Enhanced transparency in emissions reporting: An inspiring contrasting example
Amazon, a global powerhouse with over 1.5 million employees, has committed to achieving net-zero carbon emissions by 2040, 10 years ahead of the Paris Agreement targets. This ambitious goal is part of the company's co-founded initiative, The Climate Pledge.
Despite this commitment, Amazon's overall carbon emissions rose by 6% in 2024 to 68.25 million metric tons, primarily due to increased data center activity driven by AI expansion and emissions from its delivery fleet. This marks the first year-over-year increase in emissions since 2021.
The company's strategy to combat this trend includes significant investments in clean energy. Amazon aims to match 100% of the energy used by active smart devices like Echo and Fire TV with renewable sources. The company also plans to deploy over 31,400 electric delivery vans made by Rivian globally and promote Climate Pledge Friendly products, with over 1.7 billion listed.
Amazon also encourages its suppliers to align their climate goals with its own and collaborates on nearly 20 joint action projects with other Climate Pledge signatories to tackle decarbonization collectively.
Comparatively, other global technology giants such as Microsoft and Google face similar challenges with rising emissions due to AI-driven data center energy demands, but all remain committed to their respective net-zero targets by 2030 or 2040.
While Amazon's emissions have increased in absolute terms, the company reports reductions in carbon intensity per shipped unit by roughly one-third since 2019. Amazon acknowledges that the path to net-zero is complex and non-linear, emphasizing ongoing investment and innovation as keys to progress.
Amazon's annual Sustainability Reports detail the measures the company is taking to transform nearly every aspect of its operations and value chain. The reports are comprehensive, covering environmental, community, human rights, and supplier diversity impacts in impressively granular terms.
However, the 2024 Amazon Sustainability Report is not easily accessible on the main Amazon.com corporate investor relations website. The placement of these reports on a separate site may give the impression that Amazon is trying not to draw too much attention to its commitment to sustainability.
The example of Amazon, together with other companies like Shell and TotalEnergies, illustrates the wide variety of ways that TCFD reporting, net-zero goals, and "decarbonisation pathways" are being interpreted and presented by global companies. Robust, independent assessments are needed to distinguish between issuers that are walking the walk versus those employing accounting wheezes or providing misleading accounts of progress towards net zero.
Market dominance could become a force for good if it helps to embed better industry standards throughout the global supply chain. It is reassuring to discover that a growing list of companies, large and small, are adopting similar sustainability practices.
However, asset owners, investment managers, and advisors cannot always rely on company claims and presentations, and need to exercise healthy scepticism towards claims about decarbonisation, sustainable practices, and external ESG ratings. TCFD reporting risks becoming a time-consuming exercise of limited value if it does not reflect real-world facts on the ground or in the air.
The example of charities taking TotalEnergies to court in Paris serves as a reminder to call out issuers engaged in questionable or misleading practices. As we navigate the complex landscape of corporate climate action, it is crucial to maintain a critical and informed perspective.
- Amazon's increasing emissions, driven by AI expansion and delivery fleet, highlight the challenges faced by global tech companies in achieving net-zero targets, as seen with Microsoft and Google.
- Amazon's commitment to match clean energy use with renewable sources and deploy electric delivery vans globally demonstrates the company's efforts toward reducing its carbon footprint.
- Asset owners, investment managers, and advisors must exercise skepticism when evaluating claims about decarbonization, sustainable practices, and external ESG ratings, as robust, independent assessments are crucial in distinguishing genuine progress.
- The detailed Sustainability Reports published annually by Amazon provide a comprehensive understanding of the measures taken to transform various aspects of its operations and value chain, but these reports are not easily accessible on the main corporate investor relations website, possibly giving an impression of downplaying its commitment to sustainability.
- The examples set by companies like Amazon and TotalEnergies in their approaches to TCFD reporting, net-zero goals, and decarbonization pathways underscore the need for transparency and accountability in corporate climate action, with charities taking legal action against companies engaged in questionable practices serving as a reminder of the importance of maintaining a critical and informed perspective.
