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Amazon's business is growing and diversifying, so is its sustainability strategy

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Amazon’s latest sustainability report highlights the multi-pronged approach the company is taking to reach its sustainability goals, encouraging suppliers, partners and customers to embark on a more sustainable path. We support this. The numbers shared in the report also help us understand the complexities of achieving such goals in an era of business growth and diversification.

During the pandemic, Amazon grew at an unprecedented pace. From an e-commerce perspective, Amazon has become the go-to source for millions of people around the world looking for everything from food to entertainment. Such demand has driven more than 750,000 full-time and part-time jobs worldwide, investments in distribution networks, and a doubling of fulfillment and distribution center networks. The company has grown in more than just retail. Amazon Web Services experienced tremendous growth in 2021 as businesses increased their spending on compute, storage, and database services due to accelerated digital transformation.

Despite this growth, it is not surprising that the company did not reduce its carbon emissions from the previous year, instead recording an 18% increase in 2021. However, Amazon recorded a 1.9% decline in carbon intensity. The company has grown its business sustainably. This is his third year in a row that Amazon’s carbon intensity has fallen. What does this mean? Absolute reductions refer to the total amount of greenhouse gas (GHG) emissions emitted, while intensity, in grams of carbon dioxide equivalents (CO2e) per dollar of gross merchandise sales (GMS), is the total carbon emissions quantify the People disagree about which set of numbers would be a better target. I am not a sustainability researcher, but I would argue that both of these disclosures are relevant and complementary in achieving a more sustainable business. Amazon seems to agree that these numbers are significant and the company is committed to achieving its net zero carbon by 2040.

In addition to making our own business more sustainable, Amazon engages in cross-industry partnerships and invests in innovation to maximize our impact on the planet.

Driving collective influence

Co-founded by Amazon in 2019, the Climate Pledge added 253 companies in 2021 alone, bringing the total number of companies pledging to achieve net zero carbon emissions by 2040 to over 300.

In 2021, Amazon joined the Buyers Alliance to inform market demand. For example, the Sustainable Aviation Buyers Alliance has become one of the founding members of a group that promotes investment and educates the market on the importance of sustainable aviation fuel (SAF). Aviation is he one of the fastest growing sources of GHGs that contribute to global climate change. Made from renewable biomass and waste sources, SAF has the potential to perform as well as petroleum-based jet fuel, but with a marginal carbon footprint. However, not all SAFs are created equal. Depending on the feedstock and the technology used to manufacture it, SAF can dramatically reduce lifecycle GHG emissions compared to conventional jet fuel. However, some are concerned that increased intake of SAFs may encourage deforestation and put pressure on crops that are essential for food production. Others have criticized airlines for not moving fast enough, a strong criticism that emerged from the recent Farnborough International Air Show in the UK. are meeting in the South of England to discuss the future of aviation. Adoption of SAF is, of course, only part of what the aviation industry needs to achieve its net zero carbon by 2050. Given that commercial service airports are large landowners and major consumers of energy and water, achieving that goal will require airports to convert their land. Convert fleets into electric vehicles, generate renewable energy on-site, and dramatically improve energy and water efficiency.

Investing in innovation

Through the $2 billion Climate Pledge Fund, Amazon has invested in 13 companies in 2021 to accelerate sustainability progress across transportation, aviation, freight, packaging, agriculture and technology. As of today, Amazon has investments in a total of 18 companies, including Rivian, which just weeks ago launched the first electric delivery vans to start delivering orders in Baltimore, Chicago, Dallas, Kansas City and Nashville. opened the curtain. , Phoenix, San Diego, Seattle and St. Louis will reach over 100 cities by the end of the year.

consumer engagement

When it comes to consumers, Amazon wants to make sustainable choices as easy as possible when purchasing, starting with the goal of 50% of Amazon shipments to be net zero carbon by 2030. Since 2015, Amazon has invested in materials. , processes and technologies that reduced packaging weight per shipment by 38% and saved over 1.5 million tons of packaging. For example, in the US, Amazon has expanded its use of recyclable paper-padded envelopes, replacing nearly 70% of mixed-material bubble envelopes by 2021.

Amazon also helps customers make sustainable product choices through its Climate Pledge Friendly program. Since its launch in 2020, the number of products included in the program has grown from 75,000 to over 250,000 by the end of 2021. In 2021, over 370 million Climate Pledge Friendly units have been shipped to Amazon customers. These products are identified through an external certification process and displayed in shopping results with additional sustainability information on the product page. In 2022, Amazon will join the Climate Pledge Friendly program and create its own line of essentials called Amazon Aware.

Design, packaging and recycling are three key elements in a product’s journey to sustainability. For third-party products, Amazon has created its own certification called Compact by Design. This identifies products designed to eliminate excess air, water and packaging. This is in addition to the Frustration Free Packaging (FFP) program. This program ships our products using more sustainable packaging that is easy to open, fully recyclable and does not require additional packaging protection. In 2021, Amazon began offering incentives for vendors to adopt his FFP, reaching over 2 million products by the end of the year. More efficient packaging leads to more efficient shipping, which translates into a significant reduction in our carbon footprint at scale.

When it comes to its electronic product lineup, Amazon is the first consumer electronics company to commit to addressing the power used by its devices through renewable energy development, starting with its Echo device in 2020. Amazon has also invested in additional wind and solar capacity to match the energy usage of Fire TV and Ring devices worldwide by 2025. In addition to the renewable energy component of its devices, Amazon became the world’s largest corporate purchaser of renewable energy in 2020, reaching 85% renewable energy across the company in 2021.

Investing in renewable energy is one way to address the energy footprint of consumer electronics. Another is to make the device more energy efficient. Amazon rolled out Low Power Mode. This is an out-of-the-box feature for new and already used devices. By the end of 2021, his over 50% of all Echo and Fire TV devices in customer homes had low power modes. Additionally, several new Fire tablets, Fire TV, and Amazon Smart Home devices launching in 2021 are designed with energy efficiency in mind and are Energy Star certified. As more homes become internet-connected and smarter, Amazon is leveraging Alexa to allow consumers to monitor their smart devices in their homes. With its Hunches feature, Alexa can help customers who want to save energy by automatically turning off the lights if they have a hunch that no one is home and the lights have been left on. can be rented.

Finally, Amazon focuses on getting materials out of the landfill and into the circular economy loop. Most of the waste that Amazon generates is generated through customer fulfillment operations, including excess inventory, supply chain obsolete materials, overstocked products, returned or damaged products. Amazon Second Chance offers customers in several countries the option to recycle, repair, trade-in, and purchase refurbished or like-new products.

“With great power comes great responsibility” is not as accurate a statement as it is for Amazon and sustainability. The size, power and influence of its business require a level of accountability to do better work and help others do more. In a post accompanying the report, Kara Hurst clarifies that she and the rest of management are fully aware of what is expected of them. Organization. For a company of the size and breadth of Amazon, it’s a big challenge. But at Amazon, we don’t shy away from big challenges. We innovate and create. We are not, but we believe we need to act now. ”

Disclosure: The Heart of Tech is a research and consulting firm that does or has provided research, analysis, and advisory services to many technology companies, including those mentioned in this column. The author has no stock holdings in any of the companies mentioned in this column.