Countries across the globe are becoming very specific about the reporting standards. This is essential in the case of accounting for carbon credits as well. The environmental aspects are an integral aspect of financial reporting now. It is no longer a question of whether firms should do it but the question is that of how should they do it.

Although the big four accounting firms have their standard practices, the onus is there on the governments to make provide a standard. However, the accounting standards are yet to provide clear guidance in this regard. Therefore, we observe a lack of parity when we compare companies that are reducing their carbon footprint.

A Quick Introduction to Carbon Credits

One of the dark sides of economic growth is the damage it causes to our environment. There was a growing debate about measuring this damage, which leads to the development of carbon credits. The Kyoto Protocol came into existence in 1997. It extended the scope of the United Nations’ Framework for Climate Change. The objective was to ensure that countries actively participate in reducing their Green House Gases (GHG) emissions.

Therefore, the concept of carbon credit was created. Carbon credit refers to a tradeable certificate that allows an entity to have one ton of CO₂ emissions. Now, it is also important to note that when we are talking about CO₂ emissions, it also includes the equivalents. For example, a manufacturing plant may produce other gases like methane which can be converted to equivalent CO₂ emissions.

The Kyoto Protocol provides practical ways to reduce the overall GHG emissions of the world. One of the ways of reducing carbon emissions is by reducing the GHG emissions in a country where it is easier or cheaper. For instance, it may cost a Japanese country USD 100 million to reduce GHG emissions in its plant in Kyoto. However, it can pay USD 40 million to a manufacturing plant in Vietnam to achieve the same results. Similarly, on a country level, let’s say China produces an excess carbon in the year 20XX. They can purchase the same amount of carbon credit from a country that has less carbon emission.

⚡  NOTE ► Scopes of emissions

Companies like Facebook or Airbnb may not have factories or manufacturing plants that create greenhouse gases. These companies may not have this type of environmental impact called ‘direction emissions’ or they may have very small direct emissions. Nevertheless, they may still have indirect emissions. Therefore, they are also bound by the regulatory requirements. For instance, Microsoft extensively works on its CSR activities to ensure that they are not just compliant but also proactive in sustainability. Similarly, Amazon’s CSR reporting ensures that they assess their direct as well as indirect activities. A study on Airbnb stays in Sydney revealed that the indirect emissions would be significant for the firm. They estimate that each stay generates anywhere between 44 to 46 kg of CO2.
Greenhouse Gas Protocol posits these three scopes for emissions:
Scope 1: Direct emissions from sources owned by the company
Scope 2: Indirect emissions that result from the purchase of energy
Scope 3: Emissions as a result of the upstream or downstream activities in a company’s value chain.
It is most difficult to work on accounting for carbon credits for the scope 3 emissions.

The carbon transactions

Let us understand this concept from scratch by taking a simplified example of two firms: Cherry LLC and Pineapple LLC. These are (fictitious )large multinational corporations based in Northern New Jersey. Both provide Software as a Service (SaaS). However, they have very different approaches to energy usage.

Cherry is an older company therefore uses older servers, and draws all of its electricity from the power grid. Around 57% of the power comes from natural gas. Therefore, it indirectly contributes to significant carbon emissions. Let us say it emits 100 tons of CO₂ equivalent (also called eCO₂t).

On the other hand, Pineapple set up its servers recently and invested $20 million in renewable electricity plants. They end up emitting about 20 tons of CO₂. Let us say that local emissions regulations require them to stay within 80 tons of CO₂ equivalent for a year. In this case, Cherry will purchase 20 carbon credits from Pineapple and maintain the requirement.

Accounting Methodology

Although accounting methodology may vary from the practices of a particular geography, we have attempted to provide an overview of the standard practices:

Carbon Credits accounting at PwC

PricewaterhouseCoopers is a leading accounting and consulting firm. They are among the big four accounting firms. Therefore, it is pertinent to understand their functioning and prerogatives in the context of carbon credit accounting. PwC sustainability accounting consists of the following aspects:

• Understanding the client requirements
• Client assessment through an internal audit
• Preparation of the reports in accordance with the local regulations
• Life cycle assessment of the products, processes, and services
• Consulting in the improvement of sustainability practices

Summary steps of CER accounting from PwC:

1. Define the scope of business operations
2. Establish the organizational boundaries
3. Categorize scope 1, 2, and 3 emissions
4. The reporting process is developed
5. Data analysis and preparation of reports
6. Assessment of energy and emissions
7. Report preparation

Accounting systems for IFRS

IFRIC 3 and its withdrawal

The International Financial Reporting Standards (IFRS) are global accounting standards provided by the International Accounting Standards Board or IASB. IASB is non-profit organization that develops reporting standards that are standardized across the world. This provides an easy, understandable and enforceable mechanism. Way back in 2004, they intended to offer a standard that could standardize the carbon credit reporting. The figure below shows their objective for introduction of the IFRIC 3 which encompassed a vast array of schemes as shown in image below.

Current state of sustainability at IFRS

However, they met with resistance and criticism and they had to withdraw IFRIC 3 in 2005. You may read about IFRIC 3 and subsequent standards here. However, they continue to look into the carbon and emission reporting systems. IFRS has proposed to establish a separate board for sustainability to look into these matters. Inclined readers may wish to download and read the consultation paper on sustainability reporting from IFRS from this link.

Guidance note on Carbon credits from ICAI

The Institute of Chartered Accountants of India, has added a section on accounting for Carbon Credits. It is reflected in the final year syllabus of the program. This is a welcome change as the future accountants are expected to be abreast of environmental accounting. This will also prepare them for specialization into reporting and governance requirements.

ICAI has an accounting standards board. They have developed the standard for carbon accounting (31-GN-CER). You may view the pdf of the guidance note via the ICAI website. It is based on the Self-generated Certified Emissions Reductions or CER. This saleable certificate is nothing but a legally binding contract note for carbon credits in the same unit we discussed earlier (tCO₂e or tons of CO₂ equivalent). These come under the Indian Accounting Standards IAS 26.

The GN 31 specifies the following (pg 450):

• The investments in technology that leads to emission reduction is reported as tangible assets under AS 10.
• However, expenditure on R&D is accounted as intangible assets and comes under AS 26.

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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:

1. Business Leader’s impact on others
2. A not so goody-goody story
3. 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.

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.

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:

1. Doing the bare minimum and still taking advantage of the sentiment towards sustainability
2. 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.

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The CEO of a large multinational corporation entered the conference room. It was fifteen minutes before the meeting was scheduled. They were about to discuss best practices followed by companies reducing carbon footprint. His secretary quickly switched on the air conditioner. It was on full blast. However, the room was still unbearably hot. “How much do we spend on our HVAC systems?” asked the  CEO. The secretary replied, “I don’t know the exact numbers, but I am sure that it accounts for a major part of our electricity bill.” “Then add internal carbon auditing to today’s agenda,” replied the CEO.

What is ‘carbon footprint’?

The term has become popular over the last two decades. Now, it is commonly used in any discussion related to the environment. It has become imperative since sustainability has become an essential part of corporate strategy. The most widely accepted definition of the carbon footprint comes from the concept of ecological footprint given by Wackernagel. The ecological footprint is the amount of gaseous emissions associated with human-induced production and consumption activities.

However, Wiedmann and Minx developed the most appropriate definition after a perusal of several academic and non-academic definitions. They conceptualized carbon footprint as ‘The carbon footprint is a measure of the exclusive total amount of carbon dioxide emissions that is directly and indirectly caused by an activity or is accumulated over the life stages of a product.’

Why is carbon footprint important?

It is pertinent that we understand carbon footprint from a business perspective rather than an evangelist’s. Firstly, the carbon footprint is the key to the assessment of inefficiencies in our business processes. Secondly, it is not just an obligation to society but also mutually beneficial. Most importantly, the companies reducing carbon footprint gain in terms of increased understanding of their processes.

Most importantly, we need to understand that carbon footprint analysis is like a new set of eyes. Something that can potentially help us look at our business processes. For instance, direct emissions account for only 14% of the total carbon footprint. However, including the energy input, we get to a figure close to 26%.  This approach helps us understand the inefficiencies hidden from plain sight. It can help us chalk out strategies that can potentially enhance profitability.

Critical areas of carbon footprint

There are three key approaches to reduce the carbon footprint.

1. Reduction of emissions
2. Supply chain footprint reduction
3. Supply chain footprint reduction

Reduction of emissions

Direct emissions are one of the significant sources of greenhouse gases in the atmosphere. Greenhouse gas emissions that due to human activity are called anthropogenic GHG emissions. Although there are natural sources that contribute to greenhouse gases, our concern is human-induced GHG emissions.

There are different approaches to reduce GHG emissions. These approaches are primarily driven by your industry and type of business activities. If you are interested in reading more, then you may check out these resources:

• Reducing industrial GHG emissions (source: Government of the Netherlands)
• Actions for individuals to reduce GHG emissions  (source: COTAP.ORG)

However, here are four common ways how companies reduce carbon footprint:

1. Replacing dirty energy with clean(renewable) energy.
2. Adopt a circular economy over the linear economy.
3. Process improvements that will result in lower emissions.
4. Entrapment and conversion of effluents into by-products

Offsetting of emissions

The concept of offsetting your footprint is simple. Let us consider a relatively simple example. Consider that you drive to work every day. Your commute has a carbon footprint (primarily but not limited to the fuel you burn). One approach is to reduce the emissions, where you switch over to cycling to work. Tada, now you do not generate any CO₂ (directly) when you commute to work. Problem solved. However, not everyone can cycle to work. In that case, what can you do?

The second approach is to offset or neutralize your emissions while still emitting the same amount of greenhouse gases. How is that possible? Here are the steps that you can do to ‘offset’ your emissions. Firstly, you calculate how much CO₂ your car produces when you commute. You find out that you generate x kg of CO2 per month. You estimate that you need to plant n number of trees which absorb x kg of CO2 per month. Therefore, you plant n number of trees. Now every month, your net contribution to the atmosphere is almost zero kg of CO₂.

Now, extend the same analogy to industries. Consider that you run a business. Therefore, you generate a carbon footprint due to your business activities. You can plant trees to offset your emissions. On the other hand, you could fund someone else who plants trees or does some other activity that reduces the greenhouse gases on your behalf. For instance, it would cost you about  $12 to offset a tonne of CO₂ in the United Kingdom. One of the examples of a service provider that can sell you carbon credits is Terrapass. They are a California-based startup working with clients worldwide. Therefore, companies reducing carbon footprint through an external vendor also help the environment.

Supply chain footprint reduction

A supply chain is essentially a network of suppliers and vendors that work together to manufacture, transport, store and distribute business goods in different stages. Each node of the supply chain has a carbon footprint. However, there are several ways by which you can reduce the negative effect of these activities.

1. Reduction of waste: the Toyota Production System posits that there are three types of waste, namely Material waste (Muda 無駄), Unevenness (Mura 斑), and the waste due to overburden on workers ( Muri 無理).
2. Process improvement: processes are inherently inefficient. One of the ways to reduce the footprint of the supply chain is to analyze the processes. This will help us find areas for improvement.
3. Developing stringent vendor management: Larger corporations have realized that the product’s footprint goes far upstream and downstream than just production. Most companies now require the vendors to disclose the source of materials. Some companies require their vendors to follow environmental norms and certifications.

Example of companies reducing carbon footprint

BMW (Automotive)

BMW has gained a reputation for being the most environmentally conscious automotive company. They built this reputation over the last decade. Firstly, they looked at their supply chain carbon footprint. They minimized transportation carbon emissions by over 40%. Most importantly, from switching over to renewable fuels in their delivery trucks.

Secondly, they have invested heavily in electric vehicle technology. Although, BMW is not the only company reducing its carbon footprint by going electric. They are not the only manufacturers attempting this transition. However, their goal is to ensure that half the vehicles they sell by 2030 are electric. You may read more about their commitment and goals in their reports and disclosures.

Microsoft (Software)

The Microsoft CSR program is a benchmark. They have a detailed, systematic strategy to reduce their carbon footprint by 2030. Further, the company claims that they shall neutralize all the carbon contributions. In other words, they shall remove the CO₂ generated from its activities since their inception in 1975!

Microsoft has developed a pathway to carbon neutrality:

1. Cut down the operational carbon emissions
2. Reduce the supply chain emissions
3. Avoid the offsets due to emissions
4. Proactively remove carbon impact

Lyft (Transportation)

Lyft is one of the largest cab-hailing apps in the world. It has committed to reducing the environmental impact in different ways. Firstly, they have planned to make all of their fleet electric by 2030. Nevertheless, this seems like an audacious goal—especially given their presence in many countries.

Firstly, this transition will help them achieve a zero-emission goal. Vehicles contribute a significant chunk of urban air pollution. Secondly, the transition to electric cars would reduce the operating costs for their drivers. Some of these cost savings may benefit the customers through cost savings.

Puma (Apparel)

The apparel industry’s environmental impact may not be as visible as automotive. Nevertheless, it is one of the highly polluting industries. United Nations Environmental Programme made the life cycle assessment of a pair of jeans. They found that a pair of jeans takes about 3781 liters of water in the entire lifecycle. Consequently, each pair of jeans has a carbon footprint of about 33 kg of CO₂. On the other hand, it generates about 24 kilograms of CO₂ for driving a car for 100 kilometers. (footprint of driving a petrol car for 100km (62miles) at the fuel economy of 16.66km/l (37mpg))

Puma is a breed of environmentally conscious companies. Companies that take bold action and set the trend for others. In a bold move, they disclosed their carbon footprint for products. They are laying the environmental impact of their products out in public. Most importantly, they are committed to reducing the impact of their leather products that seem to have the highest carbon footprint. They estimate to cut down their carbon emissions by over 35% by 2030.

Amazon (Retail & Software Services)

In this article, we barely scratch at how these companies are reducing their carbon footprint. However, I have handpicked all of these examples to ensure they represent companies that have set a reference point for others. Finally, we take a look at the largest retailer and service giant, Amazon.

 One of the differentiating factors for Amazon is that they have already achieved some of their environmental goals. They have reduced the carbon footprint of their packaging. They have committed to reducing the carbon footprint of their supply chain by 2030. Amazon plans to go carbon neutral by 2040. Their journey towards reducing the carbon footprint has been difficult. It is more difficult for high-growth companies to make this transition. However, Amazon cut down its carbon emission intensity by 5% between 2018 and 2019.

Going forward

The average global temperature is rising. There is an ocean of evidence(no pun intended) that demonstrates the rising sea levels, shrinking glaciers. We can no longer debate whether there is global warming. Every other year, we see sweltering summer temperatures breaking previous records. The record-breaking temperatures of July 2019 were broken by May 2020. It is high time we measure our environmental impact. Measure it deeply, and act upon it. After all, what gets measured gets managed. Here are 3 simple methods for eco computing to further reduce your carbon footprint.

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The No hunger SDG or sustainable Development goal looks at ending hunger as well as malnutrition in the world. United Nations Development Program has set a set of 17 SDGs to be completed by 2030. One of the challenges faced by billions worldwide, even today, is access to quality food. Another challenge is consistent access to food throughout the year. Let us take a deep dive and see how can we contribute towards the SDG goal 2 or the zero-hunger goal.

Aligning corporate strategy to zero hunger goal

Although the CSR spending has gone up over the last decade, we are not doing enough. One of the problems is that our CSR may not be aligned with real-world problems. UNDP has released a set of 17 sustainable development goals. In this light, it is important that firms align their strategy with these SDGs. Research has shown that CSR is not just a morally responsible activity, CSR is also profitable for the firms.

Firstly, any company that does CSR, should conduct annual CSR audits. This helps in making sense of the contribution and its impact on society. Secondly, corporates can ensure that keep aside some of the monetary donations towards organizations that feed the needy. Even in developed countries, there are non-governmental organizations that help in feeding the poor. Thirdly, larger companies can fund startups working in the nutrition and food space. There is still a funding mismatch between startups for the poor vs startups for the rich. The funding is highly skewed towards companies that come up with new technology or luxury products.

Best examples of CSR programs for No hunger SDG

The best way to contribute would be to increase the food production capacity. However, few firms can indulge in such practices. The same can be said about the reduction of food wastage. Firms have little control over this aspect, even within their organizations. Nevertheless, there is still a way to contribute towards reducing hunger. Firms can contribute a part of their earnings towards providing financial assistance. We have already discussed that there are numerous NGOs and startups working in this space.

The best thing about this SDG is that its contribution towards the no hunger SDG gives you instant results. Unlike other goals that take years for you to see any measurable results. Hunger is an everyday problem. You will have faster feedback about the number of lives impacted by your assistance.

Sacoma – an integrated food company

Sacoma got the award for best CSR initiative. They have been lauded for collaborating with farmers in Kenya. The farmers grow sweet potato which is used for developing healthy gluten-free snacks. They also provide basic training to empower the farmers. This kind of initiative helps more stakeholders. Their approach is sustainable throughout their supplier chain network. It helps poor farmers earn better and lead a more balanced life.

Hershey India – a fight against hunger

Hershey is one of the largest food corporations with a presence in many countries worldwide. Their Indian business unit, Hershey India developed a project that works towards the no hunger SDG. Moreover, their project is called ‘Project Poshan. Poshan is the Sanskrit/Hindi word for nutrition. Consequently, they have been active in providing free food through their programs. They distributed small packets of essential items like rice, lentils, dried vegetables. The best part is that they leverage their employees into the projects. This sense of giving back to society is also essential in keeping employees motivated.

Some NGOs and startups working towards zero hunger goal

Using Geoinformatics for smart farming

This may seem like a high-tech idea coming out of Silicon Valley. However, this is the work coming out of an agency in Thailand. The Geo-Informatics and Space Technology Development Agency (GISTDA) has developed technologies to tap into the geo-spatial datasets. These datasets help monitor agricultural lands. Thereby they attempt to increase the yield of the food crops.

Soil health improvement in Sub-Saharan Africa

Durham University is working on techniques to increase the yield of the soil. They predict that the productivity of the soil in Zimbabwe would decline by over 30% by 2050, mainly due to increasing land temperatures. They are researching ways to make the soil more draught resilient.

Fighting food wastage and surplus

Some firms are tackling food wastage head-on. An example is SpoilerAlert, which has created a marketplace for surplus food at a discounted price. Hungry Harvest is another company that is working with an interesting idea. A lot of fruits and vegetables get wasted because they look less attractive. HH collects such produce from farmers and delivers them directly to the customers.

The effect of Covid19 Pandemic on the No Hunger SDG

We witnessed the deadly pandemic of Covid19. The entire economy of the world was affected due to the effects of this coronavirus pandemic. However, the brunt of the pandemic was bourne head-on by the poor sections of the society. This pandemic is a grim reminder of our fragile food production and distribution system. This pandemic has pushed marginalized sections into the dark shadows of hunger and malnutrition. The pandemic has made it even more difficult for us to reach the no hunger SDG. The pandemic-induced food shortage has hit countries such as Afghanistan, Haiti, Chad, Bhutan, Bangladesh, and many others. Firms need to donate wholeheartedly to organizations that look at providing basic food and nutrition programs. This shall be an important step towards minimizing the impact of this pandemic.

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We have been doing focusing only on the profits or the single bottom line. It has been like this for a very long time. However, can we really continue doing business this way? Researchers have been pointing out that our sole responsibility to increase shareholder’s value limits sustainability. Here we take a look at the triple bottom line examples. Additionally, we highlight some cases that demonstrate how we should think about the triple bottom line. 

What is the triple bottom line?

Bottom line refers to a firm’s net income. Consequently, the bottom-line approach or single bottom line approach looks at optimizing the profit. The central driving force of this approach is profit and profit comes from continuous growth. On one hand we have create immense wealth for the nations. However, we have also been exploiting the planet for resources that drive this growth. Additionally, we have also neglected the humanist approach towards the wellbeing of people connected in this process chain. 

However, things have been changing since the turn of this century. We are entering a phase of business enlightenment. We have lived under the darkness of ignorance. Only recently we have started to look beyond the shareholders and owners. The triple bottom line posits that a firm look at the three Ps. This expanded vision would help make the business sustainable in the long run. The three Ps are: 

1. People 

2. Profit 

3. Planet 

Triple Bottom Line Examples 

Novo Nordisk 

The best example of the triple bottom line is the firm that pioneered in using this in their annual reports. Denmark based pharma Novo Nordisk started using triple bottom line in the year 2004. It was way before any other firm. They specifically mention their stand on the three aspects of the triple bottom line very clearly.  

This disclosure helps the firm in communicating its commitment to sustainability. You may read more in their annual report 2019. Key takeaways: 

1. Sections/chapters for ‘consolidated social statement’ and ‘consolidated environmental statement’ in the annual report.  

2. Maintaining the focus on delivering performance while managing the social ane environmental impact of their products. 

3. Commitment towards zero environmental impact 

Microsoft 

Microsoft is one of the largest corporations in the world. They have also been highly regarded for their efforts towards sustainability. Moreover, Microsoft’s corporate social responsibility is an excellent triple bottom line example. Microsoft uses the Global Reporting Initiative’s guidelines for their annual reports. Read our detailed article on Microsoft Corporate Social Responsibility here.  

We can also take a leaf from their workbook. They are quite innovative when it comes to working on sustainability. Here are some of their future plans: 

1. Use advanced technologies like artificial intelligence for environmental preservation.  

2. Optimizing their products to use less energy 

3. Investing in smarter mobility 

Amazon 

Amazon is another interesting case when it comes to the triple bottom line. Firstly, it is the world’s largest retailer. Secondly, they have a huge logistic footprint across the world. Thirdly, they are also one of the market leaders in terms of cloud computing. All of these factors make them in a position that is filled with responsibility towards their stakeholders. You may want to read more about Amazon Corporate Social Responsibility in our detailed article.

Some of the ways in which Amazon looks at the triple bottom line are: 

1. Reduction in packaging waste 

2. Optimization of their delivery fleet 

3. Reducing water consumption linked to their services.  

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Volkswagen is one of the most interesting case stories when it comes to corporate social responsibility. Their reputation was horribly ruined because of a mega scandal. What makes this a compelling case study is their fall to a disgraceful position and attempt at an image makeover. Should we take Volkswagen corporate social responsibility seriously? Let’s find out. 

The mega scandal (2008-2015) 

Volkswagen was mired in a controversial CSR scandal in 2015. It was the Volkswagen emissions scandal or the Dieselgate scandal. The company used defeat devices. The defeat device was essentially a mechanism to ensure two different modes of operation for their diesel engine. The device controlled the NOx output and therefore passed the emission testing with flying colors. On the other hand, it deactivated this pollution control and therefore it created 40 times higher NOx than the tests while on road.  

This was known to the highest-level executives of the Volkswagen Group. Subsequently, the CEO as well as Audi’s R&D head, were indicted. As a short term loss, their market value went down by a whopping 23% by September 2015. However, the total loss incurred by the company is estimated to be much more than US dollars. 8 billion. 

Overview of Volkswagen Corporate Social Responsibility 

It is difficult to summarize the entire CSR effort by such a large firm. However, we attempt to provide key points from their annual sustainability report. 

1. The company has declared that they are committed to the Paris climate agreement’s goal. The goal is to limit global warming to 2°. In order to achieve this feat, the company intends to reduce its carbon footprint. They plan to reduce greenhouse gas emissions for both passenger cars as well as commercial vehicles. Alternatively, the company is also investing in electric mobility. 

2.  The second important goal mentioned in their annual report is that they want to move towards a circular economy. A circular economy ensures that we take bare minimum resources from nature and reuse the products without dumping them back. The net effect of the circular economy is reduced carbon dioxide emissions. Secondly, it also reduces the overall water, an energy requirement for production. Thirdly, it eliminates or minimizes the waste and toxic materials that are dumped. 

3. Commitment to environmental compliance. This is one of the trickiest and most difficult aspects of CSR at Volkswagen Group. The company has looked at strengthening its corporate governance practices. Additionally, they have also put into place checks and balances to prevent such corrupt practices. They’re following the mantra of Prevent, Detect and React to act proactively on such cases. 

Current CSR philosophy at Volkswagen 

Is it all over, or it can be fixed? 

One of the most disheartening aspects of this entire scandal was the sheer level of corporate lying that was detected in the annual report. They were rated by the Dow Jones Sustainability Index as the 2015 best company for corporate sustainability practices. Even inside their annual report, they had mentioned that they were highly committed to sustainability, Environmental Protection, and social responsibility. However, that was their public face. Privately, they were indulging in extremely unethical malpractices resulting in a massive amount of toxic emissions. 

It is never ‘the end’ unless we give up. For instance, Nike is an example of CSR, disaster, and turnaround. There was a massive outrage against Nike’s system of shoe manufacturing. Consumers started boycotting products of Nike when it was discovered that some of the shoes were getting made in exploitative sweatshops.  

Volkswagen can take a clue from Nike to clean up its mess. In fact, they’re doing just that. Some of the ways in which Nike has turned around its CSR image are: 

1. Seeking professional help in auditing their production chain.  

2. Establishing industry standard practices for supplier selection.  

3. Becoming extremely transparent in reporting of these details in their annual report. 

The road ahead for Volkswagen Corporate Social Responsibility  

One of the first steps towards solving a problem is to accept the mistakes. Volkswagen seems to have done this step alright. The message on their CSR page reads: 

“When it comes to the emissions issue, we have failed to live up to our own standards in several areas. The irregularities in the handling of emissions tests contradict everything we stand for.” 

The company has been releasing Group Sustainability Report from the last several years. At the same time, they are following international CSR reporting guidelines. 

Volkswagen has also teamed up with Microsoft Germany to work together on sustainability initiatives. Microsoft Corporate Social Responsibility is highly regarded and this joint venture could help the Volkswagen group as well. 

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Eco computing is about reducing the impact of computing on the environment. However, are we not saving the environment already by replacing physical services with digital? Why do we really need eco computing in the first place? Also, how can organizations benefit by switching to eco computing? 

IT is an eco-enabler

The impact on the environment is measured through the carbon dioxide footprint. This CO2 footprint summarizes the net use of resources. For example, if we are running an office, then we are using certain resources like electricity, water etc. Overall, information and communication technologies lead to saving the resources. Therefore, they are lighter on the environment. 

Different ways in which it has reduced the carbon footprint: 

•  Reducing the need of physical travel by replacing the meetings with video conferencing. Also work from home reduces the commutes. Thereby saving on fuel, cost and time. Some of these benefits are enjoyed by the individual. However, firms also benefit. 
• Minimizing the use of paper. We all know that paper usually comes from trees. Consequently, less use of paper means that we need to cut down fewer trees.  
• Less demand for infrastructural electricity. Going digital and working remotely has other benefits as well. Firstly, we need less electricity for heating, cooling and lighting the office. Secondly, we need lesser energy for running equipment. Thirdly, the need for other support resources is also reduced. 

In spite of the benefits of computing, there is still a lot of room for improvement. 

The environmental impact of computing 

The power consumption of computing may seem trivial at individual level. However, the aggregate power consumption is quite high. In fact, the power consumed by IT systems is around 10% of the total power consumption of the world. Let us put things into perspective. There are only four countries in the world that account for more than 10% power consumption in the world: USA, China, Russia and Japan. 

Alternatively, we can evaluate the ecological damage using carbon footprint. The computing systems also accounts for around 2.5% of the total carbon footprint. Again, the number may seem difficult to interpret. The airline industry has a carbon footprint of around 3%. We have plenty of discussion regarding the negative impact of air travel. However, there is little discussion around eco computing. 

Finally, IT also creates huge amount of E waste. Some of the common pollutants present in the E waste are: 

• Metals like Arsenic, Cadmium and Mercury.  
• Plastics 
• Other non biodegradable materials. 

Challenges towards the eco computing 

There is a general consensus towards sustainable use of technology. We are not putting in enough efforts towards eco computing. Here are some of the challenges: 

• People are not aware of the impact. 
• It is also difficult to link people’s actions towards information technology to the outcomes. 
• Corporate commitment is lacking for eco computing 
• Senior management participation is also lacking. 

Implementing Eco computing in your organization 

There are several ways in which you can implement eco computing in an organization. Firstly, we can focus on the procurement process. New acquisitions can be evaluated for ecological considerations. Secondly, we can also optimize the existing processes. This will also reduce the environmental impact. Thirdly, we can also focus on developing a work culture that promotes environmentally friendly practices.  

1. Procurement practices  

2. Process optimization 

3. Work culture  

Procurement practices 

All technologies have a finite product life. We need to replace old IT devices every few years. This can be a great place to start the process. We can keep some simple concepts in mind to develop a greening strategy for IT procurement: 

• Follow eco standards for computing devices – certain ratings like Energy Star come handy in evaluating products that meet energy saving requirements. Also, power supply for servers and desktop computers have energy ratings. The best rating is the gold, followed by silver which is followed by bronze. Although prices are very steep for the gold rated; therefore, silver seem to be sweet spot. Also, the benefits are higher for systems with higher usage than idle times.  
• Total Cost of Energy (TCO ) – the computing infrastructure have two types of costs. Firstly, the acquisition cost. This cost is also a fixed cost. On the other hand, we also have cost of running these devices. This is the variable cost. The total cost of ownership considers both these factors. When we keep TCO as an evaluation criterion for procurement rather than the upfront cost, we tend to save more money. 

Process optimization 

We can also look into the processes to find places where we can cut down the environmental impact. An easy way to think about this would be through the 3R: 

1. Reduce – Train and educate staff about the benefits of saving energy. Put stickers that encourage people to switch off the computers before leaving. If you want to take things further, you may even incentivize such behavior. Alternatively, you may also penalize non-conformers. Even a simple mail from the seniors can provide good feedback. 

2. Reuse – Older computers can be reused in two ways. Firstly, you can repurpose them for auxiliary tasks. Older workstations are competent enough for regular tasks like working on word processors and spreadsheet programs. Secondly, you may take help of 3^rd party to resell the older devices. These land up on someone’s desk who may not have the privilege to purchase a new device. 

3. Recycle – finally, recycling can be a great way of looking at eco computing. Firms typically have an e-waste management strategy. You can connect with local authorities or seek help of vendors that specialize in e-waste. One major difference between reusing and recycling is that products that are deemed as not suitable for use are recycled. If they have a work life left and are being replaced due to obsolescence, then they should be reused.  

Work culture 

Senior executives can promote work culture favoring eco computing. Culture has very strong impact on the behavior of the individuals. It can play a major role in shaping computer usage. It is a myth that screen-savers save energy. In fact, it is just the opposite. Develop a work culture where you need lesser space, lesser cooling or heating. Also encourage employees to work from home.  

Another way to promote eco computing is to adopt work from home. There has been an increase in adoption of this practice since the Covid19 outbreak. This trend is expected to continue. However, firms also need to prepare themselves to cater to the infrastructure requirements. An investment into cloud computing saves energy and offsets costs.   

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Business is all about providing value to the customers. In some form or another, all businesses use natural resources to create value. Even service industries consume electricity. They also have other carbon footprints on the environment. However, the way, we are doing business, we are exploiting our planet. Our world may get irreversibly destroyed if we continue doing business as usual. Sustainably running businesses is the only way to ensure a viable future for our coming generations. In this article, we shall take a look at environmental sustainability in Business. Additionally, we shall also see how we can include it within the corporate strategy and satisfy the environment. All of this while still providing a return to the shareholders. 

Is environmental sustainability only an altruistic concept? (no, it’s also economic)  

We often think of environmental sustainability as an altruistic concept. After all, most business and strategic models, only talk about internal resources, customers, and competitors. The environment is given a secondary afterthought in most businesses. Companies take out some small fraction of their revenues and return back to society in the form of CSR. Out of this small fraction, a smaller fraction goes towards the environment.  

However, the situation is rapidly changing. A growing body of research suggests that environmentally positive businesses perform better. Klassen and McLaughlin have suggested that there are statistically higher returns for strong environmental management. On the other hand, there is also a negative return for weaker environmental management. Now, the question arises: what is the significance of these findings? In fact, it helps look at environmental considerations intently and more accurately. 

1. Data backed support for bringing in environmental discussion to the board room. 

2. Decide between different courses of strategic decisions based on their environmental outcome. 

3. Answer skepticism with results from firms.  

What is the problem?

At the core of this problem lies the incessant exploitation of nature. Right from the industrial revolution, we have been stepping up manufacturing. As the population of the world increases, we put increasing pressures on natural resources. There is a calculation based upon the different resources that we consume called the Earth Overshoot Day. This day observes the day of the year when we have consumed the resources that Earth produces every year. In 2019, the Earth Overshoot Day was on July 29th. This means that by July 29th, 2019, we had consumed all the resources that Earth was capable of producing in the entire year. In other words, it also means that we are actually borrowing some resources from the future years. 

However, due to the global pandemic of COVID-19 this year, the Earth Overshoot Day has been extended and it was observed on August 22nd, 2020. However, the problem still remains. There was a major dip in the amount of industrial activity. However, countries have started their production again. This means that over time, we may get back to normal(dangerously high) pollution levels. Also, we should note that businesses have started to look differently at direct environmental degradation. However, companies are yet to fully understand the impact of indirect emissions. We need widespread adoption of eco computing to reduce the carbon footprint further.

Environmental sustainability in business practices 

There are some common ways in which a firm can reduce its environmental impact. The first three points are about the 3R process. One of the ways of achieving sustainability is through reduction, reusing, and recycling. Points 1 to 3 talk about these practices. The second set of environmentally friendly activities are related to the Lifecycle Assessment (LCA) and the design of the products. These are listed as points 4 to 8. The third set of activities are related to accounting and finance. These are listed in activities 9 and 10. Finally, we come to the organization’s internal activities. Some of the important practices that can boost and one mental stability in business are through departments like HR and Strategy. 

Let us discuss some of these: 

1. Reduction of waste. 
2. Reusing critical resources. 
3. Recycling. 
4. Lifecycle assessment. 
5. Environmentally friendly design. 
6. Increasing product efficiency. 
7. Reducing supply chain carbon footprint. 
8. Replacement of conflict materials.
9. Sustainable accounting.
10. CSR expenses.
11. Sustainable HR practices.
12. Strategic sustainability.
13. Sustainable information systems.
14. Sustainable marketing. 

Reduction of waste 

We can increase firm performance by reducing waste. The concept of lean manufacturing also based reduction of waste. These measures are effective as long as we take them proactively. When we’re talking about the reduction of waste, the first thing that companies do is to reduce waste during the production process. Firstly, this waste is material waste. Secondly, energy consumption and other resources that are used during production. 

Reusing critical resources. 

One of the ways to minimize environmental degradation is to reuse what we can. Forms can use parts from previously recycled products. Also, they can use other recycled materials to create the manufacturing process. This goes hand in hand with that reduction of waste. 

Recycling 

Recycling has significant benefits for the environment. Additionally, it also helps bring the bottom line down. Firms can reduce their costs and hence their profitability. Additionally, it can also help the firm establish itself as a green brand. Investors tend to favor stocks that are from such companies. This is known as green investment. However, from a purely economic perspective, two it is beneficial for the firms. 

Lifecycle assessment 

I cycle assessment is about understanding the carbon footprint of a product. The entire lifecycle of a product is traced and we try to find out how much material and energy would be used. Lifestyle includes different stages like product development, manufacturing, distribution, retail usage, and disposal. Some of the key firms that have disclosed their lifecycle assessment are Puma and Apple. 

Environmentally friendly design 

This is the successive step after the LCA or lifecycle assessment. An environmentally friendly design is one that takes into consideration the carbon footprint of a product. Subsequently, the product is designed in such a way that its footprint is lowered. This can be done in several ways. One of the ways is the reduction of material. Secondly, we can minimize packaging. Thirdly, we can also reduce the impact on distribution and retail. Fourthly, we can make recycling easier for consumers. Another upcoming aspect is designing products for their usage.  

Increasing product efficiency 

Some of the products have major share of their carbon footprint during the usage phase. We can thereby make these products more energy efficient. An excellent example of this is the EU standard for network equipment like routers. The manufacturers have been mandated to make products such as routers that consume less energy when the product is not being used. 

Reducing supply chain carbon footprint 

All of the products will have some carbon footprint in their supply chain. There are different ways to reduce this carbon footprint. Firstly, the products can be made lighter. This includes both the product weight as well as the packaging rate. The reason for this is that it takes more fuel to transport heavier products than lighter products. Second, the supply chain path can be made shorter. Thirdly, eco-friendly vehicles can be used. You can read more about the use of electric vehicles by Coca Cola in its supply chain.  

Replacement of conflict materials 

Conflict materials are those materials that are problematic. These materials are derived from places that have human exploitation. One of the commonly cited case is that of the extraction of diamonds from the African countries. Secondly, some of the materials can be very difficult to recycle. Also, some heavily degrade the environment. Consequently, companies spend some effort to replace this conflict materials with proper substitutes. 

Sustainable accounting 

Many publicly traded companies release Stainable Report. Generally, this report is also part of their annual report. This is a positive signal about the CSR activities. These reports share about the company’s steps and pledges towards the environmental sustainability of the business.  

Accounting standards are put into place to avoid haphazard reporting. This also enables the investors to get a relatively standardized comparison of firms. There are many different standards for sustainability reporting. One of the most common is the GRI sustainability reporting standard. Additionally, there are also other reporting standards like OECD and the UNGC. 

CSR expenses  

Corporate social responsibility is emerging as an effective tool. Although many countries do not enforce a CSR policy on the companies, some do. For example, India introduced section 135 of the Companies Act in 2014. This act makes it mandatory for all the companies(of certain threshold*) to spend 2% of their average net profit for the past three years on CSR. As per this law, the companies can spend a part of their profit in improving society. Some of the common areas of expenditure are in improving education, poverty, equality, gender, and environment.  

*Companies which have a net worth of more than INR 5 Billion or annual revenue of INR 10 Billion or net profit of INR 50 million.  

Sustainable HR practices  

Sustainable HR practices can also contribute a lot to the environment. A firm’s environmental policy must also strive to align the employees to these goals. The purpose of HR and this could be subtle but meaningful.  

Agile can also form the link between the top management and the different departments. He can facilitate the communication of sustainability initiatives. We can also help employees fulfill their personal goals. It enhances the wellbeing of the employees and boosts their morale. 

Strategic sustainability 

Acting in an environmentally sustainable manner can give organizations a strategic advantage. There is a positive correlation between environmental initiatives and firm performance. Firstly, government regulations mandate environmental aspects for firms. However, some firms behave in a proactive manner. The path to strategic success lies in redefining the business in terms of environmental sustainability.  

This also means that firms need to reimage the organization differently. The traditional view of the organization is a vehicle that converts inputs to outputs and thereby provides value to the shareholders. However, modern organizations need to incorporate the environment as an important stakeholder. Rather than being an unapologetic taker of resources, firms need to be a giver. In the end, the firms gain too, through cost savings, lower risks, and higher resilience of supplies. The environmental sustainability practices in business would lead to better bottom-line performance. 

Sustainable information systems 

An information system is a common domain where computing, analytics, and firm strategy come together. IS has been elemental in improving organizations in the last three decades. Presently, technologies like analytics, cloud, and social media continue to transform our organizations.  

We can leverage information systems for designing and implementing the environmental policies of the firm. A study by Zeng et al, reveals that green IS helps in minimizing environmental degradation. Additionally, they also found that it can help in improving the competitive advantage for the firms. 

Sustainable marketing 

Similar to other domains of management, marketing has a history of dealing with the environment. This goes back at least to the 1970s. It started when the consumer started showing concern about pollution. Overall, there are certain ways in which marketing can propel the firm’s environmental approaches. 

Firstly, green marketing makes products more acceptable. The number of consumers who are concerned about the environmental effect of their product is increasing every year. Green marketing is about marketing products that have a lower negative impact on the environment. However, research in the 1990s showed that mere marketing gimmick does not work. This is termed green skepticism. Also, there is a gap between how many people have a positive attitude towards the environment and how many people actually buy the products. This is said to be a major research gap in green marketing. 

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We’re living in interesting times. There’s a massive transformation going on towards sustainability. In this article we shall take a closer look at Amazon corporate social responsibility programs. It is essential for larger companies like Amazon to establish themselves as sustainability leaders. This would encourage smaller firms to follow the suit. 

Amazon – the largest online marketplace 

Amazon was founded in the year 1994 in Seattle, United States of America. When Jeff Bezos founded this company, he wanted to create an online marketplace for the books. However. As the company grew, it expanded its business into different products. Amazon has also entered totally unrelated businesses like cloud computing, and artificial intelligence. We are also enablers of future technologies in the industry 4.0 revolution. 

This publicly traded company generated a revenue of around 280 billion dollars in the year 2019. This figure is more than the GDP of many countries. This scale of operations does not come without criticisms. Some of the major criticisms against Amazon stems from the following actions: 

1. Environmental degradation due to the massive scale of packaging. 

2. Other activities that lead to carbon footprint like logistics, manufacturing. 

3. Massive energy consumption at their headquarters offices and cloud servers. 

4. Data privacy issues. 

5. Promoting hyper consumption and culture of mindless purchases.  

6. Toxic work culture  

The CSR agenda for Amazon

In fact, some 400 odd employees went on record to state their discomfort over the environmental degradation. Moreover, it comes when Amazon has very strict policies against speaking publicly against the company. From the company’s perspective, it is also very difficult to measure the true impact of its entire operations globally. 

Amazon has some arguments against the criticism about environmental damage. Firstly, the online retailers offset some of the carbon footprint because people don’t have to travel. The amount of fuel saved when people shop online offsets a lot of the environmental degradation due to the packaging. However, a counter argument against this argument is that people tend to purchase much more than they would through an offline channel. 

The company has also cited its pro environmental programs as its defense. It is one of the world’s few companies that have pledged to go carbon neutral by 2040. This is a full decade before the official mandate as part the Paris agreement. Now we shall look at the overview of some of the key CSR programs from Amazon. 

Top sustainability commitments made by Amazon Inc 

100% renewable energy 

Amazon has pledged that it would be using 100% renewable energy by the year 2025. This could have major impact on the environment. In their annual report, they have mentioned that they already have around 91 solar farms and wind farms. Which produce about 3000 megawatts of energy. There’s also a drive towards greener cloud centers across the different cloud providers. 

Reduction in water consumption  

Water is the second area of concern after electricity. It is especially true for the enterprises than individuals. Firstly, let us understand how water usage is an issue at the Amazon datacenters. Amazon is one of the leading providers of cloud services. They do it through their Amazon Web Services or AWS platform. These datacenters house powerful computers. Powerful computers also mean, huge amounts of energy. Some of this energy gets dissipated in the form of heat around these servers. It is here that water comes to the rescue. Without getting into technical details, reducing water consumption at Amazon requires an increase in thermal efficiencies through smarter designs. Secondly, they also use recycled water for cooling. 

Net carbon zero company 

This is another big pledge made by this company. Amazon has promised to go completely carbon neutral by the year 2040. This is a big challenge for any company. In fact, this is a Mega Challenge for a company the size of Amazon. However, if we breakdown this challenge into smaller components, it can be achievable. Amazon needs to look at the different segments of its businesses and treat them one by one. 

Zero carbon footprint for shipments 

This is another big promise made by this company. Amazon would be making all its shipment as net carbon zero through its shipment zero program. They have projected that they would have around half of their shipments without a carbon footprint by 2030. This part of their promise is extremely difficult to fulfill. What Amazon promises is that the entire carbon footprint of shipment would be offset or zero. There are many different steps that are involved in the shipment process. A product needs to be picked up from the shelf. It needs to be packaged. It needs to be transported and then it needs to be delivered at the last mile. All of these steps have some carbon footprint. However, their foray into reducing the shipment carbon footprint is rather appreciable. 

Creation of climate related funds 

Amazon firstly created 100-million-dollar fund for reforestation efforts. They also plan to invest in a 2 billion dollar fund for development of new technologies that would preserve our natural resources. The 100 million dollar fund would be used to conserve forest areas and wetlands around the world. This money would be used to create a corpus of funds for immediate use. We have witnessed major fires at Amazon and in Australia. If Amazon can be a part of the solution process to this challenge, it would be really helpful in preserving the natural resources. 

Optimization of delivery 

Delivery takes a large chunk of the total carbon footprint. In the near future, Amazon plans to use AI and other efficient delivery mechanisms to reduce the fuel. They also plan to use electric delivery vehicles. In fact, they have placed an order for 100,000 electric delivery vehicles. The delivery optimization is a subset of the shipment zero program. They have been testing drone delivery for quite some time now. However, their purchase of 100,000 electric vehicles would change the game. However, this process would take almost a decade. 
 

As an immediate measure, they have deployed about 1800 electric vehicles in Europe. Amazon has partnered with Mercedes Benz to incorporate electric delivery vans in its fleet. Mercedes claims that their delivery vehicle eVito is a zero emissions vehicle. This may be true about the tailpipe emissions. However, electric vehicles may also have upstream emissions if the energy to charge them does not come from the renewable energies. 

Some unsolved CSR issues of Amazon 

Although Amazon has taken a lot of steps towards positive CSR, Still a lot of ground needs to be covered. One of their major criticism has been their toxic work environment. There have been murmurs, muffled voices as well as loud cries against the culture. Employees have complained of being made to overwork. The managers have been criticized for having difficult demands on their employees. 

This kind of work  culture is not sustainable in the long run. Another company that got flagged was Tesla Motors. Human beings are not mindless agents or mare robots. Employees deserve dignity, respect and a good work life balance. Let us hope that Amazon also looks into the wellbeing of their employees in future. 

Secondly, Amazon still refuses to release the figures for energy consumption. Other cloud service providers have taken steps to release their energy consumptions. In fact, some major clients like Netflix specifically asked Amazon to disclose exact electricity usage for their services. However, Amazon refused to reveal this information.  

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Coca-Cola is one of the world’s largest companies. In fact, Coca-Cola generated around 35.1 billion dollars in revenue. This is much more than the GDP of some smaller countries. Mammoth companies like Coca Cola have immense responsibilities too. The Coca Cola corporate social responsibility program tries to give back to the society in its own ways. Let us look at this CSR program to understand where does Coca Coca Inc stands in terms of their CSR initiatives. Consequently, we will also look at some of their best practices. You can also compare the CSR activities with other companies like Microsoft’s CSR. 

The Coca Cola Incorporations 

Coca Cola is a global beverage brand. The most popular drink is Coca Cola or Coke, which is a type of carbonated soft drink. However, they make a lot of products apart from Coca Cola. For instance, if you started to try everything from Coca-Cola’s 4700+ offering. One new product every day. It would take you more than twelve years to finish all their drinks.  

However, Coca-Cola Inc has also garnered a lot of criticism. The major criticism is due to the bad health effects of this drink. The high amounts of sugar present in this drink can lead to obesity and other issues. Nevertheless, Coca-Cola also has a mammoth carbon footprint. An organization working towards minimization of plastic bottles is “Break Free From Plastic”. We have found that Coca-Cola is one of the biggest contributors to the plastic waste in the world. 

Early CSR initiatives by Coca-Cola 

First step towards social responsibility came in the form of anti-litter organization co-established by Coca-Cola in 1953. However, it was not before 1969 that the firm started analyzing the ecological impact of it’s products. When the voices against plastic waste started to pile up. Coca Cola introduced its own ways to fight the plastic problem. They started using recycled materials to make the bottles way back in 1991. Over a period of time, they have shifted entirely to recycle materials. 

One of the first ways in which they started minimizing the ecological impact was through ‘reusing’. Secondly, they focused on recycling. Eventually, they have started looking at reducing waste.

Overview of Coca Cola corporate social responsibility 

Now let us look at some of the broader themes over which Coca-Cola focused their CSR activities: 

1. Waste reduction 

2. Replenishment of water 

3. Reduction of carbon footprint 

4. Minimizing packaging 

Waste reduction 

One of the most common themes of sustainability across different companies is reduction of waste. In fact, this is one of the most tangible and visible sustainability problems plaguing this world right now. We have already mentioned that over a period of time, Coca-Cola has transformed it bottle manufacturing. Currently all their models are made from recycled materials. 

Additionally, Coca-Cola also attempts to make all of their packaging recyclable. They have set a deadline of 2025 for this. Currently (as per Coca-Cola 2019 CSR report), about 88% of their packaging is Recyclable. They’ve also pledged to cut down on the material itself. Reduction in the material is also a great way to reduce the ecological footprint of a product. In fact, they have also pledged to work on the second R of the reduce, reuse, recycle. Coca Cola has claimed that they will recycle by collecting all the bottles and cans. 

⭐ Deep Dive 

✔️The waste reduction initiative lies entirely on the selection of materials.  

✔️ One of the approaches that Coca Cola takes is to use PET bottles. PET is a highly recyclable material. In fact, in some of the places, it also uses recycled PET or rPET bottles. 

✔️ The second approach is to use recycled aluminum. Aluminum also benefits from being highly recyclable. In fact, it is much easier to recycle aluminum than many other materials. 

✔️ One of the challenges for Coca-Cola is to recycle the cartons and Tetra packs. It is very difficult to recycle these hybrid materials. 

Replenishment of water 

Water is a peculiar element. On one hand, water is the world’s most common resource. However, on the other hand, drinkable, potable water is getting more and more difficult to find. One of the criticisms of Coca Cola stems from its massive use of fresh water. Coca-Cola incorporation has taken up some initiatives to answer this problem. As per their 2019 sustainability report, they have replenished almost 160% of all the waters that they have used in their beverages. This makes the company net water positive. Additionally, they have been striving to reduce the amount of water consumed for production. Currently they use about 1.85 liters per liter of beverages prepared. 

Nevertheless, we shall look at their efforts in a more objective manner. One of the rating measures is the carbon disclosure project or CDP. Coca-Cola has been awarded a grade of A- by the CDP in 2019. The carbon disclosure project takes into account all the different aspects of the life cycle of a product.  

Reduction of carbon footprint 

A carbon footprint is defined as the total amount of carbon dioxide that is released into the atmosphere because of the activities of a firm. An initiative was started in Coca Cola Inc in the year 2013 to cut down on their greenhouse gas emissions. They have placed that they will cut down their greenhouse gas emissions by almost a quarter by 2020. 

Again, let us talk about the measurement criteria in the greenhouse gases emissions. The GHG protocol provides specific typology for greenhouse gases emissions as per the location of the activities. The scope one emissions and scope two emissions are about the facilities within the organization. I would scope tree is related to the vendors. In the case of Coca-Cola, the scope three ambitions come from other partners, like the bottling firms. 

Minimizing packaging 

The biggest criticism that Coca-Cola has faced is about the bottles. One of the ways to solve this problem is to go for refillable bottles. However, taking this a step further, we come to the water dispensing machines. Essentially, these are Water dispensers which can refill any consumers’ bottle. Currently, these type of systems are getting popular in the developing countries. These water dispensers not just reduced the plastic waste. They also lead to cost savings for both the firm as well as the consumers. 

Coca-Cola also pledges to provide smaller packages. This ensures another benefit to the consumers. We have seen that one of the criticisms of the drinks are the high amounts of sugar. All the portion sizes are shown to reduce the sugar intake. It also helps control opacity. 

Social initiatives in the Coca-Cola corporate social responsibility 

Apart from the ecological considerations, we also have to look at the societal considerations. This provides a wholesome CSR activity.  

• Women empowerment initiatives live the 5by20. In this program, they committed to empowering five million women. They pledged to promote women to be part of their supply chain. 
• Creating sustainability programs targeting the millennials. 
• Fight the ‘mother to child’ AIDS transmission through a collaboration with an organization called RED.  

Coca Cola Corporate Social Responsibility overview

Commendable initiative: Plantbottle technology

Coca-Cola came up with the Plantbottle technology in 2009. This technology is another name for using plant-based sources to make PET bottles. Coca Cola had created this technology from its internal R&D, hence it was proprietary. Overall plant bottle helps in reducing the carbon footprint. This is because of the reduction in the use of fossil fuel for making PET. These types of materials are also called bioplastics. 

One of the best initiatives from Coca-Cola Inc was to make this technology open. Open technology is one that has no intellectual property claim. They let out the formula and the process for others to use them. This could give an advantage to their competitors who could reduce the carbon footprint. However, looking at the larger picture, it would help clean up the environment and reduce carbon footprint. 

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