Amazon have recently published their sustainability report for the last year, detailing how their operations across the globe have performed from an environmental point of view, their progress, and their commitments to the planet now and into the future.
As one of the world’s largest online retailers, it’s unsurprising that Amazon are under scrutiny when it comes to sustainability - delivering more than 10 billion items a year certainly will come at a cost to the environment, but how much?
At A Glance:
With the latest report coming in at a total of 138 pages, it's clear that Amazon have a lot to say - here are the headlines:
- Became the world’s largest corporate purchaser of renewable energy
- Reached 65% renewable energy across the business
- Delivered more than 20 million packages to customers in electric delivery vehicles
- Ordered 100,000 custom electric delivery vehicles
- Launched The Climate Pledge Fund with a $2bn investment
- Increased absolute carbon emissions by 19%, overall carbon density reduced by 16%
- Eliminated more than 1 million tons of packaging material, equivalent to 2 billion shipping boxes, since 2015
- Reduced the weight of outbound packaging by over 36%
A Closer Look:
The World’s Largest Corporate Purchaser of Renewable Energy
We know that adoption of renewable energy is crucial in the fight against climate change, so news like this is surely a good thing, right? Well...not completely… Whilst purchasing renewable energy is a positive thing for the planet as wind, solar, and hydro energy emits no greenhouse gases, unlike non-renewable energy such as fossil fuels, and will help Amazon on their journey to achieve net zero, it’s not actually addressing the root of the problem - the carbon emitting activities in the first place. Purchasing renewable energy doesn’t encourage Amazon to behave any differently, and it’s not changing their infrastructure - if anything, it’s allowing them to continue with poor environmental practices, and not feel as guilty about it. In an operation as large as Amazon, there will be many carbon emitting activities taking place throughout the supply chain which could at worst, be significantly improved, and at best, be removed altogether - it comes down to businesses owning and taking responsibility for their actions and implementing change, instead of relying on offsetting to be the solution.
65% Renewable Across The Business
As mentioned above, renewable energy is really critical to limiting climate change, so for a business as large as Amazon with thousands of warehouses, offices, and stores across 5 continents to be using 65% renewable energy is great news - and the even better news is they’re set to be using 100% renewable energy by 2025. Originally they were targeting 2030, so a 5 year improvement on that is really commendable. Personally, I think the statistic which is most impressive in this area isn’t one Amazon seem to be shouting about - the improvement from 42% renewable energy in 2019, to 65% in 2020. A near 55% increase in 12 months for a multinational business is a giant leap in the right direction, and one they should be proud of.
More Than 20 Million Packages By Electric Delivery Vehicles
20 million packages certainly seems like a fair few - however when you consider that Amazon deliver more than 10 billion items a year, those 20 million parcels by electric vehicle doesn’t seem to be that many at all (in the grand scheme of things), representing just 0.2% of their deliveries. This number will only increase over the next decade, but with the power and capacity Amazon has, I’d expect them to be doing more at this stage.
Electric Delivery Vehicle Fleet
Amazon ordered 100,000 electric delivery vehicles in 2019 - the first of which were on the roads earlier this year. They’re planning on having 10,000 on the road “as early as 2022”, and the remainder up and running by 2030. Whilst I appreciate 100,000 electric vehicles is going to require work at their delivery centres across the globe with charging stations an absolute must, I do think the roll out could happen much sooner - what are they gaining by waiting? Will these charging points actually use renewable energy, or is the delay in deployment to give them time to sort out further offsetting? Another thing to consider here is that Amazon rely on third party couriers to deliver reportedly up to 50% of their parcels - if 100,000 electric vehicles of their own is only enough for half of their deliveries they need to make at the moment, what are they going to do to cover for the inevitable business growth they’ll see over the next 9 years? Rely even more on third parties? If so, will they only work with third parties who use electric vehicles? Perhaps they should increase their order, and quickly too...
The Climate Pledge Fund
Off the back of co-founding The Climate Pledge in 2019 which sees businesses commit to being net zero by 2040, in 2020, Amazon created The Climate Pledge Fund. The idea behind The Climate Pledge Fund is for Amazon to invest in companies that can ‘accelerate Amazon’s path to meeting The Climate Pledge.’ And that investment isn’t small either - it’s set as $2bn and the plan is ‘to support development of decarbonising services and technologies’. So far, they’ve invested in 9 companies, with services ranging from lower carbon concrete to electric aircrafts. Amazon are clearly aware of their current largest carbon emitting activities and are thinking ahead to achieving the 2040 target they set for net zero. They know they need solutions to their problems, have identified who can provide them, and are investing a hefty amount into them. A really great initiative - let’s hope the companies they’ve invested in aren’t going to be exclusive for Amazon and will provide access to their services regardless of business size as it could be a real game changer on a big scale.
Carbon Emissions Increase, Carbon Density Decrease
Unsurprisingly, Amazon saw huge growth last year as, in the UK at least, everyone was forced to shop online. More online shopping means more deliveries, so the question was never ‘would Amazon’s carbon emissions increase?’, it was always ‘by how much?’ A near 20% increase in emissions is significant and scary for any business, let alone one the size and scale of Amazon. 2020 certainly did cause unprecedented demand, and pretty much overnight too - undoubtedly they would have needed more delivery vehicles for the increased order volumes, yet they didn’t use any of their 100,000 new electric vehicles and instead outsourced or purchased more non-electric vehicles. At the time, it would have come down to letting customers down or abandoning their environmental responsibility - whilst neither of these options are something a business wants to be faced with, there would have been a better compromise than the colossal 19% increase in carbon emissions we’ve seen.
There is more hope for the future though, as Amazon are reporting a reduction in overall carbon density of 16%. Partly due to the change in customer behaviour and online shopping having a lower carbon footprint compared to their physical stores, and also in part to their fulfilment operations which saw an increase in renewable energy usage, efficiencies in transport network, and reduction of packaging materials.
Amazon are admitting that they are still in the early stages of decarbonising their business, and that it will take several years for the reduction in carbon intensity to be reflected in an overall carbon footprint reduction - which it will - and is certainly now a bigger task given the huge, unforeseen, increase in emissions last year.
Saved 1 Million Tons of Packaging Material
Amazon have come under a lot of scrutiny for the size of their packaging compared to the size of the contents. This has evidently improved in the last 5 years with that enormous reduction in packaging material through investment in technologies and solutions, which means they now have just a handful of packaging items, and there will be a solution which gives a ‘best fit’ for the vast majority of the 350 million products they sell. However, Amazon still face a problem when it comes to shipping multiple items in one order. Multi-product orders are frequently being sent in oversized packaging which not only is a waste of materials, but is resulting in a much larger carbon footprint than necessary due to the amount of air they’re shipping. Dedicating just one paragraph to one of their biggest problems, and opportunities to improve, in the 138 page report where they state they’re using AI to optimise packaging choices is a serious oversight in how much of a problem this is for them. Oversized packaging means there is air (with or without void fill) in nearly every single despatch Amazon do. Air in a parcel is an inefficiency; not only is the packaging the wrong size, but it also means that less parcels will fit in delivery vehicles, meaning more on the road, and therefore, unnecessary extra carbon emissions. And on a business of Amazon’s scale, these inefficient packaging choices are really coming at a cost to the environment. This has been a problem for a while, and we need to see improvements in action.
Outbound Packaging Weight Reduction
A reduction of packaging weight is a good thing as it shows Amazon are continuing to improve the materials they’re using to send goods, however, this is really further evidence for our above point. Reducing the weight of outbound packaging isn’t going to solve the fundamental issue which Amazon have, as air has no weight. Lighter packages don't help with the wasted space they have in their supply chain, nor the knock-on-effect of far more vehicles on the roads than necessary and the associated higher carbon emissions. Using AI and algorithms to decide which size packaging is needed is great in theory, and sometimes in practice too, but ultimately, common sense should prevail and step in when there is a more suitable solution available.
Overwhelmingly, Amazon are doing a great job when it comes to sustainability. Ultimately, people shop on Amazon because it’s convenient, it’s reliable and it’s fast, not because of their values, their renewable energy usage, nor their packaging choices - but they’re making a real effort when really, they don’t have to. As one of the world’s largest retailers who turned over $386.06bn in 2020 alone, there’s nothing stopping Amazon from using cheap plastic mailing bags which they could import from China for a fraction of a pence per bag - but they’re not. They’re choosing recyclable packaging, they’re choosing to eliminate single use plastic films, they’re choosing paper over plastic. Whether that’s because of a genuine desire to protect their namesake and the planet itself, or because they want to be seen to be doing the right thing is another matter, however I do believe it’s more the former than the latter. No-one has set a target for Amazon to be net zero by 2040, other than Amazon. No-one has demanded a $2bn investment into cutting edge companies providing climate positive solutions, but Amazon have done it anyway.
The cause of frustration we, and a lot of others, have is that they have the power, the people, and perhaps most crucially, the funds, to do even more and make a really positive and lasting impact, but they’re not even vaguely testing the limits. They’ve made some good changes so far and are laying the foundation for doing a lot of big things right in the future, but there’s smaller and more attainable opportunities right in front of them which they’re neglecting at the moment. Addressing the amount of shipped air in their supply chain would be straightforward for them to put right, looking at how they can change to genuinely green business activities instead of relying on purchasing carbon offsets in the short term is another key step for them which has gone unmentioned as well. Fundamentally, ignoring the situation altogether will never result in change.
Other business giants could learn an awful lot from Amazon’s approach and practices for sustainability. If governments and official bodies won’t take the climate crisis as seriously as it needs to be taken, businesses, particularly ones with so much power, should take matters into their own hands and start - if not now, when?
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