Amazon Dropped From Climate Watchdog's List of Companies Taking Action on Emissions

Four years after announcing a plan to eliminate its carbon emissions, Amazon.com Inc. has lost an important endorsement from the leading watchdog of corporate climate pledges. The Science Based Targets initiative (SBTi), a United Nations-backed body that validates net-zero plans, has taken the company off its list of firms acting on climate goals.

The move follows Amazon's failure to set a credible emissions-reduction target through SBTi's verification process. In 2019, the company said it would eliminate or offset all of its carbon emissions by 2040, and a year later it committed to submitting its goals to SBTi for validation.

Amazon is working to electrify its last-mile delivery fleet and to remove fossil fuels from its electricity supply. However, it has not provided a detailed road map for tackling the other sources of carbon in its business. Its emissions are up roughly 40% since it announced the net-zero target, although they edged lower in 2022 as growth slowed and renewable energy projects began operating. This year, the Seattle-based company also withdrew a goal of delivering half its packages with zero carbon by 2030, saying the commitment had been superseded by a companywide net-zero goal.

Company spokeswoman Elizabeth Fine said Amazon remains in contact with SBTi. She said the company had worked with the organization for several years to determine suitable submission guidelines and methodologies for complex businesses, and that it intends to keep working with SBTi on a path forward. "In tandem," she said, Amazon will also seek to set science-based targets with other organizations. Amazon argues that SBTi's requirements have changed since 2020 and that its current emissions metrics do not fit Amazon's business model, making it difficult to submit a target in a meaningful and accurate way.

The decision raises questions about Amazon's standing in funds marketed as responsible in their environmental, social and governance practices. The largest ESG exchange-traded fund, managed by BlackRock, lists Amazon among its top three holdings. Bloomberg data show the company is held in more than 900 ESG funds registered in the European Union alone, representing about 2% of outstanding shares.

Amazon has the largest market value of the roughly 120 companies that have lost the SBTi endorsement. Just over 5,700 companies have made commitments or set targets with the initiative, among them Microsoft, Walmart, Dell Technologies, Cisco Systems, Apple and EBay.

SBTi introduced a stricter compliance policy in January that gives companies 24 months after making a commitment to set a specific target. Previously, companies that fell short were deleted from its public database. Now the organization labels them as having had their "commitment removed." SBTi said the aim is to increase transparency and accountability, and to discourage companies from making commitments without acting on them. The policy currently applies only to non-financial companies; financial firms have until April 2024, or six months after SBTi publishes its standard for financial institutions, whichever is later.

The organization's role in financial markets continues to grow. Euronext launched a series of indexes in July that include only companies with SBTi-approved emissions-reduction targets. Paul Chandler, director of stewardship at the UN's Principles for Responsible Investing, called it "disappointing" that some companies are failing to meet the expectations of initiatives like SBTi, which he described as one of a few bodies providing key tools for investors engaging companies on climate change.

SBTi urged all removed companies to re-engage with the process as soon as possible, saying urgent corporate climate action is needed to limit the worst effects of climate change.