Amazon Warehouse working conditions and employee injuries have been a constant source of tension between the corporate giant and its critics. A new safety and wellness program will roll out to all U.S. sites by the end of the year as Jeff Bezos’ company continues to add massive amounts 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: “Because you have paid for it all. The comments came as Amazon, the second largest employer in the United States after Walmart, faced persistent accusations about workplace safety.
The National Council on Occupational Safety and Health has added Amazon to its “Dirty Dozen” list of America’s Most Dangerous Employers. Earlier this year, New York Attorney General Letitia James slammed Amazon for insufficiently protecting workers amid the coronavirus pandemic. filed a complaint against. As Amazon finished the quarter at $ 100 billion for the third time in a row, showing that customers continue to shop with the e-commerce giant and that it is one of the more tech companies. trillion dollars that dominate the market, has The question is whether more investors will start to pay attention to worker safety.
According to Morningstar, at a time when environmental, social and governance concerns have reached $ 2 trillion on Wall Street, with investors in suite C and global assets under management in the ESG fund, this is clear to this day. . Not here. The company issues high rates to investors on other key ESG topics, including climate change policies.
Workplace issues are included in Amazon’s ESG ratings, but they don’t scale as much as other factors relative to other large retailers. ESG analyst firm Just Capital, which ranks companies as “fair” on how they treat their employees and on safety at work, assigns similar scores to Amazon and Walmart. And on another key job factor, Amazon ranks # 1: local job creation.
Not all ESG scoring models value worker safety measures the same across all industries. According to an MCSI spokesperson, this includes occupational safety in ESG analysis, but “for industries and companies most prone to health and safety issues, we are deepening health and safety in these industries.” . generally includes mining operations and heavy manufacturing.
How occupational safety matters in ESG rating
Employee safety is an oft-overlooked part of ESG, and it’s one of Amazon’s biggest and most difficult issues to solve.
Roxana Dobre, associate director of consumer goods research for Sustainlytics, the Morningstar company that calculates ESG risk, said Amazon’s ESG rating has improved on environmental metrics, but it needs to improve. improve in the social category, especially with employees. How does he behave? Employee safety is a factor in Amazon’s overall ratings and the company has been hit recently, Dobre said, because the response to COVID-19 was “not timely” and the company did not. everything possible to reduce the spread of the virus. made.
One of the challenges of business ESG ratings is that they take a variety of metrics into account and aggregate them into a composite score, said Tensei Whelan, professor of business and society at New York University and director of the NYU Stern Center for Sustainable Business. .
“Even within a category, such as Workplace Matters, rating companies look at salaries, benefits, diversity and inclusion in addition to health and safety,” said Whelan. He also noted that there are other categories, such as energy, packaging and consumer safety, which are aggregated into a single number with varying weights based on the methodology of rating agencies.
Even if a company like Amazon scores low on employee safety, the company’s overall score on workplace issues can still be in the middle of the pack, as other factors such as salary and employee benefits may score higher than that of similar companies.
“This is one of the challenges of Amazon’s ESG rating, because it’s a big company with a lot of complexity,” Whelan said.
Importance of retaining workers
An Amazon spokesperson said in a statement that the company is “dealing with new and continuing risks that require continuous innovation, and we are making progress – investing billions of dollars in new measures. and safety technologies, and developing our global health at work. and the security team to more than 6,200 employees.
Worker safety and satisfaction is a big issue for Amazon, even though it hasn’t featured prominently in ESG ratings. He has faced an increase in business at a time when he is hiring at a breakneck pace. Amazon employs more than 1.3 million people worldwide and added 500,000 workers in 2020.
A recent New York Times survey showed data that Amazon was losing 3% of its hourly associates every week, even before the pandemic, with an annual turnover rate of 150%, to its peers. almost double the rate. Despite skepticism about Amazon’s increased focus on employees, corporate security experts say the issues need to be addressed to ensure it has the employees to support its business for decades to come, as the demographics of the workforce are approaching a declining pool of available talent.
How investors perceive worker protection
“We should think about it,” said Dan Romanoff, equity research analyst who covers Amazon for Morningstar. “We see the headlines.”
But Romanoff said he could count on one hand the number of questions asked on the subject over the past few months – and most of them came from reporters.
“It’s not something that investors are really focused on,” he said.
Amazon is a tough place to work. An analysis released in June by the Strategic Organizing Center, a coalition of four unions, found that Amazon workers are twice as likely to be injured on the job as e-commerce workers for Walmart, and the injury rate for Walmart. Amazon delivery drivers. 50% more than drivers for UPS.
Some investors are speaking out on this issue. Nicole Middleton Holloway, CEO of wealth management firm Strategy Squad, said: “I think I’m there. I am in favor of the fact that they should treat their employees better with humanity.
Judy Samuelson, executive director of the Business and Society program at the Aspen Institute, said working conditions are increasingly important, but companies need to think about them strategically and do what they need to do to be successful at long term. need to focus. “What are the inputs that are important to our business? There are things that should be summed up at the top. The thing Facebook really needs to be successful? It’s different from what Amazon really needs to go through, ”he said.
While no matter what company-specific workforce issues need to be addressed, Samuelson pointed out that 91% of profits are returned to shareholders each year. “We spend a lot more money on share buybacks than our employees,” she said.
ESG as a way to financially assess companies dates back to the 2006 United Nations Principles for Responsible Investment (PRI) report. Labor issues are becoming increasingly important as part of the ESG equation, according to Betsy Atkins, founder of Baja Corporation, a venture capitalist who also provides corporate governance advice on issues. issues such as ESG.
She said worker safety is already part of the risk management of the board’s audit committee and often focuses specifically on OSHA-mandated safety compliance regulations. And that has become a big part of the equation for good boards.
“As ESG has evolved, worker safety inspection is now also part of ESG,” she said.
Bezos: “We need a better vision”
Amazon’s workforce issues haven’t affected its brand. In its 2020 ranking of global brands, Interbrand named Amazon No. 2 behind Apple, which for years has faced more targeted pressure from investors on the labor practices of its Chinese giant contract manufacturing partner Foxconn. Amazon also topped Kantar’s list of top global brands in 2021.
“It’s not only a strong brand, one of the strongest of the strongest, but it’s a brand that we are all used to,” said Hayes Roth, director at HA Roth Consulting. “I don’t see any vulnerability there.”
Yet Amazon has started to respond to workers’ concerns. In his last annual letter to shareholders as CEO, Bezos acknowledged that “we need a better view of the success of our employees” and called Amazon “the best employer on the planet” and “the land for which work “. Promised to make it the safest place ”.
In May, Amazon launched a safety and injury prevention program that it plans to expand to all U.S. operations before the end of the year, as part of a $ 300 million security spend. workers. The company aims to reduce the rate of recordable workplace incidents, an OSHA measure covering injuries and illnesses, by 50% by 2025.
Bezos noted in his last annual letter that the idea that Amazon employees are “desperate spirits and treated like robots” is wrong.
But detractors of the company in the labor movement continue to say that it defines the attitude of the company towards the workers.
“It all comes from the model that Amazon has built to manage its human employees, who don’t understand that they are humans and not robots,” said Stuart Applebaum, president of the retail union, wholesale and department stores. According to the National Labor Relations Board, Amazon recently tried to violate labor rights by warehouse workers in Bessemer, Alabama, unsuccessfully, to join the union.
“At Amazon, you are run by a robot, you get your mission from an app, you are disciplined and even sent back by text,” Applebaum said. “I think Amazon is unique in that they’ve gone to remove human contact in the workplace.”