Pres­sure on Be­zos to de­liver more than hot air

Ama­zon’s model may re­quire big­ger re­vamp to de­liver on cli­mate pledges, find Olivia Rudgard in San Fran­cisco and Hasan Chowd­hury

The Daily Telegraph - Business - - Technology Intelligen­ce -

Jeff Be­zos wants you to know that Ama­zon is se­ri­ous about tack­ling cli­mate change. In the space of four days last week, his com­pany launched a $2bn (£1.6bn) ven­ture cap­i­tal fund to in­vest in tech­nolo­gies that tackle car­bon emis­sions, bought an elec­tric self-driv­ing car firm and re­vealed that it would re­name a Seattle ice hockey sta­dium to the “Cli­mate Pledge Arena”.

“In­stead of call­ing it Ama­zon Arena, we’re nam­ing it Cli­mate Pledge Arena as a reg­u­lar re­minder of the ur­gent need for cli­mate ac­tion,” the bil­lion­aire founder wrote in an In­sta­gram post cap­tion­ing a ren­der­ing of the sta­dium’s fu­ture logo.

In Fe­bru­ary, he an­nounced a $10bn pledge in his own name to fi­nance sci­en­tists and char­i­ties on the front line of global warm­ing, build­ing on an or­der of 100,000 elec­tric ve­hi­cles last year from car man­u­fac­turer Ri­vian and a 2040 tar­get to have net zero emis­sions.

The moves are meant to show that the world’s rich­est man and his tril­lion-dol­lar com­pany mean busi­ness when it comes to the en­vi­ron­ment. But any praise for the bil­lion­aire’s cli­mate change bat­tle plan war­rants some de­gree of scru­tiny.

The com­pany’s own en­vi­ron­men­tal record has drawn crit­i­cism, as a 22pc in­crease in sales last year came with a 15pc rise in car­bon foot­print dur­ing the same pe­riod, and ques­tions linger over the real sig­nif­i­cance of a few bil­lion dol­lars from a com­pany worth more than $1 tril­lion and an en­trepreneur worth more than $150bn.

Ac­cord­ing to a 2018 re­port from the In­ter­gov­ern­men­tal Panel on Cli­mate Change, a United Na­tions body, the cost of a 1.5C in­crease in tem­per­a­tures by 2030 could lead to dam­age costs of $54 tril­lion.

Ama­zon’s am­bi­tions to ad­dress its car­bon foot­print ap­pear sig­nif­i­cant. It hopes to power all of its op­er­a­tions with 100pc re­new­able en­ergy by 2025. By 2030, the aim is to make all Ama­zon ship­ments net zero on car­bon. Ten years af­ter that, the goal is to be net zero on emis­sions across the board.

Net zero pledges have their own is­sues, of­ten re­ly­ing on murky off­sets rather than mean­ing­ful changes to busi­ness prac­tice. The $2bn fund an­nounced last week will be tar­geted at find­ing emerg­ing tech­nolo­gies with greener so­lu­tions for en­ergy stor­age, transporta­tion and man­u­fac­tur­ing.

Paul Grif­fin, pro­fes­sor of man­age­ment at the Uni­ver­sity of Cal­i­for­nia, Davis, says the ef­fec­tive­ness of this fund will de­pend on how it is in­vested and how trans­par­ent any spend­ing and im­pact in­for­ma­tion is.

“We would see some fan­fare about the funds be­ing awarded, but the ac­tiv­ity could be a non-pub­lic or­gan­i­sa­tion so we might not see much about what they’re do­ing with it and what the re­sults were, other than any vol­un­tary re­port­ing, which is go­ing to be a lit­tle bit bi­ased to make them look good any­way,” he says.

This fund isn’t a char­i­ta­ble ven­ture from Ama­zon. Fig­ures point to strong re­turns com­ing from green in­vest­ments. Morn­ingstar, a US fi­nan­cial ser­vices firm, found in­vest­ments in en­vi­ron­men­tal, cor­po­rate and so­cial gov­er­nance (ESG) fields placed 66pc of funds tar­get­ing these ar­eas in the top halves of their cat­e­gories.

David Storm, head of multi-as­set port­fo­lio strat­egy at RBC Wealth Man­age­ment, claims the strength of per­for­mance of ESG bets shows they are “more re­silient dur­ing bear mar­kets” the likes of which have been ex­pe­ri­enced since the on­set of the pan­demic.

“While in­vest­ing in com­pa­nies with sus­tain­able busi­ness prac­tices is wor­thy on its own, there’s a long-held mis­con­cep­tion that do­ing so comes at a price of lower in­vest­ment re­turns,” he says.

Data from Pitchbook, the re­search firm, found clean­tech start-ups in the US raised $7.1bn from ven­ture cap­i­tal in­vestors in 2018, more than ever be­fore.

Wise in­vest­ments could also im­prove the busi­ness it­self, mak­ing it more ef­fi­cient and help­ing it pre­pare for a fu­ture af­fected by the im­pacts of cli­mate change.

Zoox, the self-driv­ing start-up founded in 2014 and snapped up by Ama­zon last week, will dove­tail into the ecom­merce gi­ant’s plans to bring a cleaner means of get­ting goods to on­line shop­pers who have turned to the com­pany more than ever be­fore dur­ing lock­down.

There are some hopes that sim­i­lar moves from other global en­trepreneur­s mo­ti­vated by the fi­nan­cial and PR ben­e­fits of be­ing greener could build enough mo­men­tum to keep tem­per­a­tures down.

Larry Fink, the bil­lion­aire chief ex­ec­u­tive of Black­Rock, the in­vest­ment man­age­ment firm, ac­knowl­edged in a let­ter to clients ear­lier this year that cli­mate change would ac­cel­er­ate a “fun­da­men­tal re­shap­ing of fi­nance”.

This is not the first time trendy en­thu­si­asm has sprung up for green in­vest­ments. Pitchbook data in­di­cates that ven­ture cap­i­tal in­vest­ments rose 137pc between 2006 and 2008 in the US clean­tech sec­tor, but even­tu­ally fiz­zled out in the af­ter­math of the 2008 fi­nan­cial crash.

This time around warn­ings are more ur­gent and the need more press­ing. Sci­en­tists es­ti­mate that global emis­sions will need to be halved over the next decade to pre­vent a cat­a­strophic 1.5C climb in global warm­ing.

Ama­zon em­ploy­ees have been push­ing for over a year for the com­pany to take the cli­mate is­sue se­ri­ously, form­ing a group called Ama­zon Em­ploy­ees for Cli­mate Jus­tice.

They have ques­tions about the com­pany’s wildly suc­cess­ful busi­ness model, re­liant on pleas­ing the cus­tomer with speedy de­liv­er­ies and end­less choice, and whether it can ever be com­pat­i­ble with sus­tain­abil­ity.

Ear­lier this year it fired sev­eral em­ploy­ees who had been in­volved in the group but has in­sisted they were ousted for break­ing in­ter­nal poli­cies, rather than for speak­ing out against the com­pany.

“Ama­zon is pri­ori­tis­ing growth and sales over re­duc­ing car­bon emis­sions. It still has not proven that its busi­ness model can be sus­tain­able,” the group said fol­low­ing the fund an­nounce­ment.

Ma­gali Del­mas, pro­fes­sor of man­age­ment at the UCLA In­sti­tute of the En­vi­ron­ment, says Ama­zon could also shift fo­cus to com­mu­ni­cate bet­ter with its cus­tomers about cli­mate change.

Wary of adding fric­tion to the process, the com­pany pro­vides lit­tle in­for­ma­tion for con­sumers about the en­vi­ron­men­tal im­pact of the prod­ucts they are buy­ing or ways to nudge them to trade a lit­tle bit of speed for greater ef­fi­ciency.

“They’re so timid in terms of their gen­eral op­er­a­tions. They could def­i­nitely do more, they have an in­cred­i­ble abil­ity to touch mil­lions of cus­tomers,” she said.

Ama­zon is will­ing to take on cli­mate com­mit­ments that help it be­come a bet­ter com­pany. It might be less will­ing to make changes that threaten to slow its growth ma­chine.

‘We’re nam­ing it Cli­mate Pledge Arena as a reg­u­lar re­minder of the ur­gent need for cli­mate ac­tion’ ‘Ama­zon is pri­ori­tis­ing growth and sales over re­duc­ing car­bon emis­sions. It still has not proven its busi­ness model can be sus­tain­able’

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