Amazon Corporation has been experiencing controversy over its activities. Amazon has been growing at rates that no other organization is presently facing. Amazon has moved from an online bookstore to a one-stop shopping destination for various goods and services. The company has expanded its operations into the international market while also aggressively developing AWS cloud services business. The technological innovation has made Amazon the market leader by spurring its growth in the recent past. Presently, Amazon accounts for about 4% of the value of the whole S&P 500 (Di Salvo et al., 2017).
Despite starting as a book shelve store, Amazon has transformed in various aspects to become the leading global brand. Amazon has been positioning itself as a responsible organization working towards the common good of society. For example, it increased the minimum wage to $15 an hour and allocated over $700 million to retrain 30 percent of its US workers (Ertem-Eray, 2020). However, there is a challenge facing the Amazon concerning its business operations’ environmental sustainability and accountability.
Challenges Facing Amazon Corporation
Amazon has recently faced criticism over its environmental conservation claims over the past few years contrary to its objective of becoming an environmental sustainability leader. The company launched a $2 billion Climate Pledge Fund in June 2020 to invest in sustainable firms and technologies that would be essential in ecological protection (Donaghy, Henderson, and Jardim, 2020). It acquired the naming rights to Seattle’s major indoor games amenity, which was proposed to be the Climate Pledge Arena. The was meant to encourage other companies to follow the same example of action on environmental conservation initiatives.
The “Bezos Earth Fund” aim to attain a zero-carbon emission by 2040 and a 100% renewable energy consumption by 2030 (Ertem-Eray, 2020). The company later fast-tracked its commitment to reach the goal by 2025 by purchasing 100,000 electric power-driven distribution automobiles (Ertem-Eray, 2020). These efforts indicate Amazon’s desire to promote the reduction of carbon emission.
Amazons Contentious AWS Cloud Computing Platform
Amazon’s use of the AWS cloud computing platform for oil and gas exploration has generated debate. Petroleum producing giants, including Shell, British Petroleum, and ExxonMobil, are leveraging computing capabilities of Microsoft, Amazon, and Google to heighten their petroleum extraction and reduce production costs (Donaghy, Henderson, and Jardim, 2020). The controversy arises on the exploration practices of Amazon, and yet there is a need to ensure that the remaining fossil fuel in the ground stays there (Di Salvo et al., 2017). Amazon’s exploration activities raise a concern about its commitment to climate pledge actions. The contract that Amazon enters with exploration companies using the cloud services fails to align with its climate pledge’s goal and commitment.
In a press statement addressing the issue, Amazon asserted its target to give the energy industry technologies that are similar to the ones available to other industries. The move sought to enhance its efforts to make businesses less carbon-intensive while helping to fast-track the establishment of renewable energy businesses. Amazon and other tech giants offered advanced data-driven innovations designed to help discover, extract, distribute, refine, and market enhance cloud computing petroleum products (Donaghy, Henderson, and Jardim, 2020).
Carbon emissions connected with the products sold on Amazon’s e-commerce platform are a significant aspect that needs consideration. However, the company’s emission reports only considers the products with Amazon branding during manufacturing and fail to add the third party’s emission to the firm’s total carbon effect from its activities. Amazon has not declared the intention to enact emission requirements on third parties with business operations on Amazon’s platform and other market places.
Amazon’s environmental sustainability strategies have failed to appease the environmental activities. Consequently, the company faces persistent pressure, negative publicity, and potentially additional initiatives by Amazon. It carbon footprint increased by 15% in 2019. A section of Amazon employees under the umbrella, Amazon Employees for Climate Justice (AECJ), indicated that a 15% growth in the firm’s total emission contradicted what is appropriate to regulate the increasing temperatures in the climate change catastrophe. The firm tends to prefer growth and increase in sales at the expense of reducing its carbon footprint.
The AECJ eventually branded the USD 2 billion climate pledge and the Bezos Earth Fund as a standard public relations PR trick. Moreover, the corporation is criticized for ecological seclusion due to the establishment of a large wagon depot in the neighborhood of the minority community area of San Bernadino. The tech giant has been accused of releasing harmful fumes from the truck depot (Martiskainen et al., 2020). These allegations are detrimental to Amazon’s accountability towards sustainable development.
Significant Response Measures
Amazon should have taken bold steps to avert the growing criticism and demonstrate accountability in their carbon emission reduction initiatives. Amazon needs to have established assessment criteria to ensure its supply chain’s sustainability, which the firm has never established up to date. The organization needs to evaluate the supply chain, which would include private sources, such as transportation, procurement, waste, water, and energy, that the suppliers use to make Amazon’s products. Furthermore, rhe commitment to buy electric power-driven distribution automobiles need to consider the environmental impact. The corporation should ensure the use of renewable energy sources throughout its business operations.
The Benefit of CSR to the Corporation as a Principle of CSR to Amazon
Corporate social responsibility as a business model integrates self-regulatory approaches into the Company’s operations to satisfy the stakeholders’ ethical or social demands and limit the government’s authority in the market rule. The action develops positive public relations and increases profits and employee satisfaction. CSR efforts play a role as a venture that benefits the corporations in the long-run by implementing a holistic strategy that optimizes returns by estimating for non-market externalities when executing business activities.
The organization considers this principle to achieve non-market benefits that other corporations frequently neglect but have an unseen market benefit in the past (Visser, 2016). This principle states that a business implements the CSR practices in their organizational strategy due to the recognition that the Company’s assets and market values depend on social goods external to the market. A corporation implementing CSR also does so because they recognize that smart CSR endeavors are beneficial to the institutions.
A corporation can benefit from implementing CSR in two different ways. First, a company can benefit from an improved marketplace that fosters growth, high profits, and optimize opportunities for the business to thrive through participation and exploiting the social resources that short-span investments fail to utilize. For instance, a healthy economy promotes an increase in the demand for the business after meeting the human needs and growth of goals (Visser, 2016). A company that invests to meet its personal objectives without considering society will achieve the temporary success that is possibly harmful to the shareholders and the economy’s general health. Business organizations that practice in debatable operations are unsustainable in the long-term, specifically in a community that is keen and inspects business procedures.
The primary objective of most people is to attain a quality life. CSR has a fundamental role in creating opportunities that improve the quality of life. Corporations that enhance CSR practices are significant to the community’s desire to have the greatest living standards of people, families, and other dependents. The businesses then use CSR as a public relations marketing strategy that upholds a healthy public image and promotes employee satisfaction for being part of such organizations. The employees also become loyal to such organizations besides the Company attracting community loyalty (Visser 2016). Therefore, CSR is significant in promoting the common good through enhancing liberty, equality, and innovation.
Amazon’s Response to the CSR Challenges
The primary objective of Amazon and other business enterprises is gaining and maintaining a higher profit margin on products and services sold by controlling production and operational costs. Initiatives to transform big businesses’ operations into B Corporations would mean economic implications and hence the operating criteria of such organizations.
According to the Executive director and co-founder of the Emory Center for Alternative Investments, Klaas Baks, Amazon’s CEO Bezos is concerned about the wellness of the environment. Yet, the company exists in a competitive market. Amazon’s initiatives towards the environment focus more on receiving a positive perception from the community and customers, which is good for the business’s success.
Stakeholder theory for corporate social responsibility describes the significance of a company to society. The theory states that the primary goal of a business is to build relationships while also creating value for all the shareholders (Nikolova and Arsic, 2017). On the other hand, CSR focuses on the duty of a business towards the local community and, broadly, the society. Stakeholder theory suggests that a company needs to create value for all parties with interest in and impacted by a business, including business owners, investors, creditors, employees, customers, and the community in which a company operates. Being a corporate entity, Amazon has a role in maximizing profits as it operates in a competitive market. Getting and maintaining higher earnings is a benefit directed towards the shareholders.
Employees for environmental justice are among the stakeholders and have a right to demand their employer to be accountable for the impact of their business activities and operations. The world is currently struggling with the effects of climate change and global warming. Continuous carbon emission is likely to worsen the situation. Firms, including tech giants such as Amazon, have a duty to ensure that their activities generate value to the communities which they serve. Promoting initiatives towards sustainable development would be an effective way of benefiting the community as the activities would help in mitigating climate change.
Amazon’s initiatives towards accountability on reducing greenhouse gas (GHG) emissions are worth the praise. The company, however, should have taken various measures to prohibit the criticism and ensure they remain on course in their carbon emission reduction initiatives. Amazon needs to enact assessment principles to ensure their suppliers meet relevant sustainability standards on carbon emission, which the firm has never established up to date. For example, consumers have recently taken on financial responsibility and social contempt over the recent activities that condemn the sale of single-use plastic products.
Producers have a role in reducing the resultant pollution effects of their products. Amazon lacks accountability and hence problematic. Amazon publishes limited information on the environmental effects of its operations (Fahad and Rahman, 2020). The organization does not also easily produce sustainability or environmental impact reports that are easily accessible. The lack of transparency makes it difficult for the public to evaluate Amazon’s activities towards the environment.
Amazon Corporation needs to evaluate the supply chain, which would include private sources, such as transportation, procurement, waste, water, and energy, that the suppliers use to make Amazon’s products. Amazon’s proposal to purchase 100000 electric power-driven distribution automobiles should consider the environmental sustainability of its supply chain. The Company needs to ensure that the electrical power for the fleet is a sustainable source and not coal-powered power plants. The firm needs to ensure they fulfill their goal of purchasing electricity for its distribution vehicles from renewable energy sources.
Amazon has maintained its carbon emission footprint as a secret for a long time. However, the decision to release part of its data on climatic emissions despite the staggering status would be significant to the image of the corporation. The report indicates that the Company’s emission volumes were 44 million metric tons of CO2 in 2018.
The volume, which includes indirect emissions, exceeds the emission levels of its market competitors like Apple, Google, and Microsoft. Hence, Amazon lags other tech companies on efforts towards environmental sustainability. Amazon needs to continue with its activities to install new renewable energy projects, an initiative it aims to achieve net-zero carbon by 2040 (Ertem-Eray 2020). Amazon has established solar projects in several regions worldwide, such as New South Wales in Australia, Vasternorrland in Sweden, and Halifax County in the United States.
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