As the largest buyer of renewable energy among Chinese companies listed in the BloombergNEF 2021 ranking, Alibaba has cut a total of 619,944 tons of carbon emissions by changing its energy mix to include more clean sources in FY2022 (ended March 2022), according to the company’s Environmental, Social and Governance (ESG) report published on August 29.
This report is Alibaba‘s first progress update since it pledged to reach carbon neutrality by 2030 and slash carbon emissions by 1.5 gigatons across its digital ecosystem by 2035.
“We believe in our responsibility and capability to be a driver of positive change more than ever,” said Alibaba Chairman and CEO Daniel Zhang in the report.
In the first half of 2022 alone, Alibaba purchased more than 800 million kWh of clean energy, a 150% increase from the full year of 2021. In FY2022, 21.6% of the electricity for Alibaba Cloud was from clean energy.
During the company’s FY2022, Alibaba‘s greenhouse gas (GHG) emissions totalled 13.249 million metric tons of carbon dioxide equivalent (MtCO2e). Among them, direct GHG emissions (Scope 1) accounted for 0.927 million MtCO2e, including stationary combustion, direct fugitive emissions, and mobile combustion.
Indirect GHG emissions (Scope 2) from purchased electricity and heat were 4.445 million MtCO2e, mainly used for operating cloud computing data centers, retail stores, offices, and warehouses. Indirect GHG emissions along the value chains (Scope 3) that could be accurately assessed were approximately 7.877 million MtCO2e, consisting mainly of fuel consumption in outsourced transportation and distribution services in the e-commerce business, purchased power in leased data centres, use of packaging and consumables, infrastructure operations, and employee travel.
“ESG not only provides a framework for tackling a series of global challenges, but is also the bridge to carry Alibaba to 102 years and beyond,” added Zhang.
Alibaba Group is targeting Scope 1 and 2 carbon neutrality, as well as 50% carbon intensity reduction for Scope 3 by 2030. It has also added a new Scope 3+ dimension to its targets to facilitate an additional 1.5 gigatons of decarbonization across the Alibaba Ecosystem by 2035. Alibaba’s digital platform is home to 1.3 billion consumers and tens of millions of merchants.
Alibaba says it has developed a systematic five-step approach to prioritise (targets), integrate (ESG into business design), coordinate (transformation of the relevant value chain), amplify (impact through platform), and complement its ESG goals (with charitable works).
In addition, Alibaba showed its carbon reduction progress in various dimensions. For example, Alibaba Cloud has vowed to run its data centers entirely on clean energy by 2030. The cloud provider’s data centers lead cloud service providers in Asia with an average power usage effectiveness (PUE) of 1.247 in its 2022 fiscal year, according to the report.
In FY22, Alibaba-owned logistics arm Cainiao applied smart algorithms to optimize package sizes, cutting the use of packing materials by 15% on average, and its logistics warehouses installed 24.9 MW of solar power capacity, accounting for an estimated 16,000 tons of carbon dioxide equivalent.