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Carrot and stick approach to emissions reporting.

Updated: Feb 26

The carrot and stick approach only goes so far. Government policy may not be enough to get some companies to decarbonize. What if your customer required you to go green in order to keep their business. What if that customer was the one of the largest companies in the world involved in e-commerce, cloud computing, digital streaming, grocery, and artificial intelligence. Well, that would certainly move the needle.

Amazon will ask suppliers to report emissions starting next year. Walmart and Apple already require such reporting. Amazon says it is going to help suppliers transition to renewables and migrate to sustainable materials. If Washington did this it would be considered intrusive and an overreach. When companies like Amazon require it, suppliers will have to ask themselves how much they want the business. For most companies the answer will definitely be, “Yes, we want Amazon as a customer. What do I need to do!”

This takes the sustainability and the ESG debate and flips it on its head. In the US in particular, there is a culture of rugged individualism and the entrepreneurial spirit. I think it's been encoded into our DNA. That is one reason there are so many fast growing American tech companies. Unfortunately that also means we hate to be told what to do, by anyone, even if it's the right thing. However, if you don’t agree with the policy are you going to walk away from the client?

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