While the proceeds of the issuance were designated as general corporate purposes, it is widely acknowledged that Amazon will be using this transaction for AI-related capex, particularly around data centre expansion. Indeed, the company plans to spend USD200bn on capex this year.[1]
The recent bond deal not only continues the spate of hyperscaler jumbo issuance (following Oracle and Alphabet) but is a sign of things to come given the funding needs of these companies. For climate-focused fixed income investors, with growing exposure to this technology pathway, what are the key investment risks?
The rise of AI and subsequent growth in data centre capex in recent years has naturally resulted in increasing electricity demand, given the significant energy required to run a data centre. Indeed, data centres are estimated to have consumed 1.5% of global electricity in 2024, with this consumption growing at 12% per year over the last five years, with forecasts increasing to 15% from 2024 to 2030.[2]
This increased electricity consumption means the emissions pathway of Amazon is likely to be very different, even when compared to a few years ago. The company does not report emissions under a location-based method, nor does it break down emissions by business area. This is particularly salient as Amazon Web Services (AWS), the largest cloud computing provider globally, forms the largest proportion of the company’s operating income. While only accounting for 18% of revenue, the AWS business generates 57% of operating income and requires significant capex.
Since Amazon pledged in 2019 to reach net-zero emissions by 2040, its overall emissions have risen 33%,[3] and its immense capex programme suggests this trend is unlikely to reverse anytime soon. While the company has tried to play down any concerns about water and electricity use,[4] media reporting suggests the opposite,[5] and this is again an issue that will only draw further scrutiny as the hyperscalers keep tapping bond markets.
ESG investors have historically been overweight in the technology sector, given its typically low emissions.[6] However, the scale of power consumption and Amazon’s AI-ambitions suggest investors could have substantial future exposure to the energy transition, perhaps as much as sectors such as aviation and manufacturing in the longer term. Investors therefore need to be conscious of the potential of rapidly rising emissions in this sector in the years to come.
There is one further factor of interest for sustainable investors. Looking at debt outstanding, this jumbo issuance puts Amazon under the spotlight for its deforestation exposure.[7] Wait, what? That might be surprising to some, but as a dominant global retailer – second behind Walmart[8] – its supply chain has exposure to several commodities (e.g. palm oil, soy, beef, leather, pulp & paper, and timber) that are linked to deforestation.[9]
Considering the size of its retail operations and revenues (North America: USD 426bn, international: USD 162bn; FY 2025),[10] the company has an important role as a powerbroker and could play a more active role on this front.
Amazon’s jumbo bond issuance brings its deforestation exposure into focus for sustainable investors. As a major global retailer with supply chains tied to commodities like palm oil, soy, and beef, Amazon plays a significant role in curbing deforestation. This sizeable deal offers investors to engage the company more actively on its environmental impact.
With its recent (and future) bond issuance, benchmarked investors will have more exposure to the company. This presents a risk for investors who may be underprepared for such exposure to the energy transition and therefore should evaluate Amazon’s commitment to sustainability as it continues to issue. Investors have an opportunity to engage on critical challenges around energy and water consumption, as well as supporting deforestation-free supply chains.
[1] "Amazon sees 50% boost to capital spending this year, shares tumble", Reuters, 5 Feb 2026.
[2] "Energy demand from AI", International Energy Agency, 10 Apr 2025.
[3] "2024 Amazon Sustainability Report", Amazon, 15 Jul 2025.
[4] "Amazon data centers: How much water and electricity do they really use?", Amazon News, 12 Dec 2025.
[5] "Amazon strategised about keeping its datacentres’ full water use secret, leaked document shows", The Guardian, 25 Oct 2025.
[6] "Power thirst complicates ESG investors’ love affair with tech stocks", Reuters, 26 Sep 2024.
[7] Our Deforestation Debt Universe is a resource designed to bring greater transparency to the financial risks associated with deforestation for fixed income investors, identifying 119 significant corporate issuers with material exposure to deforestation-linked commodities. For details: “Deforestation Debt Universe: update”, AFII, 29 Jan 2026.
[8] “A look at 2025’s Top 50 Global Retailers”, NRF, 17 Apr 2025.
[9] In its latest assessment (albeit from 2024), Forest 500 assigns a poor score to Amazon’s overall approach, with deficits across all key categories and no overarching commitment of deforestation. Bloomberg’s ESG analytics, updated live, also highlight high deforestation risk.
[10] “AMAZON.COM ANNOUNCES FOURTH QUARTER RESULTS”, SEC / Business Wire, 5 Feb 2026.
