In January 2020, Microsoft announced its $1 billion Climate Innovation Fund, and six months later Amazon unveiled its $2 billion Climate Pledge Fund.
An analysis of the investments made since then reveals how the Seattle-area tech titans are aiming to reach ambitious carbon goals and boost their bottom lines. They have backed a range of companies trying to strip carbon out of energy, industrial processes, and the environment.
“They’re focusing on making smart investments in things that have real-world implications both near- and far-term,” said Gabriel Scheer, director of innovation for the investment and accelerator nonprofit Elemental Excelerator.
The companies are targeting startups aligned with their “core business operations,” he said. But they’re also going beyond that by investing “in companies that could open whole new lines of business for them as well as educating them on a burgeoning field — thinking carbon offsets and capture, specifically.”
Their priorities overlap in some areas, with shared interests in clean energy and green construction innovation.
“They’re focusing on making smart investments in things that have real-world implications both near- and far-term.”
They also diverge, particularly given Amazon’s role as a global online retailer. In the most recent example, the company announced Wednesday an investment in Genecis, a startup that uses food waste to make biodegradable “bioplastic” packaging and other products.
Amazon didn’t disclose the amount being invested in Genecis or how much it has spent from the fund so far. The company also doesn’t have a deadline for deploying the capital, according to a spokesperson.
But the clock is ticking for Microsoft. The company gave itself four years to invest $1 billion and has allocated $564 million so far — which means it needs to write checks totaling $463 million by January 2024 to meet that deadline.
The two companies are looking for deals in a sector that keeps plugging along despite the broader economic slowdown. Investors last year pumped more than $40 billion into climate companies, according to Climate Tech VC. That represented a 3% decrease over 2021, mostly due to lower growth-stage funding. The number of deals, however, was up 40% to 1,000 rounds.
Neither Amazon nor Microsoft provided details on individual deals, but have publicized the names of the 45 startups receiving investments. GeekWire compiled their names and categorized their areas of focus. Scroll to the end of the story to see the complete list of companies.
Clean energy
Cloud computing is a core revenue driver for both Microsoft and Amazon. The related storage and computing operations rely on massive data centers around the world that are packed with computers that chug energy 24 hours a day.
So it makes sense that clean energy companies comprise the biggest wedge of the companies’ climate fund portfolios. Ten of Microsoft’s portfolio companies and eight of Amazon’s are clean energy businesses innovating in batteries, hydrogen fuel, solar and electrical grid technologies.
The two teamed up last year to participate in a $100 million round for Moxion Power, a California startup manufacturing large portable batteries that can replace diesel-burning generators.
Transportation and carbon
When it came to their next-biggest sectors, the two companies parted ways.
Amazon — deemed the world’s largest retailer by some counts — needs to move millions of packages each year. So green transportation makes up roughly 30% of the companies that Amazon backs. And some of the startups that GeekWire categorized as clean energy are developing technologies that can decarbonize vehicle and airplane fuels as well, so this wedge could arguably be even bigger.
Amazon’s transportation investments include electric van and truck manufacturer Rivian, as well as electric and hydrogen powered planes — all key transit modes for pulling carbon out of Amazon’s giant delivery network. Amazon-branded Rivian vans are already hitting the road, though Rivian’s stock drop has cut into Amazon’s overall earnings.
For Microsoft, 20% of the companies in its portfolio are in carbon tech. That includes carbon removal ventures such as Climeworks and Heirloom that pull carbon dioxide out of the air, as well as software startups working in carbon accounting and tracking carbon offsets.
Carbon-focused software startups could tie into Microsoft’s growing interest in carbon accounting. The company, as well as Salesforce and numerous startups, are vying to become the dominant platform for tracking and reducing carbon emissions and carbon offsets. The race is on to become “the one emissions-data software provider to rule them all,” Axios reported.
Amazon is also offering carbon accounting tools through AWS.
Construction
The companies are aligned for their third-most funded climate area: construction.
Both businesses need low-carbon steel and concrete as they build out data centers or corporate office buildings. The traditional methods of producing these materials are incredibly energy intensive and multiple startups are innovating planet friendly alternatives.
The two companies both backed Canada’s CarbonCure, a startup that removes carbon from the atmosphere and chemically traps it in concrete.
Rocky road to carbon cuts
As Microsoft and Amazon are doling out millions, the climate tech solutions they’re investing in can’t arrive fast enough. Microsoft has set a goal of becoming carbon negative by 2030 (which also helps explain some of its carbon removal investments) and Amazon aims to reach neutrality by 2040.
But the road to those targets has been rough.
After three years of slightly shrinking its carbon footprint, Microsoft saw a 21% increase in emissions to nearly 13.8 million metric tons of carbon dioxide equivalent released in 2021.
Amazon’s carbon footprint grew 18% in 2021 to 71.54 million metric tons, marking the third straight year of increased emissions since the company started sharing the information.
Amazon in particular has publicized the purchases and deployment of its climate-related investments. That includes using Moxion’s batteries instead of diesel generators on Amazon Studios’ film and television sets; conducting test flights of BETA Technologies’ electric aircraft between Amazon Air Hubs in Kentucky and Ohio; and backing green plastics company Genecis and its founder, Luna Yu.
The Genecis investment also supports Amazon’s goal of investing $50 million of its fund in female founders.
“The work of Luna Yu and her team at Genecis have the potential to make plastic alternatives more affordable and change the impact plastic packaging has on the environment,” said Alan Jacobsen, principal materials scientist at Amazon, in a statement.
Microsoft is also making use of the tech in its portfolio. It has a partnership with Alaska Airlines and Twelve to demonstrate the capabilities of Twelve’s low-carbon fuel, which could one day shrink emissions from the company’s business travel.
Microsoft last year signed a 10-year deal with Climeworks to remove 10,000 tons of carbon from the atmosphere. Climeworks’ process was recently validated by an independent source — the first such verification for the industry.
Given the global, diverse reach of the tech giants, it’s clear that an all-of-the-above approach to investing is essential to curbing their climate impacts.
Or as Brandon Middaugh, director of Microsoft’s fund, said in announcing the CarbonCure round: “Achieving a net zero carbon future requires developing innovative new technologies to address carbon emissions across industries.”
Here are the complete lists of each investment, compiled by GeekWire:
