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Following the news in late 2023 that Amazon was dropped from the Science Based Target initiative due to an "expired commitment” (meaning it failed to establish a credible goal for reducing carbon emissions by the required deadline of 2024), the e-commerce company published their 2023 sustainability report with some new developments.
For Amazon to achieve its net-zero target by 2040, it will heavily depend on reducing emissions across its entire value chain. Because of this, Amazon will require suppliers to report their greenhouse gas emissions as part of a 2024 update to its supply chain standards. Amazon will also prioritise working with suppliers with a decarbonisation plan and those committed to reaching net-zero emissions.
As part of their net-zero strategy, Amazon has identified its highest-emitting suppliers, which collectively contribute more than 50% of the emissions to their Scope 3 footprint. Amazon expects these suppliers to provide a plan for decarbonising their operations and to demonstrate real progress over time. However, Amazon has not offered a timeline for taking action on these requirements.
By strengthening the reporting requirements for their suppliers, Amazon is making them accountable for their contribution to climate change, whilst at the same time, Amazon is able to make data driven decision by prioritising those with robust decarbonisation plans. However, this can only work if Amazon simultaneously takes all the necessary steps to reduce their own operational emissions, starting by re-validating their SBTi commitments and net zero targets. Amazon must lead by example to ensure that its climate commitments are taken seriously and not viewed as "blame-shifting" to their suppliers.
For the time being, Amazon’s supplier requirements set a strong precedent in corporate sustainability. This means that in the not-too-distant future, smaller organisations may be asked to start measuring, reporting, and reducing their carbon footprint as part of the requirements to continue supplying products and/or services to larger companies.
Even for organisations not currently covered by legislation, the fact is they likely supply to companies that are. The trend of increasing decarbonisation requirements for suppliers is not unique to Amazon. Frameworks such as CSRD, ISSB, and CS3D are driving carbon reporting pressures, causing these requirements to extend from large corporations to smaller companies within their value chains. CSRD will se over 49,000 companies report on different sustainability metrics, with carbon accounting across the value chain being one of them.
This means that getting your carbon accounting and net-zero strategy in place can help you become more prepared for upcoming requirements from your buyers, your clients, your stakeholders, and regulation.
If you’d like to start measuring, reporting, and reducing your business’ carbon emissions, get in touch with the team and find out more about how you can get ahead of regulations.
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