Amazon is a multinational technology company that is considered as one of the most influential cultural and economic forces in the world. It was founded by Jeff Bezos and started as an online market for books and later expanded to sell software, electronics, video games, and many more. Over the years, Amazon has invested in infrastructures and in helping a lot of independent sellers to reach customers through data analytics, which has also enabled sellers to also understand their business. As a technology company, Amazon is guided by several principles that have helped them grow and cover most parts of the world. Their principles include a passion for invention. This has enabled the introduction of new product in the market which customers interacts with them on a daily basis. They are also focused on customer obsession rather than competitor focus, as in any business, amazon believes that customers are always right. Commitment to operational excellence and long-term thinking is also their main principle. They focus more on long term objectives. This helps them to remain on business for a foreseeable future.
Ethical issues affecting Amazon
- Impact on the environment
Although with all the principles that govern amazon, it has been faced with a lot of ethical issues over the years. In 2018, Amazon was reported to have emitted approximately 44.4 million metric tons of carbon IV oxide. Based on recent studies on health issues, CO2 poses a great risk to human health. Its exposure to environments can have damaging effects on the human body—these causing health problems such as reduced cognitive performance, inflammation, and kidney and bone problems. The emission causes both employees and even customers across the globe to incur extra costs to cover their medical bills. In September 2019, a group referred to as Amazon Employees for Climate devoted to protesting on the environmental impact and injustice to climate change that was brought up by Amazon. The group later petitioned the company requiring them to stop their contribution to politicians who were involved in the denial of climate change. They also demanded Amazon to seize their relationship with companies that dealt with fossil fuel that accelerated the extraction of gases and oil acceleration and also to reduce the emission of carbon by the year 2030. Following the petition, the CEO of Amazon and its board of directors, including Kara Hurst, were impacted a lot and had to assure the public that they will handle the problem regarding climate change. In a statement made by Kara Hurst, director of Worldwide Sustainability at Amazon, said that Amazon has installed solar energy systems to date at 25 fulfillment centers and that the company is planning to install at 30 more centers by 2020.
Amazon company has taken the initiative to address the environmental issue by signing the climate pledge in which it will meet the climate agreement goal ten years ahead of time. They are also committed themselves in considering making deliveries for their prime customers at the most convenient and efficient time.
- Exploitation of workers
In June 2018, a report was exposed to poor treatment of Chinese workers. They were working for long hours without permanent contracts. Most of the employees had temporary contracts and were working with lots of effort in the belief that they will be graduated to proper employee status and change their ways of living (Reynolds, 2011). An investigation that was conducted by the Chinese Labour Watch reported that the percentage of employees who worked as dispatch workers were at 40% compared to 10%, which was requires by law. The dispatch workers were always required to pay physical examination fees, receive no social insurance, receive no extra wages for overtime, and sent home during sick leave with no pay. The employees who were part of the stakeholders were impacted a lot since most of them lost their homes due to poor salary payment. In the recent
In turn, an Amazon spokesperson, Melanie Janin, stated that the company had issued regular counteractive monitoring and an action plan to help the employees who were working under such conditions. The Ethical Consumer did not contemplate the statement as enough response due to the serious and systemic nature of the criticisms. Amazon also announced that it would be extending paid leave for new parents by six weeks to improve the employee’s morale.
- Tax avoidance
Amazon’s company has been evading in paying sales tax over the years. This is as a result of the court statement in 1992 that prevented states from collecting sales tax from e-commerce companies. They are proficient in playing local government and state against each other by requesting large subsidies in order to set their stores in an area. They promise the creation of employment and better living standard due to the economic boost to the area, which in turn leads to no change. Employment becomes stagnant, and the company continues avoiding to pay more taxes. In October 2017, amazon evaded tax through a subsidiary in Luxembourg of approximately 75% of its profit. The European Commission, after its investigation, ruled that Luxembourg recover $250 million-plus interest from Amazon.
The avoidance of tax, like in many companies, affects the stakeholders at most. Companies’ earnings are taxed at the organizational and again shareholder level when they are later distributed as a dividend. Therefore, corporate tax evasion increases after-tax cash flows creating either more paybacks for managers or greater after-tax cash flows to shareholders. (Baker & Comer, 2012). In a report made by amazon, they said that they play the exact roles which companies are required to do, which is paying all the taxes due and creating new employments which are based on the laws created by the government.
- Opposition to trade unions
In previous years Amazon has been opposing the trade unions. In 2001, approximately 850 employees were laid off due to unionization, but Amazon later declined the link between the company laying off the employee and the movement. They also stated that they don’t believe that the union was to the best interest of stakeholders. In early this year, a report that leaked suggested that Amazon had a map that they used to monitor their customers and employee based on ethnicity and racial diversity. The map showed that those who live in a poor community had a high chance of unionizing. The company, over the years, has come up with ways to stop its workers from forming into unions to improve their better working conditions and pays, which will reflect the effort of the work they always do. Still to date, the employees and the companies have not reached an agreement regarding the unions.
References
Reynolds, G. (2011). Ethics in information technology. Nelson Education.
Baker, S. D., & Comer, D. R. (2012). “Business Ethics Everywhere” An Experiential Exercise to Develop Students’ Ability to Identify and Respond to Ethical Issues in Business. Journal of Management Education, 36(1), 95-125.