Amazon is one of the leading corporations in the world. Retailing and cloud are the core business areas that contribute a significant chunk of their revenue. However, their approach towards business operations has been shifting in the past five years or so. Amazon now spends heavily on sustainability. Amazon CSR activities offer a look into their approach towards the greater good.
Jeff Bezos started Amazon as an online marketplace in 1994. It was an era when he had to explain to people ‘what is internet’ even before explaining his business model. Fast forward to 2021, and it is the largest retailer in the world with a market capitalization of 1.625 Trillion USD. To put things into perspective, only ten countries in the world have a GDP of more than 1.6 trillion dollars.
Why should you even read about Amazon’s CSR activities?
The climate clock is ticking, and with each passing year, we are inching closer to the inevitable climatic decline. Businesses have been slow in sustainable practices. In this regard, it is important to note that business leaders have a lot of impact on smaller firms. Amazon is an interesting case for CSR for a variety of other reasons as well. Here are three key reasons why Amazon CSR activities are important:
- Business Leader’s impact on others
- A not so goody-goody story
- Emulatable role of Jeff Bezos in Amazon CSR activities
Business Leader’s impact on others
We started this discussion with the round-up of the gigantic market size of Amazon. A company of that size and influence does command imitation from other firms. One concrete example is ‘The Climate Pledge.’ When Amazon started this program in 2019, its goal was to align with the Paris Climate Accords. Paris climate accord states that companies should become carbon neutral by 2040. Amazons have been able to get on board around 107 signatories till 2021.
A not so goody-goody story
Although some firms had sustainability at their core from the very beginning, for instance, we have firms like Patagonia. However, Amazon has a non-linear story regarding CSR. Amazon was highly criticized at some point in time for its work culture and turning a blind eye to the environment. Their turnaround story is still in progress. Nevertheless, they have come a long way forward and have shown commitment to the triple bottom line. This non-linear storyline makes it an interesting business tale. They have transformed themselves by questioning the very premise of business processes. At times they were turning over new leaves to make their business more sustainable.
Emulatable role of Jeff Bezos in Amazon CSR activities
It has been discussed widely in the literature that the rule of top management is critical to the success of CSR. Jeff Bezos is an excellent example of the top management taking ownership of the CSR activities for a firm. He has also taken it a step further. Bezos has personally pledged to donate $2 billion to charity. However, he is also the only remaining person in the top five list to have not signed the giving pledge.
Read our detailed analysis of Amazon’s Corporate Social Responsibility (click here)
The backstory – one of the late adopters
It is ironic when a business leader is considered a laggard in a business area. Although Amazon was the largest online retailer, it was a very slow adopter of CSR. Firstly, they did not put enough effort towards sustainable practices. Secondly, they had some of the most horrendous work cultures. This came as a shocker to some, who assumed that silicon valley tech startups were the epicenter of warm and friendly work culture.
| Triple Bottom Lines | Performance | News Articles |
|---|---|---|
| Profit | ✔ | Investopedia, Jul 2011 |
| Fortune, 2021 | ||
| Poeple | ✘ | Recruiter Magazine, Aug 2013 accessed from Archive.org |
| The Verge, Apr 2020 | ||
| Planet | ✘ | The Guardian, Dec 2012 |
| CNN, Sep 2019 |
We can see from the above scorecard that Amazon has not been too keen on CSR activities. Even recent articles from top outlets have pointed out flaws in their work culture. They are still not a fully sustainable corporation. However, that being said, Amazon has been steadily moving towards a sustainable organization.
Commitment or PR?
Different people look at CSR from different lenses. If you ask an activist, CSR is a responsibility of every organization that they run away from. On the other hand, if you ask a CEO, they may look at it as a strategic tool. Even within an organization, there may be different executives who may or not consider it essential. One of the reasons for this disparity is the lack of ‘pull’ from the consumer side. While consumers want to indulge in sustainable brands. They often don’t.
Here comes the opportunity for firms to act upon two dimensions:
- Doing the bare minimum and still taking advantage of the sentiment towards sustainability
- Pledge to make significant changes. These changes require an extensive reinvention of the corporate wheel
Amazon’s approach to CSR activities
Most of the firms take the first approach as it is easier. In the case of Amazon, the recent trend has been towards the second approach. Here are some of the key commitments from Amazon:
Firstly, Amazon has committed to carbon neutrality by 2030. That is an entire decade earlier than the Paris Climate Accord. Also, Amazon has already incurred capex into electric mobility. They expect to have a total outlay of around 700 million US Dollars. This shall help them develop a fleet of about 100,000 electric vehicles in their delivery system. We can already see the deployment of autonomous vehicles on a large scale within the Amazon warehouses. On one hand, it helps reduce the costs, on the other hand, it may also reduce the workload of the workers.
Secondly, Jeff Bezos has been eloquent about climate commitment. When statements about Amazon CSR activities come from the horse’s mouth, it adds a lot of credence. They have developed an in-house system to manage carbon credits. Finally, Bezos has also announced a climate and sustainability bond of a billion dollars.
Amazon’s CSR activities & initiatives
1. Sustainable AWS cloud
While cloud computing itself is a green technology, eco-friendly clouds can further help the environment. For instance, the carbon footprint of AWS cloud systems can be up to 88% lower than on-premise systems. However, cloud computers can be made even more efficient by either of the two ways:
- Deploying more energy-efficient servers
- Using renewable energy sources
However, the problem is that the user adoption of green cloud energy sources remains low. Amazon’s VP of sustainability architecture, Adrian Cockcroft, said that their goal is to make their customers aware of the benefits of green cloud systems.
2. Promoting sustainable consumption
Amazon has a lot of tricks up its sleeve when it comes to influencing consumer behavior. Firstly, they employ promotions for eco-friendly labels during earth day. This year they offered between 15% to 25% discounts on products from select brands.
Secondly, they also encourage customers to buy Amazon renewed products. These products are nothing but certified refurbished ones. It takes little effort to find out that a significant chunk of any product’s life cycle goes into production. Companies that reduce their carbon footprint typically look at this aspect thoroughly.
3. Amazon Sustainability Data Initiative
The Amazon Sustainability Data Initiative is called the ASDI by the Amazonians. In essence, it is one of the enablers of CSR activities at Amazon. Amazon has created a team that looks into data analytics to promote sustainability. Data is the new driver of innovation. ASDI has been looking at using the rich data they already have and deploying it to process large data sets.
They have also been able to use their expertise in data analysis to help their clients. For example, ASDI developed a model to predict how solar energy can be captured better by solar panels for Solcast.
4. The protection of the rainforests
It is a clichéd phrase, but that does not make it any less accurate: rainforests are the lungs of our planet. One of the mega environmental challenges is the shrinking of rainforests. Amazon is part of an initiative called LEAF, which is a public-private coalition to protect the rainforests. LEAF could be among the most important among Amazon CSR activities.
Let us take a quick look into how this initiative works. One of the leading causes of deforestation is the demand for commercial oil production(palm oil), agriculture, and industrial land. The participants of this program attempt to reduce these requirements, therefore, reduce or eliminate the demand for land claimed from forests. On the other hand, the participating countries and companies also attempt to reduce pollution, thereby increasing the effectiveness of these rainforests and protecting them from issues like acid rain.
5. Environment-friendly air-transportation
Contrary to what some people think, the airline industry is not the mega villain of the environment. It accounts for only 1.9% of all greenhouse gas emissions. Nevertheless, even this small number is also significant. Mainly because the airline industry has been growing steadily for the past several decades. Also, a low polluting aircraft can serve a dual purpose for Amazon. Firstly, it wins some points as a part of Amazon’s CSR initiatives. Secondly, and more importantly, it also saves them the cost of transportation.
They are working with BETA technologies to develop a cargo aircraft. This aircraft would run on electricity just like the electric cars. Such an idea would not have been possible a decade earlier. However, there have been rapid developments in electric mobility, battery technology, and optimized power delivery. They are banking on some of these developments and building an aircraft. This aircraft even has a name, ALIA, and we can expect to see some public display of prototypes by 2025.