Amazon’s latest report on its environmental and social initiatives has many of the platitudes about renewables, EVs and emissions that are typical from these annual dispatches — but one pending new policy is likely to have a huge ripple effect across its entire supply chain.
“While our most visible sustainability work may be in how we deliver orders to customers’ doorsteps, we are more than an e-commerce company, Amazon is an entertainment studio, cloud provider, grocer and more — and we are making sustainability a priority across all of our business,” writes the company’s vice president of worldwide sustainability, Kara Hurst, in the opening letter, which was published last week, and is based on last year’s performance.
Hurst summarized her nine report takeaways in a blog published last week. (You can download the 82-page report off that link.) Here’s the revelation that puts Amazon’s entire supply chain on notice: Starting in 2024, Amazon will update its supply chain standards “to require regular reporting and emissions goal setting.” Hurst writes: “We’ll also use our scale, investment and innovation to date to provide our suppliers with products and tools that will help them reach their goals — whether those are transitioning to renewable energy or increasing access to sustainable materials.”
Few companies require this sort of supply chain disclosure, although some, such as Amazon’s rival Walmart, have been pushing for this transparency for years through its Project Gigaton initiative.
The report includes few other details about the program, such as whether there will be exemptions for small suppliers. An Amazon spokeswoman said no additional details about the new supply chain emissions reporting policy will be provided at this time.
But two specific objectives are mentioned. First, Amazon hopes to use its size and scale to “benefit businesses that are committed to decarbonizing” and provide “products and tools to both track emissions and help decrease them.” Among other things, Amazon said it will help “select suppliers” transition to using carbon-free electricity. This is a practice that has also been embraced by Walmart, as well as Apple.
Second, you can expect Amazon to pay particular attention to the suppliers with product innovations that could help Amazon or other companies with emissions reduction work. The report notes: “We will continue to look for suppliers that help us achieve our decarbonization vision as we select partners for business opportunities.”
How much Amazon reduced its carbon footprint last year
From an overall standpoint, last year Amazon reduced its carbon footprint by 0.4 percent, largely helped by its aggressive renewable energy purchases, according to its progress report. The company’s “carbon intensity” — that is, its emissions expressed in relation to revenue — was 93.7 grams of carbon dioxide equivalent per dollar of gross merchandise sales, down 7 percent from the previous year. The overall total of its carbon footprint in 2022 was 71.27 million metric tons of carbon dioxide.
Amazon disclosed a small reduction of 0.7 percent in 2022 for the Scope 3 emissions related to its supply chain. Much of that, the company said, was related to its ability to manage reductions related to building construction (like its new headquarters in Virginia) and in logistics, as the company shifts to ship more goods itself rather than use third-party suppliers, according to the report.
In contrast, Amazon’s Scope 1 emissions — related to fossil fuels and refrigerants — increased by 11 percent last year, which the company attributed to business growth, changes to its logistics policies and “an improvement” in how it calculates carbon emissions that enables it to use more granular data about its operations. (Find out more about that methodology here.)
Here are five more intriguing data points from Amazon’s report:
- 90% - As of its writing, Amazon had invested in 410 solar and wind projects, which enables it to claim that 90 percent of its operations are powered by renewables. It uses those certificates to make this claim even if the power being generated isn’t directly powering its operations, and it still reigns as the largest corporate purchaser of renewable energy. The goal is to reach 100 percent status by 2025.
- 9,000 - The number of electric delivery vehicles that are now part of Amazon’s fleet, including 5,000 in the United States. The company’s goal is to have 100,000 Rivian electric delivery vans on the road in just seven years.
- 15,000 - Green hydrogen is also big on the agenda. Amazon now uses 15,000 hydrogen-powered forklifts at its distribution centers in North America. It has enough fuel agreements in place to grow that number to 40,000 by 2025.
- 11.6% - The reduction in Amazon’s use of single-use plastics in 2022, as it switched to other materials or ditched additional packaging altogether. Indeed, the company says 11 percent of its packages last year arrived at customers’ doors “without added Amazon delivery packaging.” That compares with 8 percent in 2021.
- 800 million - The number of products shipped last year that were linked to Amazon’s Climate Pledge Friendly program, created to highlight options that have been vetted through one or more third-party certification programs. That’s roughly 10% of all packages it shipped. The Climate Pledge is Amazon’s overall commitment to reach net zero by 2040. As of the report, close to 400 other companies had signed onto that pledge.
Some other areas where there’s room to do more
Of course, there is always room for improvement. As just one example, Amazon’s grocery operation, including the Whole Foods supermarket chain, doesn’t currently have a goal in place for sourcing soy — a commodity closely linked to deforestation — and, in the report, it set its first sustainable sourcing target for buying fresh and frozen beef last year. That policy requires Amazon to procure beef only from regions with low deforestation risk by 2025.
“You might not see all of the large-scale changes that we are making reflected imminently; our company thinks in the long term,” Hurst acknowledges in her remarks, reflecting on the work still to be done across Amazon’s entire operation.