Amazon (NSDQ: AMZN) revolutionized the retail industry in the United States, and for several years has had a strong presence in Europe and Asia. Its market cap among retailers lags only behind Walmart. Jeff Bezos’ creation long ago moved beyond book sales and found success with the Kindle e-reader, meanwhile becoming the online shopping mall for thousands of retailers. More recently, it expanded into cloud computing services. Despite its successes, the e-commerce giant has attracted criticism for a perceived lack of transparency of its carbon footprint.
Amazon’s management prefers to avoid the debate, though its “Our Planet” portal points to a Scottish University study that suggests online shopping is an environmentally friendly alternative to conventional shopping. The company also claims it has taken an aggressive approach to the reduction of packaging. Philips/Norelco, for example, changed its packaging based on Amazon’s customer feedback, and other companies have followed suit. Now at least 350 products from popular brands ship via Amazon in boxes made from recycled cardboard, without wire ties or clamshell packaging.
Despite these and other initiatives, Amazon does not disclose information on how it assesses or manages data related to climate change management. To that end, Calvert Investments, one of the largest sustainable and responsible investment firms in America, filed a shareholder proposal with the U.S. Securities and Exchange Commission earlier this year to address the issue. The proposal urges stockholders to vote yes on a resolution asking Amazon to disclose quantitative data related to its data centers, the Kindle, and business risks associated with climate change. In sum, Calvert Investments has asked Amazon to participate in the annual Carbon Disclosure Project (CDP) questionnaire, joining 4,700 companies that already do so. Amazon urged its shareholders to vote no on the proposal, and at its June 7 annual shareholders meeting announced that they had sided with Amazon’s management.
Expect the chorus against Amazon to grow louder. Greenpeace International claims that the company and its peer ICT companies will consume electricity at a 12 percent annual increase in the coming years because of its shift to cloud computing. Volatile energy prices and climate change could have a serious impact on the company’s bottom line. For now, however, Amazon has sniffed at climate change disclosure, saying that it does not believe that “preparing an ad hoc climate change report is an efficient use of time and resources.”
The company is content to leave sustainability issues up to its customers and suppliers, and its website points to consumer behavior as evidence that e-commerce makes “greener lives” easier. As far as logistics are concerned, any changes in mitigating greenhouse gas emissions are left up to couriers such as UPS. Amazon is keeping mum about who is responsible for its massive network of data centers, but assuming that a number of them are leased, any energy-efficiency or carbon-neutral initiatives would be the responsibility of those companies, not Amazon.
Amazon’s attitude towards carbon disclosure clearly stems from its business model. Most books the company ships are not technically part of its inventory; it does not manufacture the Kindle; unlike companies such as Walmart, it does not have its own trucking fleet; the millions of items for sale on Amazon are not on its balance sheet; and it leases, not owns, most of the space–30 million square feet in total–necessary for its operations. Hence any concern over climate change is the prerogative of its suppliers and vendors.
Like any publicly owned company, however, Amazon’s loyalty is to its shareholders, even more so because of US corporate law. In a business culture where metrics mean everything, organizations such as Calvert Investments and CDP need to demonstrate how improved carbon disclosure and management can pay dividends for Amazon’s shareholder, not just demand it. Large companies such as Walmart sometimes make dramatic shifts towards sustainability on their own terms, and the same will be true of Amazon.
Leon Kaye is founder and editor of GreenGoPost.com.
This article originally appeared in The Guardian.