The world is in an interesting place right now related to the environment. Simultaneously, the debate rages on in the digital town squares, we are experiencing heat waves this summer, and the EU is trying to go greener yet held energy hostage by Russia’s natural gas. OK, maybe environmental interesting equals environmental chaos right now. Public companies have recently taken a leadership role to help drive and execute environmental agendas, hoping to bring some stability to the chaos.
Companies like Amazon get a lot more scrutiny for its sustainability reports given its marketplace success as the #1 IaaS (Infrastructure as a Service) provider with its giant hyper scale datacenters and as the world’s largest etailer with hundreds of distribution centers connected by fleets of package delivery trucks and planes.
As I have written before, Amazon has a track record of environmental leadership and innovation. I wanted to take this opportunity to hit the highlights of its 2021 sustainability report related to its environmental actions.
Net-net, in 2021, the company grew its business and capabilities considerably while increasing its carbon footprint at a much lower rate.
2021, A year of exponential growth and change
My company, Moor Insights & Strategy, analyzes many parts of Amazon. Amazon’s 2021, to say the least, was a year of growth that, quite frankly, helped the world live better with Covid.
During Covid, we didn’t want or couldn’t go shopping in a physical store, and many of us shopped at Amazon and had everything delivered from food to game consoles to our homes. We watched Amazon Prime videos at home on Fire TVs. In their time of need, many businesses turned to AWS for help to instantly scale and transform their capabilities related to remote work and commerce.
What seemed like magic wasn’t. It came from quick decision-making and massive investment in people and facilities.
Simultaneously, in 2021, Amazon added 750,000 employees, doubled its package fulfillment network, increased package deliveries by 500%, according to the WSJ, and increased AWS revenue by 37% across the globe. I have worked for large companies previously, and I can tell you that this growth at one time is a miracle.
Carbon footprint grows 18%
Not at all shocking with all of this growth, Amazon grew its carbon footprint by 18%.
While some will focus on the carbon footprint growth percent, I think it’s more logical to look at the carbon efficiency.
Amazon increased packages by 500%, its fulfillment network increased 200%, workers increased 100%, AWS grew revenue by 37%, and while carbon footprint increased by 18%.
The company cited that “carbon intensity,” emissions compared to revenue, decreased by 1.9%. I think Amazon’s use of carbon intensity is good but may not tell the whole story I tell about carbon efficiency.
Net-net, Amazon created exponentially more output with a comparatively slight increase in carbon footprint.
How Amazon did it in 2021
So how on earth did Amazon accomplish this? It’s a long list of many things that add up to efficiencies.
One way was the kind of power it procured. Amazon achieved the distinction of being the world's largest corporate purchaser of renewable energy in 2020. According to the 2021 report, renewables now power 85% of the energy Amazon uses across its businesses, and 115 of its distribution centers have solar panels installed that can deliver 80% of the building’s energy needs.
Another was the kind of transportation it used. The company expanded the use of its zero-emission transportation efforts, sharing that it delivered over 100 million packages with zero-emission vehicles (such as electric delivery vans, cargo bikes and on-foot deliveries) in 2021. I am unaware of any other company delivering more packages with zero-emission transportation. Amazon aims to make 50% of its shipments net-zero carbon by 2030.
The company also helped consumers find and buy greener products. It tripled its Climate Pledge Friendly products from 75,000 to 250,000 and shipped 370 million units in the US and Europe.
Finally, the company has eliminated over 1.5 million tons of packaging since 2015 and reduced per-shipment packaging weight by 38%.
Many initiatives done at the same time in 2021 made a big difference.
While the trajectory of this article is about 2021, I’d be remiss in not citing that the company isn’t satisfied with where it is today related to the environment. It knows and wants to do more.
Kara Hurst, Vice President and Head of Worldwide Sustainability at Amazon, said it like this, “We continually seek ways to challenge ourselves and improve how we deliver for our customers, support our employees, and accelerate the pace of innovation. This mindset is ingrained in our culture, so every day, we apply the same relentless pursuit to delivering progress on our sustainability commitments.”
Likely the most well-known of Amazon's longer-term sustainability initiatives is "The Climate Pledge," cofounded with Global Optimism, a private business dedicated to combatting the climate crisis. The 2021 report shared that over 300 companies and organizations worldwide have joined the commitment to become carbon neutral by 2040, a full ten years ahead of the timeline put forth by the Paris Agreement. According to Amazon, these signatories span 51 different industries across 29 countries, demonstrating the many angles the Pledge is attacking the issue.
To hit this goal, Amazon is making some big moves like ordering 100,000 Rivian delivery trucks, making $2B investments in companies to innovate and productize new kinds of green energy, greener transportation, and utilizing greener building materials. It has 274 renewable projects announced worldwide as of the end of 2021, which is impressive. At AWS, the company is expanding its line of energy-sipping Graviton processors that claim to consume 60% less energy at the same performance level. I expect the company to extend these power-sipping capabilities to AI inference and training with Inferentia and Trainium lines of processors.
I recommend reading pages 10-13 of the report to get even more details on what is next.
To meet the Covid challenge head-on in 2021, Amazon invested exponentially in people, buildings, and equipment to deliver the massive influx in goods and services both consumers and businesses needed. Whether you look at carbon efficiency or carbon intensity, Amazon dramatically improved its carbon standing and deserves credit. Amazon didn’t take a bow in the environmental section of its 2021 sustainability report but focused more on how it will improve even further which says a lot how it looks at its environmental responsibility. You can check out the report here.