Amazon Pressed on Workers’ Rights – Again
Long-term shareholder value comes under threat as tech giant fails to live up to human rights commitments.
Issues around workers’ rights to freedom of association and collective bargaining are due to come under the spotlight once more during Amazon’s 2024 AGM next week.
Building on similar initiatives in previous years, a 20-strong investor coalition including the likes of Storebrand Asset Management , AkademikerPension, Cardano and CCLA Investment Management – and led by the Shareholder Association for Research and Education (SHARE) – have come together to file another resolution on the subject.
Due to be presented on 22 May, the proposal aims to assess how the tech giant’s actions align with its policies to respect international human rights law – including the Core Conventions of the International Labour Organization (ILO) and the ILO Declaration on Fundamental Principles and Rights at Work.
“We continue to be concerned that Amazon’s reported conduct towards employees seeking to unionise contradicts its stated commitment to respect fundamental rights to freedom of association and collective bargaining, as articulated in the UN Global Principles for Business and Human Rights (UNGPs),” Martin Buttle, Better Work Lead at CCLA, told ESG Investor. “Such apparent misalignment poses material reputational and operational risks to the company, which, if left unaddressed, may threaten long-term shareholder value.”
The upcoming AGM comes amid ongoing unionisation efforts at Amazon, with recent applications made in the US, UK, and Canada. Meanwhile, various media reports have revealed cases of intimidation, retaliation and surveillance. The company was recently fined €32 million ($34.55 million) by France’s data protection authority CNIL for “excessive” and illegal surveillance of its employees.
“We want to see Amazon publish an independent report so we can identify the extent to which these allegations are true, and whether they are creating material risks to the long-term value of the business,” said Buttle. “Ultimately, we believe the company should implement its own policies and demonstrate its credentials as a rights-respecting employer.”
According to the CCLA, an alleged US$14 million has already been spent by Amazon to quash unionisation efforts – including US$4 million on consultants brought in to dissuade workers from joining.
“Amazon may insist it’s committed to recognising employees’ fundamental right to freedom of association, but public reports suggest its actions continue to fall well short of that commitment,” said Sarah Couturier-Tanoh, Director of Shareholder Advocacy at SHARE. “This apparent misalignment creates material risk for investors and threatens long-term shareholder value, which is why SHARE and its co-filers are urging the company to do better.”
SHARE has been leading the investor movement for workers’ rights at Amazon since 2021, when it filed a first shareholder proposal in response to widespread reports of the company’s anti-union activities. Since then, the pace of unfair labour practices at the multinational has accelerated and expanded, Couturier-Tanoh explained – moving beyond the US to countries like the UK and Germany, where labour standards are considered to be higher.
Boiling point
With a market cap of US$1.97 trillion – roughly similar to that of the MSCI China Index (US$2.01 trillion) – Amazon is currently the world’s fifth largest company by value – operating across the US, Europe and Asia. As the second largest employer in the US (1.1 million) and one of the biggest globally (1.6 million), it has come under increased scrutiny in recent years over working conditions and trade union rights within its premises.
“As a UK-based investor, we are particularly concerned about reports from Coventry, where GMB union has alleged efforts to undermine union organising including captive meetings, displaying anti-union messages and flooding the fulfilment centre with QR codes that let employees cancel their membership,” said Buttle. “Whilst we welcome Amazon’s commitment to upholding high standards in its workforce, we are concerned that internationally, it has faced well-documented criticism for its approach to recognising trade unions and workers’ right to collectively bargain.”
Last month, GMB filed legal proceedings against Amazon on that basis that staff had been pressured to leave the union and attend hour-long anti-union seminars, while union representatives had reportedly been bullied and intimidated. At the time, a GMB senior organiser said Amazon had become a “multi-billion-pound corporation…out of control”. The multinational’s ongoing poor track record on employee rights has also meant institutional investors have ramped up their actions.
“Cardano has been following the practices at Amazon as it is involved in several human capital-related controversies, including interference with workers’ rights to freedom of association and collective bargaining,” said Marie Payne, Responsible Investment Officer at Cardano. “We believe that the severity and scale of the controversies poses the risk of infringing several international standards. Amazon has unfortunately been unresponsive to engagements on the topic.”
Earlier this month, a US National Labor Relations Board (NLRB) judge ruled that Amazon CEO Andy Jassy had broken the law when he made anti-union comments on several occasions in the media. Speaking on CNBC in 2022, he said workers were “better off not [joining a union]”, calling them “bureaucratic” and “much slower” than direct connections with managers.
“This issue matters on many dimensions,” Tulia Machado-Helland, Head of Human Rights and Senior Sustainability Analyst at Storebrand, told ESG Investor. “It’s in Amazon’s own interest to come clean about numerous allegations of interference with workers’ right to unionise by allowing for a third-party assessment of the implementation of its own policies.”
With emerging EU regulation such as the Corporate Sustainability Due Diligence Directive (CSDDD), which will soon require mandatory human rights due diligence, large companies of the likes of Amazon will also face increased financial risk. The regulation would mean a company can be held liable for failing to prevent or address adverse human rights impacts, Machado-Helland explained.
“We have been trying to engage with Amazon on workers’ rights for more than four years within various investor engagement coalitions, but despite many attempts, the message hasn’t gotten through,” she added. “We haven’t seen progress and allegations continue to arise in this area, despite the company’s stated commitments. As a result, we once more saw it necessary to co-file a shareholder resolution this year.”
Ripple effect
Beyond the ethical implications of failing to abide by human rights law, misalignment with internationally recognised standards on workforce practices presents significant risks for investors.
“Effective and transparent due diligence is needed to reassure shareholders when repeated allegations of misconduct arise,” SHARE’s Couturier-Tanoh told ESG Investor. “In the past couple of years, global investors have taken stances in favour of better labour relations to mitigate those risks in their investment portfolio. Several companies have answered the call, including Starbucks and Apple, but we are still waiting for Amazon to follow suit – and, frankly, to do better.”
In late 2022, Amazon’s investors co-signed a letter calling for the board of directors to commission an independent, third-party assessment of its adherence to stated commitments on workers’ rights. Having received no meaningful response, they escalated the engagement by co-filing a shareholder resolution ahead of the company’s 2023 AGM.
“This year, the co-filing involved more investors across several countries, including the US, the Netherlands, the UK, France and several Nordic countries – showing how the issue is gathering global attention,” said Payne. “The controversies relating to Amazon’s practices around freedom of association are not just in the US but across different jurisdictions, putting them at risk of disruptions to business operations in multiple regions.”
Last year’s proposal achieved 34.6% of the overall vote and 41% of independent shareholder votes, down from 47% of independent votes on a similar resolution in 2022 – which the CCLA interpreted as symptomatic of the “politically charged ESG backlash” in the US at the time.
“Despite such a significant vote in support and efforts by the CCLA, SHARE and other investors to reach out for dialogue on this issue, we have yet to receive a response,” said Buttle.
Amazon has previously faced investor pressure on other fronts – including plastic use and investor dividends.
“Respecting labour rights, including freedom of association, is essential for maintaining a social licence to operate and ensuring long-term sustainable returns,” said Payne. “Companies with strong labour practices create a more stable and sustainable business environment – which, in turn, benefits workers and investors.”
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