News broke last month that Amazon's greenhouse gases were up 18% over the prior year and up 40% since they first started formally reporting carbon emissions in 2019.
18% of their carbon footprint is equivalent to over 70 million metric tons of carbon dioxide. Sounds bad right? Nearly every household has heard of Amazon, and few don’t use their services in some way. So when COVID hit, worry about the virus and armed with stimulus funds in a number of countries, many consumers swapped their normal high street shopping for the digital shopping basket. The steep rise in online shopping pushed Amazon to dramatically expand its network of delivery vans, planes and trucks.
Likewise, the demand spurred the lightning-speed opening of massive new warehouses and data centers, doubling Amazon’s fulfilment network (something that took 25 years to build) in just under 18 months.
In 2020, Amazon were one of the first corporations to aggressively set carbon targets, incorporate green energy into their warehouses and data centres, pursue electric van fleets, and to reward green investment through their $2 billion Climate Pledge Fund - all with the aim of combating rising GHGs. While early criticisms likened their ESG efforts to an ambitious fad, their progress in this space has been undeniable – and phenomenal. One glance at their annual Sustainability Report (an eye-watering 101 pages) and it’s hard to find any organization doing what they’re doing on the same scale.
Forbes wrote in March this year about Amazon’s 600% rise in membership across its Climate Pledge Fund, a collection of 300+ impressive organizations (themselves well-known like Uber, Maersk, SAP, Virgin/O2, Tech Mahindra, CLIF Bar to name a few) who have their own sustainability targets and well-developed ESG programs indicating that this is a serious group out to make a change.
“signatories now account for more than 3.5 trillion in global annual revenues. All said and told, participants employ a cumulative eight million people worldwide, across 51 different industries, operating in 29 countries.” Wrote Patrick Moorhead, Forbes contributor.
The Pledge is a pact that binds its signatories to achieving the Paris climate goals and thus mandates that the companies introduce strategies to decarbonize their organizations by 2030 (ten years ahead of the Paris climate treaty). Any carbon emissions that are still produced are to be compensated for by permanent carbon offsets and in this way the signatories can become fully carbon neutral. As despite the wealth and scale of Amazon, founder Jeff Bezos recognized that collaboration was essential to making meaningful climate change as all companies are dependent upon each other, for example in their supply chain.
Drawing against that $2 billion Pledge fund, Amazon and partners invested in over a dozen start-ups across transportation and logistics, green energy, buildings and manufacturing, food and agriculture.
Indeed, there are a range of measurements that highlight Amazon’s progress on sustainability. For example, Amazon is on track to power 100% of its operations by 2025, a full five years ahead of its own 2030 target. In 2021, it was able to achieve 85% of its renewable energy goals. And while GHG emissions rose, the Seattle-based company was able to reduce its carbon intensity. The company has stated that the drop in carbon intensity means that it is becoming more carbon efficient, for example its carbon intensity dropped 16% from 2019 to 2020. So even with the boom in business, its carbon intensity fell again last year making 2021 a year where some progress was still to be made on GHG goals.
Source: Amazon Annual Sustainability Report 2021
The Climate Pledge Program is not only about acting in a more sustainable way, but it's also concerned with providing solutions. Amazon and the Pledge Signatories use the pledge to come together, collaborate and to exchange advanced ideas on how to minimize GHGs. The company and its partners cooperate in experiments on technologies such as green energy be it in hydrofuels to power transport, innovative solar panel systems, or in the carbon-reduced concrete used to build warehouses.
And yet the increase in their emission is a challenge for the company, particularly given their high-profile pledge to be carbon neutral by 2030. Not only is it substantially off-target from their Pledge commitments, it exposes the company’s ESG targets – and its measurements – to deeper scrutiny and some scepticism.
Amazon’s climate reporting and the ways it measures its own ESG record have faced scrutiny in the past, and a report earlier this year by Reveal from the Center for Investigative Reporting found the company, in contrast to major retailers such as Target and Walmart, only counts product carbon emissions from Amazon-branded goods, and not those of generic products sourced from manufacturers (all of which it sells directly to the consumer).
Amazon has never admitted any failure in its measurement, but a company spokesperson said the company follows guidance from the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard in determining its Scope 3 emissions separate to the emissions generated from a company’s supply chain.
While these issues raise major questions around Amazon’s ability to hit their 2030 targets, it’s impossible to ignore the online giant’s colossal commitment to steadily driving technological advancements in climate change. Equally difficult to deny is the universal reality that most companies – as they prosper and expand into new markets - leave a physical footprint on the earth. And unfortunately the scale of the emissions footprint is often indicative of a company’s size and speed of growth.
What matters more is their stewardship to the planet and their accountability to shareholders, employees, and customers to mitigate excesses and pollution and to not make it worse.
Even Amazon, despite extraordinary efforts to integrate its sustainability commitments into its own operations, faces hurdles and extremely hard-to-solve problems. Still, there is much to be learned from the tech giant who has shown that science, technology, and collaboration are crucial. Above all, perhaps the most important observation is recognizing Amazon’s willingness to take the lead back in 2020 has had dramatic and far-reaching influence over businesses large and small committed to making a more sustainable world to live in.
How can small businesses progress their own sustainability initiatives? Read our blog here for implementing an ESG plan. Need help? Get in touch.
Kelli Wilks is Management Consultant at Spring CPO where she advises clients on ESG priorities, procurement transformation, negotiation strategies, and supplier performance.