How Amazon Can Deliver On Its Promise To Reduce Emissions

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As an organization that has shipped billions of items with fossil fuel-powered vehicles, Amazon has faced extreme criticism for lack of transparency about its environmental practices. In response, Amazon announced "Shipment Zero," a new initiative in which the company aims to make all of its shipments net zero carbon and half of its shipments to be carbon neutral by 2030.

"This follows an extensive project over the past two years to develop an advanced scientific model to carefully map our carbon footprint to provide our business teams with detailed information helping them identify ways to reduce carbon use in their businesses," wrote Dave Clark, SVP Worldwide Operations at Amazon, in a company blog post in February. "We believe that lower costs include lowering the costs to the environment we all live and work in every day. We'll keep you posted as we work towards achieving Shipment Zero."

Shipment Zero is a big step in the right direction, but its targets are challenging. Amazon's shipments rely both on air and ground transport, making it more difficult to implement positive environmental change. Plus, Amazon's data centers are powered by public utilities and its packages are shipped by numerous third-parties, including USPS, FedEx and UPS, each of which have their own procedures regarding their vehicles and usage of fossil fuels.

To reach the goals outlined in its Shipment Zero initiative, Amazon will need to do more than leverage its influence with suppliers and carriers, address operational issues and push for more renewable energy options. Below are suggestions for how Amazon can address its carbon footprint.

Engage key stakeholders

Some of the best suggestions for how Amazon can reduce its footprint could come from its own suppliers, employees, and customers. These individuals and groups could provide a valuable, ground floor insight into how the company could improve:

● Gauge suppliers for suggestions on how to reduce packaging weight and space to reduce shipping impact, improving overall packaging reuse and recyclability.

● Request carriers provide recommendations on how to reduce packaging weight and space.

● Survey employees for ideas on how to improve packaging use and shipment consolidation.

● Review customer feedback for tips and suggestions on how to improve shipping procedures, as well as how to reduce overall environmental impact.

Engage customers

Much of Amazon's success has been derived from its ability to quickly respond to customer demands. Amazon can find an opportunity by engaging its loyal customer base into becoming part of its carbon reduction efforts.

Making customers aware of Amazon's intent to reduce Co2 emissions and providing them shipping options that help achieve those goals will prove beneficial to Amazon. This could include encouraging customers to make orders in bulk to reduce multiple shipments or potentially charging different shipping prices for items based on their carbon footprint. For example, the Co2 output for transporting a particular item could be included alongside shipping information for a particular product:

● If customers want an item tomorrow, the transportation mode is air + van, which equates to 50 lbs in Co2.

● For two-day shipping, the transportation mode is truck + van from the nearest location, which equates to 10 lbs of Co2.

● For four-day shipping, the transportation mode is truck to consolidation center to truck to van, which equates to 8 lbs Co2.

● For dropbox pickup using public transportation, truck to dropbox would leave many customer shipments at the same location, displaying minimal Co2 levels.

One idea that Amazon has proposed is to allow its prime members to pick one day a week to receive orders, reducing the frequency of shipments and overall Co2 emissions. It's also important to consider the impact of the returns process, one that can send even more packages back to Amazon centers. The company could deem items priced below a certain dollar value non-refundable, or enable recipients of gift deliveries to change details or aspects of their item before it is shipped.

Reevaluate transportation modes

In 2016, transportation accounted for approximately 28 percent of the United States' greenhouse gas emissions, according to the Environmental Protection Agency. The table below shows the relative carbon emissions of each mode, to move the same package the same distance.

While this is highly simplified, this information shows that packages could move 10 or even 20 times the distance on the ocean as they do by air. Unfortunately, with the creation of Amazon Air, the company is likely to rely heavily on increased airplane shipping options in the near future. To cover increased environmental costs, Amazon could still charge an additional amount to consumers whose items are being shipped by air.

Even though shipping by ocean appears to be a more environmentally friendly option at first glance, it always requires some other transportation method for full delivery, increasing Amazon's carbon footprint. Shipment by rail is also an option for Amazon to reduce its Co2 output, as well as the use of electronic drones for deliveries, pending FAA approval. Plus, the possibility of adopting electric-powered vehicles for shipping operations on a large scale could significantly reduce Amazon's Co2 output overall.

There is no single best way for Amazon to reevaluate or choose new transportation options. The company, though, should still use this information to make well-informed decisions about environmentally-friendly shipping.

People and operations

Beyond how it actually ships goods to consumers, Amazon can still make a positive environmental impact at its own facilities and campuses. This can be done on an operational level, like enacting new environmental procedures or policies that encourage or require solar power, electric forklifts, hydrogen equipment, and more. The company can also accomplish this on a staff level, encouraging employees to carpool or telecommute, be conscious about their electricity and fossil fuel consumption at work and at home, and providing incentives to team members who meet these goals or provide new ideas of their own.

The best leaders lead by example, and the case shouldn't be different for Amazon executives and business partners when working to reduce Co2 emissions. Unless a supplier is close to a facility, Amazon should minimize air travel for those visits. The company could also host meetings with vendors and other partners via video conference, reducing overall air travel to different parts of the country or world. If an employee has to travel for work, Amazon should consider the lowest impact way for that person to travel, including encouraging public transportation and instilling rental car policies that allow only fuel-efficient vehicles.

Amazon's carbon footprint is massive, but the company's current and future efforts to reduce Co2 emissions will greatly benefit the environment and provide a positive example for other organizations looking to do the same. The ideas and resources to reduce their carbon footprint already exist. All Amazon needs to do now is take action.

Wendy Tate, Ph.D. is a Professor of Supply Chain Management at the University of Tennessee. She teaches undergraduate, MBA, Executive, and Ph.D. students in Strategic Sourcing and Sustainability. She has an interest in the financial impacts of business decisions across the supply chain.

Lisa M. Ellram, Ph.D., C.P.M., CMA, is the Rees Distinguished Professor of Supply Chain Management at the Farmer School of Business, Miami University in Oxford, OH. Her primary areas of research interest include sustainability; buyer-supplier relationships; services purchasing and supply chain management; offshoring and outsourcing; and supply chain cost management. She has published in numerous top journals spanning a variety of disciplines and has presented her work in more than 25 countries.