Amazon, one of the world’s largest companies, is committed to becoming a more sustainable company and meeting its ambitious climate goals. Kara Hurst, Chief Sustainability Officer at Amazon and one of Time magazine’s “100 most influential climate leaders in business” of 2023, discusses with McKinsey’s Tony Hansen how Amazon is working on reaching its Climate Pledge goal of net-zero carbon emissions by 2040.
While the scope of this challenge is large, Amazon has been taking bold steps to reimagine its operations, including building 479 solar and wind projects around the world; inventing a new, recyclable packaging material and limiting plastic packaging waste; deploying thousands of electric delivery vehicles globally; and putting Climate Pledge Friendly badges on products that qualify for the program. In addition, there are numerous nature-based solution projects underway to enhance climate resilience and improve outcomes for local communities.
An edited version of their conversation follows.
McKinsey: What was the genesis of Amazon’s sustainability journey and what are the big goals?
Kara Hurst: Over the past decade, we’ve been listening to our customers and examining the science. As life on our planet is changing, we need to evolve our business to change with it and create new ways of operating. Our sustainability North Star is The Climate Pledge, a commitment by Amazon and more than 450 other organizations around the world to be net-zero carbon by 2040. Everything we do in our sustainability strategy works backward from there. We co-founded The Pledge with Global Optimism in 2019 because we knew we couldn’t do this alone, and there was a real need for joint action and collaboration in many industries to work together in support of the future products and services that will move us faster towards our decarbonization goals.
Part of this journey is recognizing that, for a business as big and diverse as ours, our Climate Pledge commitment to reach net-zero carbon 10 years before the Paris Agreement’s goal of net zero by 2050 is incredibly ambitious. The road is not easy and the changes can take years, but we cannot wait. We’re going to need to invent solutions to problems that don’t yet have answers. But the hard work is worth doing if we’re going to win this fight—and I believe we will.
McKinsey: With a carbon- and packaging-intense business model, can you give a sense of the scope of Amazon’s challenge?
Kara Hurst: We have to examine every part of our business. The packages that customers receive on their doorsteps are often the most visible example, and reducing packaging waste is obviously a big priority. But we also have to consider everything that goes into delivering those packages—the entire global transportation ecosystem; the delivery vehicles; the energy that powers our fulfillment centers; the buildings, water, and energy for Amazon Web Services’ (AWS) data centers; and so much more. Multiply that by billions of customer orders a year in dozens of countries around the world, and you start to get a sense of the scope of our challenge.
But the great thing about our size and scale is that it’s also an opportunity. We can send demand signals about energy and climate technology solutions, and motivate further growth and development to benefit our entire industry. We are also able move fast, such as building a growing portfolio of more than 479 solar and wind projects around the world and becoming the globe’s largest corporate purchaser of renewable energy. We can invent new technologies to help reduce and eliminate plastic packaging, build more energy efficient AWS chips, and launch a worldwide electric delivery fleet in just a few years.
McKinsey: How do you leverage innovation, science, data, and machine learning to achieve your goals?
Kara Hurst: A great example is how we’re reducing our packaging materials. In the United States, in Euclid, Ohio, for instance, we recently converted our first highly automated fulfillment center to eliminate plastic delivery packaging. Our engineers invented a new paper packaging material—one that stretches, is more weather resistant, and can be heat sealed—and then adapted our machines to use this new paper instead of plastic. This conversion to all-curbside recyclable packaging is part of our multiyear effort to reduce plastic packaging across the United States. Simultaneously, we’ve been using machine learning to quickly identify products that can be shipped safely with less packaging material. Combine these efforts, and now every order shipped from this facility is packaged with curbside recyclable material.
This is a first-of-a-kind project for us and one that makes us hopeful that we can continue reducing packaging waste. A lot of the science, engineering, and effort that goes into this might not be as obvious as other sustainability efforts, but we’re okay with that. We’re always customer focused, and the great joy of taking on this challenge has been making sure we’re still delivering customer orders safely and representing the service, selection, quality, and price that our customers have come to expect, even during this type of engineering project.
McKinsey: How does Amazon approach scaling a beneficial, but expensive technology or solution?
Kara Hurst: When we committed to The Climate Pledge in 2019, Rivian’s electric delivery van was just a sketch on paper. Yet, we made a commitment to order 100,000 of them by 2030, knowing that decarbonizing what we call the “last mile” of the delivery process was a necessity for reducing the emissions of our operations. It was a big investment in what was an unfinished product. And there isn’t an investment anywhere near this big that doesn’t have a huge amount of risk. That’s the cost of making bold commitments, which is why our approach with climate technology is the same as our outlook on any big investment: focus on the long-term results, understand that we may be misunderstood in the short term, and measure success by the impact we can make for customers, our industry, and our planet.
Fast-forward a few years, and that sketch became a reality. We’re now at the point where we’re beginning to recognize the fruits of the investment, and soon we’ll reach our goal of making electric vehicle delivery not just the norm, but the expectation. We recently crossed the 10,000-vehicle milestone in the United States and have begun rolling out the first vans from Rivian in the European Union. We intend to have 100,000 in our global fleet by 2030, which will complement our multifaceted electrification strategy around the world. In India, for example, we’ve partnered with manufacturers such as Mahindra Electric to provide more than 6,000 electric vehicles currently and plan to have 10,000 there by 2025. In many regions, we’re also investing in electrified micromobility solutions.
By fielding this many electric vehicles, we’re seeing second and third order effects that are informing our sustainability strategy beyond the vehicles themselves. For example, chargers are needed to power an electric fleet, so we now have more than 12,000 chargers installed at over 100 delivery stations in the United States. And these chargers are tapping into our renewable energy strategy, where we are on track to have all of the electricity powering our operations be attributable to renewable energy sources by 2025.
This example shows that it is crucial to take a long-term view of an investment when aiming to reach our Climate Pledge commitment of net-zero carbon by 2040. In geological terms, that’s the blink of an eye but in terms of human expectations, it can feel like we’re not moving fast enough. We are, in fact, moving fast but the payoff may not be instant. You have to stay the course and find the signal through the noise.
McKinsey: What is a “Climate Pledge Friendly” product and is there customer demand for more sustainable products?
Kara Hurst: Products that are designated Climate Pledge Friendly must be certified by one or more of the sustainability certification organizations with which we partner (there are over 50). The badge is a signal to customers that this is a more sustainable product, backed by a high bar of scientific study. The Climate Pledge Friendly program is completely voluntary for brands, but more brands are seeing the value and are pursuing it, with over 300,000 products across 20,000 brands qualifying to date. This growth also reflects the direction in which customers are headed. Our latest data show that the addition of a Climate Pledge Friendly label will give an average lift of 10 percent in page views on Amazon.com.
This is an example of how becoming more sustainable is good for a variety of stakeholders, our communities, and our planet, but also for our businesses. I would advise any leader that these are the kinds of strategies you need to think about to stay in front. Creating easy access points for your customers to make more sustainable choices is the key to customer obsession.
McKinsey: How is Amazon factoring nature into the sustainability strategy and measuring impact?
Kara Hurst: Nature-based solutions are a great way to support projects that enhance climate resilience while having positive outcomes for local communities. This has become an important part of our strategy. For example, we helped create the LEAF Coalition (Lowering Emissions through Accelerating Forest Finance), a public-private initiative that aims to raise $1 billion to protect the world’s tropical rainforests, with rigorous carbon standards, and to safeguard Indigenous populations.1
A few months ago, I spent time in the Western Ghats region in India. We have invested in local projects there through our Right Now Climate Fund—our $100 million commitment to invest in nature-based solutions that both fight climate change and drive social benefits for communities by restoring forests, wetlands, and grasslands around the world.2 I visited farmers who are in a program that will ultimately plant one million trees in the region. These trees will become a carbon sink, providing family farms with high-value trees versus subsistence crops while helping create natural barriers for wildlife, which will benefit both humans and animals.
Our Right Now Climate Fund has also supported numerous other projects, such as helping with reforestation across Italy, and even assisting the return of beavers to West London for the first time in 400 years, to name a few.
McKinsey: What is the next horizon of sustainability for consumer products and retailers?
Kara Hurst: Increasingly, sustainability priorities are becoming commonplace—and when consumers expect them, businesses will act on them. People already want effective products that work as intended, do not harm the planet or people, utilize innovative designs and materials, and that are not wasteful. This plays out in our daily lives, from the cars we drive to the products we buy and to the services and experiences we choose. The sustainability discussion is becoming more sophisticated. Consumers are demanding that the products they buy and the retailers they buy from consider the impacts of these products—the chemicals, ingredients, and materials the products use, as well as how they are manufactured, packaged, and transported.
In turn, businesses can get better at communicating their values and the benefits that their sustainability strategy has for their customers, communities, and the world. The circular economy will become more prevalent, where consumers won’t feel the need to own every product or service, but will still be able to access it when they need it. It is important that businesses move fast, take risks, and accept imperfection on the road to decarbonization.
The sustainability conversation has also already evolved beyond topics such as energy and new technologies. One of the most exciting but least-discussed benefits of pursuing a sustainability strategy is the economic benefit to local communities. We’ve started to measure, for example, how many jobs are created and the healthier outcomes that result when we invest in a new solar or wind farm or electric vehicles. While people may not understand what goes into renewables or grid modernization, or what the Paris Agreement is about, there is no doubt that they want to live in places with clean air, drought-resilient land, fewer intense fires, and a thriving economy. Investing in these things is good for all of us.