Prime for the Planet: How Amazon.com is Tackling Climate Change
Evan Carver, Rachel Dixon, Megan Friedman, Jayalaxmi Jagannathan, Megan LeBlanc
Amazon and Climate Change
Most Americans are familiar with the experience of receiving an Amazon package. They return home from work and see the unmistakable sight at their door – a brown box affixed with Amazon-branded packing tape and the signature curved arrow logo. These ubiquitous boxes are a modern-day convenience that we often don’t think twice about. But with a warming planet, how will Amazon’s business model be affected by climate change?
Much of Amazon’s e-commerce business model relies on fast delivery to customers and the ability to deliver even to remote locations. This is such a principle of their business that their website highlights a story about “Amazon’s most unique delivery locations around the world,” including stories and videos for each location. An example of one such challenging delivery is to Sanibel Island, Florida which is still reeling from the effects of a devastating hurricane. Parts of the causeway bridge, the only way in and out of Sanibel Island, were destroyed by Hurricane Ian. It took several weeks to reopen the causeway and resume deliveries to normal. Sanibel’s devastation and Amazon’s response are one way the company could be affected by climate change. As extreme weather events increase in frequency, Amazon’s operating costs will increase, and their sales will decrease as deliveries are impacted.
Amazon, in its 2023 annual report, published potential negative effects of climate change, including higher operating costs due to extreme weather events, increased investments in transitioning to low-carbon, changes in consumer behavior, increased compliance costs from climate regulations, and reputational damage from Amazon’s environmental impact (Amazon.com SEC Filing).
With so many negative effects of climate change ranging from direct effects like extreme weather events to indirect effects like customer behavior decreasing sales, Amazon has a vested interest in improving its carbon footprint. If Amazon contributes to climate change with high carbon emissions, they would be robbing from tomorrow to pay for today. Despite the public’s perception of Amazon.com, they are investing in a greener future and a sustainable business model.
How Amazon is Tackling Climate Challenges
Amazon has emerged as a leader in corporate sustainability, taking bold steps to reduce its environmental impact while leveraging opportunities for innovation and growth. Amazon is committed to achieving net-zero carbon emissions by 2040, a decade ahead of the Paris Agreement, through its co-founded initiative, The Climate Pledge. The company has already reached its goal of powering all operations with 100% renewable energy, seven years ahead of schedule, by investing in over 600 wind and solar projects globally. These projects are expected to offset emissions equivalent to powering 8.3 million U.S. homes annually (source).
In logistics, Amazon has regionalized its fulfillment network to reduce transportation distances and emissions. It has also deployed over 24,000 electric delivery vehicles globally and ordered 100,000 more, cutting delivery-related carbon emissions significantly (source). Packaging innovations, such as eliminating plastic air pillows and reducing packaging weight by 33%, have further minimized waste (source).
Amazon leverages sustainability as a competitive advantage. As the world’s largest corporate purchaser of renewable energy, it drives global clean energy transitions while enhancing operational resilience (source). The $2 billion Climate Pledge Fund supports startups developing carbon-reducing technologies, fostering innovation in areas like energy storage and sustainable materials (source). Additionally, Amazon aligns its sustainability goals with customer expectations. Initiatives like the Climate Pledge Friendly label make it easier for customers to identify eco-friendly products, strengthening brand loyalty while promoting sustainable consumption (source). Through these efforts, Amazon not only mitigates climate risks but also positions itself as a global leader in sustainable business practices. Its approach demonstrates how integrating environmental responsibility into core operations can drive both ecological and economic value.
Counting Carbon: How Amazon measures, reports, and rates its carbon performance
Amazon produces significant carbon emissions from their package deliveries, but behind the convenience of their one-day prime shipping is a complex network of processes that contribute to their carbon footprint. As concerns around climate change continue to grow, Amazon has committed to reducing their environmental impact, but how do they accurately measure, report, and improve their carbon performance?
Amazon’s operations generate emissions at every stage, from warehouses, transportation, data centers, and manufacturing processes. To account for this, they follow the Greenhouse Gas Protocol that classifies their emissions into Scope 1, Scope 2, and Scope 3 emissions. Scope 1 includes emissions from fuel used with deliveries, Scope 2 are the indirect emissions from power used at their fulfillment centers, and Scope 3 are their indirect emissions across their supply chain. Their Scope 1 and 2 emissions are assessed by Ernst & Young LLP and Scope 3 are reviewed by Apex. Past emissions are also reviewed to ensure accuracy when comparing usage.
To track their carbon foot printing, Amazon uses seven specialized measurement models to provide a clear picture of their carbon impact including financial, transportation, energy, refrigerants, packaging, amazon devices, and employee commute. Amazon ensures that they are transparent with their reporting of these carbon emission measures. They use cloud technologies to implement these seven models to identify their largest emission sources for the business sectors. One example would be to track their activities for one part of the business; one day shipments, and see the total emissions used for the package to travel through the fulfillment centers, to the delivery, and the packaging.
Amazon’s Future Playbook
Amazon is working toward net-zero carbon emissions by 2040 and can take additional steps to speed up the process. As mentioned, Amazon is already powering 100% of their operations with renewable energy well ahead of their intended schedule (2030). However, installing solar panels and wind turbines at fulfillment centers, data centers, and offices would help reduce reliance on external power sources and could allow Amazon to go beyond carbon neutral into net negative carbon territory. Investing in advanced battery storage systems would also allow Amazon to store extra renewable energy for use when demand is high. As a global powerhouse, Amazon could also collaborate with utility providers and policymakers to improve clean energy infrastructure and reduce dependence on fossil fuels, helping drive a broader transition to sustainable energy.
Amazon’s supply chain and Scope 3 emissions play a major role in its carbon emissions, so making it more sustainable would have a big impact. Outside of expanding their own electric vehicles, Amazon could require external suppliers to follow stricter environmental standards, such as setting emissions reduction goals and using greener manufacturing methods.
Cutting down on packaging waste is another key step. Again, while Amazon has made strides by cutting out some single-use plastic, the company could improve by offering more biodegradable and compostable packaging, encouraging sellers to use minimal and recyclable materials, and creating a system where customers can return used packaging for reuse or recycling. For instance, anyone who has returned a package to Amazon via UPS or Whole Foods recently may have noticed that these facilities use single-use plastic bags to re-package Amazon products. While this increases customer satisfaction by improving convenience, the company could use compostable or recyclable bags and still serve the same purpose.
Amazon’s future success relies on mitigating climate change and its effects as much as possible. Amazon also needs consumer behaviors and attitudes to be favorable so that they do not lose business if climate change accelerates. For their own sake, and for the planet’s, Amazon must continue investing in sustainability efforts. (Save the Amazon to save Amazon.)
Sources
Amazon.com SEC Filing. (2023). United States Securities and Exchange Commission. https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/c7c14359-36fa-40c3-b3ca-5bf7f3fa0b96.pdf
Amazon Staff. (2024). Amazon’s most unique delivery locations around the world. https://www.aboutamazon.com/news/transportation/amazons-most-unique-delivery-locations-around-the-world
Amazon Staff. (2024). Watch how Amazon delivers to customers off the coast of Florida on Sanibel Island, one year after Hurricane Ian. https://www.aboutamazon.com/news/transportation/how-amazon-delivers-to-sanibel-island-florida-video-photos
Amazon.com (n.d.). Carbon Methodology. Amazon Sustainability. https://sustainability.aboutamazon.com/carbon-methodology.pdf
