Amazon loses key backer four years into plan to eliminate carbon emissions

Four years into a plan to eliminate its carbon emissions, Amazon has lost a key endorsement from the world’s leading watchdog of corporate climate goals.

The Science Based Targets initiative (SBTi), a U.N.-backed entity that validates net-zero plans, has removed Amazon from its list of companies taking action on climate goals after the tech behemoth failed to implement its commitment to set a credible target for reducing carbon emissions.

The move raises questions around Amazon’s status as a preferred stock among funds marketing themselves as ESG (which stands for environmental, social and governance).

The world’s largest ESG exchange-traded fund, managed by BlackRock, lists Amazon among its top three holdings.

The company is also held in over 900 ESG funds registered in the European Union alone, representing about 2% of outstanding shares, according to data compiled by Bloomberg.

Amazon is in contact with SBTi, according to Elizabeth Fine, a spokeswoman for the company.

“We’ve collaborated with the Science Based Targets initiative over the last several years in order to determine appropriate submission guidelines and methodologies for complex businesses like Amazon,” Fine said by email.

Amazon intends to “continue to work with” SBTi “to establish a path forward for submission.”

But “in tandem,” Amazon “will also seek to set science-based targets with other organizations,” she said.

Amazon has the largest market value of the roughly 120 companies to have been stripped of the SBTi endorsement.

Just over 5,700 companies have made SBTi commitments or targets, including Microsoft, Walmart, Dell Technologies, Cisco Systems, Apple and eBay.

Amazon in 2019 said it would eliminate or offset all of its carbon emissions by 2040, and a year later the company committed to submitting its goals through SBTi’s verification process.

The retailer and cloud-computing company is working to electrify its last-mile vehicle fleet and remove fossil fuels from its electricity sources but hasn’t offered a detailed road map for how it plans to eliminate the other sources of carbon from its business.

Amazon’s emissions are up by about 40% since it set out its net-zero target, though they ticked lower in 2022 as the company’s growth slowed and renewable-energy projects came online.

The Seattle-based company earlier this year retracted a sustainability goal that aimed to have Amazon deliver half its packages with zero carbon by 2030.

The commitment, it said, was superseded by a company-wide net-zero goal.

Meanwhile, SBTi’s foothold in financial markets keeps growing.

Euronext recently launched a series of indexes that feature only companies with SBTi-approved emissions reduction targets.

The new products, launched in July, “respond to the growing demand for sustainable investment tools from investors and from the market,” Euronext said in a statement.

Paul Chandler, director of stewardship at the U.N. Principles for Responsible Investing, said it’s “disappointing” that “some companies are failing to meet the expectations of initiatives like the SBTi,” which he said is among a small handful of bodies providing “key tools” for investors in their “engagement with companies on climate change.”

“Corporate progress on climate in line with the Paris Agreement is essential to meeting investors long term return needs and obligations to clients and beneficiaries,” Chandler said in an emailed statement.

A stamp of approval from SBTi helps investors figure out whether portfolio companies have committed to credible climate goals.