NEI engaged with Amazon in July 2024 to go over their water strategy, as part of the Valuing Water Finance Initiative (VWFI), initiated by Ceres.
We had our first meeting with Amazon in July as part of the Valuing Water Finance Initiative (VWFI), initiated by Ceres. The VWFI is a global investor-led effort to engage companies with a large water footprint to value and act on water as a financial risk and drive the necessary large-scale change to better protect water systems.1 We are a co-lead of the Amazon engagement, and the lead of the Sony engagement.2
The predominant consumer of water within Amazon’s corporate structure is Amazon Web Services (AWS), which provides cloud computing platforms for a range of clients including individuals, companies and governments. Financial statements for the 2023 fiscal year show AWS sales topped US$90 billion, which was about 16% of Amazon’s total revenue and a 13% increase over the year prior. AWS runs massive data centres that require a significant amount of water for cooling—and the business is clearly in high-growth mode, especially with the surging demand for AI applications. AWS is the largest such company, with Microsoft and Google also in the space.
We met with representatives from AWS as well as from the parent company. AWS is further along in its water strategy than Amazon, given the importance of the resource to that particular business. AWS has an ambitious target of being “water positive” by 2030, a goal set in 2022. Simply put, that means the business will “return more water to communities and the environment” than it uses in its data centres.3 The company says that as of 2023, it is 41% of the way to the target.4
Reaching the target requires action in four areas: sustainable water sources, efficiency, water reuse, and replenishment. As of now, AWS is only disclosing an efficiency metric. One of our pieces of feedback was that we would like to see them disclose metrics around the remaining three pillars of the strategy. While the ambition is there, as well as the methodology for calculating the water positive percentage,5 there is no concrete roadmap for how the company expects to reach the destination.
With respect to capital allocation, company representatives acknowledged they have an initial budget for the water positive program, focusing first on reducing or recycling water, then on replenishing it. There are some cases where replenishment may get higher priority. To provide an idea of scale, Amazon’s latest sustainability report shows the company returned 3.5 billion litres of water to communities from replenishment projects in 2023.6
We are pleased that Amazon conducted a water risk assessment on its global operations last year; however, the company has not disclosed the results. As of now, investors do not have details on which regions, operations, or supply chain areas have been identified as the most vulnerable to water stress or other water-related risks. We expressed in the meeting that this would be valuable information to disclose.
Our suggestions for Amazon in the short-term are to improve disclosures on the their operational water risk assessment, as well as mitigation plans and performance metrics. We also suggested they continue to conduct a supply chain water risk assessment and disclose those results and mitigation plans as a medium-term objective.
