Washington: Microsoft's greenhouse gas emissions rose sharply by 27 per cent in its latest fiscal year, underscoring the growing environmental cost of the global artificial intelligence boom as tech companies rapidly expand data centre infrastructure.

According to Microsoft's 2026 Environmental Data Fact Sheet, total greenhouse gas emissions reached 21.1 million metric tons of carbon dioxide equivalent (mtCO2e) for the fiscal year ending June 30, 2025, up from 16.7 million mtCO2e the previous year.

The latest figures come days after Google and Amazon also reported significant increases in emissions, highlighting how the race to build AI infrastructure is making it harder for major technology firms to meet their climate commitments.

Microsoft's emissions intensity also increased for the first time in at least six years. The company emitted 75.0 mtCO2e per million dollars of revenue, compared to 68.1 mtCO2e a year earlier, despite reporting a 15 per cent rise in annual revenue to $281.7 billion.

A major contributor to the increase was a dramatic rise in Scope 2 market-based emissions, which are linked to purchased electricity. These emissions climbed nearly tenfold, rising from 259,090 mtCO2e to 2.7 million mtCO2e during the reporting period.

Microsoft said the increase was partly due to a change in its carbon accounting policy after it stopped purchasing spot energy attribute certificates and carbon removal credits in February 2025.

The company said the move reflected a "commitment to high-integrity climate action," while acknowledging it would "temporarily move us out of a carbon-neutral position."

The report also showed that Microsoft's water consumption increased by 22 per cent to 8,170 megalitres, with around half of its water withdrawals coming from regions facing high or extremely high water stress.

The disclosures from Microsoft, Google and Amazon reinforce growing concerns over the environmental footprint of AI infrastructure. Earlier this month, the United Nations reported that global data centres now consume so much electricity that only ten countries in the world use more energy.

During London Climate Week on June 23, UN Secretary-General António Guterres launched the AI Environmental Transparency Initiative, calling on major AI companies to transition all data centres to renewable energy by 2030.

"If AI is to help build a better future, it must be honest about what it costs us now," Guterres said.