by Laura Feinstein and Eric de Place
Rating the Climate Claims and Actions of Alaska Airlines, Albertsons, Amazon and Boeing
This article was first published at sightline.org. https://www.sightline.org/2020/09/21/how-cascadian-corporations-stack-up-on-climate/
When Amazon announced that its new professional hockey arena in Seattle would be called “Climate Pledge Arena,” it was clear that 2020 would be a year of splashy corporate announcements about fighting global warming. Not only will the future home of the Kraken be the first net zero carbon sports arena in the world, but Amazon pledged to be net zero carbon across all of its businesses by 2040.
Meanwhile, Microsoft announced it will go a step further: aiming to be carbon negative by erasing all future emissions as well as past emissions going back to the founding of the company in 1975.
These are big aspirations by big companies, but how likely are they to succeed? And, are other leading Northwest corporations following suit? To answer those questions, we examined 11 Northwest Fortune 500 companies to see how these revenue leaders are leading on climate responsibility. We believe the exercise is useful because these 500 companies represent about two-thirds of the United States’ gross domestic product and an outsized number of them call Cascadia home.
As discouraging as the federal government’s failure may be, it is possible to find reasons for cautious optimism in climate action at other scales, including city and state leadership, and increasingly, in corporate America.
Our roster of companies includes nine well-known firms that are headquartered in the U.S. Pacific Northwest, plus two with a significant history and ongoing presence in the region. We included Boeing because 45 percent of its workforce is located in Washington, which was formerly home to its corporate headquarters. And, Intel made our list because 18 percent of its workforce is in Oregon, about 21,000 employees. By comparison, Google has less than 5 percent of its workforce in the Northwest while Facebook has around 10 percent.
Our review did not capture some other Northwest companies that rank in the Fortune 500, including Weyerhaeuser (457), Expedia (263), Expeditors International (389), Fortive (422), Lithia Motors (252), and Micron Technology (134). We did include Alaska Airlines and Nordstrom; although they are smaller than some in the former list, we felt they warranted inclusion because they are such prominent public-facing brands.
To evaluate the seriousness of the 11 companies’ climate commitments, we focused on three areas:
1. reducing carbon emissions,
2. using renewable energy, and
3. implementing energy efficiency measures.
We also surveyed their membership in and partnerships with six major climate change initiatives that provide important frameworks for corporations trying to combat climate change.
Before we dive into our findings, a quick note about corporate emissions will help make our analysis intelligible. Carbon analysts generally break down corporate emissions into three categories:
• Scope 1 includes direct emissions from sources like fuel and refrigerant use in company facilities and vehicles;
• Scope 2 includes indirect emissions from purchased energy, such as gas-fired power from an electric utility;
• Scope 3 emissions are all other indirect emissions from activities like business travel, employee commuting, the use of products sold, transportation and distribution, and supply chain purchases.
A real-life illustration of these categories may help make clear the distinctions. Microsoft counts the exhaust from its corporate vehicle fleet in Scope 1 emissions. The company’s Scope 2 carbon emissions are those attributable to powering its physical operations like data centers and office buildings, which includes the electricity it buys from utilities. And, when a teenager switches on her Xbox for gaming, whether in Redmond or Rome, the emissions from the electricity powering the device are counted as Microsoft’s Scope 3 emissions.
In fact, Scope 3 contains all other emissions rooted in Microsoft’s existence, everything from the gasoline burned by employee commuting, to jet fuel for business travel and global product shipment, to all relevant emissions from their suppliers. Not surprisingly, Scope 3 emissions are typically a company’s largest category of emissions, as well as the most difficult to calculate.
Here’s how they stack up.
Three of the 11 Northwest companies we examined emerge as leaders when it comes to making commitments that really move the needle: Microsoft, Amazon, and Starbucks. All three will be sourcing 100 percent renewable energy for their business (reducing their Scope 1 and Scope 2 emissions), and all three are promising to slash their total emissions, including Scope 3 emissions. Some highlights:
Microsoft stands alone in its pledge to be carbon negative by 2030. It has also made a broader promise to, by 2050, erase all of its historical carbon emissions (at least those in Scope 1 and 2) dating back to the founding of the company in 1975. By purchasing renewable energy credits, Microsoft had by 2016 already met the RE100 standards for 100 percent renewable energy. But now the company is pledging to go even further, obtaining 100 percent renewable energy through power purchase agreements for all of its physical operations, including data centers, buildings, and campuses, by 2025.
Amazon co-founded The Climate Pledge in 2019, announcing its plan to become carbon neutral by 2040, a decade ahead of the Paris Climate Agreement timeline. For a company with a huge distribution and transportation reach, zeroing out the emissions’ footprint of its shipments will be a cornerstone of the strategy. Amazon recently moved up its timeline to source 100 percent renewable energy by 2025, and is currently around 42 percent renewable energy.
Starbucks will meet its renewable energy goal in 2020, sourcing 100 percent of its energy for its global operations from renewable sources through a combination of solar and wind power purchase agreements, as well as renewable energy credits. The firm has a goal to reduce all emissions by 50 percent by 2030, with an aspirational goal to be resource positive, storing more carbon than it emits, by 2050.
In the original version of this article, we awarded an honorable mention to Intel and Nike, but the honor is undeserved. Intel is sourcing 100 percent renewable power for its United States and European Union operations (which works out to be 71 percent globally), and has cut their product’s overall carbon footprint substantially. Nike is sourcing 100 percent renewable energy for its business by 2025, and has pledged to reduce carbon by 65 percent for Scope 1 and 2 emissions, and 30 percent for Scope 3 by 2030.
Since publication, we have learned that both companies sit on the executive committee of the Oregon Business & Industry association, which, along with a coalition of industry groups, recently sued Oregon Governor Kate Brown arguing that she illegally issued an executive order adopting new standards aimed at sharply reducing Oregon’s greenhouse gas emissions over the next 30 years.
“Made in the Northwest” Products
Two companies on our list are major manufacturers of products that consume fossil fuels: Boeing with its jets and PACCAR with its semitrucks.
Boeing has easily the largest Scope 3 footprint — the carbon emitted by people using its product — of any company on our list. Commercial aviation makes up 2 percent of the world’s carbon emissions or 915 million metric tons annually, and Boeing’s commercial aircraft likely account for a little less than half of that, if market share is any indicator. Adding to that are the unpublished emissions from the defense and space aircraft that Boeing produces.
PACCAR, a major manufacturer of medium-duty and heavy-duty trucks, including Peterbilt and Kenworth big rigs, has attempted to estimate the carbon footprint of its in-service trucks and other Scope 3 emissions at 175 million metric tons; Boeing has not.
Still, both are improving. Boeing and PACCAR have put meaningful engineering effort into improving the fuel efficiency of their products, in each case driven by governmental carbon regulation. In 2011, the U.S. Environmental Protection Agency put in place standards that drove a 10 to 21 percent improvement in fuel economy for heavy-duty trucks by 2014 and a requirement for a 3 percent improvement beyond that by 2017.
Model year 2019 PACCAR trucks improved fuel economy and carbon dioxide emissions by 14 percent over 2014 models. And, last summer, Europe adopted a CO2 emissions standard for heavy-duty vehicles that will drive a 30 percent cut in their CO2 emissions by 2030.
As part of a global agreement brokered by the United Nations’ International Civil Aviation Organization (ICAO) that established new fuel efficiency standards for aircraft, Boeing has committed to a 1.5 percent average annual improvement in fuel efficiency of its commercial aircraft.
The company hopes to achieve this goal by both retrofitting older planes with aerodynamic technologies like winglets and engineering new aircraft with lighter materials and more efficient engines. This commitment is part of a larger suite of goals that support the aviation sector in achieving CO2 reduction for carbon-neutral growth in the airline industry by 2020 and halving the net CO2 emitted by this sector by 2050. Each new airplane Boeing develops is 15 to 20 percent more efficient than the product it replaces, so as we see airlines retiring older, less-efficient aircraft during the Covid-19-induced travel downturn, carbon footprints will improve because the mix of in-service aircraft is, on-average, becoming more fuel efficient.
While vehicle manufacturers have far more energy-intensive products, other Northwest manufacturers have made similar commitments for their products. This year, Intel is developing notebook computers that use just one-fourteenth the energy of its 2010 models. Meanwhile, Microsoft and Amazon’s cloud computing services, an alternative to on-premises data centers, are around 85 percent more energy efficient than traditional on-site server infrastructure. Coupled with Microsoft and Amazon’s 100 percent renewable energy commitments, these cloud computing services could reduce carbon emissions by between 88 and 95 percent over on-premise data centers.
PACCAR deserves credit for tabulating (and sharing) the carbon emissions that come from using its trucks, but it should get dinged for a misguided strategy: using natural gas to try to achieve emissions reductions. PACCAR counts among its “low-carbon” offerings compressed natural gas (CNG) and liquid natural gas (LNG) engines as alternatives to trucks powered by diesel or gasoline. The company supplies more than 50 percent of the market for fracked gas trucks, but the industry has so far failed to acknowledge that the all-in greenhouse gas emissions related to fracking, moving, and compressing or liquefying natural gas erase all of the alleged climate improvements.
PACCAR is not the only company to make this misstep. Natural gas features prominently in corporate strategies for reducing greenhouse gas emissions by both Albertsons and Nordstrom. Both firms identify fracked gas trucks for their distribution operations as part of their strategy to reduce their carbon footprint.
Alaska Airlines, a major North American airline carrier, has the best carbon footprint ranking for any U.S.-based carrier according to a 2018 atmosfair report. Globally, however, the picture is less rosy: Alaska is ranked just 22nd worldwide out of 125 airlines, after slipping from 14th place in the 2017 report. The airline’s 2019 sustainability report indicated that the company had achieved a 16 percent reduction in emissions per revenue-ton-mile over 2012 due to the use of efficiency enhancing winglets and navigation technologies. Still, officials acknowledge that this achievement is unlikely to fulfill the company’s goal of reducing emissions 17 percent below 2009 levels.
More worrisome, by early 2020, Alaska Air’s overall Scope 1 and 2 emissions were up by a whopping 70 percent in the past five years. (The collapse in air travel following the Covid-19 pandemic has almost certainly reduced these figures substantially.) Like Boeing, Alaska Air has voluntarily agreed to meet the United Nations’ CORSIA goals (Carbon Offsetting and Reduction Scheme for International Aviation) designed to cap aviation emissions at 2020 levels, though the program has received sustained critique from some climate hawks.
The company currently has no operations powered by renewable electricity, although in 2019 it did commit to fueling its 737 MAX aircraft with a blend of biofuel and traditional jet fuel. Alaska Air is working with airports in Seattle and San Francisco to develop a strategy for sourcing sustainable aviation fuel. These biofuels may be able to reduce carbon emissions, but the availability of the feedstock to produce them sustainably is currently limited and scaling up may have broader negative consequences for the environment.
Albertsons, a major U.S. grocer that owns Safeway and Haggen, has not made transformational climate commitments nor joined any of the major initiatives that we surveyed combatting climate change. Like Costco, the company has on-site solar generation prominently featured in its corporate sustainability report, although it amounts to less than one-half of one percent of its annual energy use. Albertsons has no published emissions reduction or renewable energy targets. While proactive on deploying money-saving energy efficiency upgrades in its stores, the company seems to be primarily following consumer interest in climate-friendly behavior, which has thus far been insufficient to spark meaningful change beyond trying to burnish its reputation.
Amazon is launching a $2 billion climate fund to pursue investments in clean energy and technologies to combat climate change. And, Amazon CEO Jeff Bezos is donating another $10 billion of his personal fortune to fight climate change. In addition to other admirable pursuits like powering Amazon with 100 percent clean energy by 2025 and becoming net zero by 2040, Amazon announced it is ordering 100,000 electric delivery vehicles (so that 50 percent of all shipments will use net zero carbon in their fulfillment, packaging, and transportation by 2030).
The company has also named the Seattle’s new professional hockey venue, “Climate Pledge Arena.” Unlike its peers who have signed onto third-party-led climate initiatives, Amazon is home-growing its own climate initiative, filling a space where other accepted programs already exist. Still, the company has had four other corporations join its pledge: Infosys, Mercedes Benz, Reckitt Benckiser, and Verizon.
Yet for all these positive actions, Amazon works against the climate as well. The company has very diverse business arms — cloud computing, online retailing, and grocery delivery just to name a few — including some highly carbon-intensive components. Most prominent is its global logistics network that depends heavily on fossil fuels for air and ground transportation, along with energy-intense server farms across the world.
Amazon generates around 50 million metric tons of carbon annually, comparable to the carbon footprint of entire countries like Switzerland or Norway. Worse, its artificial intelligence technology is used by oil and gas companies to improve drilling prospects, improving their profitability. Donations from Amazon have gone to climate-science-denying organizations. And, Amazon has threatened to fire employees who have been vocal about Amazon’s contribution to climate change. On that score, Amazon’s employees deserve a round of applause for pushing the company toward faster climate action.
Boeing sells airplanes around the globe, so its business success is linked to international protocols governing climate. The most prominent of these in the aviation sector is the United Nation’s market-based measurement system called Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) that has so far been adopted by 78 countries. In order to remain competitive, Boeing now engineers aircraft that meet the CORSIA fuel efficiency standards, which aim to halt carbon emission growth in aviation starting in 2020 and halve carbon emissions by 2050.
CORSIA’s 2050 goal would be achieved, in a large part, by using alternative jet fuels with a smaller carbon footprint, especially biofuels. Boeing has already experimented with these biofuels, flying around 1,600 miles in partnership with Alaska Air, and has shown that they are technologically viable. Commercializing these biofuels will prove to be a bigger challenge because of the difficulty of harvesting, processing, and distributing biofuels, not to mention making them cost-competitive with fossil fuels.
Internal to the company’s operations, Boeing set five environmental goals in 2018. By 2025, the company aims to: reduce greenhouse gas emissions by 25 percent, reduce water consumption by 20 percent, reduce waste to landfill by 20 percent, reduce energy consumption by 10 percent, and reduce hazardous waste by 5 percent. Many of these are a tall order.
According to its most recent scorecard, Boeing actually increased water consumption and hazardous waste production. It may also need to accelerate progress on greenhouse gas emissions and energy goals, both of which improved in 2018 — but neither of which appears to be on track. Boeing’s internal goals may appear less aggressive compared to peers in our evaluation who have found pathways to become carbon neutral, have zero-waste facilities, or have reduced energy use in their facilities by 20 percent or more.
A look at more Cascadian Corporations: Costco, Intel, Microsoft, Nike, Nordstrom, PACCAR and Starbucks.
Laura Feinstein focuses on energy policy, particularly natural gas in- frastructure and energy decarbon- ization. She recently researched and wrote about innovative approaches to limiting natural gas pipeline expansion. Before joining Sightline, Feinstein worked as an engineer for Puget Sound Energy, modernizing the regional energy grid. She has a bachelor’s degree from Purdue University in electrical engineering and a master’s from the University of Washington in mathematics.
Eric de Place, director of Thin Green Line, spearheads Sightline’s work on energy policy. Known as a leading expert on coal, oil, and gas export plans in the Pacific Northwest, he is considered an authority on a range of issues connected to fossil fuel transport, including carbon emis- sions, local pollution, transportation system impacts, rail policy, and economics. He has a master’s degree in philosophy from the University of Notre Dame. Find his latest research here, email him at email@example.com.