Microsoft Corp. has entered into a strategic collaboration with sustainability technology provider Novata to expand access to ESG solutions for small and mid-sized enterprises globally, the companies said in a joint statement on Tuesday.

Under the partnership, Novata will leverage Microsoft’s Azure AI Foundry, Azure AI Search and Microsoft Fabric to scale its sustainability data management and reporting tools, aiming to improve how SMEs collect, manage and disclose climate-related information.

Widening ESG Access for SMEs

As part of the agreement, Microsoft will serve as a key distribution partner for Novata, expanding access to Novata’s platform and its Carbon Navigator tool.

The collaboration is designed to make ESG solutions more attainable for smaller firms and suppliers within Microsoft’s global ecosystem.

The joint effort will also include the co-development of artificial intelligence-powered tools to help clients streamline their sustainability efforts and generate actionable insights.

Enhancing Supply Chain Compliance

Novata will support Microsoft suppliers in meeting climate reporting requirements by offering tools to track and manage emissions data more efficiently. The move comes as regulatory and investor pressures mount globally for more transparent climate risk disclosures.

“We are excited to deepen our relationship with Microsoft, a company that has not only revolutionized productivity but has also been a leader in addressing the climate crisis and leveraging AI for good,” said Novata CEO and co-founder Alex Friedman.

Building on Prior Investment

The collaboration builds on Microsoft’s existing financial relationship with Novata through its Climate Innovation Fund, which has backed the ESG software firm since 2023.

CIF focuses on accelerating climate solutions through targeted capital investments in early- and mid-stage technologies.

Jeremy Pitman, director of partner development at Microsoft, said the partnership reflects a commitment to turning climate responsibility into a business opportunity. “Our collaboration with Novata will enable a key segment of our clients to seamlessly and affordably integrate cutting-edge sustainability technology into their operations,” he said.

Growing Demand for ESG Tools

Novata, launched commercially in April 2022, has rapidly gained traction among private market investors. The platform is used by hundreds of general partners in private equity, venture capital, and private credit, with more than 10,000 portfolio companies worldwide and $12 trillion in assets under management connected to its ecosystem.

The company is a certified B Corporation and Public Benefit Corporation, aligning with broader goals of inclusive and sustainable capitalism.

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