Amazon Clicks on Supply Chain Scope 3 Emissions.
Author: Peter van Dijk, Chief Sustainable Finance and Policy Officer, Canada's Forest Trust
The landscape of corporate environmental responsibility is about to experience a seismic shift, with Amazon, the e-commerce titan, leading the charge. In a move that underscores its commitment to a more sustainable future, Amazon has announced it will require its suppliers to report on greenhouse gas emissions starting in 2024. While few details were provided, Amazon’s Vice President of Worldwide Sustainability, Kara Hurst stated: “We’ll use our scale, investment, and innovation to provide tools and resources to help [our suppliers] reach their goals—whether that’s transitioning to renewable energy or accessing more sustainable materials.”
If successful, Amazon’s impact could be transformational.
Amazon’s empire was built on a logistics network capable of moving items worldwide as fast and cost-efficiently as possible. Today, the company is estimated to generate $26.6 million an hour! Amazon is a business without precedent in the history of capitalism, and its power to shape the world is unrivalled. Amazon’s announcement also indicates the company’s ongoing commitment to meeting the goals of the Paris Agreement 10 years ahead of schedule, as outlined in its Climate Pledge. It sends a powerful message to the corporate world, emphasizing that environmental responsibility is not just about internal practices but extends to the entire supply chain, specifically targeting the most challenging category of emissions.
By all accounts, Scope 3 emissions are the most challenging to measure and address.
Emission scoping emerged from the 2001 Green House Gas Protocol, dividing emissions into three categories – Scope 1, Scope 2 and Scope 3. Scope 3 encompasses those emissions not produced by the company itself, nor are they the result of activities from assets owned or controlled by them but by those up and down its value chain. Deloitte estimates that for most businesses, Scope 3 emissions account for more than 70 percent of their carbon footprint, and yet, they are most often outside a company’s direct control. These types of emissions arise from the extraction, manufacture, and processing of raw materials and those produced by customers using the company’s products. Globally, companies need to cut emissions across all three scopes to meet internationally agreed targets on global warming.
Amazon has an outsized influence on global markets and, therefore, has a massive impact on the world’s transition to a green economy.
Amazon’s announcement sets in motion a critical ripple effect, transforming how businesses of all sizes operate, with a particular focus on those companies that form part of Amazon’s vast and diverse supply chain. The onus will now be on suppliers to track, record, and report their carbon emissions, underlining their integral role in the fight against climate change. Although this new directive will likely present challenges in the short term, especially for small and medium-sized enterprises, it also allows these organizations to demonstrate their commitment to sustainable practices. By aligning with Amazon’s vision for an eco-conscious future, suppliers will contribute to a global cause and gain a competitive advantage in an increasingly eco-aware market.
If Amazon created a world where “one click” can deliver the world to our doorstep, can they also help shape a world where consumers are able to click our way to a better future?
More than just an administrative protocol, Amazon’s 2024 emissions reporting requirement represents a pivotal move towards comprehensive corporate sustainable business practices. Its influence provides a major impetus for suppliers to adopt greener practices, which, when added together, will be a major and very necessary step forward in the collective fight against climate change.
