Assignment 3:

Sustainability: Superior Financial Performance or Corporate Survival?

Kishan Patel

ECE 7000: Renewable Energy Policy

Due: 06/22/2020
 Businesses and residents are all thinking about sustainability. Whether it be solar panels,

electric vehicles, emissions control, or waste management, sustainability practices are steadily on

the rise. However, what is the motive that people and businesses are trying to achieve? Are such

sustainability practices a form of strategic differentiation that can lead to superior financial

performance or is it a strategic necessity that can ensure corporate survival but not necessarily

outperformance? I believe that these practices are a form of strategic differentiation that can lead

to superior financial performance because of the desired end state to maximize profits in any

business.

The number one goal of any business is to cut cost and make profit. Every decision made

will be made in the best interest of that goal. As Ms. Liesel Schwarz, Villanova University’s

Sustainability Manager, had discussed in our lecture, the president and board of directors will not

allow for something that won’t save the university money or generate a profit. The same applies

for businesses and residents.

Looking at Amazon is a great example. Amazon is constantly striving for excellence in

the area of sustainability. They are inventing new methods of packaging to reduce waste, using

renewable energy such as solar to power their facilities, and eliminating carbon in their supply

chain by using electric vehicles and drones. As a part of Amazon’s Climate Pledge, they plan to

be net zero on carbon emissions throughout their whole business by the year 2040 (Amazon). In

doing so, I believe Amazon will have an upper hand financially as they will cut operational costs.

Although many sustainability practices require more up front capital than traditional

methodologies, the long term cost is where savings prevail. With the nature of Amazon’s

business, transporting and delivering goods is costly in terms of gas. With electric vehicles, the

operating cost is significantly decreased. In the United States, the average annual cost to operate
a fossil fuel car is $1,117 while the average cost to operate an electric vehicle is $485 per year

(EnergySage). Amazon recently ordered 100,000 electric delivery vehicles from Rivian set to be

in use as early as 2021 (Amazon). This means that with 100,000 vehicles, Amazon would save

over $63.2 million annually on fuel alone. With the prices of electric vehicles becoming more

feasible and Amazon’s investment initiatives into Rivian, I feel that the cost of these electric

vehicles will not be too far off in comparison to a fossil fuel delivery vehicle. From a financial

standpoint, the transition to electric vehicles will provide Amazon with an advantageous cost

savings opportunity.

Similar to electric vehicles, Amazon also has an initiative to use 100% renewable energy.

Amazon currently has 57 solar rooftop systems globally which have the total capacity to supply

110 megawatts of power (Amazon). Each of their solar rooftop systems are able to generate 80%

of the annual energy needed for each of their fulfilment facilities (Amazon). This means that the

facilities only buy 20% of their energy, putting Amazon in an advantageous financial situation.

Amazon is a great example of how sustainability practices provide superior financial

performance. This is a great motivation factor for businesses to adopt such practices. This

situation is to be treated like an investment; you have an upfront cost, such as equipment and

installation, but will get a return on your investment as time progresses, which in this case is a

large reduction of cost. Sustainability is a great way to gain financial leverage and help the

planet, all at the same time.

 Works Cited

Amazon. “Sustainability.” US About Amazon, 2020, www.aboutamazon.com/sustainability.

EnergySage. “Costs and Benefits of Electric Cars vs. Conventional Vehicles.” EnergySage, 22

Apr. 2020, www.energysage.com/electric-vehicles/costs-and-benefits-evs/evs-vs-fossil-

fuel-vehicles/#:~:text=A%202018%20study%20from%20the,gasoline%2Dpowered

%20vehicle%20is%20%241%2C117.