Amazon is putting pressure on its suppliers to reduce their carbon emissions by requiring them to share emissions data, set emissions goals, and report on their progress starting in 2024. This move by Amazon follows similar actions by other big businesses such as Microsoft, Walmart, and Apple, who are also pushing their suppliers to adopt eco-friendly practices. Major industries have found that scope 3 emissions, which come from indirect sources like supplier emissions, account for about 75% of all emissions on average. By requiring suppliers to disclose emissions and set goals, companies like Amazon have more control over reducing emissions in their supply chains.
However, these decarbonization mandates can create challenges for smaller suppliers who may lack the resources and skills to meet tracking and reporting demands. Many small and medium-sized business owners prioritize reducing emissions but cite a lack of funds and skills as barriers to taking action. Compliance costs can be considerable, which is particularly challenging for businesses with tight cash flow. Tracking emissions data is also a time-consuming process that requires significant resources. Small businesses, already under economic stress, are more focused on employees and their bottom line than sustainability.
Despite the challenges, big companies are increasingly looking farther down the supply chain to address emissions because they are falling short in their own reduction goals. Many large corporations are producing more emissions than they can reduce due to increased consumer demand and global growth. To support their suppliers, corporate giants like Amazon are offering assistance, including funding, better terms, training, and access to clean technology. However, suppliers ultimately have to make independent decisions on how to approach sustainability goals, and companies will choose suppliers that can comply with their emissions reduction requirements. Those that don’t may face consequences or eventually have difficult conversations with their partners.
