Amazon.com Says Climate Change Could Hurt Its Business

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Amazon.com is perhaps the first of America’s mega-tech companies to file in a 10-K that climate change could hurt its business. The company reiterated this several times in the document, but it was most notable in the section called “Risk Factors.”

Who else has climate delivery problems?

Amazon.com’s cautioned “…disruptions from natural or human-caused disasters (including public health crises) or extreme weather (including as a result of climate change)..”  This is not the last time investors will see this in public filings. Amazon.com has not included this language in its SEC filing for regulatory reasons alone. A look at Amazon.com’s core businesses demonstrates risks that affect several industries. Walmart, the largest retailer in America, is among these.

How big a problem are storms?

Aside from Amazon’s large cloud business, AWS, the world’s biggest in the sector, Amazon.com is primarily in the e-commerce business, which relies on logistics and transportation via truck, ship, and air. It also has a burgeoning drone-based delivery system. All other large retailers will need to manage the same challenges. 

Massive storms, which have occurred more regularly recently, often cut off airports, sometimes for days. This means slow delivery for items for which Amazon.com has promised two-day delivery. This two-day service has been important to Amazon.com’s growth and ascent to the top of the US e-commerce sector. 

Amazon.com reported that revenue rose from $149.2 billion last year to $170 billion in its most recent quarter. Net income rose to $10.6 billion from $278 million. North American e-commerce was Amazon.com’s largest business by far, with revenue of $105.5 billion and operating income of $6.5 billion. International e-commerce continues to be affected by the same environmental threat. The international division had revenue of $40.2 billion and an operating loss of $419 million.

No matter how much net income businesses like Amazon Prime Video and AWS bring in, they won’t mitigate the importance of e-commerce and the risks that will be an ongoing challenge.

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