Working conditions at the Amazon warehouse and worker injuries have been a constant source of tension between the corporation giant and its critics. A new safety and wellness program will roll out at all US locations by the end of the year as Jeff Bezos’ company continues to add massive numbers of new employees.
CHRIS J RATCLIFFE | AFP | Getty Images
Amazon founder Jeff Bezos raised some eyebrows this summer when he returned to Earth after a historic space flight in July and gave a speech thanking the company’s employees and customers “because you paid for all of this”. second largest employer in the US after Walmart, faces persistent allegations about occupational safety.
The National Council for Safety and Health at Work has added Amazon to its “Dirty Dozen” list of the most dangerous employers in the US. Amazon has just closed its third $ 100 billion quarter in a row, which shows that customers continue to shop with the e-commerce giant and it is one of the trillion-dollar-plus-tech companies dominating the market, The question arises as to whether more investors will start paying attention to occupational safety.
At a time when environmental, social, and governance concerns have taken center stage on Wall Street, C-suites, and investors, and assets under ESG funds worldwide are nearly $ 2 trillion in emissions, according to Morningstar are rated as highly by investors as other key ESG topics, including corporate climate change policy.
Workplace issues are factored into Amazon’s ESG ratings, but they’re not as important as other factors when compared to other large retailers. ESG analyst JUST Capital, which rates companies on how “fair” they treat their employees and safety in the workplace, gives Amazon and Walmart similar ratings. And Amazon ranks # 1 on another important factor in employment: local job creation.
Not all ESG rating models weight occupational safety indicators equally in all sectors. It includes occupational safety in its ESG analysis, according to an MCSI spokesperson, but “For industries and companies most vulnerable to health and safety concerns, we’re delving deeper into health and safety. Those industries.” usually include extractive industries and heavy industry “. . “
How occupational safety is incorporated into ESG ratings
Occupational safety is an often overlooked element of ESG and 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 Amazon’s ESG rating has improved on environmental metrics, but needs to improve on the social category, which is dealing with employees. Occupational safety is a factor in Amazon’s overall ratings and the company recently took a hit, Dobre said, because its response to Covid-19 was “not timely” and the company did everything in its power to prevent the spread of the disease Contain Virus.
One of the challenges with corporate ESG ratings is getting them to take a variety of metrics into account and aggregate them into an overall score, said Tensie Whelan, professor of economics and society at New York University and director of NYU Stern’s Center for Sustainable Business.
“Even within a category, such as workplace issues, rating companies can consider wages, benefits, diversity and inclusion in addition to health and safety,” said Whelan. She also noted that there are other categories such as energy, packaging and consumer safety, all of which are grouped into one number with different weightings depending on the rating agency’s methodology.
Even if a company like Amazon does poorly on safety at work, the company’s overall score on workplace issues can still be in the middle, as other factors like pay and benefits may outperform their peers.
“That’s one of the challenges with Amazon’s ESG ratings because it’s a huge company with a lot of complexity,” said Whelan.
The importance of employee retention
An Amazon spokesperson made a statement that the company is on a path that “requires constant innovation to address both new and ongoing risks, and we are making progress – investing billions of dollars in new security measures and technology and expanding our global workplace health and safety team to more than 6,200 employees. “
Employee safety and satisfaction is a big issue for Amazon, even if it doesn’t show up that much in ESG ratings. It has seen increased turnover at a time when it was hiring new employees at a rapid pace. Amazon employs more than 1.3 million people worldwide and added 500,000 employees in 2020.
A recent New York Times research uncovered data showing that Amazon was losing about 3% of its hourly workforce every week, even before the pandemic, implying an annual turnover rate of 150%, almost twice that of its competitors. Despite skepticism about Amazon’s increased focus on employees, occupational safety experts say there is a need to address the issues to ensure that staff will support their business in the decades to come as the workforce demographics see a diminishing pool of available talent forecast.
How investors see occupational safety
“We should look at this,” said Dan Romanoff, a stock research analyst who works for Amazon for Morningstar. “We see the headlines.”
But Romanoff said he could count on one hand the number of questions he had received on the subject over the past few months – and most of them came from reporters.
“It’s not something that investors really focus on,” he said.
Amazon is a tough employer. An analysis published in June by the Strategic Organizing Center, a coalition of four unions, found that Amazon employees are injured at work twice as often as Walmart e-commerce employees and that the injury rate for Amazon delivery drivers is 50% higher than the drivers for UPS.
Some investors have commented on this issue. Nicole Middleton Holloway, CEO of Strategy Squad, an asset management firm, said, “I think I’m in.
Judy Samuelson, executive director of the Aspen Institute Business and Society Program, said that working conditions are becoming increasingly important, but companies need to think about them strategically and focus on what they need to do to be very successful in the long run. “Which inputs are of decisive importance for our company? There are things that should come to the fore. The thing Facebook really needs to get right? It’s different from what Amazon really needs to get, ”she said.
Regardless of what company-specific labor issues need to be addressed, Samuelson pointed out that 91% of profits are returned to shareholders every year. “We spend massively more money on share buybacks than we do on our workers,” she said.
ESG as a method for the financial valuation of companies goes back to the 2006 report of the United Nations on Responsible Investment (PRI). According to Betsy Atkins, founder of Baja Corporation, a venture investor who also offers corporate governance advice on topics like ESG, employee issues are becoming increasingly important as part of the ESG equation.
She said occupational safety is already part of risk management that rests on a board’s audit committee and is often specifically focused on safety compliance regulations mandated by OSHA. And it’s become a bigger part of the equation for good boards.
“With the further development of ESG, supervision of occupational safety is now also part of ESG,” she said.
Bezos: “We need a better vision”
Amazon’s work problems haven’t hurt its brand. In a ranking of global brands in 2020, Interbrand ranked Amazon 2nd, behind Apple, which has been facing increased pressure from investors for years because of the work practices of its giant Chinese contract manufacturing partner Foxconn. Amazon also topped Kantar’s list of Most Valuable Global Brands in 2021.
“This is not just a strong brand, the strongest are among the strongest, but one that we all use,” says Hayes Roth, Managing Director of HA Roth Consulting. “I don’t see any weak point there.”
However, Amazon has started addressing workers’ concerns. In his last annual letter to shareholders as CEO, Bezos admitted that “we need a better vision for our employees to succeed” and pledged to make Amazon the “Best Employer On Earth” and “Safest Workplace On Earth”.
In May, Amazon launched a safety and injury prevention program that is slated to roll out to all U.S. operations before the end of the year, part of the $ 300 million it will spend on occupational safety. The company’s goal is to reduce the number of reportable incidents in the workplace, an OSHA measure of injury and illness, by 50% by 2025.
Bezos noted in his last annual letter that the notion that Amazon workers “are desperate souls and are treated like robots” is imprecise.
But the company’s critics in the labor movement continue to say that this is how the company treats workers.
“It all comes from the model that Amazon created for its human workforce, which doesn’t seem to understand that they’re humans, not robots,” said Stuart Applebaum, president of the Retail, Wholesale and Department Store Union . According to the National Labor Relations Board, Amazon was recently found to have breached labor laws after warehouse workers in Bessemer, Alabama tried unsuccessfully to join the union.
“At Amazon you are managed by robots, you get your job via an app, you are disciplined and even fired by SMS,” says Applebaum. “I think Amazon is unique in that it has removed human interaction from the workplace.”