This is part 2 of my ethical review of Amazon, and it will broadly examine the topic of Amazon’s ethics and social responsibility. (Part 1 focused on the Amazon Dash program.) I think the best way to start is by looking at what Amazon has to say about itself in its latest sustainability report.
Amazon’s 2020 Sustainability Report
Amazon published its 124-page 2020 sustainability report just a few months ago, so the information is pretty up-to-date. Although the report is long, it’s fairly thin on content because much of it is taken up by fancy but meaningless graphics and there’s an awful lot of repetition.
I’m pretty used to reading sustainability (/social responsibility) reports at this point and have an idea of what to look for. Side note: Hans Rosling’s book, Factfulness, is a useful primer for non-scientists who aren’t used to analyzing these kinds of data and forming conclusions from them. Here are my notes from my reading of Amazon’s 2020 sustainability report; I was also looking at UPS’s report at the same time, to keep things in perspective.
- There’s often no context. For example, the report states that “Amazon has nearly 30 LEED certified buildings in the US.” Well, that’s good to know, but what percentage of Amazon’s total building count is this? Energy-efficient LEED-certified buildings are fairly common among new buildings, these days. Also, are these LEED-certified buildings mainly Whole Foods stores? Amazon implies, later in the report, that this is indeed the case. If there’s one bright spot in Amazon Corp., it’s Whole Foods. But Amazon deserves little credit for that – Whole Foods was good before Amazon bought it. In fact, I’m concerned that Amazon might ruin a good thing.
- Irrelevant information. The report’s opening letter places the most emphasis on Covid-19 precautions and the number of new jobs that Amazon has added during the pandemic. This isn’t relevant to company sustainability, or it’s tangential at best, but it’s placed front and center in the report.
- Emphasis on future goals rather than actual accomplishments. For example: “In 2019, Amazon co-founded The Climate Pledge—a commitment to be net zero carbon across our business by 2040.” This is a common tactic in sustainability reports from multinational corporations. For example, about 20 years ago companies such as Nestlé were proud to announce a commitment to the end of slavery in their supply chains by 2020. They didn’t come close to achieving this, as outlined in my post on slavery in the chocolate industry, but the optics looked good at the time. Amazon’s promise buys more time to continue business as normal – mission accomplished (without actually accomplishing anything).
- Carbon Footprint: Amazon does report its carbon footprint in meaningful terms. The company’s total carbon footprint has risen 15% from 44.4 million tons of CO2 in 2018 to 51.2 million tons in 2019. Because the company has grown, Amazon also reports the carbon footprint per dollar of merchandise sales: this was 128.9 grams in 2018 and 122.8 g in 2019 – a reduction of 5%. But an increase in total company carbon footprint is not compatible with the goal of being net zero carbon by 2040. Obviously, this total carbon footprint should be decreasing! I’ll get back to that later.
- Too much repetition. Amazon mentions that its plan to have 100,000 electric delivery vans by 2030 no less than 11 times in the report! Amazon got an awful lot of mileage out of this story – I’ve been bombarded with ads about it and there’s a huge emphasis on how these vans will look. So, since Amazon has made such a big deal about it let’s take a look in more detail.
Amazon’s electric vehicle plan
It’s good that Amazon is finally doing something, but really the company could have started addressing the carbon footprint of package delivery a lot sooner. For comparison, an older UPS sustainability report states:
In 2017, we continued expanding our rolling laboratory — UPS’s fleet of approximately 9,100 alternative fuel and advanced technology vehicles.
I’m not saying that UPS is wonderful but even against this benchmark from 2017, Amazon seems to be lagging badly.
…with 10,000 new vehicles on the road as early as 2022 and all 100,000 vehicles on the road by 2030. This is projected to save millions of metric tons of carbon by 2030. – Amazon’s 2020 Sustainability Report
It’s obvious from Amazon’s aggressive advertising on this that it’s the crown jewel in their plan. It’s a perfect marketing strategy because the branded vans have attracted lots of media attention and will deliver sustainability messaging directly to our neighborhoods. It probably is the best part of Amazon’s report but, like the 2040 climate goal, it’s distant-future based and should have been addressed much sooner.
Amazon’s commitment here is to have 10% of the vans on the road “as early as” 2022 and all 100,000 vans operational by 2030. Previously, Bezos had said that Amazon would have 100,000 electric vehicles on the road by 2024.
Amazon clearly has a bad reputation, and the electric van plan is an attempt to fix that image – which is fine. But it seems that the fixes outlined in Amazon’s 2020 report were designed to roll out as slowly as possible (while obviously looking as good as possible). Case in point: Let’s look at Amazon’s carbon footprint next!
Amazon’s carbon footprint & cloud computing
You know how air travel is often cited for its high carbon footprint? Well, move over airplanes (especially since lockdown began) as the ICT (Information and Communications Technology) sector is now responsible for a bigger chunk of carbon emissions than air travel. Since 2013, the percentage of worldwide carbon emissions attributed to the ICT sector has risen from 2.4% to 3.7% (compared to around 2.5% for air travel). Cloud computing is a big chunk of that and who dominates cloud computing? Not Google or Microsoft, but Amazon Web Services (AWS).
Amazon Web Services is the largest cloud service provider in the world, with an ever growing network of data centers, often situated in locations with dirty forms of energy.
Northern Virginia is now known as Data Center Alley because the data centers there process something like 70% of internet traffic. The main electricity provider in the area, Dominion Energy, has increased reliance on fracked gas for electricity production and seems to be in no rush to increase the percentage of renewable energy in the mix. According to Greenpeace’s Click Clean report on Virginia:
Since 2017, AWS appears to have turned its back on its 100 percent renewable commitment, increasing its already massive operations in Virginia by 59 percent, without any additional renewable energy supply. AWS itself is an unknowing silent partner in Dominion’s growth strategy, due to the gravitational effect created among other data center operators who want to tout to their customers a direct connection to AWS’s massive Virginia operations.
Greenpeace’s Click Clean report gave Amazon a grade of C, compared to an A for Google and a B for Microsoft. Note also what while Google and Microsoft have made good headway towards reducing their carbon footprints, Amazon’s total carbon footprint has risen 15% in just one year from the 44.4 million tons of CO2, shown in the in the graphic below, to the 51.2 million tons reported in 2020.
Let’s be clear: as the largest retailer on the planet, Amazon should have offset all corporate carbon emissions a decade ago or, at the very least, after the 2016 Paris agreement. Several of the companies that I featured here and on my sister site (Ethical Bargains) have offset their carbon footprints going back years (e.g., Clif Bar). This can be done via non-profits that conserve and plant forests worldwide and it could be set up very quickly if Amazon wanted to do it.
Amazon ethics and social responsibility: Packaging
I touched on this in the first post (How Ethical is Amazon?) – faster shipping means a larger carbon footprint and a more stressful work environment for the workers involved. Faster shipping is central to Amazon’s business model – many customers pay the Amazon Prime membership fee primarily for the fast free shipping.
But besides the carbon footprint of fast shipping, what about packaging materials? There were a few factors that led me to phase out Amazon.com for online purchases and one of them was the amount of packaging that Amazon continued to stuff into its boxes and plastic bubble-wrap envelopes. Here’s a quote from Amazon’s 2020 sustainability report:
We are working to source 100% of the wood fiber in this packaging from responsibly managed forests or recycled sources.”
Working to….?! We’re all familiar with how much cardboard Amazon generates – why on earth has this not all 100% post-consumer recycled for years? Amazon has been shipping products for more than two decades and is only now announcing that they are working towards fixing this. FFS.
This mirrors Amazon’s actions on carbon footprint and delivery vehicles – it all involves future promises and is starting way too late. Amazon could have become a leader in sustainable packaging and carbon-neutral delivery but the fact that it chose not to, says a lot about the company’s priorities, just as the Amazon Dash project did.
Tax avoidance by Amazon
I just completed my US tax return and noticed this breakdown of US tax income and spending:
Ignoring the 21% outlay on defense for now (a subject for another post), note that 39% of US federal tax comes from individuals and only 5% from corporations. Most of us pay tax at least twice – once after earning it and a second time when we spend it and/or make income from investing it (see this post on ethical investing, by the way!). Meanwhile, Amazon Corp (and Bezos, personally) pays much less than it should.
This topic of Amazon’s tax avoidance has been covered many times, so I’ll just refer you to this 2019 article covering an investigation of the world’s biggest companies by Fair Tax Mark.
The report singles out Amazon, which is run by the world’s richest person, Jeff Bezos, as the worst offender. It said the group paid just $3.4bn in tax on its income so far this decade despite achieving revenues of $960.5bn and profits of $26.8bn. Fair Tax Mark said this means Amazon’s effective tax rate was 12.7% over the decade when the headline tax rate in the US has been 35% for most of that period.”
That extra $5 billion would have come in handy for supporting schools, hospitals, etc. If Amazon really wanted to make things better during the pandemic (as stated at the opening of the 2020 sustainability report) a good way to do this would have been to pay its fair share of taxes.
Amazon gets US tax rebate
OK – one more update because the 2020 tax situation is actually worse. Everyone knows that Amazon has been killing it during the pandemic but, amazingly, the corporation’s tax rate seems to be actually dropping! Here’s an update for Amazon’s first quarter of 2020 from the Institute of Taxation and Economic Policy:
And this revenue boom translated into $3.3 billion of pretax income for the quarter. If the company ends up paying the statutory 21 percent U.S. corporate tax rate on those earnings, that would mean almost $700 million of sorely needed federal tax revenue for just the first three months of this year—but because Congress has allowed Amazon to shirk virtually all of its income tax responsibilities, Amazon’s federal income tax bill for the quarter will likely be a lot closer to zero than $700 million.
Despite reporting $29 billion of U.S. income over the last three years, the company has reported a total of zero current federal income taxes over the same period. (In fact, the company’s three-year federal tax total was negative—a rebate of $102 million!)
Amazon ethics and social responsibility: Summary
I used to actually have relatively hopes for Amazon and only gradually stopped buying items on Amazon.com over the last decade as I discovered more about the company.
Amazon appears to be doing as little as it figures will be publicly acceptable, buying more time by focusing on promises for 2030 and 2040. Even if we did accept these goals (or vague verbiage, in some cases) we would expect to see progress toward them, such as a decrease in Amazon’s total carbon footprint, which instead rose by 15% in one year. Coupled with that, the Amazon’s web data centers are reportedly regressing in the percentage use of renewable energy rather than progressing.
Amazon could do more to work with any number of organizations to offset its carbon footprint, starting today. Some ways of doing this (e.g., the Pur Project) are better than others but all options are better than doing nothing. The clock is ticking and mitigating climate change is all about acting quickly.
Same deal with Amazon’s packaging – the company is now “working towards” using materials that are recycled or from responsibly-managed forests after shipping out billions of packages for more than 25 years.
There are several topics that I didn’t cover in this post, either because they are fairly well covered in the media (e.g., working conditions), or because I’ve touched on them in previous posts (e.g., Amazon’s low ethical rating for electronics manufacturing). There are also topics that I edited out because the post was a little long: drone delivery, controversial items stocked by Amazon, Amazon’s poor rating for animal welfare, etc.
There would also have to be a whole post dedicated to Amazon and Bezos’s impact on privacy, and their collaborations with organizations such as the NSA – instead I’ll refer you to these posts by The Intercept and the ACLU.
Ring provided its Ukraine-based research and development team virtually unfettered access to a folder on Amazon’s S3 cloud storage service that contained every video created by every Ring camera around the world. – The Intercept
Amazon is building the tools for authoritarian surveillance that advocates, activists, community leaders, politicians, and experts have repeatedly warned against. – ACLU
There were one or two more positive topics (e.g., some employee benefits) that I didn’t cover here but I did consider them when deciding on an ethical rating. I’ll always try to be objective here and hope that I’ve managed to do this. Please comment below if you think that I missed some important points, whether positive or negative.
Also, it’s necessary to mention the “elephant in the room” with Amazon, which I touched on previously: the huge role that Amazon plays in enabling throwaway consumerist culture. You could certainly argue that Amazon deserves a rating of zero Green Stars on this point alone.
I thought that after reading Amazon’s 2020 sustainability report, I might have to increase my ethical rating a little bit. As it turns out, I have no compunction about sticking with the same rating as the last Amazon post that looked at the Amazon Dash program.
I’m scoring Amazon 1 out of 5 Green Stars for social and environmental impact.