Podcast Summary: Inside Microsoft’s $1B Climate Fund Strategy to Hit Net Zero by 2030

Podcast: Inevitable, an MCJ podcast
Episode: Inside Microsoft’s $1B Climate Fund Strategy to Hit Net Zero by 2030
Date: May 12, 2025
Host: Cody Simms
Guest: Brandon Middaugh, Senior Director, Climate Innovation Fund, Microsoft

Episode Overview

In this episode, Cody Simms speaks with Brandon Middaugh, who leads Microsoft’s $1B Climate Innovation Fund. The discussion centers on the fund’s journey five years after its 2020 launch, how it's supporting Microsoft’s ambitious net zero by 2030 strategy, and lessons learned from investing in over 60 climate tech startups. They dive into how Microsoft leverages both its capital and purchasing power to help scale critical climate solutions, with a unique approach to strategic corporate investment.

Main Discussion Points and Insights

1. Background and Origins of the Climate Innovation Fund

• Microsoft’s 2030 & 2050 Goals — Launched in 2020 alongside bold sustainability commitments:
  • Carbon negative by 2030
  • Remove all historic Scope 1 and 2 emissions by 2050 (since Microsoft’s 1975 founding)
  • Water positive and zero waste by 2030, plus ecosystem protection
    (00:53, 02:06)
• Brandon’s Path — From childhood nature lover in Maryland, through consulting for global giants on sustainability strategy, to joining Microsoft’s cloud team and eventually leading the Fund.
  (03:17–07:09)

“[The fund] was part of the overall sustainability strategy...our 2030 targets are to be carbon negative, water positive, zero waste, and protecting ecosystems by 2030.”
— Brandon Middaugh (02:06)

2. How Microsoft Approaches Climate Investment

• Strategic, Not Just Financial — Focused on sectors where Microsoft will ultimately be a buyer (carbon removal, clean electricity, materials, water, fuels, e-waste).
• Invest-to-Procure: Investments often come alongside offtake agreements, creating a “flywheel” between capital provided and Microsoft’s procurement power.
  (10:04–12:55, 15:24–16:45)
• Market Development — Emphasis on growing supply in nascent markets; for example, from 1 million to 5 million metric tons of carbon removal contracted since 2020.

“Our North Star is to grow the markets that we need to succeed in progress towards our sustainability targets.”
— Brandon Middaugh (11:19)

3. Philosophy and Mechanics of the Fund

• Investment Stage: Post-Series A/B, targeting commercially demonstrated solutions needing anchor customers to scale.
  (14:06)
• Geographic and Product Focus: Global, but with an eye toward solutions that tie directly to Microsoft’s operations and intractable emissions.
• Catalyzing Markets: Limits focus on super early tech risk; instead, Microsoft leverages its presence and demand to lower barriers for proven but scaling solutions.
• Differentiation as a CVC (Corporate Venture Capital): Not just providing capital, but also market insight, offtake, advocacy, and partnering with startups’ go-to-market strategies.

“CBC is about leaning into the joint roles as a buyer, an investor, a solutions provider, an advocate and even a go to market partner...”
— Brandon Middaugh (15:24)

Notable Deals:

• Climeworks (Orca project in Iceland): Project finance + carbon removal offtake.
• Twelve (SAF producer): Investment + partnership with Alaska Airlines on sustainable aviation fuel for Microsoft business travel.
  (16:21–17:53)

4. Market Evolution, Challenges, & Collaboration

• Market Demand > Supply: Carbon removal and other climate solution markets have grown, but not nearly fast enough relative to Microsoft and global needs.
• Integrative Approach: Fund works closely with internal procurement and sustainability teams to align investments with future operational needs.
• Co-Investing: Intentionally co-invests alongside others, including MCJ, to validate markets and encourage broader adoption.
  (22:31)

“We want to ensure that while this is relevant for us, it’s also relevant for the rest of the market, for the rest of the global economy.”
— Brandon Middaugh (22:31)

5. Beyond Carbon: Water & Resilience Investments

• Water as an Emerging Focus: Microsoft has begun investing in water infrastructure, efficiency, and social projects (e.g., via WaterEquity, Emerald Technology Ventures’ Global Water Impact Fund).
• Resilience & Adaptation: Acknowledgement of the need for risk and resilience tools (e.g., Matiga Solutions for climate risk analytics, Vibrant Planet for wildfire prevention, LineVision for grid resilience), but main fund focus remains mitigation over adaptation.
  (26:35–28:33)

“Adaptation and resilience is core to the global climate response... We’ve determined that we’re going to primarily invest in mitigation solutions because we see that being our role in the markets.”
— Brandon Middaugh (26:35)

6. Working with Microsoft: Guidance for Startups

• Mandate: Innovate, Accelerate & Scale: Now focusing even more on finding partners ready to achieve massive scale.
• Emphasis on Collaboration & Transparency: Startups should avoid siloed commercial conversations and strive for open engagement across Microsoft teams.

“We value the opportunity to work together and we tend to prioritize the partners who are...ready to build that scale with us in a collaborative way.”
— Brandon Middaugh (30:50)

7. Reflections, Lessons, and the Path Forward

• Five-Year Learnings: The ecosystem is growing, but scaling remains the biggest challenge.
• Tens of new roles, new talent: Explosive interest in climate careers among students and graduates is a hopeful driver for the next wave of innovation.
  (34:10–36:04)
• The Operational Future: Grid management moving toward distributed, digitized, AI-driven systems; rapid evolution expected by 2030.
• Microsoft’s Legacy: Asserts the critical role large companies play in building climate solution markets and the importance of market-shaping investments.

“Transformation only seems inevitable in hindsight.”
— Brad Smith, shared by Brandon Middaugh (38:54)

Notable Quotes & Timestamps

• “We launched the fund as part of the overall sustainability strategy for the business. Our 2030 targets are to be carbon negative, water positive, zero waste, and protecting ecosystems by 2030.”
  — Brandon Middaugh (02:06)

• “When we launched in 2020 ... there was about 1 million metric tons of eligible durable carbon dioxide removal ... Last year we announced we contracted in excess of 5 million metric tons.”
  — Brandon Middaugh (11:35)

• “It's a template approach that we have used with a number of airline partners ... What's unique about how it has applied to 12 is that we also put capital to work with the company.”
  — Brandon Middaugh (17:53)

• “We absolutely choose to invest alongside others where we can partner as part of a syndicate.”
  — Brandon Middaugh (22:31)

• “Another important thing to know about Microsoft is that we strongly value what we call a one Microsoft culture ... We value transparency across teams. We value the opportunity to work together.”
  — Brandon Middaugh (30:50)

• “I fully expect that we will see dramatic change in assumptions for what our technological tools in the energy systems look like. ... In five years you will need more than 12 spots [on the grid dispatch board]; you will need 1,200 spots to capture the sources of generation.”
  — Brandon Middaugh (36:04, paraphrased)

Section Timestamps

| Segment | Start | Highlights | |---------|-------|------------| | Introduction & Microsoft’s Goals | 00:00–02:06 | Origins of the fund, net zero vision | | Brandon’s Personal Journey | 02:59–07:09 | Consulting, policy, joining Microsoft | | Evolution since 2020 & Market Challenges | 07:56–12:33 | AI/data center impacts, market growth | | Investment Focus and Strategy | 12:55–15:24 | Invest-to-procure, where they play | | Differentiation & Example Deals | 15:24–18:08 | Climeworks, Twelve, role as buyer+investor | | Co-Investment & Market Building | 19:12–23:14 | Collaboration with others, building supply | | Water & Adaptation Investments | 23:48–28:33 | Strategy on water, adaptation vs. mitigation | | Advice for Startups | 29:07–32:47 | Scale ambition, transparency, partner fit | | Reflection & Looking Forward | 33:49–38:33 | What’s next, talent, grid evolution, legacy | | Closing Thoughts | 38:54 | “Transformation only seems inevitable in hindsight.” |

Takeaways for Listeners

• Microsoft’s Climate Innovation Fund actively shapes markets, not just bets on individual technologies.
• The interplay between investment and procurement (market demand) is at the core of Microsoft’s impact: they are both a critical early buyer and patient capital provider.
• Scale and collaboration are the predominant themes: Microsoft seeks partners with vision, readiness for mass adoption, and a willingness to work cross-functionally.
• Water, resilience, and adaptation will play bigger roles going forward.
• The next five years promise even more rapid evolution in climate tech, grid management, and will be powered by a new generation of climate-motivated talent.

Memorable Closing Thought:

“Transformation only seems inevitable in hindsight.”
— Brad Smith, via Brandon Middaugh (38:54)