As Prime Day approaches, an A-Z of Amazon’s climate efforts
We all have a vested interest in this behemoth's climate strategies succeeding.
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By Justin Sharon
(Justin Sharon is a longtime freelance writer. After working at Merrill Lynch for many years, he transitioned to financial journalism. Among other subjects, he also authors a monthly column about British soccer.)
NEW YORK (Callaway Climate Insights) — In May 1997, the month I joined Merrill Lynch’s equity research department, an obscure company that sold books on this newfangled “Interweb” thing went public. Adjusted for a quartet of subsequent stock splits, its initial offering price was a touch over seven cents a share. During the dot-com boom, I worked down the hall from Henry Blodget, the analyst who arguably did more than anyone on earth bar Jeff Bezos himself to put Amazon.com (AMZN) on the map with his seemingly outlandish prediction that stock in the unprofitable firm then often derided as “Amazon.org” would soon hit $400.
Somewhere in a parallel universe, I plonked down $10,000 worth of jingling money on the IPO. (A stretch, as a young Gen Xer whose career oiling the wheels of capitalism had barely just begun, but definitely doable. After all, this was the era when my fellow 20-something Friends Monica and Rachel could somehow afford to live in a luxury West Village apartment, terrace included, on a waitress’ salary).
The tech wreck, 9/11, Lehman Brothers, a Covid-19 crash, and assorted other calamities all came and went. Yet in my parallel universe I kept the faith and never sold, instead only cashing out almost a quarter-century later on Bezos’ final day as CEO. That ten grand? After increasing 179,184%, it was now worth about $18 million.
Accordingly, I’m writing this from the French Riviera, a locale W. Somerset Maugham once brilliantly described as “a sunny place for shady people”. (It is indeed hot, all the more so in an age of global warming, but the sultry temperatures are somehow made more bearable by the sea breezes aboard my luxury yacht).
Alas, back on planet Earth in the real universe I did absolutely none of this. As a result, I’m currently cursing sky-high air conditioning bills while sweltering in my shoebox-sized Manhattan apartment as we approach mid-July, statistically the warmest spell of the entire year in New York City.
Reflecting on this “sliding doors” moment from my long-gone youth — and watching the endless accumulation of cardboard boxes litter my lobby daily — has me pondering the environmental impact of all those deliveries from Amazon, whose very name pays homage to the world’s largest tropical forest.
It seems a particularly apt question to ask on the eve of Prime Day, Amazon’s seven-year-old annual shopping extravaganza for members that generated $11.79 billion in 2021 sales. Spanning 20-plus countries on five continents, the global bazaar brings a Black Friday ethos to peak summer, with some 250 million items purchased during last year’s event alone.
The misnamed Prime Day (this year, July 12 and 13) plays a key role in making the world’s largest online marketplace such a merchandise juggernaut.
Technically the event spans 48 hours, starting this year at the stroke of midnight Pacific Time on Tuesday. Which just happens to be the birthday of pioneering environmentalist Henry David Thoreau. How’s that for symbolism?
According to eMarketer, Amazon will account for 39.5% of all U.S. retail e-commerce sales in 2022, equivalent to approximately $1 trillion and more than five times what Walmart (WMT) brings in. As of February 2020, Amazon delivered 10 billion items per year, a figure which soon came to seem quaint following the subsequent pandemic-fueled acceleration of online shopping.
Earlier optimism over the Internet retailing model, with one MIT study in 2013 suggesting that “clicks” would be more environmentally friendly than “bricks,” has given way to a more muddled reality. In addition to all those corrugated boxes and single-use items ultimately headed for landfill, Amazon’s diesel-fueled trucks and considerable data center footprint have all raised climate concerns.
The marine conservation group Oceana reported that Amazon’s plastic packaging waste jumped to 270,000 tons during lockdown, with much of its air pillows, bubble wrap, and envelopes destined to end up in the ocean. Greenpeace, for its part, has taken the firm to task for the heavy carbon footprint of its cloud computing centers in Virginia.
Amazon’s latest sustainability report revealed its carbon emissions rose 19% in 2020.
Ironically, the long-planned publication was released in late June 2021, the very week that the company’s headquarters endured a brutally oppressive heat dome. The mercury in Seattle hit a record high of 108°F. amid a broader baking of the Pacific Northwest.
This increased carbon footprint didn’t prevent MSCI from raising Amazon’s Environmental, Social, and Governance (ESG) rating from BB to BBB amid the pandemic. That’s still a less-than-stellar score, though, and Amazon has attracted the ire of some climate activists over the years, not least for the accountability of its metrics that are often voluntary and heavily reliant on self-disclosure.
Climate advocates have accused it of being insular, reactive, and overly enamored of relatively opaque data, especially those involving international third-party sellers. In 2016, the Carbon Disclosure Project (CDP) gave Amazon an ‘F’ rating following several years of refusing to participate in its surveys.
By contrast, Apple (AAPL), Google parent Alphabet (GOOG), and Microsoft (MSFT) all got ‘A’ grades.
Amazon’s own employees have joined climate change marches in San Francisco, demanding greater urgency from the company on the issue. Earlier this year, the NewClimate Institute disparaged the company’s “low-integrity” climate pledge. And in May, Amazon shareholders rejected a resolution which would have required the retailer to disclose its plastic packaging footprint.
To be sure, Amazon would contend that its commitment to the climate amounts to much more than merely hot air. The retailer, already the world’s largest purchaser of renewable energy, aims to generate 100% of its power from such sources within three years. It has vowed to be completely net zero by 2040, fully a decade ahead of the goals set by the Paris Agreement, and has contracted with EV startup Rivian Automotive to produce 100,000 electric vans by 2030. The Amazon Wind Farm Texas adds more than 1,000,000 megawatt hours of clean energy to the grid annually, and the company also has a solar presence in several states.
In calling climate change “the biggest threat to our planet,” Jeff Bezos has committed $10 billion to address the issue via the Bezos Earth Fund. Amazon’s founder, whose voting control still amounts to some 12.7% of outstanding shares, took to the stage at the COP26 summit in Glasgow last year to pledge $2 billion towards nature conservation.
Just this month, Amazon announced it will deliver packages by e-cargo bikes and on foot for the first time in the UK. Its new micro mobility hub in London is part of an overall alternative energy initiative aimed at reducing reliance on diesel trucks and fossil fuels.
The turbocharged pandemic-era boom may be ebbing, in tandem with Amazon’ stock price in 2022, but online shopping will only become more ubiquitous over time.
Indeed, Amazon is purportedly planning its first ever “Prime Fall” event this autumn.
Love or loathe this uniquely polarizing company, anyone who harbors genuine environmental concerns has a vested interest in Amazon’s climate efforts succeeding. It is simply too big to fail.