on Friday. We're delighted to see him. He was just appointed as Professor of Practice with a joint appointment with the Cronkite School. You'll be hearing a lot more from Peter in the coming years.

He has over 20 years experience as a director and editor most notably with Carbon Nation, a Climate Change Solutions Film. He also had some involvement with West Wing and Lord of the Rings.

Peter Byck: The behind the scenes.

Lauren Kuby: Behind the scenes?

Peter Byck: Yeah.

Lauren Kuby: He's met and collaborated with the leading minds from the world of climate, clean energy, military applications, and land use. His contacts span the globe keeping him up-to-date on the fast moving frontier of the clean energy revolution. He's currently in pre-production for Carbon Nation 2.0, an ongoing series of short films promoting a low carbon economy. With that, I turn the podium over to Peter Byck and his first ever Carbon Nation Conversation. Welcome.

Peter Byck: Thank you Lauren. Thank you. I wish this was on the round so we could be spinning, but I'll sorta do this. It's a real pleasure to be here. Lauren does so much work on these events. All I know is it's really hard to fill a room. There's always usually a lot of empty seats. Every time I've worked with Lauren she fills the room perfectly. I'm looking forward to more collaboration.

It's an honor to be here at ASU. This will be the first of what we hope to be many Carbon Nation Conversations. The first person to say yes was the first person I asked, which is—

Lauren Kuby: That's a good record.

Peter Byck: Exactly—which is TJ Dicaprio. We'll give you just a quick rundown and then we're gonna get into the conversation. She works for Microsoft. She's a Senior Director of Environmental Sustainability. That's from 2009 to now. She's just won some really neat awards, the 2013 U.S. EPA Individual Leadership Award. We'll find out why. This other award that I find very cool, the 2012 U.S. EPA Green Power Partner Award for leading Microsoft to become the U.S.'s third largest purchaser of renewable energy. We're sitting here with someone who cares about moving us to a low carbon economy and she's well positioned inside a company. She's not outside holding the placard running around bitching and moaning. She's inside and working it and she's working it in a beautiful way.

When TJ and I first spoke on the phone it was January or February. We met from a guy from DEPA, a guy named Blaine. Our conversation immediately went on a lot of different levels. One of the cool levels was just sort of like what your life is and who you are. You were telling me last night at dinner that you're a sailor and that your job on these ships is you look for the wind. Just talk about that.

TJ DiCaprio: Peter, thank you. I’m a wind watcher. For raising sailboats someone needs to know where the energy source is, the power is, and so I either go up or out and keep an eye on where the wind is. Then I work together with the captain and that's where we direct the boat. What's exciting about it is, and what I apply to the work that I do, is there's always the need to be listening, to be watching, to be aware of external influences because those all impact how we get to our goal. We can have a goal. It might adjust. We need to be flexible with the input that we get in order to get to that point B or to get to our goal and be successful. That's the application of what I've done with my personal love of sailing.

Peter Byck: She's a sailor. She's a pilot. TJ, you worked at Microsoft awhile ago and then you left. Then you came back. Tell us briefly what you did at Microsoft and when and the sort of interaction you had with your customers and sort of that world. Then you left and you did some cool stuff and then you decided to come back. Just give me that quick rundown.

TJ DiCaprio: Okay. My first life at Microsoft in my career was primarily in sales and marketing. Actually I started in tech support and then moved to sales and marketing. There I learned quite a bit about listening, listening to the customer, understanding needs, responding to that, and as well focusing there on what is the business value in talking to customers, the business customers. That was a key element that I was able to internalize and learn.

I ended up taking a break. I needed to go off even just for some personal reasons. Careers can take many paths following a personal life. I took a break and I went over to Florence, Italy and lived for a few years, studied art, and did quite a bit of traveling and really enjoyed that experience.

Peter Byck: How long had you been working for Microsoft before you took that break?

TJ DiCaprio: I was just about at the nine year mark.

Peter Byck: Okay.

TJ DiCaprio: I did some consulting during the time that I was in Florence and really immersed myself in the culture, the food, the wine. It was just an amazing experience. Then I realized it was time to come back and I came back to work at Microsoft at that time and realized that I wanted to get into a part of Microsoft that really made a difference and that sung with my heart. I have an educational background in environmental studies from the University of California. I wanted to apply that. I kept very close contact and relationships with my professors, my teachers, my colleagues from school and that was a big influence in my life. When I came back, I really wanted to be able to use that and come into environmental work.

Peter Byck: You, in college—it was at UCSB, right?

TJ DiCaprio: Right.

Peter Byck: You studied environmental science?

TJ DiCaprio: Yeah, environmental studies.

Peter Byck: Environmental studies. Then you had a career that had virtually nothing to do with that. You get your head cleared out in Italy with the wine and the food and the cheese.

TJ DiCaprio: Yeah, Italy does that.

Peter Byck: And you come back and you realize, "I've gotta do something more to my core, more to something I care about."

TJ DiCaprio: Mm-hmm.

Peter Byck: Does Rob Bernard show up in this moment?

TJ DiCaprio: Yes. Rob Bernard currently is our Chief Environmental Strategist at Microsoft. Poor Rob. I came back and approached Rob and told him about my passion for the environment, the impact I felt that I could make, and so he gave me a chance.

Peter Byck: But you created a job that didn't exist.

TJ DiCaprio: To a certain degree that is very true. Yes.

Peter Byck: And then he didn't know how much you were gonna create. Let's get right into—I call things a carbon tax. We're calling it a carbon fee, but it's virtually the same thing, but there's reason tax and fee and storytelling elements in that. Why don't you tell me what was the light bulb moment for you of thinking, "We should have a fee for the carbon used at Microsoft"?

TJ DiCaprio: It all gets down to accountability. That's something we discussed a little bit earlier. There was a path to that. This is part of how Microsoft started. It's a company that has been committed to environmental sustainability and started tracking carbon emissions back in 2007 and had a first goal to reduce carbon emissions 30 percent by 2012 based on 2007 levels. Meeting that goal was a first try. It was a first goal for the company. I inherited that goal when I actually came on in role.

We met that goal. Part of that was purchasing renewable energy and that's part of the reason behind that move. We're trending in the right direction. We can't give out specific details, but Microsoft is trending in the right direction for purchasing renewable energy.

Peter Byck: They were number three and they're trending in the right direction. Stay tuned.

TJ DiCaprio: Step by step. What we realized is that especially in the technology industry, Microsoft itself with its own operations, has a business shift away from software products into the cloud business in services. Therefore, as a result of that, Microsoft is investing in data centers globally. Data centers consume quite a bit of energy. The epiphany was when I realized not only are our internal operations causing an increase in emission, I could no longer say that we will have an absolute reduction in emissions because they were growing because of the data centers.

Also, our customers, because of the use of technology, there's the proliferation of devices which also require consumption of energy. This impact was so significant that we realized there really is no option but to go carbon neutral. That's the overarching policy that we initiated for Microsoft.

Peter Byck: Just to jump in. You're saying to yourself, "We're gonna be using a lot more carbon, but let's get the offsets. Let's make sure that we're becoming carbon neutral even though we're gonna be using so much more. There's no way we're gonna not use anymore carbon. There's no way we're gonna reduce it to any significant level now. It's just gonna grow."

TJ DiCaprio: No matter how much we reduce, and that's through efficiencies. The strategy for carbon neutrality is really to be lean primarily, which is to drive efficiencies. How can we be more efficient with the use of our data centers, with the use of our buildings, with the use of our software development labs?

After driving the efficiency, how can we then green our energy source as much as possible? How can be buy more renewable energy? How can we invest in innovation? How can we invest in innovation in developing countries to help them evolve in lower carbon economies? Those were the two key areas that we focused on for carbon neutrality. There is going to be a certain amount that we can't always reduce or green because of geographical locations, etcetera, as an example.

Peter Byck: And then travel and—

TJ DiCaprio: Yeah, and then travel. There's some things. That's where we are able to then invest in carbon offsets, which help developing countries innovate.

Peter Byck: Give us one example of that piece right there, the developing country innovating carbon offset. You guys are giving money to whom and they're doing what with it?

TJ DiCaprio: For example, we've got some investments. We have investments in wind energy in China and India where our operations are. We felt it was very important to invest in renewable energy where our data centers are. Then as well, into farming so that we can have actually multi cycle investments where we support farmers that then use that biogas and they fuel the foundation for promoting additional farming and food that then builds culture and community around that and provides people jobs.

Peter Byck: So you have a farm that's collecting its off gas?

TJ DiCaprio: Yes.

Peter Byck: Using that to spin a turbine.

TJ DiCaprio: Yes.

Peter Byck: So they're not off gassing. So you're preventing methane from hitting the atmosphere that was hitting the atmosphere and then that community's benefiting cuz now they're producing electricity from what was a waste product.

TJ DiCaprio: They can send renewable energy to the grid and use it themselves and start to build a community with jobs and food.

Peter Byck: Got it.

TJ DiCaprio: So it's got multi levels.

Peter Byck: We've got the carbon neutral piece. When did the fee come in, the carbon tax? Tax day. Have to say it.

TJ DiCaprio: Tax day.

Peter Byck: She's not gonna say the word tax, ladies and gentlemen. She's gonna say fee.

TJ DiCaprio: I'm gonna say fee.

Peter Byck: Yes.

TJ DiCaprio: It's very important. It was the accountability. It was really getting the engagement of the people, the business divisions. What we have done is to create this fee to pull people together and to engage, to tap their creativity, their brainstorming, and have them be part of the process for how we approach and improve carbon neutrality.

Peter Byck: Across the company.

TJ DiCaprio: Across the company, yeah. We're in over 100 countries. Right now I think we're at 109, 110 countries, subsidiaries in each of these countries, and then we have data centers in many of those countries as well, and 14 different business divisions. We're able to drive that excitement. That's really the excitement. When people are accountable, they become engaged. When they become engaged, they get creative and they wanna be part of the solution. Actually this carbon fee suddenly made carbon reduction and carbon neutrality a solution that people wanted to engage with in ways they had never considered before.

Peter Byck: Give us a clear definition of the carbon fee and then I'm gonna go into a little bit of how that happened.

TJ DiCaprio: Okay. Microsoft, what we've done is, we charge a carbon price associated with the energy consumption of our data centers, our software development labs, and our office buildings, and then also as well for the consumption of business air travel, so basically airline fuel, jet fuel. The important point here is cascading existing chargeback systems. In going into an organization, what's important is you take a look at the financial structure and say, "How does corporate finance charge all of these business divisions around the world?" And simply put in and tap into those chargeback systems a new line item now that says, "carbon neutral."

That's where we calculate. We take our emissions and we calculate that by the price that depends on the actual source of the emissions. Then we drop those through the chargeback models. They show up on the line items of each of the business divisions. The business divisions, on a quarterly basis, pay that fee. It comes into a carbon fee bucket and then we use that bucket of funds to invest in the projects I mentioned before, internal carbon reduction projects, which are energy efficiency, renewable energy, travel reduction programs, then purchasing renewable energy, and also as well investing in carbon offset projects around the world.

Peter Byck: I've got one question about that. The idea of all the money's coming into one place, it's not each division gets its money back. If my divisions pays $100,000.00 in the carbon fee in that quarter, I don't get that back for my division, but I get to propose to you something I wanna do in my division?

TJ DiCaprio: Yes.

Peter Byck: Now I'm in competition with the other divisions to—

TJ DiCaprio: Get more efficient and buy more efficient and buy green energy and do all the things we want them to do. In a way it instills the right behavior in itself.

Peter Byck: Right.

TJ DiCaprio: That's exciting.

Peter Byck: You're dealing with—the CFO has to like this for it to get traction, correct?

TJ DiCaprio: Mm-hmm. Yes.

Peter Byck: How did you even get to the CFO of this giant company? You weren't hanging out with him, I assume. You guys weren't pals or playing golf and things like that.

TJ DiCaprio: No.

Peter Byck: You had to work your way through the system.

TJ DiCaprio: Yeah.

Peter Byck: Earn your way through the system. What was the story you were telling? We wanna talk about stories. What was the story?

TJ DiCaprio: What's critical about the story are two things. One is the language that one uses. For instance, in traveling, you've been to China.

Peter Byck: Right.

TJ DiCaprio: You've been to Italy.

Peter Byck: I haven't. We tried.

TJ DiCaprio: Let me rephrase this, Peter.

Peter Byck: I've been to Kentucky.

TJ DiCaprio: Okay. You've been to Kentucky. Tell me a place that you've traveled.

Peter Byck: Wales. England. France.

TJ DiCaprio: France.

Peter Byck: There you go.

TJ DiCaprio: Let's take France. Do you know French?

Peter Byck: [Inaudible].

TJ DiCaprio: In being in France, when you didn't know the local language, how was that experience? Were you somewhat limited?

Peter Byck: Very.

TJ DiCaprio: Yeah. In trying to speak the language or trying to speak French, I know that when I go to a place, especially being in Italy and the first few times, I started to use my hands a lot. I speak English to the Italians or to the French. I shout louder in English. I use the same words of, you know.

What happened, what I did for the CFO is to start speaking his language. That's the key element of putting a price on carbon. Suddenly I wasn't speaking French—

Peter Byck: Hippy.

TJ DiCaprio: Exactly. I wasn't speaking hippy.

Peter Byck: You weren't speaking hippy.

TJ DiCaprio: Yeah, exactly.

Peter Byck: You were speaking business.

TJ DiCaprio: Then, once I had the language right, then it was leading with the business case.

Peter Byck: What were some of those key words you were using, the phrases and the things? What are the details there?

TJ DiCaprio: These key phrases are very relevant to a business. They can also be tweaked a bit for any organization. It was mitigating risk. That brings in the drama. That's the antagonist. We've gotta mitigate the risk. The risk that we're mitigating is primarily margin because we can get more efficient. We've gotten mitigate risk to margin.

Peter Byck: And you know cost of energy's just going up.

TJ DiCaprio: Exactly.

Peter Byck: Right. Okay.

TJ DiCaprio: Exactly. What measure can we help control the consumption of energy and cost to help margins? The other is mitigating the risk to revenue. That was another component. Brand is an important component there.

Peter Byck: Yeah, talk about brand cuz that feel soft and it doesn't feel like—where does this fit into brand? We can get into that more later.

TJ DiCaprio: It's really important because the CFO lives in a world of hard cost benefit analyses and what was important also about using the language and putting a price on carbon is suddenly we had entry into the cost benefit analysis on both the benefit and the cost side. We were able to start to speak those finite terms to get into the models that the organization lives by.

The brand, having a soft value is not bad. It's a good thing to put on top of the financial analysis because it's understood that there is value there and that is a very important element that the sustainability team can bring.

Peter Byck: Some of the things that I've been seeing in just my travels are when a CEO really pushes the employees to reduce the energy use or reduce the materials use, they get turned on. They actually get charged by it and they actually show up to work more, they call in sick less, and there's this great cascading event that happens out of that. Are you seeing that sort of thing?

TJ DiCaprio: Absolutely.

Peter Byck: Give me some of that.

TJ DiCaprio: The pride that's happening with the individuals coming to work. I can use some examples of communicating out to some of the financial folks. For each of these business divisions, we'd have to talk about—not have to, but the other beauty about speaking the right language is you can educate. Suddenly there's accountability, there's education, because people need to learn what they're accountable for.

The finance folks would come in on a business group by business group basis or business division and I'd have these discussions. Well, they're busy on a million different things. They've got their financial cycle and they've got this and this deadline and they've been working all weekend. When I sit them down it would take 15 minutes to describe what this model is, the importance certainly to the organization and to the company, to our customers and to the world. One hundred percent of the time they'd walk out of that meeting smiling, light, saying, "I am so proud to know that this organization's committing to this and I am so happy about it. And, oh by the way, this will really help me as a tool to reduce cost." That makes everybody happier. It makes them feel more productive. It's enabling success.

Peter Byck: At a Fortune 50 company you're finding that kind of feel good situation for putting a price on carbon?

TJ DiCaprio: Yes.

Peter Byck: That's the theory, right? That's what we all think would make sense and now it's making sense. It's happening.

TJ DiCaprio: The creativity that's happening now too. For instance, I was talking to one of our online service division leads and suddenly he's saying, "Well, you know now that we have this price on carbon, we're including it in our long term planning." The price of a server over time, etcetera is much higher than it would be certainly without incorporating this into his model. Suddenly we're starting to get in longer term.

Talking to another business division lead that said, "Hey, this carbon price is good, this is great, but now that I understand what's going on, it doesn't seem like this is quite enough. What more can I do?" There are now with the governance council, these business divisions are represented. From the business divisions we get together every month and now that they are accountable, they're engaged, the brainstorming, the creativity that happens on a regular basis has never happened before.

Peter Byck: You just talked about basically life cycle assessment of a piece of equipment, a data center server. It seems to me that's been a missing link is the person who buys the gear being in charge of the energy use of that gear for the life cycle of that piece of equipment. That's why folks aren't buying the more energy efficient thing because it costs more up front and there's this hurdle to get over.

TJ DiCaprio: Right.

Peter Byck: Yeah, that's gonna cost me more this quarter, but over eight years it's gonna save the company enormous amounts of money.

TJ DiCaprio: Right.

Peter Byck: That's a hurdle that your pool of money is helping people jump over?

TJ DiCaprio: Yes. What we've done is we're accepting grants for the use of these funds and we get proposals in. What we do is help different business divisions for their particular project get over the hurdle rates. If they need to invest in a more efficient piece of equipment, it accelerates. It accelerates the energy efficiency. If we can apply those funds, it makes a difference.

Peter Byck: Now people in Microsoft are writing grants for money from Microsoft to buy more efficient stuff.

TJ DiCaprio: Yeah. What's really special about that—

Peter Byck: Who's saying yes? Who's the chief of that?

TJ DiCaprio: It's the CFO.

Peter Byck: So it's not you?

TJ DiCaprio: Well, he needs recommendations.

Peter Byck: Does he ask opinions?

TJ DiCaprio: Yes he does.

Peter Byck: Nice.

TJ DiCaprio: He does. And Rob Bernard is part of the whole process to take a look and say, "These projects are carbon reduction. These do make sense." The team really takes a look at them and then sends recommendations.

Peter Byck: So now this little small sustainability department at Microsoft is now a place of funding. Is it gonna get like some serious money? Are we talking more and more serious money?

TJ DiCaprio: We're evolving over time. Really the first part of this we're in just nine months now that we've started this.

Peter Byck: Hold on. Nine months?

TJ DiCaprio: Yes.

Peter Byck: Okay. So it's brand new?

TJ DiCaprio: Yeah. We wanted to share the whole process really. We didn't wanna wait until it was two or three years old and then come back, but really share the growing process and the excitement and the enthusiasm. It is entrepreneurial. We're evolving that over time. We really wanna get the infrastructure built or let's say the plumbing, which is integrating into the financial structure. How do you go through and bill and make sure this works and get the money in and then establish how you get the money out?

Then as we do that, then we are working through blending that price on carbon so that we can have a finite price on carbon and then we can evolve that over time.

Peter Byck: Like a single metrics.

TJ DiCaprio: Yeah.

Peter Byck: Which isn't there yet. So when someone says to you, "How much do you pay for a ton of carbon?", that's not a simple straightforward answer yet.

TJ DiCaprio: Not yet.

Peter Byck: But you're working towards that.

TJ DiCaprio: That's the goal.

Peter Byck: That's the goal.

TJ DiCaprio: Yeah, that's the goal. Having that price and then increasing it over time. We certainly didn't wanna shock the system, especially when it's new and vulnerable and fragile. We needed to really get solid plumbing so that it could withstand movement and creativity. It's an interesting balance because we wanna be creative, but we can't get too creative when the infrastructure isn't quite solid enough. We're learning as we go there. Again, in talking to some of the real estate folks, they have never seen the type of collaboration across the company, across a hundred different countries, saying, "Gee, you know, let's look at energy efficiency. What are some of the things we can do?" And sharing that kind of information.

Peter Byck: You're achieving the thing that so many sustainability officers hope to achieve within their companies—you're getting it in the DNA of the company.

TJ DiCaprio: Yes.

Peter Byck: It's getting in every department.

TJ DiCaprio: Yeah. With a very simple model and it's repeatable.

Peter Byck: There was a moment where you had a discovery that I'm gonna use the word carbon tax again, she's not, but people think of tax as bad and punitive. I've done something wrong and you're gonna tax me.

TJ DiCaprio: Right.

Peter Byck: And you had a moment where all of a sudden you realized it's not a punitive thing. It's a beneficial thing.

TJ DiCaprio: Yeah.

Peter Byck: Can you talk to that?

TJ DiCaprio: There are two different ways to look at things. It either can be punitive or accountability can seem punitive, yet when you turn it around and say accountability means engagement. Accountability means innovation and change.

Also, moving from a fee from being punitive to being supportive is that's where we have the funds available to give back to a business division and say, "Yes, go ahead and accelerate this project. Move ahead. Let's do it now rather than waiting." That type of support the business divisions just light up. Then the engagement even gets bigger and more creative and there's more involvement in the process.

Peter Byck: Which is the theory that I keep hearing and there it is in place happening.

TJ DiCaprio: Yeah.

Peter Byck: Disney had an internal carbon tax from about 2010. Did you study that? Do you know anything about that? Was there any conversation between Disney and Microsoft?

TJ DiCaprio: The Disney folks actually have reached out and I just had a conversation with them just a couple of weeks ago. I think that what we're going to do moving forward is start to share ideas on how to build the infrastructure, keeping it simple, which is really key, how to keep it simple and where we can help to expand.

Right now Microsoft is charging a price on carbon across—it's emissions across all the scopes, which is technical term, Scope 1, 2, and 3. How can we help our other colleagues in different companies understand how you can do that across many scopes? They can help share their ideas that they've learned from their examples as well.

Peter Byck: You said there's 14 business divisions at Microsoft?

TJ DiCaprio: Yeah.

Peter Byck: Are you guys doing this in all 14?

TJ DiCaprio: Absolutely.

Peter Byck: Someone's decided, "Let's just really do this." For example, they could've just said, "Let's just try it on the travel and see how that goes."

TJ DiCaprio: Right. Or the data centers.

Peter Byck: Or the data centers and see how that goes. How did that happen to where you got full buy in and we're all jumping off into the pool together?

TJ DiCaprio: I think it's a matter of really taking a look at the whole situation. That was the philosophy behind carbon neutrality. We could've come forward and said, "Well, we're gonna try to reduce X percent, X percent. Nope. Let's go carbon neutral. We could try with a smaller portion of our operations. Nope. We're going across the board."

We still have room also to grow. Employing commuting, that's an area. What's fundamental there, we need to get measuring the emissions before we can broaden on what else we can charge. That's part of the evolution. Really it was a matter of if we're going to do this, we really need to make this commitment and we need to follow through with it cuz that's the point.

Peter Byck: How many employees does Microsoft have?

TJ DiCaprio: Ninety some thousand.

Peter Byck: Ninety some thousand. One hundred and ten or so countries.

TJ DiCaprio: Yeah.

Peter Byck: Is its net income reportable?

TJ DiCaprio: Yeah. We're about $77 billion.

Peter Byck: Annually.

TJ DiCaprio: Yeah.

Peter Byck: That's big. That's bigger than a lotta countries. I say that in a good way. I personally feel that we can't fix this big problem of climate change without major corporations. Here's a major corporation leading the way, which is why I asked you to be the first person in this series. I then all of a sudden think, well if companies can do it that size that are bigger than some countries, how does this help our country on a federal level in federal departments and things like that?

TJ DiCaprio: Right.

Peter Byck: Have you had experience with anyone from the government coming to you, talking with you? Are they catching the scent of this beautiful thing happening?

TJ DiCaprio: It's an exciting model. It's productive. It's making a difference. The way Microsoft looks at our focus is how we are managing our own internal operations. That's really our focus to set an example and do this with a simple repeatable model so that it can be used with different organizations.

The answer to your question is yes we are having discussions with different representatives across the government to say how can they be more efficient in their internal operations? How can they lead by example? That's really even from local governments that we're working with all the way up through if it's city, regional, state, and then up to national level.

Peter Byck: In nine months, you're already having those conversations.

TJ DiCaprio: Mm-hmm.

Peter Byck: Do you think Microsoft is a healthier company because of this?

TJ DiCaprio: Absolutely. Without a doubt. We want to improve. This is giving us really the mechanism to be able to get together, engage and brainstorm on how to do that.

Peter Byck: That's what I was saying last night when we met, if it's not helping your company be a better company, it shouldn’t be done.

TJ DiCaprio: That's right. It wouldn't be taking off if it wasn't.

Peter Byck: Right.

TJ DiCaprio: That's part of try things. It's having that mind of you explore. Charting your way and realizing, okay I need to be aware of all the variables that are happening. Take a step. Try things out.

Peter Byck: Yeah. Is there interest in opening this up for Q and A? You folks got some questions? Yeah, we have some questions. All right. Why don't we sort of set that up? One of the things that—I was talking to a fellow at Facebook and Facebook at one point just decided, we need to redesign from scratch all of our servers and database infrastructure because we feel it's so wasteful what we're getting.

TJ DiCaprio: Yeah.

Peter Byck: Although the lights and all the plastic boxes around all their servers were beautiful, when they took them off they saved 21 percent of their energy immediately. Just the boxes that did nothing other than look cool when you looked down a row of 50 of 'em.

TJ DiCaprio: Right.

Peter Byck: They're doing something that's called "Open Compute." It's with a lot of companies and so they're open sourcing all the stuff they're doing so anyone can take that information. Are you guys looking at a formal open sourcing of this information?

TJ DiCaprio: And especially around data center efficiency because our data center team has some great energy experts and they're driving innovation in this area, not only how to be more efficient with that envelope, take the envelope off and be able to have self-contained elements that use minimal water.

We're working with the UN in Nairobi and have installed an IT pack there that has been very efficient in its minimal use of water and minimal use of energy. Then as well taking those sorts of concepts and being able to cycle in renewable energy and using power from methane to be able to power the data center and really bringing those on site to actually transition to what's called data plants so that they are self generated energy plants that are dispersing data.

Peter Byck: Are you guys using fuel cells at all? Have you looked into that?

TJ DiCaprio: We're doing some pilot programs with fuel cells. Absolutely. That's actually we'd be using the methane to power the fuel cells. That would be a strong link in the data plant.

Peter Byck: You guys have a goal of having your data centers become self powering?

TJ DiCaprio: Yes through data plants and renaming them data plants.

Peter Byck: Data plants.

TJ DiCaprio: Yes.

Peter Byck: That's pretty exciting.

TJ DiCaprio: Yes it is.

Peter Byck: Those are big. That's not just throw a solar panel on a hot water heater.

TJ DiCaprio: Right. Yeah. Very innovative techniques being investigated and piloted now.

Peter Byck: And are you right in there? Are you able to just go to anybody in that link and just ask them any question you want and learn, learn, learn?

TJ DiCaprio: Well, it's pretty exciting especially to realize what their pilots are and what their projects are. Again, this is part of the governance council that we have now, our carbon neutrality, is that now that we have a corporate wide policy around carbon neutrality, when we get together for these meetings it is information sharing. The data center energy team can show up and let all of the business divisions, cuz it's not just the sustainability team but all of the business divisions now are better understanding the innovation and the renewable sources of energy that we are consuming and building and piloting for our data centers.

Peter Byck: Are you guys writing code to manage this whole game?

TJ DiCaprio: Yes.

Peter Byck: Are you gonna have potentially a product, a software product that's like the carbon fee product for any company to use to guide them?

TJ DiCaprio: Oh I see. Well, we haven't really walked down that road. Again, we're just at the beginning now. We're testing it out.

Peter Byck: Might make a little money. I don’t know.

TJ DiCaprio: It's really so simple and it doesn't need a program.

Peter Byck: It doesn't need that.

TJ DiCaprio: It doesn't need that. That's really the important point is it's pretty simple when you use existing models to cascade.

Peter Byck: Which is part of your game.

TJ DiCaprio: Yes.

Peter Byck: Don't try to reinvent anything. Just hop onboard what's being used.

TJ DiCaprio: Exactly. You need to track your emissions and then establish that price. We established the price based on the use of the funds and then enter that into the financial structure.

Peter Byck: Have you guys looked at if a price on carbon becomes like a law? Will your internal game plan still work?

TJ DiCaprio: Yes. We will, excuse the pun, we will sustain that and keep that going because it has so many benefits operationally.

Peter Byck: It seems like it would almost put you ahead of the game.

TJ DiCaprio: Mm-hmm.

Peter Byck: It seems like you guys are becoming stronger because you're sort of ready for whatever comes down the pike.

TJ DiCaprio: Absolutely. We're already training the operations how to approach this and how to deal with this. Also, how to support the end game which is renewable—is efficiency, is renewable energy.

Peter Byck: Where I would go next, and she already told me that there's no—I can't talk about it, is does Microsoft support a national carbon tax and she has no answer for that, but I asked the question. I just wanted you guys to know I asked the question. I'm not gonna ask her right now. I’m not gonna ask her right now.

Let's go for some Q and A. Is there a mic floating around? Awesome. This gentleman right here.

Lauren Kuby: That's no gentleman. That's Nick [Inaudible].

Audience: Don't mistake me for a gentleman. Just a quick question. As people borrow money against this fund or as you grant money outta the fund, and they reduce their carbon, is their carbon tax then lower next year? Next quarter?

TJ DiCaprio: Yes. As long and as well they have savings from let's say not paying as much to the utility, so in energy savings. Or if it's travel, their T&E costs go down. Their energy costs go down.

Peter Byck: T&E?

TJ DiCaprio: Thank you. Travel and Entertainment. Their travel costs go down. They keep their savings and then as well, their carbon fee goes down as well. That's part of the benefit in that cost benefit analysis with the finance department.

Lauren Kuby: One of our graduate students, Kevin.

Audience: Thanks. This is really interesting.

TJ DiCaprio: Great.

Audience: I appreciate you coming here. To channel my inner conservative, when Microsoft adds this tax, then Google or Apple is gonna jump on or nationally if the U.S. does something then China is going to undercut 'em and it's gonna actually hurt the company. How do you get over—did somebody bring that up when you were trying to push this through? Did you have an answer for that?

TJ DiCaprio: That's actually what we hope to have happen. It's really a goal that because it's a simple repeatable model that other organizations will take it on as well because that's what the planet needs. The more other companies are doing this the better. If Microsoft does it by itself, we won't solve the problem.

Peter Byck: But you're saying—

TJ DiCaprio: From a cost perspective?

Audience: It would be awesome if everybody adopted it, but just that if you've added this cost, would it make you less competitive? That's always the argument on the national level. I was wondering about the argument on the corporate level.

Peter Byck: You're saying, does the implementation of this internal carbon fee make Microsoft less competitive?

TJ DiCaprio: Because of the cost model.

Peter Byck: Because of the cost?

TJ DiCaprio: Right.

Peter Byck: And you're saying?

TJ DiCaprio: It's actually quite the opposite. Really what's happening now is we're seeing from our customers requests for proposals that want to know how are we demonstrating environmental responsibility. This is enabling us to increase revenue. Really the point would be, and I know we have to get down to the margins, but it's outweighed by the benefits we have in driving efficiencies. We reduce costs from an efficiency perspective a lot greater than the cost assumed by the fee to drive that.

Also, as we move through and renewable energy, the pricing on that and the cost of that goes down, I think that what we'll see is overall when you look at total operational costs, that there will be a balance there. That's part of, excuse my reference back to the wind, but that's watching the wind.

What's simple about the model is you have very few—you've gotta find these key points that you can change and twist to adjust. If it's that price of carbon and you put most of your variability in that price of carbon, you can work with the price of carbon. You don't have to tear down the structure. You don't have to change the structure. You simply move that one variable and that is able for you to manage the cost of carbon neutrality.

Peter Byck: You mean increase or decrease?

TJ DiCaprio: Yes. By that one knob, that on throttle.

Peter Byck: Mm-hmm, and find your sweet spot for the company at this point in time.

TJ DiCaprio: Yes.

Peter Byck: I've got a question for the audience. I wish I'd asked it earlier. When you walked into this room, before you walked in this room, students, how many of you thought you would wanna work for Microsoft? Okay. Now how many of you wanna work for Microsoft? There you go. That's how you get good employees doing cool stuff.

My theory is that this generation and anyone coming up behind you is really gonna wanna work for companies that are gonna be doing this stuff.

TJ DiCaprio: Yeah. It's important.

Peter Byck: Is that accurate? I'm seeing a lotta heads nod.

TJ DiCaprio: And to have an executive group that supports this is pretty amazing. I've learned a lot about our own executives through this process and how excited they are about it.

Peter Byck: Yeah. It's like I was telling you. Energy companies get a lot of bad press a lotta times. I was saying to you last night, I've never met anyone who worked at an energy company who wasn't a person. When you get down to it being a person, people feel better doing this stuff. They just do. What is that? If that's just a natural reaction, then there's gotta be something to it.

TJ DiCaprio: It's being proud. It's being proud as a dad.

Peter Byck: Yeah.

TJ DiCaprio: Our CFO can go home now and talk to his kids that come home and say, "Dad what about this?" He can say, "Hey, this is what we've got going."

Peter Byck: Yeah. Call me the tax man. Yes sir?

Audience: Thanks. I've got a couple questions. One is I'd like you to address it seems to me that this type of a program should give Microsoft some advantage from the aspect of resiliency where looking at potential brownouts, our energy consumption is focused on hydrocarbons and I think that all indications are the current systems are not gonna be able to keep up. If you're building some redun—I don’t know if redundancy is the right word, but if you're providing enough diversity and other channels, I would hope that would improve your resiliency.

The other question—I'd like you to address that. The other thing is you've got—you said Microsoft is third?

Peter Byck: The number three purchaser—

TJ DiCaprio: U.S. per renewable energy.

Peter Byck: - of renewable energy.

Audience: Yes. Who's one, two, four, five?

TJ DiCaprio: We're all shuffling around there, but we've got Intel and Kohl's. That's so funny. I kind of focus forward. Intel is number one and Kohl's is number two. Right now.

Peter Byck: Kohl's?

TJ DiCaprio: Yeah.

Peter Byck: Not Wal-Mart, but Kohl's. Wow.

Audience: And how are they doing it that's different than what—

Peter Byck: Well, they're purchasing renewable energy, but they don’t have their internal carbon fee.

TJ DiCaprio: Yeah. They find their funds in different ways. Our renewable—actually, it's interesting cuz number two was before the carbon fee. That actually was the interesting first stage, was to get the engagement and the support for that set of purchases for renewable energy. Then it was, we need to drive accountability down to the business divisions that are consuming this energy. That actually was the first step, when the CFO basically at a corporate level ended up funding the set of purchases for that first number two slot. Then it was, please I don't want you to be covering this. We need to drive the accountability so we can get the innovation and the engagement into the business divisions. That's basically the birth of the carbon fee.

Peter Byck: To his first point then, resiliency.

TJ DiCaprio: Resiliency. Very important point and thank you for bringing it up because the energy strategy, it's our offices, facilities, and our data center folks, is definitely resiliency. It's also secure. Security is really important. I think what's happening now with this carbon fee is that it builds up the renewable, the green, the clean pillar within that strategy. It is diversification. It's having onsite fuel cells, etcetera. That is really critical to resiliency and security for the data centers.

Peter Byck: Yeah, cuz you're in 110 countries, so not every grid is as strong as our fragile grid.

TJ DiCaprio: Right. Yeah.

Peter Byck: Anybody else? Awesome.

Audience: You mentioned that one of the scopes that you're thinking about working on is the downstream consumer use of energy. Have you started working on that yet?

TJ DiCaprio: Right now it's been through, how can we develop software that is more efficient in the use in the hardware. Whether it's power management—that was actually in Windows 7. Definitely by the coding we're driving efficiency out of the hardware use. Definitely. You know, even upstream with our supply chain, how can we—Wal-Mart, that's a really good example with their supply chain. We're starting here with Microsoft and our operations and getting our own house in order is really what we're doing here. How can we then facilitate that downstream energy efficiency and energy reduction, I suppose, but efficiency for our customers? But also then, how can we work upstream, is the term, with our supply chain in order to start expecting those same types of behaviors and responsibility there too.

Peter Byck: How are we doing on time, Lauren?

Lauren Kuby: We're good.

Peter Byck: We're good?

Lauren Kuby: [Inaudible].

Peter Byck: Oh sweet. Excellent. Excellent. Okay. Yep.

Audience: My question was sort of related to the political question as well as engagement. Given that your approach is a stakeholder approach, it's all the stakeholders involved in Microsoft taking ownership of this and responsibility for this, and it's the right approach. I really like it. Microsoft as a public corporation ultimately answers to its shareholders, not its stakeholders.

TJ DiCaprio: Mm-hmm.

Audience: Have you had any backlash from shareholders? I assume probably not, but that's probably because of the transparency that you've taken from Stage 1, am I correct?

TJ DiCaprio: Yes. Mm-hmm. That's where—and it's an interesting lesson in stakeholder analysis, is who are all of the stakeholders, how often do you communicate with them. It's the approach to gaining buy in across a wide set of stakeholders. The board of directors is aware of this. If anything, the shareholders are really very positive and are asking more from Microsoft and that's been very helpful. It's the customers asking for more and it's the shareholders asking for more.

Audience: Excellent. To expand on that and the political perspective, with profit as in return on investment, profit is the primary motive of a public corporation. Do you believe that's a measurement comprehensive enough to create benefit within an organization?

TJ DiCaprio: Absolutely. Yes.

Audience: Because of a carbon fee structure.

TJ DiCaprio: Yeah. It helps. Again, it helps mitigate risk against margins, reducing margins. It helps reduce against declining revenue. Those are all terms certainly that the shareholders understand when they want a profitable business. That's where getting the right language and speaking French with the price rather than a metric ton and then putting that business case forward by using the right words, now that you've got the language down, use the right words and driving it forward, presenting a solution.

Peter Byck: You don't believe policy change is necessary in order for companies to become more beneficial, it's just more language and obviously internal recognition of your—

Peter Byck: Are you saying national policy?

Audience: Yeah. Internalizing your externalized costs and realizing that you'll make more profit outta doing so.

TJ DiCaprio: Absolutely. That is the point and thank you for bringing that beautiful phrase up. It's internalizing the external costs of greenhouse gas pollution. That's exactly what we're doing to be more aware of the total cost of our operation. Not only is that very responsible, it also can lead by example and we're taking that action. We have an internal policy and we have that internal policy as carbon neutrality. In technical terms that's a command and control policy. Then we have the carbon fee, which in technical terms is an incentive based policy. That's the framework that's set up. We're not waiting for any type of national—it's what action can we take now. Hopefully that will be an example and it can represent hope for us in taking action.

Audience: Thank you.

Peter Byck: Don't you think Microsoft feels better about making these decisions cuz they weren't told they had to? Like you guys are choosing to do this.

TJ DiCaprio: Interesting. There's certainly an entrepreneurial element to it that is engaging the group. There is something about being part of something new that is very helpful.

Peter Byck: I've got a friend in Kentucky who's the most libertarian of libertarians that I know. He and I talk a lot about politics. His thing about federal regulations and laws is to his mind the best one, although he doesn't want any, but if you had to have some would be to give incentive to do things but don't mandate the doing of things.

Audience: Hi. Thank you so much for coming over here. This is great. I have a couple questions. One is what's next? What are you looking forward to do moving this fee forward? Another one is what about your suppliers? How are you engaging them? Is this something that you're gonna pass on to Tier 1, 2, 3? How do you not mandate them to do it, but incentivize them to do it?

TJ DiCaprio: Right. Those two questions go hand in hand. As we evolve, and again the first few months has been getting the infrastructure set, getting the plumbing in place so all of this moves well, the water actually runs from one end to the other and it doesn't cause any problems. Then people get used to it. They get very comfortable with it. Then the creativity really starts to go. That is not only—once we get the infrastructure and the plumbing in place, then we can go to the use of funds. That's where the creativity—we can really be focused on the creativity there.

As part of that, right now Microsoft is working with our Tier 1, 80 percent of our spend in particular categories, to request that our suppliers track emissions. Again, this is all step by step. First you've gotta track the emissions before you can measure the emissions to be able to start to reduce the emissions. Then how you reduce the emissions can happen in a variety of different ways.

We're starting to engage our supply chain looking at our colleagues in different corporations as fine examples to see how we might be able to engage more.

Audience: [Inaudible].

TJ DiCaprio: It's the—

Peter Byck: Repeat his question.

TJ DiCaprio: Let me make sure that I heard that correctly as well as—is it the vision to encapsulate all of the carbon, whether it's from our own internal operations, our suppliers, and our customers? I think that in demonstrating responsibility, we're starting with our internal, keeping our internal house in order. I think that's a natural progression as the education and the awareness across the company deepens for what we're doing and why. Even at the beginning now, there were a lot of very basic conversations that had to go on about metric tons of carbon and how is that associated. How do you buy renewable energy? How is it in the mix?

The beauty of this is that it is educational. People are listening. Corporate vice presidents are saying, "Thank you. I've learned something new today. This is really exciting. I love that we're doing this." That's gonna happen step-by-step. Yes. In the roadmap over the years, that's definitely the plan for us.

Peter Byck: We know you're the number three purchaser of renewable energy in the United States right now. Can you tell me a percentage of Microsoft's energy in the U.S.? What percentage of your energy in the U.S. is renewable?

TJ DiCaprio: Given this purchase, we're 100 percent renewable.

Peter Byck: A hundred percent renewable.

TJ DiCaprio: Using the renewable energy credits to offset our energy consumption in places like Kentucky, in the offices in Kentucky. Gross we're at about 25 percent. When you look at net gross as just the emissions that you generate consuming energy off the grid. When we purchased this incremental renewable energy through different mechanism, then that nets it out to zero.

Peter Byck: For the U.S. operations.

TJ DiCaprio: Yes.

Peter Byck: So you guys are carbon neutral for the United States.

TJ DiCaprio: We're actually carbon neutral right now globally.

Peter Byck: Globally.

TJ DiCaprio: Yeah. Data centers, software development, labs, our offices and our air travel.

Peter Byck: Very cool.

TJ DiCaprio: We process through two quarters now and invested in the energy efficiency projects—that reduction won't show up most likely we're anticipating that won't be for another 9 to 12 months that the efficiency, depending on the project, will end up showing up in reduced emissions. We've invested there and then as well in purchasing renewable energy and then the carbon offsets to net out the operations.

Peter Byck: Got it. When you have a place like in Kenya you were talking about where you're getting the methane, you're running the turbine, that's an offset, right?

TJ DiCaprio: That's a carbon offset, yeah.

Peter Byck: How long 'til that becomes just business as normal and it's not countable as an offset anymore?

TJ DiCaprio: There are certain periods of time—

Peter Byck: You know what I'm asking?

TJ DiCaprio: Yeah. What's nice about the carbon offset, and there's associations that have set standards and criteria where they rate or certify certain offset projects. That's part of the additionality or what's taken into consideration for how long is a project valid in offsetting, taking this example, Microsoft's carbon? They have a timeline that they're set and they vary by project. This one in particular I think it's three years for them.

Basically it's really for them just to get the foundation for their business so that they don't go away without that funding. It's getting them to financial stability so that they can keep going.

Peter Byck: The theory is that they keep going and then you guys find another one that you can use for three years.

TJ DiCaprio: Absolutely. Yeah.

Peter Byck: That's huge.

TJ DiCaprio: Yeah.

Peter Byck: That's really huge. I'm glad to hear that. I'm glad it's not like, "Well, it's 100 years we're gonna use that credit."

TJ DiCaprio: Well and the projects are so exciting to see what people are thinking of in different parts of the world. It really aligns with the Kyoto protocol on how developed countries, let alone a corporation in a developed country, which is really exciting, can support developing countries in emerging growth areas and help them innovate more quickly.

Peter Byck: I think we need a new term, developed corporations and developing corporations.

TJ DiCaprio: Yeah, that's true.

Peter Byck: Yes sir.

Audience: Yeah, excuse me for being the skeptic in the room, but—

TJ DiCaprio: Oh we love ya.

Audience: Whenever large corporations come in and start telling me all the wonderful things they're doing for the environment I tend not to believe it. Are there any publicly available sources? You say you're carbon neutral. Are there any public available sources that will show this? Will show that you're better than Intel and Kohl's or the other major corporations? Is there anybody tracking the actual amount of carbon emissions that Microsoft is producing around the globe in all its offices and all its travel and all its production and all its transportation and so on?

TJ DiCaprio: That's a very good question. I'm happy to say that yes we do and we're third party verified. We publicly report through the Carbon Disclosure Project, which is an organization that has the—I think there's about 8,000 businesses now that report publicly through the Carbon Disclosure Project. That information is used by institutional investors to evaluate responsible, sustainable organizations and other corporations so that we can see what each other's doing.

We have all of our emissions verified as part of that process and then as well we're having this whole carbon fee third party verified as well once we get through our first financial cycle.

Peter Byck: Are those third party verifications transparent? Do you have those posted online?

TJ DiCaprio: Yes. Absolutely. Yeah. Part of the Carbon Disclosure Project—it's cdproject.net.

Peter Byck: Didn't they just change their name? Does anyone know that? It's CDP now.

TJ DiCaprio: Yeah. They went to their acronym kind of as a branding perspective.

Peter Byck: They rate companies. They check everybody out.

TJ DiCaprio: They're pretty tough. Their survey to complete is a year long process. The level of detail of the questions gets more intense, significantly more intense every single year and the point structure that they use to evaluate. Transparency wise, we did get a 99 percent in transparency for our disclosure of our emissions. I forgot to mention that.

Peter Byck: There's data that I'm getting from a banker friend actually in Seattle, who's pulling data from Bloomberg and other sources, where when a company just is transparent about the energy they use, they're seeing a rise in their stock value. When a company then starts to lower those energy and resources, is what I meant to say in the first part, then they're seeing additional value in the stock market.

TJ DiCaprio: Interesting.

Peter Byck: The money they are loaned, they're financing rates get lower in the same way. There's actually market reflection right now. People, I guess, assume if a company's gonna be transparent about their energy use and the materials used, they're a standup company; therefore, they're more trustworthy.

TJ DiCaprio: Yeah. This is, to your question, still a nascent area. I've seen a big change in accountability and the CDP is certainly part of that and also the verifiers of these offset projects have been exponentially improving over time. I think that as we see more organizations, and the good news about having corporations come in is these corporations come in with their money. If they can help move markets that will help other folks, then it's a good thing. As long as it's all honest and transparent and verified is the argument back on that.

Audience: In terms of getting buy in at the executive level, what were some of the last hurdles? Did you need to change planning horizons? Also, what were some of the, to use I think it's Peter's terms, the unanticipated benefits? You talked about some of the learning.

TJ DiCaprio: Okay. An answer to your first is keeping it simple. Literally the CFO said, "Okay, TJ, this is great. It's fabulous. I love the idea. Your last hurdle is I want that plumbing. I want that infrastructure to be simple." It was not to have new planning cycles per se or new chargeback models. It was entering, really scuba diving, into the financial structure of chargeback models and going in there and saying, "Okay, this works to that because how can I maximize accountability and simplicity at the same time? I have to make it simple. How can I maximize reaching every single business division around the world?" That was the final hurdle. We didn't sleep for probably, I don’t know, four months. Then when we did it was very strange dreams.

Audience: And to get to that carbon neutral commitment, how thoroughly did you need to cost out or have certainty around how much are we gonna make?

TJ DiCaprio: That was a lot more sleepless nights.

Audience: How much is it gonna cost of this? Did you have to get sort of 75 percent of the way there including the carbon pricing piece with energy efficiency and the renewable that would have a predictable payback period and then there's a little bit unknown? How far did you have to go?

TJ DiCaprio: A few different approaches to combine. First of all, the principle is to be very conservative. At the end, with projections, I wanted to if anything come out net negative, meaning we are way carbon neutral. We're contributing. We're negative. In order to do that, I took historical, because we had tracked emissions for several years. I took historical data and I also talked to the business divisions and said, "What are your projected increases?", which we had established that pattern over time, but I really pushed on 'em cuz this time it really mattered. I took that and then of course you have the extra layer of—see there's so much complexity in this anyway that if you have a complex model, it crashes cuz there's enough complexity in the world, let alone smart people get involved and then oh my good Lord.

Then there's the energy pricing. When we talk about we're going to go out and purchase renewable energy, what is the price of that over time and how can we maintain carbon neutrality? The idea is to have a forward view and projections that are reasonable in a market that is clearly unreasonable and things can shift. It's the wind watcher. You gotta be out there watching, feeling every little movement to understand how that impacts your model and really, in order to get back to simplicity, cuz I don't wanna confuse you, it all comes back down to that carbon price.

Peter Byck: You had one extra thing where you were saying the unintended benefits.

TJ DiCaprio: Oh yeah, unintended benefits. It's miraculous. Really. To get people together that are now engaged and interested, it is limitless what people can come up with. When you get passion with engagement and interest driven by accountability, it's remarkable. For instance, the long term planning was a start, but to have people come together and say, "We wanna think about new ways we can drive efficiency." Seeing these people passionate about changing the behavior of their business division, of their subsidiary and the projects that are coming forward. The passion and the excitement and the ripple effect. We couldn't have anticipated how positive this would be.

Peter Byck: Can you be specific about any of those projects that are coming forward?

TJ DiCaprio: Yeah. They range—I was gonna say, they are the traditional change your lighting, fix the blowers. They're also from even simple to we wanna go out of bottled water. We wanna develop a bike system. The way people are thinking is brilliant, and especially in our subsidiaries and where they're coming forward. Even our data center team. How can we go ahead and we build infrastructure differently? How can we engage renewable energy in a new way? How can we fuel our fuel cells with renewable energy? These types of conversations weren't happening before we implemented this.

Peter Byck: I think we have one more question and the gentleman in this front table has the mic.

Audience: I like your analogies. I'm a sailor and pilot. You're basically still using auxiliary power. You're trading off your energy. Oil can be used for medicine. It can be used for plastics and lots of other things. We don't have to burn it for energy. We can be sailing with the wind.

TJ DiCaprio: Yeah.

Audience: When do you see yourself turning around to being all energy and not burning it?

TJ DiCaprio: I think that to give you from a bigger picture perspective, that's the direction we're heading because we understand that's what we're going to really need to be doing. In the future, that's going to be frankly from a business perspective, that's gonna be the cost effective approach because depending on finite resources, the clear indication of the future and when we bring the cost of climate change impact, but just the cost of a finite resource, clearly is going to increase over time. When we look even from a financial perspective, renewable energy, even with the demand, may increase the price, but that's the direction we have to go to maintain profitability.

It is step-by-step over time and the good news, and part of the unexpected benefits, are the amount of people that Microsoft is now hiring in order to take a look at these issues, exactly that. Now basically the energy team on the data center is tripled in the last nine months since we've started these discussions. Again, it's getting those smart people in that room to brainstorm and to make progress faster and accelerate that. That's definitely the direction that we're heading.

Peter Byck: Just sort of talking about the wind, I've got a friend who's at Ernst and Young and in their sustainability division they used to have like three people. He's just hired 40. That's a multiplier because they're then consulting all the companies. That's the wind, right?

TJ DiCaprio: That's the wind.

Peter Byck: Okay. We're gonna tie it up. When TJ and I were first trying to get to each other on the phone, she had to push back the phone call a few times cuz she had a loss. She'd lost her mom. I want to understand what your parents gave you that brings you to here right now.

TJ DiCaprio: Yeah. Wow.

Peter Byck: You can just tie it all up in a nice neat bow.

TJ DiCaprio: Thank you. Yes, my mother passed away on January 24th. What my family brought to me was a sense of accountability. I was always held responsible for the consequences of my behavior. That's probably been part of it. The other is another rule was to leave any place or person better off than before I arrived. There's definitely that.

Peter Byck: Place or person.

TJ DiCaprio: Place or person. Yeah.

Peter Byck: I heard the place. I didn't hear the person.

TJ DiCaprio: Yeah, the person.

Peter Byck: Nice.

TJ DiCaprio: The place or person. And gratefulness as well. Gratefulness for our world. We would as a family, and I was able to go with my mom and dad alone. Big gap in sibling thing. I was a surprise. I was able to spend time with them alone on our vacations each year. We would spend a lot of time at the ocean and ended up in the San Juan Islands, which is where I ended up with Microsoft. The incredible time we had together in nature and the respect for that. Even just growing up my mom let me go surfing. She encouraged it. It was engaging with the earth.

Peter Byck: Yeah, parents—I'm here because of my parents. You all have the answer to your question. Did your parents help get you here? I’m so glad you got you here. Lauren, thank you so much for making this happen. You really did—just asked Lauren, "Hey do you wanna do this?" She was like, "Sure." I don’t know how many approvals you then had to get. I don’t know that stuff yet.

Lauren Kuby: Not many.

Peter Byck: Not many. That's good.

TJ DiCaprio: We all have to go start taking this kinda action now too. Drive to school.

Peter Byck: You were asking me what happens after this event, right? If you can inspire anyone towards action in their company, yay. If you can inspire the students to start demanding these things in the jobs they get going down the pike, yay. If you can stay in touch, that'd be great. If you could help ASU do the same thing that you're doing, I'm not speaking for anyone I'm just suggesting that might be an interesting idea. All those things. Then we're gonna meet some students later on today too.

TJ DiCaprio: Okay. If there's one point to leave you all with, it's take the action. Don't wait for action, but be the action. Just go be it. It's amazing what magic happens. Yeah.

Peter Byck: Awesome. Thank you.