Why Amazon CEO Jeff Bezos’s $10 bn to fight climate change may not help

This article was first published in the Deccan Herald.

Amazon CEO Jeff Bezos recently announced through an Instagram post that he would donate $ 10 Billion from his personal wealth to the newly created Bezos Earth Fund to fight climate change. The global initiative will fund scientists, activists and NGOs according to the social media post. However, questions such as when will the money be disbursed, whether the fund will be a private foundation, a limited liability corporation, or a donor-advised fund remain unanswered.

In recent years, we are seeing increased instances of giving by mega billionaires. Warren Buffet committed a majority of his wealth to the Bill & Melinda Gates Foundation. Mark Zuckerberg also pledged 99 per cent of his Facebook shares to the Chan Zuckerberg Initiative, soon after the birth of his daughter in 2015. Billionaires like Infosys’ Nilekanis and Wipro’s Azim Premji have signed the ‘Giving Pledge’, committing the majority of their wealth. Bezos, who hasn’t signed the ‘Giving Pledge’ is the latest to jump onto the strategic philanthropy bandwagon.

While the individual grant by Bezos is laudable, fighting the adverse effects of climate change will require ‘collective action from big companies, small companies, nation-states, global organizations, and individuals’, as Bezos’s post acknowledges. Thus, to understand the direction the fund takes, it makes sense to analyse the policies and actions of Amazon with regard to climate change over the years.

On September 19, 2019, Amazon signed ‘The Climate Pledge’ and committed to achieving the requirements of the Paris Agreement by 2040, ten years in advance of the 2050 deadline. For the record, Amazon releases 128.9 grams CO2 equivalent per dollar (USD) of Gross Merchandise Sales (GMS). It aims to fulfil 80 per cent of its energy requirements across all businesses, through renewable energy, by 2024 and raise the share to 100 per cent by 2030. Investing $100 million in reforestation projects around the world and securing a fleet of 100,000 electric delivery vehicles also feature as goals in the Amazon Sustainability Report 2019. Approximately 80 per cent of Amazon’s total emissions, which equal 44.40 Million Metric Tons (mmt) CO₂ equivalent, come from indirect sources — corporate purchases and Amazon-branded product emissions, as well as third-party transportation, packaging upstream energy-related emissions forming the majority.

Amazon’s treatment of the climate action activists from within the company who formed the Amazon Employees for Climate Justice group in April 2019 has been less than encouraging. An open letter, signed by 8,702 employees, to Jeff Bezos and the Board of Directors, asked the company to ‘adopt the climate plan shareholder resolution and release a company-wide climate plan’ to tackle the climate crisis. Bezos used his influence and 16 per cent stake to vote down the proposal in the Annual General Meeting of Amazon’s shareholders. However, the support that the group garnered from other stakeholders in the company made Bezos relook his position and lead to the birth of the above mentioned ‘Climate Pledge’.

The climate group has also urged Amazon to shift to renewable sources for Amazon Web Services, its most profitable business. Amazon continues to award contracts to fossil fuel companies for powering its data centres for the cloud services. Amazon is not alone in this regard. Big Tech companies, including Google and Microsoft, are building partnerships with fossil fuel companies to leverage Artificial Intelligence to extract more oil from the earth efficiently. It remains to be seen if Amazon breaks the trend and puts its mouth where the money is. Amazon also sponsored a gala by the Competitive Enterprise Institute – a free-market think tank that engages in climate change denial.

Governments have a significant role when it comes to spending to fight climate change. The Paris Climate Accord was also signed between countries and not companies (even though Amazon did make a pledge). Governments are better actors to fight climate change because the trade-offs they face are inherently different than private companies. For example, when Amazon claims that it was to be carbon neutral, it will have to revise its practices to achieve that goal. That could mean cutting corners and making compromises when the company’s own interests are at stake. Governments are long-term and do not face the threat of extinction, unlike private enterprise. This provides ministries and departments with the luxury of a longer-term vision.

When you take that into account, it makes sense to better fund governments by paying taxes rather than donating personal wealth through commitments made on Instagram. However, Amazon has not been a great taxpayer. From 2008 to 2018, Amazon has paid $1.5 billion in corporate taxes. It’s closest competitor, Walmart, has paid $64 billion by comparison. Keep in mind that between September 2008 and September 2018, the value of Amazon’s stock grew more than twenty-four times from $78.3 to $1,915. During the same period, Walmart’s stock price went from $59.73 to $94.59. Amazon should have paid a lot more in taxes than $64 billion, and yet it ended up paying $1.5 billion.

Putting the prior actions of Amazon with regard to policies, treatments of employees, investments in fossil fuel companies and low taxes paid into perspective, the $10 billion individual grant is not close to what Amazon can do to minimise its carbon footprint and fight climate change. It is a welcome gesture, but we need much more to confront this global challenge.

(Utkarsh Narain and Rohan Seth are technology policy analysts at the Takshashila Institution, an independent centre for research and education in public policy in Bengaluru.)