Amazon is Under Pressure Over Warehouse Safety Again

Amundi joins Tulipshare in asking the Magnificent Seven company to report on working conditions at its logistics sites

Ruth Saldanha 12 February, 2024 | 10:31AM
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Amazon UK

For the third year in a row, activist investor Tulipshare has asked that Amazon (AMZN) provide an independent report on working conditions for warehouse workers.

But this time, the proposal has a $2 trillion (£1.6 trillion) supporter. European asset manager Amundi supports the resolution, impact fund Tulipshare says.

The proposal was first filed in 2022, when it garnered 44% of the vote at the company's annual meeting. Adjusted for independent vote share, this worked out to 53% of the vote.

In 2023, the proposal got 35% support. Adjusted for independent vote share, it brings the support to 43%. Amazon founder Jeff Bezos owns more than 9% of the company.  

"Last year's proposal received the highest votes of any Amazon proposal filed that year," Tulipshare Fund chief executive Antoine Argouges tells Morningstar.

"Such a strong showing of support encouraged our decision to refile, as it is clear these issues are important to shareholders. Continued investigations and negative press show that this issue remains prevalent at the company.

"Shareholders proved last year that they want to see these risks mitigated and see Amazon take action to address its safety issues and mistreatment of workers. We are hopeful this year's resolution will receive even stronger support".

Amundi declined to comment.

Back in its 2023 proxy statement, Amazon had responded to Tulipshare's proposal saying "we have disclosed our workforce incident rates along with industry data. Our goal is to be the safest workplace within the industries that we are typically designated: the General Warehousing and Storage and Couriers and Express Delivery Services industries.

"While we still have work to do, from the beginning of 2019 to the end of 2022, even with the addition of nearly 900,000 new employees, we saw our worldwide recordable incident rate improve by almost 24% and our lost time incident rate improve by 53%".

Amazon declined to comment on the 2024 proposal.

Typically, companies meet investors whose proposals receive wide support, however.

"If investors feel unheard, this raises a governance red flag which can spill over into votes against board nominees or pay approval", says Jackie Cook, director, stewardship, product strategy & development at Morningstar Sustainalytics.

"Companies definitely want to avoid this. But an enlightened board will want to hear from investors, put their position across and also learn".

Why are Amazon Workers' Rights on the Ballot?

According to Tulipshare, in 2022, there were 38,609 total recordable injuries at the company, with 95% of those being serious enough to leave workers unable to perform their regular job functions or forced to miss work entirely.

"Recent developments, including ongoing investigations by the US Department of Labor, US Department of Justice, and the US Senate Health, Education, Labor, and Pensions (HELP) Committee have highlighted underreported injury rates, inordinately high employee turnover rates, and productivity targets that jeopardise the health and safety of workers within Amazon's fulfilment warehouses, reinforcing the need for shareholder intervention," the filer said in a press release.

Why do Shareholders Care About Amazon Workers?

Morningstar covered Amazon's 2023 AGM and found that the 18 shareholder proposals on the proxy card (up from 15 in 2022) covered a broad range of environmental, social, and governance themes. Four of the resolutions were what Morningstar calls "key resolutions", supported by more than 40% of independent shareholders. Among them were:

1. Freedom of association and collective bargaining;
2. Warehouse working conditions;
3. Customer use of facial recognition technology; and
4. Customer due diligence on human rights.

While average adjusted support for the four proposals has fallen slightly, "it appears that many shareholders believe greater transparency on these matters is of benefit," Morningstar director of investment stewardship research Lindsey Stewart SAYS. Average support for environmental and social resolutions fell in 2023 as large managers backed away from ballot items considered to be highly prescriptive, poorly defined, or redundant.

On why shareholder support dropped last year, Cook argues it is hard to agree with the position that it only, or even primarily, came down to the resolutions themselves, pointing to Morningstar data showing an average 10% drop in support for sustainability-linked proxy ballot measures (not counting measures put forward by anti-ESG groups). Amazon's two worker rights resolutions are a case in point: essentially the same ask, with no obvious improvement in the issue from 2022 to 2023, yet a substantial drop in support. 

Minority Support Doesn't Mean Defeat

With the current voting structure, because Bezos owns a little under 10% of Amazon, it is harder for minority shareholders to prevail, using the majority vote standard. Proxy votes are generally nonbinding, after all. But shareholder proposals help measure investor attitudes around key issues and are essentially a barometer for management.

"We believe it's critical as a responsible investor to engage with companies on ESG issues, even at controlled companies," says Emma Pullman, chief stewardship officer at BCGEU (British Columbia General Employees Union).

"We look to the companies we invest in to manage their human rights risks, address their human rights impacts and provide adequate disclosure as a demonstration of strong risk oversight and sound corporate governance.

"The best outcome is that the company agrees to the disclosure we've asked for, and begins providing investors with critical information on supplier audits. If not, we will consider following up with the company and refiling the proposal next year if necessary".

For Argouges of Tulipshare, success means: "Blackrock and Vanguard supporting our resolution leading to a majority vote, ultimately ensuring fair and safe working environments for Amazon warehouse workers".

At the end of the day, each vote offers management teams insights into shareholder sentiment. Activist shareholders believe that if enough of the minority shareholders vote in favour of a resolution, management and the board will take notice and effect change.

Note: This article was amended to update Tulipshare's description

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amazon.com Inc173.54 USD-0.68Rating

About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor, Morningstar.ca

 
 

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