You win again, Greenpeace.
First, the environmental advocacy group successfully pressured Apple (NASDAQ:AAPL) into committing to using 100% renewable energy in its data centers and corporate facilities. With Al Gore on the board of directors, a massive mountain of cash, and an embedded corporate belief in sustainability, that wasn't too tall of an order to fill, though.
Next up, search giant Google (NASDAQ:GOOG)(NASDAQ:GOOGL) made a similar vow to work its way up to 100% renewable energy. Google has been actively investing in renewable energy and buys electricity directly from wind farms near its data centers. Google announced a new long-term purchase agreement on Tuesday to use wind power in an upcoming data center in the Netherlands. Currently, 35% of Google's operations are powered from renewable sources.
After years of resisting external pressure, Amazon (NASDAQ:AMZN) has finally caved and has also committed to achieving 100% renewable energy usage for its network infrastructure.
Amazon's cloud will go green eventually
Amazon Web Services has now detailed its commitment on its site. The company points out that cloud computing is "inherently" better for the environment because of the scale AWS provides relative to unused capacity in corporate data centers today.
The e-commerce company notes that it currently operates three data centers that are completely carbon neutral. Amazon says it wants its global infrastructure to achieve 100% renewable energy usage in the long term.
That commitment is particularly important considering Amazon is the dominant provider of cloud computing services. Within cloud computing, Microsoft is starting to catch up to Amazon in the Infrastructure-as-a-Service market, but Amazon is still ahead by a long shot. And with Amazon's aggressive expansion plans for AWS in the coming years, the segment's long-term sustainability is extremely important.
Greenpeace's green streak
That's seven companies that Greenpeace has successfully gotten to commit to using renewable energy to power their cloud operations. Mission Sabotage Fire Phone was a success.
Greenpeace quickly applauded the move, calling it a "potential breakthrough toward building a green Internet." At the same time, the advocacy group called for Amazon to show how serious it is. Peers like Apple, Google, and Facebook detailed road maps with specific timelines on how they planned to reach 100% renewable energy.
Amazon should embrace transparency so its customers can see progress. Greenpeace says transparency is one of Amazon's biggest weaknesses (investors know how that feels as it relates to financial reporting). Half of AWS servers are located in the Eastern United States in Virginia, a region where coal is heavily utilized. Greenpeace wants Amazon to lobby local utility companies to provide more renewable energy.
"Carbon neutral" can also be achieved by buying carbon credits to offset actual emissions. That sounds good on paper, but in practice Greenpeace wants Amazon to elaborate on how it defines "renewable."
But at what cost?
The question for investors is: Can Amazon afford it? Amazon isn't exactly the most profitable company in the world, and dirty energy is cheaper than clean energy. Presumably, that's why Amazon resisted for so long.
Continued infrastructure expansion will already be quite capital intensive and weigh on profitability, and committing to renewable energy will increase those capital requirements.
That's not to say Amazon can't do it. Rather, Amazon needs to put its money where its mouth is and show investors and customers that it's serious.
Evan Niu, CFA, owns shares of Apple and Facebook. The Motley Fool recommends Apple, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (A shares), Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.