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Amazon Launches $2 Billion Climate Venture Capital Fund

Amazon is launching a $2 billion Climate Pledge Fund, with the goal to accelerate the path toward a zero carbon economy

(Investopedia) E-commerce giant Inc. (AMZN) is launching a Climate Pledge Fund that will invest in companies developing products, services, and technologies that will "facilitate the transition to a zero carbon economy," as stated in the company's press release. In 2019, Amazon was a co-founder of The Climate Pledge, which aims to reach the goals of the Paris Agreement 10 years ahead of schedule by generating net zero carbon emissions by 2040. Other signatories include Verizon Communications Inc. (VZ) and Infosys Ltd. (INFY).1 Amazon said its initial investment in the climate venture fund will be $2 billion, but the company did not detail over what time period it planned to invest the money.2 Led by billionaire CEO Jeff Bezos, Amazon is one of the world's largest and most influential companies, with a market value of nearly $1.4 trillion as of today.3 While the climate investment fund's stated goal is altruistic, the investment nonetheless reflects a foray into yet another major industry by Amazon that already includes e-commerce, cloud computing services, and retail groceries. To put the $2 billion Climate Pledge Fund investment in perspective, Amazon in fiscal 2019 reported revenue of $280.5 billion, net income of $11.6 billion, and net cash flow from operating activities of $38.5 billion.4 Global Scope In the press release, Amazon founder Bezos stated that the fund will invest in "visionary entrepreneurs and innovators who are building products and services to help companies reduce their carbon impact and operate more sustainably." He added, "Companies from around the world of all sizes and stages will be considered, from pre-product startups to well-established enterprises."2 The announcement comes as Amazon has faced rising pressure from both employees and protesters regarding the giant company's impact on the environment as it has ballooned in size. 5 Wide Range of Industries The fund will seek investment opportunities in a wide range of industries. Among these are: transportation and logistics; energy generation, storage, and utilization; manufacturing and materials; the circular economy; and food and agriculture.2 The concept of the circular economy involves eliminating waste and re-using resources to the greatest extent possible.6 Seeking Other Big Investors Meanwhile, Amazon will seek to enlist other Climate Pledge signatory companies as financial backers of this investment program. In a similar move, software giant Microsoft Corp. (MSFT) announced in January a plan to be "carbon negative" by 2030, while also launching its own $1 billion fund to "accelerate the global development of carbon reduction, capture, and removal technologies."7 Amazon's Sustainability Report In addition to announcing its Climate Pledge Fund, Amazon also released its sustainability report for 2019. Highlights include: Amazon is on a path to use 100% renewable energy by 2025, five years ahead of schedule; Amazon's $100 million Right Now Climate Fund has invested in a reforestation project in the Appalachian region of the U.S. and a urban greening project in Berlin, Germany; and the company already has 91 renewable energy projects worldwide.2

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