Like with any other product, solution or initiative Amazon undertakes, customer obsession drives the company's sustainability strategy. "Sustainability is an important issue for our customers around the world, and we are continually investing, inventing, and improving to make every customer interaction more sustainable than the last," wrote Kara Hurst, Vice President, Worldwide Sustainability, at Amazon, as part of the company's 2022 Sustainability Report.
The very detailed report offers insights into the improvements and challenges the company faces on its path to a more sustainable business. Three key data points that highlight both of those aspects of the journey:
Amazon is on a path to powering its operations with 100% renewable energy by 2025, five years ahead of schedule. In 2022, 90% of the electricity consumed by Amazon was powered by renewable energy sources, thanks to more than 400 wind and solar projects worldwide.
Amazon's carbon intensity registered a 7% decrease in 2022, even as the company continued to experience business growth. This metric enables the assessment of how Amazon's carbon footprint is changing concerning the expansion of its operations.
Amazon also recorded an overall reduction of 0.4% in its total carbon footprint in 2022.
Amazon's sustainability effort extends beyond its own operation, as it believes that supporting third parties in their crucial efforts to decarbonize and combat climate change. Fueling this desire is the awareness that the company has one of the largest value chains in the world, and it is aware that to see meaningful progress, the company must gain a comprehensive understanding of its own emissions, including its suppliers. Starting next year, Amazon is taking proactive steps by updating its Supply Chain Standards that will mandate regular reporting of emissions data and set ambitious reduction goals. Amazon is well aware that achieving sustainability goals requires collaborative efforts. Amazon leverages our extensive scale, investments, and innovative capabilities as part of its commitment to enabling suppliers. By doing so, the company aims to provide its suppliers with cutting-edge products and tools that can accelerate their sustainability journey. These efforts include supporting their transition to renewable energy sources and facilitating access to sustainable materials.
By pushing its suppliers to be more environmentally conscious, Amazon can achieve much more than lowering its carbon footprint. First and foremost, it has an impact on reputation and brand image. Consumers today are increasingly conscious of the environmental and social impacts of the products they purchase. By partnering with sustainable suppliers, Amazon can enhance its brand image and reputation as an environmentally responsible and socially conscious company. This, in turn, can attract more environmentally conscious customers and foster brand loyalty.
Working with suppliers to be more sustainable can also help Amazon mitigate potential risks associated with environmental and social issues. These risks include supply chain disruptions due to climate-related events, reputational damage from unethical practices in the supply chain, and legal and regulatory challenges related to sustainability and environmental compliance.
Amazon has such a diversified business that it is hard to think of all the ways the company needs to account for its carbon footprint. The most obvious impact consumers and regulators alike see is linked to its e-commerce business. From its logistic buildings to the vehicles used to deliver our shopping to the packaging everything we buy is in.
In its pursuit of sustainability, the company is actively deploying new building technologies, such as low-carbon concrete, to enhance the environmental performance of its facilities. Notably, the launch of its second headquarters buildings has set a remarkable precedent for sustainable design, incorporating innovative elements that showcase the company's commitment to reducing its ecological footprint.
Amazon also invests in sustainable logistics technologies and has more than 15,000 hydrogen-powered forklifts in its fulfillment centers in North America. In 2022, Amazon signed a deal for enough green hydrogen to fuel 40,000 forklifts annually by 2025.
On a global scale, Amazon is making significant investments in renewable energy sources. For three consecutive years, it proudly holds the title of the world's largest corporate purchaser of renewable energy, reflecting its steadfast dedication to transitioning to cleaner energy alternatives.
The company's teams analyze routes and distances to optimize its logistics operations to develop a more efficient system for delivering packages to customers. This approach aims to streamline delivery times while minimizing emissions, thus reducing the overall environmental impact of the company's operations.
Another significant step towards electrification involves the company's ambitious plan to introduce 100,000 Rivian electric delivery vehicles into its fleet by 2030. In 2022, Amazon had more than 9,000 electric delivery vehicles in its global fleet, and EVs delivered 145 million packages in the U.S. and Europe. The company also deployed e-cargo bikes, scooters, and on-foot deliveries from micro-mobility hubs, including in New York City's Manhattan and 20 cities across Europe—from London and Paris to Marseille and Munich.
By transitioning to electric delivery options, the company aims to reduce emissions and promote sustainability within its transportation infrastructure significantly.
But Amazon is more than shopping; sustainability remains a top priority, even when viewers tune in to enjoy their favorite Amazon Original series. Behind the scenes, the company is actively implementing eco-friendly practices to reduce the use of fossil fuels in its production studios. This includes deploying battery-electric generators, utilizing solar-powered cast trailers, and increasing the adoption of electric vehicles on set.
Cloud computing, specifically through Amazon Web Services (AWS), also significantly minimizes both Amazon's and its customers' environmental impact. By shifting away from running their own data centers, which often consume excessive energy due to low utilization rates, customers can leverage the advanced engineering of AWS data centers. These data centers utilize highly reliable, secure, and energy-efficient hardware, contributing to substantial reductions in carbon footprints. AWS can potentially decrease customers' workload carbon footprints by nearly 80% compared to on-premises computing workloads. As Amazon aims to power AWS fully with renewable energy, this figure is expected to increase further.
Finally, Amazon takes an active role in addressing challenges faced by communities where it operates. Water scarcity is one such challenge amid growing concerns about unprecedented droughts worldwide. To make a positive impact, Amazon has pledged that by 2030, AWS data centers will return more water to communities than they consume in their direct operations, working towards mitigating water scarcity and contributing to the well-being of these communities.
For Amazon and any other business independent of size, embracing sustainability is not just about meeting immediate demands but a strategic move for long-term business viability. As governments and regulations evolve to address climate change and sustainability concerns, businesses that are proactive in adopting sustainable practices will be better positioned to thrive in a changing business landscape.
There is also a cost optimization opportunity. Sustainable practices often lead to increased efficiency and cost savings in the long run. For example, adopting energy-efficient processes and materials can lower operational expenses and reduce waste disposal costs, ultimately benefiting both Amazon and its suppliers. I am very eager to see the updated Supply Chain Standards requirement in the new year because by working with suppliers on sustainability initiatives, Amazon will foster innovation and collaboration throughout the supply chain.
Sharing best practices, technological advancements, and sustainable solutions can create a positive ripple effect, encouraging more suppliers to adopt sustainable practices and accelerating the industry's overall progress. An enhanced level of collaboration with suppliers will also allow Amazon to demonstrate its commitment to meeting the expectations of various stakeholders, from customers to investors, and aligning its values with theirs.
Disclosure: The Heart of Tech is a research and consultancy firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this column. The author does not hold any equity positions with any company mentioned in this column.