Although most frequently discussed in a regulatory sense, climate change and its effect on the planet is undoubtedly a private sector issue. Businesses of all sizes participate in habits that exacerbate greenhouse gas emissions and stand to lose tremendous value in the long run if operating costs subsequently rise. Data centers, transportation expenses, utility costs for office buildings and warehouses—energy accessibility greatly shapes the outcome of a business model.
Additionally, companies are incentivized to take a stand on issues of importance to their customers. Sixty-eight percent of Americans believe climate change is caused by human activities and forty-five percent of individuals are deeply concerned about its reverberating effects—as a result companies must deliver in this area. The largest American technology companies addressed their participation in this phenomenon in a 2016 U.S. Court Briefing filed in support of the Clean Power Act. Through this forum and others, Amazon has signaled this as an area of perpetual focus for the company going forward.
Current & Future Initiatives
Through its public relations arm, Amazon has clearly outlined a plan to lessen its energy consumption and production of waste.
Energy Consumption. Amazon aims to support its Amazon Web Services through 100% renewable energy sources in the short term and will be at 50 percent by the end of 2017. Amazon currently has 10 renewable energy projects in process that will generate over 2.6 million megawatt hours of energy annually when completed. Additionally, Amazon is currently utilizing recycled energy to warm its newest buildings in Seattle by capturing the heat created by a nearby data center and piping it into its buildings.
Packaging. As the Amazon logo has become ubiquitous on the side of packaging, the company has funded initiatives to make delivery more eco-friendly. Through eliminating excess packaging—multiple boxes inside of larger boxes—Amazon cut 55,000 tons of produced waste in 2016. Additionally, they are moving to 100% recycled packaging and recently arranged for some suppliers to ship directly to consumers, bypassing repackaging and transportation to and from an Amazon distribution center.
Transportation. While drone delivery is intended to solve the “last mile” problem in the mid-term, it also could cut Amazon’s and its customers greenhouse gas (GHG) emissions. The drones are battery powered, providing a clear alternative to the current carbon emitting transportation options today. Additionally, Amazon can more efficiently supply a neighborhood with goods instead of each house acting independently. If the company is successful with wooing more customers by the convenience of drone delivery, families will travel to the store less and emit less carbon into the air.
While Amazon is taking concrete steps to reduce its direct involvement in climate change, it is still far behind its industry peers. It only recently began hiring personnel for sustainability related positions. Further, at the 2017 Annual Shareholder Meeting the motion to include sustainability targets as part of executive compensation was voted down. Carbon Disclosure Project, a nonprofit that queries companies on annual carbon emissions data, reported that Amazon is in the minority of S&P500 companies that chose not to report in 2016. Amazon’s peers (e.g., Apple, Walmart) have taken these steps to show dedication to change. It is hard to excuse Amazon from what seems to be the evolving industry standard.
Additionally, Amazon does not impose environmental standards on its marketplace suppliers. Therefore, although Amazon is improving its own supply chain, it may concurrently encourage the growth of companies that are not pursuing the same type of improvement in their own operations. While it is extremely difficult to pinpoint Amazon’s culpability (or lack thereof) for the actions of third party actors on its site, it must be accounted for when reviewing the sustainability of the supply chain that has fueled Amazon’s success. Though it may not be feasible in the short term, offering incentives towards positive supply chain behavior is a powerful tool Amazon could someday wield.
As Amazon and ecommerce continue to change the way we purchase goods, the intersection of business and sustainability becomes more complicated. Can Amazon overcome the inherent friction between being environmentally conscious and supporting a business model built on frequent consumption of goods? If Amazon is serious about decreasing humanity’s contribution to climate change, should they enforce production standards on the companies that use its marketplace?
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