Amazon? ESG?

Excuse us for the hot take. But yes, we believe there is a place for Amazon based on its continued emergence as a rising leader in fighting climate change despite its complicated labor challenges.

The Elephant in the Room

Amazon has certainly had a mixed history of labor issues. The recent failed union vote, and its run-up, has brought up more controversy for Amazon. Amazon actually has unionized workers in major European markets.

Among big tech, Amazon’s employment model is a different animal. Relative to FAANG* peers, the company employs a massive labor force1, with many employees being lower-skilled laborers involved in preparing and moving shipments.


*FAANG is an acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google).

Employee Headcount and Median Compensation 1

Based on latest company reports


The nature of its workforce makes Amazon more similar to retail businesses than traditional tech leaders and, like other retail giants, Amazon took significant criticism for employee safety during the initial phases of the COVID pandemic. However, we observed that the firm committed large amounts of capital to improve the situation as the pandemic wore on. Amazon also took the lead among large retailers in raising the minimum wage during covid.

Amazon’s Leading the Corporate Charge for a Cleaner Planet

As mentioned earlier, any mention of Amazon’s inclusion in ESG portfolios is likely to center on its growing role as a climate change champion.

The company’s philosophy takes a pragmatic tone to it, as seen the below from their latest annual meeting report illustrates.2

“We are committed to and invested in sustainability because it’s a win all around—it’s good for the planet, business, customers, and communities.”


Amazon’s commitment to a cleaner world is illustrated in a number of significant initiatives:

  • Co-founded Climate Pledge in 2019, with over 50 member firms aiming for net-zero carbon by 2040, 10 years ahead of Paris Agreement of 2050.3

  • Amazon committed $2 billion Climate Pledge Fund to invest in decarbonizing technologies.4

  • Per Amazon, company became the world’s largest corporate purchaser of renewable energy in 2020.5

  • Introduced Climate Pledge label products ahead of Prime Day in 2020, making it easier for customers to discover and shop for more sustainable products in Amazon’s store.6


Supporting Corporate Climate Champions with ECOZ

Our primary focus with TrueShares ESG Active Opportunities is to develop a climate-resilient ESG ETF that focuses on the radical reduction of portfolio carbon footprint.

To achieve this, we invest in industries and firms that are actively leading the charge on the low-carbon economic transitions. Our focus means times when it’s difficult to identify a firm that is perfect in every aspect of ESG.

However, we have developed a systematic approach to find champions in carbon transition. Specifically, we focus on several criteria below.


How We Vet Our ESG Investments

Is the company a leader in its industries low-carbon transition?

Does the company currently have relatively low carbon emission intensity?

Does the firm's hiring and board make-up reflect healthy gender representation?

Is the firm a leader in technology transformation for its industry?

Do we see the firm as a good investment opportunity, with prospects for solid return-on-capital?

Does the firm have sound governance (board independence, data security, consumer privacy focus)?


When we evaluated the company’s current policies and future plans ahead of adding them to our portfolio, Amazon checked many of these boxes.

Does that mean there’s no work to be done by Amazon to make itself a better corporate citizen? Even Jeff Bezos would be hard-pressed to argue that.

But that doesn’t mean it can’t play a role as a carbon-reducing corporate leader in a well-rounded ESG strategy.

References:

  1. Source: Latest available company data in SEC Edgar filings (https://www.sec.gov/edgar/searchedgar/companysearch.html). Employee headcount data was taken from company annual reports. Employee compensation data was from the latest company proxy filings.
  2. Source: Amazon (Notice of 2021 Annual Meeting of Shareholders & Proxy Statement) https://www.sec.gov/Archives/edgar/data/0001018724/000110465921050333/tm2035374-1_def14a.htm.
  3. Source: The Climate Pledge https://www.theclimatepledge.com/us/en/Signatories
  4. Source: https://www.aboutamazon.com/news/sustainability/we-are-all-in-on-the-climate-pledge-net-zero-carbon-by-2040
  5. Source: https://www.aboutamazon.com/news/sustainability/amazon-becomes-the-worlds-largest-corporate-purchaser-of-renewable-energy
  6. Source: https://www.aboutamazon.com/news/sustainability/how-amazon-is-helping-customers-shop-more-sustainably

Important Information

The content herein includes the views, opinions, and analysis of the investment manager as of the date of publication. These views and information are subject to change without notice and are not meant to be a complete analysis of any market, industry, country, or company.

Certain information herein has been obtained from third-party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy, completeness, or timeliness of this document. TrueMark Investments accepts no liability for any losses arising from the use of this information and reliance upon the comments, opinions, and analysis in the materials is at the sole discretion of the reader.

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