Urgent actions — major investments and innovations — are needed across virtually every business sector to respond to climate change. In September 2019, Amazon and Global Optimism co-founded The Climate Pledge, a commitment to reach net-zero carbon emissions by 2040 – 10 years ahead of the Paris Agreement.
Reaching this goal means measuring emissions, setting aggressive reduction targets based in science, and investing in transformative decarbonization solutions. Amazon joined the Science Based Targets Initiative (SBTi) to align our decarbonization goals with the best available science, and measures and reports carbon emissions following the GHG Protocol and an independent verification process.
The most aggregate metric used to report emissions is total — or absolute — emissions. For a complex company like Amazon, even this “absolute” metric is complicated to calculate. And the aggregate, company-wide carbon number does not tell the full story of the company’s performance, or provide the insights needed by businesses and individual teams to drive decarbonization initiatives. To help gain deeper insights, Amazon also tracks carbon intensity per dollar of gross merchandise sales (GMS), and more detailed metrics for individual business units.
High-growth companies such as Amazon need to measure their carbon intensity to track, in detail, whether they are making the right investments needed to decarbonize a business, and to decouple their business growth from greenhouse gas emissions. As companies invest in new products and services, the metric should not be whether the company’s footprint simply shrank, but whether and how fast it is lowering its carbon intensity and decoupling business operations from carbon emissions.
A recent whitepaper by Miguel Jaller, associate professor of Civil and Environmental Engineering at UC Davis, and Scott Matthews, professor of Civil and Environmental Engineering at Carnegie Mellon University, provides important insights on the importance of carbon intensity metrics, particularly for high-growth companies:
“For high growth entities, tracking carbon intensity of overall activity, or for key components, may be a critical part of analyzing progress towards meeting reduction goals. During periods of fast growth and innovation-driven market disruption, carbon intensity improvements may be expected to catch up to or outpace economic growth, and result in net total emissions reductions. In most cases, fast growing companies are not tied to legacy systems and infrastructure. This offers the opportunity to focus investments in new processes, assets, systems, and infrastructure that can achieve substantial intensity reductions at lower costs, with minimal disruptions to day-to-day operations. These new technologies and business models help achieve direct and internal improvements, and may provide system-level benefits as they allow substituting entire processes (e.g., traditional shopping) with more efficient ones (e.g., online shopping). They may also enable behavioral changes that further help decarbonization efforts.”
The whitepaper explains the relationship between developing complementary absolute and intensity metrics, and how together they enable the transition to more efficient processes:
“Carbon intensity-based targets can also enable innovative improvement pathways, as efforts can be spent identifying efficient processes or making the necessary changes and upgrades to existing processes to reduce their intensity. For example, replacing grid electricity with renewable electricity in a building will reduce its carbon footprint. This is a great outcome, but if the building can also be redesigned through the use of innovative technologies to increase revenue in a subsequent year, the footprint would remain unchanged, but the intensity would continue to decrease. The same is true for the use of fleet vehicles, which can be decarbonized to reduce the overall footprint, but can also have delivery routes better optimized to reduce intensity. If packaging volume can be reduced, total emissions decrease, and if more packages can fit in a vehicle, then intensity is further reduced. Making such systems more efficient can have further overall benefits to financial and carbon performance, but those efficiency gains might only be recognized with intensity-based metrics.”
As Jaller and Matthews argue, we need companies and countries to continuously lower carbon intensity per unit of economic activity. And we need better ways to evaluate investments in the low-carbon technologies and infrastructure needed today to get to net-zero carbon by 2040.
Amazon releases 2020 sustainability report
Amazon's 2020 sustainability report, released today, details the company's progress in measuring and reducing the carbon intensity of its business operations. Amazon's overall carbon intensity decreased 16% in 2020. Read the full report.
Amazon’s 2020 sustainability report shows the start of this progress towards measuring and reducing the carbon intensity of business activities, following a number of investments in large-scale decarbonization initiatives (such as electric vans). Amazon’s overall carbon intensity decreased 16%, from 122.8 grams of CO2 per dollar of GMS in 2019 to 102.7 grams of CO2 per dollar of GMS in 2020. This year-over-year carbon intensity comparison reflects early progress to decarbonize operations as the company continues to grow and invest in innovations.
It is still early days in our sustainability journey. And there are still a number of technical challenges for which no single company has an answer. Amazon will continue to look to academics like Jaller and Matthews for insights into these technologies and measurement challenges.
As Amazon continues to decarbonize operations and accelerate toward The Climate Pledge commitment, it will be critical to continue to engage the latest science to create actionable metrics for target setting, investment decisions, and accountability on bending carbon curves.
If you would like to learn more about Amazon’s carbon methodology, please visit our Sustainability reporting website.
