Microsoft

Microsoft has an expansive ecosystem of products and services which enjoy strong customer loyalty. Through Microsoft Windows and Office 365, Microsoft is a global leader in the IT Software industry.

More recently it has become a key player in artificial intelligence via its investment in and collaboration with OpenAI. Through Azure, it is one of the main providers  of cloud computing infrastructure and the increasing adoption of cloud services by businesses of all sizes offers an excellent growth opportunity.

These diversified sources of revenue and market-leading positions in high-growth industries have generated excellent returns for shareholders over decades and through different economic cycles. The company has a strong balance sheet and generates very reliable cash flows. 

Like many firms in the tech sector, Microsoft faces scrutiny not only for its operations but also for how its products are used by its customers.

Whilst considered non-strategic and contributing only a small portion of revenue, some of these products (e.g. software, communications, and data processing services) are licenced to customers including various armed forces and national defence departments. 

To limit risks of abuses occurring in its supply chain, the company has established a Supplier Code of Conduct, which is aligned with the Responsible Business Alliance's responsible supply chain standards, and includes this as part of all supplier contracts.

Despite strong processes to mitigate supply chain risks, Microsoft’s size and global reach expose it to potential violations related to working hours, occupational safety, fair wages, and freely chosen employment. These risks are exacerbated by the company’s reliance on third-party suppliers.

Additionally, critical materials for the functionality or productivity of the company’s products poses concerns. Many of these minerals have few available substitutes and are sourced from regions with geopolitical instability.