The working conditions of the Amazon warehouse and the injuries of the workers have been a constant source of tension between the corporate giant and its critics. A new safety and welfare program is being developed all over the United States by the end of the year, as Jeff Bezos ’company continues to add a massive number of new employees.
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Amazon founder Jeff Bezos raised his eyebrows this summer when he returned to Earth after a historic space flight in July and delivered a speech thanking the company’s employees and customers “for paying for all this. “. the second largest employer in the United States after Walmart, has faced persistent accusations about job security.
The National Council on Occupational Safety and Health included Amazon in its “Dirzen Dozen” list of the most dangerous employers in the US Earlier this year, New York Attorney General Letitia James filed a lawsuit against Amazon to protect inadequately workers in the midst of the coronavirus pandemic. Although Amazon has just finished its third consecutive quarter of $ 100 billion, showing that customers continue to shop with the e-commerce giant and that it is one of the tech companies with more than a billion dollars dominating the market. , there is the question of whether more investors will start paying attention to worker safety.
At a time when environmental, social and governance concerns have become a focus on Wall Street, in C-suites and with investors, with global assets managed in ESG funds approaching $ 2 trillion, according to Morningstar, it is unclear so far issues have such a high rating among investors as other ESG core issues, including corporate climate change policies.
Workplace-related issues are being taken into account in Amazon’s ESG ratings, but they don’t tip the scales as much as other factors compared to other large retailers. The analytics firm ESG JUST Capital, which rates companies on how they “fairly” treat their employees and on job security, gives Amazon and Walmart similar scores. And, in another key work factor, Amazon ranks number 1: creating local employment.
Not all ESG classification models weigh on worker safety metrics equally in all sectors. According to an MCSI spokesman, it includes occupational safety in its ESG analyzes, but “for industries and companies that are more prone to health and safety issues, we delve deeper into health and safety. These industries often include extractive operations and heavy manufacturing. “
How occupational safety factors are classified in ESG ratings
Worker safety is an often overlooked element of ESG and is one of Amazon’s biggest and most difficult problems to solve.
Roxana Dobre, associate director of consumer goods research at Sustainalytics, a Morningstar company that calculates ESG risk, said that while Amazon’s ESG rating has improved in environmental metrics, it needs to improve in the social category. , specifically in terms of how it treats employees. Worker safety is a factor in Amazon’s overall ratings and the company was recently successful, Double said, because its response to Covid-19 “was not timely” and the company did not do everything possible. to mitigate the spread of the virus.
One of the challenges of the company’s ESG ratings is that they take into account a wide variety of metrics and group them into an overall score, said Tensie Whelan, a professor of business and society at New York University and director of the Center for NYU Stern Sustainable Business.
“Even within a category, such as job-related issues, qualifying companies may be looking at wages, benefits, diversity and inclusion in addition to health and safety,” Whelan said. He also noted that there are other categories, such as energy, packaging and consumer safety, which are collected together in a number with a different weighting depending on the rating agency’s methodology.
Even if a company like Amazon has a low employee safety score, the company’s overall score on workplace issues may still be at the center of the package, as other factors such as pay and benefits , can get higher scores than similar companies.
“This is one of the challenges of Amazon’s ESG ratings, as it’s a huge company with great complexity,” Whelan said.
The importance of retaining workers
An Amazon spokesman said the company is on a “journey” that requires constant innovation to deal with new and persistent risks, and we are moving forward: investing billions of dollars in new safety measures and technologies and expanding health global of our workplace and security team to more than 6,200 employees “.
Employee safety and satisfaction are a major issue for Amazon, although it has not appeared significantly in ESG ratings. He has faced an increase in turnover at a time when he was hiring at a furious pace. Amazon employs more than 1.3 million people worldwide and added 500,000 workers by 2020.
A recent New York Times investigation found data showing that Amazon lost about 3% of its associates every hour, even before the pandemic, which meant an annual turnover rate of 150%, almost twice as much as that of his companions. Despite skepticism about Amazon’s growing focus on employees, occupational safety experts say it is necessary to address the issues to make sure it has staff to support its business in the coming decades. Demographics of the active population predicts a decrease in the amount of talent available.
How investors look at worker safety
“We should look at it,” said Dan Romanoff, an equity research analyst who covers Amazon for Morningstar. “We see the headlines.”
But Romanoff said he can count the number of questions he has received on the issue on the one hand in recent months, and most came from journalists.
“It’s not something investors are really focused on either,” he said.
Amazon is a hard place to work. An analysis released in June by the Organizing Strategic Center, a coalition of four unions, found that Amazon workers are twice as likely to be injured in the workplace as Walmart e-commerce workers and that the rate of Amazon delivery driver injuries is 50% higher than UPS drivers.
Some investors comment on the issue. Nicole Middleton Holloway, CEO of Strategy Squad, a wealth management company, said: “My view is that I’m in it. I’m on the side of the fact that they need to have better human practices with their workers.”
Judy Samuelson, executive director of the Aspen Institute’s Business and Society Program, said working conditions are becoming increasingly important, but companies need to think strategically and focus on what they have to do to be very successful in the long run. “What are the inputs that are critical to our business? Are there things that should boil down to the highest. Is what Facebook really needs right? It’s different from what Amazon really needs,” he said.
While it doesn’t matter what the company’s specific labor issues are, Samuelson noted that 91% of profits are returned to shareholders each year. “We are spending massively more money on stock repurchases than our workers,” he said.
ESG as a way to financially assess companies dates back to the 2006 United Nations Principles for Responsible Investment (PRI). According to Betsy Atkins, founder of Baja Corporation, a venture capitalist who also offers corporate governance advice on issues such as ESG, workers ’issues are growing in importance as part of the ESG equation.
He said worker safety is already part of the risk management that falls to the board’s audit committee and often focuses specifically on the safety compliance regulations required by OSHA. And it has become a bigger part of the good board equation.
“As ESG has evolved, now worker safety oversight is also part of ESG,” he said.
Bezos: “We need a better vision”
Amazon’s labor issues haven’t bothered its brand. In a global brand ranking in 2020, Interbrand named Amazon number 2, just behind Apple, which for years has faced more concentrated pressure from investors over the internships of its Chinese contract manufacturing partner Foxconn. Amazon also topped the list of Kantar’s most valuable global brands in 2021.
“This is not only a strong brand, but the strongest are the strongest, but we all use it,” said Hayes Roth, director of HA Roth Consulting. “I don’t see any vulnerabilities in it.”
Still, Amazon has begun to address workers ’concerns. In his latest annual letter to shareholders as CEO, Bezos admitted that “we need a better view of our employees’ success ”and pledged to make Amazon the“ best employer on Earth ”and“ the safest job on Earth “.
In May, Amazon launched an injury prevention and safety program that plans to extend to all U.S. operations before the end of the year, a portion of the $ 300 million they spend on worker safety. The company’s goal is to reduce workplace incident rates, an OSHA measure that covers injuries and illness, by 50% by 2025.
Bezos noted in his latest annual letter that the idea that Amazon workers are “desperate souls and treated like robots” is inaccurate.
But critics of the company in the labor movement continue to say that this is what defines the company’s approach to workers.
“It all comes from the model Amazon has created to deal with its human employees, who don’t seem to understand that it’s human beings and not robots,” said Stuart Applebaum, president of the Retail, Wholesale and Department Store Union. It was recently found that Amazon violated labor laws after workers at the Bessemer, Alabama warehouse tried, unsuccessfully, to join the union, according to the National Labor Relations Commission.
“At Amazon, you’re managed by robots, you get your work done from an app, you’re disciplined, and they even send you text messages,” Applebaum said. “I think Amazon is unique in that they’ve been eliminating human interaction from the workplace.”