Amazon is pressuring its “highest-emitting” suppliers — those that collectively contribute 50 percent of its supply chain emissions — to demonstrate how they will reduce their emissions.
The move comes on the heels of the $2.1 trillion (market cap) cloud computing and e-commerce giant requiring its suppliers of all sizes to report on their greenhouse gas emissions, as part of an update to its supply chain standards in early 2024.
The consequences of not following those plans “over time” could mean Amazon will reconsider a given supplier partnership and seek alternatives, Amazon said July 10 in its 2023 sustainability progress report published that day.
“We will prioritize our business toward those who provide their plans and results on their path to next-zero carbon emissions,” the progress report said.
Amazon’s strong-arm tactics, along with information and assistance on emissions reduction roadmap development, put the company at the forefront of corporate efforts to get suppliers in lock step with sustainability strategies. Experts say real business consequences and human support are needed to effectively get smaller companies to respond.
The company did not make an executive available to comment.
Copy what we do
Amazon didn’t offer a timeline for taking action on its threat, but it also isn’t leaving things to chance.
Amazon is already working directly with many suppliers to develop emissions reduction roadmaps, according to the report, and is encouraging them to join the Climate Pledge, so far signed by 500 companies that have pledged to go net zero by 2040.
In addition, Amazon’s sustainability team has turned its own best practices into an expansive library of detailed playbooks, case studies and methodologies it is publishing on the new Amazon Sustainability Exchange website. Some examples of what you’ll find there:
A primer for how to measure carbon emissions, identify the metrics that matter most for your business, and turn them into disclosures.
Ideas for switching to electric fleets, including how to install charging infrastructure.
Recommendations for reducing the footprint of buildings ranging from grocery stores to corporate offices to warehouses and distribution centers.
A “starter” guide for creating a water conservation strategy.
Energy efficiency tips and resources related to sourcing renewable energy.
“We’ve learned a lot. We could keep those learnings to ourselves, but we know that achieving net-zero will require collective action from those that supply our operations,” said Amazon chief sustainability officer Kara Hurst, in a blog post about the new site. “And we’re in a unique position to help drive significant global change.”
Suppliers need financial, educational resources
A small but growing number of multinational companies with mature sustainability programs, including Ikea, Microsoft, Philips and Walmart, are asking suppliers to adopt emissions reduction or environmental goals.
Resources such as the ones on the new Amazon Sustainability Exchange are useful, but many partners will need one-on-one interaction to become actively engaged, said Jon Powell, former global head of the sustainability practice at Salesforce and now CEO of advisory firm Apex Catalytic.
“That takes humans to do; you can’t automate that,” he said.
The most successful initiatives combine incentives such as financing, co-marketing opportunities or better contract terms, with consequences for failing to act, including threat of losing a business relationship, said Cooper Wechkin, founder and CEO of consulting firm RyeStrategy, which has developed sustainability education programs for a number of well-known technology companies including Salesforce.
“It takes multiple touch points to get suppliers really moving,” Wechkin said. “You want them to see why this action matters, but you don’t want them to resent it.”
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