The $10 billion impact of Amazon and Bezos Earth Fund on the carbon credit market raises questions about climate regulations.
TakeAway Points:
- The influence that Amazon and the Bezos Earth Fund have over carbon credit regulations is a cause for concern as it affects big businesses like Apple and H&M.
- Attracting businesses like Uber, IBM, and Microsoft, Amazon’s Climate Pledge provides an alternative to SBTi’s stringent carbon credit limitations.
- CEOs are drawn to lower-cost carbon credits because of budgetary constraints, but because of their elusive nature, there is disagreement over the standards for climate policy.
Influence of Amazon and Bezos Earth Fund
The influence of Amazon and Jeff Bezos’s $10 billion charitable group, the Bezos Earth Fund, over the carbon credit market is raising concerns. The Bezos Earth Fund is a significant funder of the Science-Based Targets Initiative (SBTi), a globally-renowned body that sets voluntary standards and strict limits on the use of carbon credits to offset emissions. This initiative is relied upon by major corporations such as Apple and H&M.
Amazon, on the other hand, is expanding its own voluntary pledging initiative, which has been signed by over 500 companies, including Uber, IBM, and Microsoft. This initiative could provide an alternative way to achieve climate goals without limiting the use of carbon credits. The SBTi is currently rethinking its approach to offsets, a decision that could be crucial for Big Tech companies as artificial intelligence increases emissions due to greater use of data centers.
Experts and campaigners are concerned about the potential influence of Amazon and the Bezos Earth Fund on SBTi. A former SBTi staff member raised fears about the perceived influence of the Bezos fund on climate standards in a complaint to the UK charity commission. The commission plans to advise SBTi on improving its governance, including addressing conflicts of interest. The Bezos Earth Fund stated it “looks forward to reading the findings of the UK Charity Commission,” while SBTi emphasized its clear governance processes and proactive steps to improve these mechanisms.
Corporate Dissatisfactions and Solutions
The battle over the future of the SBTi is significant for corporate efforts to achieve climate goals. Some companies are frustrated with SBTi’s restrictions on the use of credits to just 10% of emissions. Over the past year, Amazon and Microsoft were among the hundreds of companies removed from SBTi’s list of groups taking ambitious enough steps to hit “net zero.” The Bezos fund also backs the Greenhouse Gas Protocol, which is reconsidering its approach to offsets.
Amazon is seen as promoting alternatives to SBTi’s standards. Companies signing its Climate Pledge must promise to hit “net zero” by 2040, in line with the 2015 Paris climate agreement, but can choose how much to cut their own emissions versus buying offsets. Amazon also contributed to creating a market label, Abacus, to test the quality of carbon credits. Holger Hoffman-Riem, a member of SBTi’s technical advisory group, commented, “If big polluters like Amazon want to reach net zero as cheaply as possible, they may well have an incentive to engineer a situation where offsets are seen as credible.”
Strategic and Financial Repercussions
Buying credits is typically cheaper than cutting supply chain emissions, making them a preferred tool for some chief executives under pressure to keep climate promises made to shareholders. Carbon credits represent a tonne of CO₂ removed or saved, but their benefits are difficult to quantify. Energy credits, meant to represent new renewable energy, are used similarly to offset emissions.
SBTi insiders have expressed concern about a “Hydra” of carbon and energy credit lobbyists at climate policy meetings. A person close to the Bezos fund countered this criticism, stating, “They cannot stand the fact that they no longer have a carte blanche to set the rules. Welcome to a grown-up world of standard setting.” Amazon is the only company to have funded SBTi’s core work, although it is no longer a current financial backer. Other companies like Lafarge, ArcelorMittal, Danone, and Ikea have funded specific projects.
