Apple announced in late July a plan to be carbon-neutral by 2030 by committing to cut emissions in its supply chain and products. It joined a growing list of companies, including Amazon, Microsoft and Delta Air Lines, that pledged to be carbon-neutral in the coming years.
Many companies are responding to increased demand from Environmental, Social and Governance, or ESG, investors. Stakeholders and shareholders care more about what a company does for the world, not just how much money it makes. The trend is gaining momentum, as 2019 was a record year for ESG stakeholder interest.
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Climate science says that global temperatures have already risen by about 1 degree Celsius from industrialization. The risk is, scientists say, that if the climate rises any more — between 2 and 4 degrees celsius from current levels — irreversible damage could occur in the environment including massive sea level rise and extinction. Many investors keep this in mind when considering where to put their money.
The Paris Agreement, as well as the United Nations Sustainable Development Goals, are international political agreements to address climate change. Private companies are taking steps to align with these programs so there’s a public and private partnership to actually mitigate climate change, because much of global emissions come from industry — an estimated 21%, according to the 2014 Intergovernmental Panel on Climate Change report.
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One step businesses can take is to set a carbon-neutrality goal. The idea behind carbon-neutrality is there’s a global carbon budget and a widespread recognition that businesses have a role to play in reducing carbon emissions and mitigating climate change.
It’s relatively easy for companies to pledge carbon-neutrality with a wide variety of firms offering different carbon-neutrality certifications and a plethora of “carbon-offset” credits available. Carbon offsets are credits awarded to projects that reduce any of a basket of greenhouse gas emissions under various standards programs.
But when companies want to help the environment, there’s a big difference between net-zero carbon and decarbonization. A company can be net-zero carbon by buying carbon offsets, but it could still be increasing its carbon footprint and increasing emissions.
So a company is still emitting more CO2, but it's spending more money on projects to repay that "carbon debt" without paying the full balance of the debt, especially when considering secondary emissions from consumers' energy sources when they use iPads etc. It's better to decarbonize the supply chain and products — redesign polluting systems to be more sustainable. This will help in a way that’s compatible with climate science and mitigate the 2 degree rise.
Lowering its carbon footprint will require Apple to actually decarbonize its polluting processes — removing emissions from its supply chain and products. For companies like Apple to do their part, it will take coordinated efforts and good carbon accounting.
Apple is certainly making strides toward innovative designs for decarbonization. Its plan includes low-carbon product design, expanding energy efficiency, renewable energy, process and material innovations and carbon removal. The Cupertino, California-based company said it's already carbon-neutral for corporate emissions worldwide but plans to bring its entire carbon footprint to net-zero.
Apple is also designing robots that recover materials from old tech. In late July, Microsoft, another tech giant, announced it will require its suppliers to report emissions.
Amazon, similarly, is taking real and quantifiable steps toward reducing carbon, including a program called Shipment Zero, which aims to make 50% of all shipments net-zero carbon by 2030. Amazon will achieve this goal through its existing frustration-free packaging and ship-in-own container, which reportedly has reduced packaging waste by 25% since 2015, according to MarketWatch.
Amazon also placed a $440 million order for electric vans from Rivian, which makes emission-free electric delivery vehicles. Amazon ordered 100,000 vehicles from Rivian in 2019, which the company expects will deliver packages by 2021.
To make an impact on climate, companies have to have good carbon accounting — they have to keep track of their carbon footprint and there are different ways to measure the carbon footprint. A company with 10 employees is much easier to decarbonize than a large tech company like Apple or a supplier like Amazon because those larger companies have complicated supply and value chains.
Indirect value chain emissions are environmental impacts of a business that aren’t a direct link in the supply chain. A business can do things like use 100% renewable energy in its shipping, but it might not be counting the energy sources that consumers use when they plug in an iPhone, or in Amazon's case, how its sellers choose to produce items. These indirect sources of emissions still contribute to the global carbon budget.
In carbon accounting, the emissions created beyond a company’s direct supply chain, such as electricity used by consumers when using a tablet or smartphone, is much larger. If companies actually seek to be a part of global carbon budgeting, the accounting has to have a larger scope.
The Science Based Targets initiative is one way that companies can adhere to decarbonizing standards. The initiative helps companies align their carbon emissions with the global carbon budget.
Although these companies are making bold pledges toward carbon-neutrality, decarbonization must play a large role in their efforts — they must make an effort to reduce emissions.
Neither Amazon nor Apple plans to fully take the carbon emissions out of their business. Carbon offsets will help them reach their net-zero pledges. Apple aims to reduce emissions by 75% in its manufacturing supply chain and will mitigate the rest using carbon offsets.
For Amazon, the “Right Now Climate Fund” is part of a mitigation tactic — the company is investing $100 million in reforestation projects and smaller-scale renewable energy. However, Amazon’s total carbon footprint still went up 15% in 2019.
When a company buys a carbon offset, it’s promising to “pay back” carbon that it has already used by supporting renewable projects, including reforestation projects, landfill methane reduction projects and renewable energy programs.
Projects like this including reforestation have been criticized because they allow emissions to continue when climate science says emissions have to decrease. Peter Miller told Vox, “buying offsets is better than doing nothing, but it's not in and of itself enough.”
“Amazon’s goal of net-zero carbon is ambitious but achievable,” Sue Reid, vice president of climate and clean energy at Ceres said to MarketWatch. “Many of the solutions, like switching to renewable energy and ramping up energy efficiency, are no-regrets strategies that can bring near-term and long-term cost savings.”
Amazon didn’t disclose to the Carbon Disclosure Project in the past. Stephen Donofrio, founder of Greenpoint Innovations, said failure to disclose to the Carbon Disclosure Project has “shaded them from their stakeholders’ efforts to establish a clear pathway to impact management, accountability and ultimately action,” to MarketWatch.
As companies like Apple and Amazon make this shift to increasing transparency, they seem to be taking the opportunity to be good to all stakeholders. While some aspects of carbon-neutrality can be cost-saving, companies like Amazon and Apple will be challenged to do good in the areas that haven’t achieved economies of scale — those of stakeholder rights and labor relations.
Jillian Lynch is a senior international affairs major. Contact Jillian at firstname.lastname@example.org.
Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours. I wrote this article myself and it expresses my own opinions. I’m not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.