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Amazon launches sustainability bond

Bond was part of a much larger, six-part $18.5bn offering

Amazon has issued a $1bn sustainability bond, which it will use to fund investments in renewable energy and clean transport as well as community education and affordable housing.

The bond was part of a much larger, six-part $18.5bn offering that saw one tranche—40 years in duration—yield just 95 basis points above US Treasuries.

The US technology sector has invested heavily in renewables over the past decade, with the goal of meeting its own energy demand sustainably. Amazon, Google, and Facebook together accounted for the procurement of an enormous 20GW of combined wind and solar from 2010-2020, according to the IEA

20GW – Tech sector procurement of wind and solar

Apple sources clean electricity from its own solar farms. Amazon has funded wind power and Facebook has sited server farms along the Columbia River, the location of a lot of hydro and wind energy capacity. But the Amazon sustainability bond marks a new development for the sector —green bonds are usually issued by governments or development banks.

At the same time as the bond issuance, the company released a detailed and goal-oriented Sustainable Bond Framework that cited both the ongoing efforts for its own energy use and the broader goals it has for society, including the firm’s purchase of 100,000 electric vehicles (EVs) for its delivery fleet.

Critical mass

A worker-led revolt in late 2019 produced bad publicity for Amazon when 1,500 employees walked out and accused the company of doing too little on climate, which led to forced redundancies.

As a result Amazon began its move to electrify its delivery fleet, lodging orders and taking a stake in EV manufacturer Rivian.

Should the company make good on its plan to issue further green bonds, it may turn out the tech giant is indeed driving down the cost of climate change mitigation.

The firm’s power in the market on EV makers, real-estate developers and job-training providers could create a critical mass of purchases that means those sectors receive a major boost to sales.

Some critics say Amazon's rapid push into sustainable green energy and other socially minded commitments is a way to head off a regulatory breakup. The firm has long come under fire for the way it controls prices paid to its largest suppliers and dominates the market in which it operates.

But famed investor Bill Miller recently observed that, even if Amazon was broken up, its Cloud services division alone was so valuable that the company would be worth more to investors in separate parts. 

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