Amazon Highlights Climate Change as a Risk Factor in Annual Filing
Amazon has added new disclosures regarding climate change to the risk factors section of its annual filing. In the filing, the company warns investors that climate change could have a material effect on its business. Amazon states that climate change could cause its sales and operating results to fluctuate, making it more challenging to sustain growth or resulting in decreased revenue.
This update reflects the increasing climate threats and the costs they pose to businesses. While Amazon included climate change among its risk factors in its 2021 annual report, this year it has added expanded disclosures.
According to Amazon, climate change could lead to increased operating costs due to extreme weather events and climate-related changes such as rising temperatures and water scarcity. The company also mentions increased investment requirements associated with transitioning to a low-carbon economy, decreased demand for products and services due to changes in customer behavior, increased compliance costs due to global regulations and third-party requirements, and reputational damage resulting from perceptions of its environmental impact.
The United Nations has previously warned of a rapidly closing window of opportunity to cut emissions caused by fossil fuels and keep global warming below 2 degrees Celsius. Additionally, the UN weather agency confirmed that 2023 was the hottest year on record.
Economists have also signaled that extreme weather caused by climate change has led to supply chain disruptions and worker shortages.
Amazon, with operations in over 100 countries and regions, employs 1.52 million people globally. The company has set ambitious climate goals for itself, including being carbon neutral by 2040 and powering its business operations with renewable energy sources by 2025. It has also invested in more than 500 wind and solar projects globally.
In an effort to reduce its reliance on gas-powered delivery vans, Amazon plans to put 100,000 electric Rivian vans on the road by 2030.
In 2020, Amazon acquired the naming rights to a professional sports arena in downtown Seattle, branding it Climate Pledge Arena. Last July, the company lowered its carbon emissions for the first time since it began disclosing the figure four years ago.
Amazon has faced pressure from its corporate employees to address its environmental impact, including concerns about air pollution in communities of color where some of its facilities are located. Lawmakers have also probed how the company manages its frontline workforce in extreme weather events.
Overall, Amazon’s acknowledgement of climate change as a risk factor in its annual filing reflects the growing recognition of the impact of climate threats on businesses and the need for companies to address these risks.
