Amazon Is A Green Company!

My colleague Steve Banker published an article on October 1 titled The Worst and Best in Sustainability: Amazon vs. Dassault Systèmes. He referenced Corporate Knights’ ranking of Dassault Systèmes as the world’s most sustainable company. Later in the article he cast his vote for Amazon as the world’s least sustainable company and discussed his reasoning.  I respectfully disagree with Steve’s evaluation of Amazon’s “green” status. This article explains why I actually consider Amazon to be a leader in transforming our economy toward green business.

Size, Scale and Scope of Activities

Amazon is an enormous business. In 2017, the company generated $177 billion in revenues. Shipping costs, including sortation and delivery center and transportation costs, were $21.7 billion. So, in absolute volumes Amazon consumes a lot of energy and generates a lot of waste. But one needs to analyze energy use and waste generation in a scaled manner to develop an “apples-to-apples” comparison. Corporate Knights does this well by dividing revenues by the resource consumption or waste generation measure of interest. For example, they evaluate energy intensity of revenues (revenue/non-renewable energy use), carbon intensity (revenue/GHG emissions), and waste intensity (revenue/non-recycled waste generated).

Steve points to the greenhouse gases produced by transportation vehicles. He states that e-commerce is inherently less green that traditional brick and mortar due to a larger volume of smaller deliveries in e-commerce. I agree with this point in general. However, he failed to include consumers’ trips to stores and home from stores in the purchase process. Including this final leg would provide a more accurate “apples-to-apples” comparison of supply chains. This process is extremely inefficient, consumes a large amount of fossil fuels, and generates substantial GHG as well. I believe comparing supply chains to final destination in this way levels the field with respect to e-commerce vs. traditional brick and mortar.

Absolutes, Alternatives, and Influence

I also agree with Steve’s premise that “Amazon has done more to grow e-commerce than any company in the world.” But I see this influence as a positive. Because of e-commerce, consumers make purchases from their laptop computers and smart phones, rather than driving to the store to browse for deals. Because of e-commerce, more and more advertising in being done in online ads rather than print ads. And speaking of online content, Amazon derives a substantial amount of revenue from e-book downloads (instead of paperback and hardcover books), streaming video (instead of DVDs pressed on plastic), and MP3 downloads (instead of records or CDs). Finally, let’s remember that Amazon Web Services accounts for almost 10 percent of Amazon’s revenues. I expect that Amazon data centers run much more efficiently than its customers’ servers would if they chose to host their servers on-premise. In fact, the AWS website says “A typical large-scale cloud provider achieves approximately 65% server utilization rates versus 15% on-premises.” Furthermore, AWS goes on to say, “In January 2018, AWS achieved 50% renewable energy usage.”  They note six solar farms in Virginia and 3 wind farms in the eastern US.

In conclusion, I believe that Amazon is a lot “greener” than a traditional review would suggest. Furthermore, Amazon is a leader in driving commerce toward modern alternatives. These alternatives are typically “greener” than their traditional counterparts. And standard digital purchase (e-commerce) of physical items is gradually transitioning to digital purchase of digital items, thanks in part to Amazon’s influence. Amazon is driving us toward a greener economy. Not so much by purpose but by effect.