Unpacking Corporate Responsibility at Amazon

Thud. Another Amazon Prime package drops on the doorstep, a sound almost as common as the mailman’s steps themselves.

For tens of millions of consumers, Prime is a gateway to everything from baby wipes to dinner to a quick fix for a misplaced wedding ring. Most shoppers use or have used Amazon, a fact that highlights the retailer’s power as well as its responsibility to be a good corporate citizen. At a time when trust in big business is flagging, the pioneering online retailer has an outsize presence, and any move it makes toward improving corporate responsibility promises to be a seismic shift that would influence all the industries impacted by Amazon’s meteoric growth – from food and electronics to web hosting and media. So what is the state of CR at Amazon?

A CR Magazine review of its practices and strategy finds that Amazon has made significant progress in two major areas: packaging improvements and renewable energy commitments. These are both material issues for the company, a big deal from an environmental perspective, and deserve to be lauded. Amazon’s “frustration-free” packaging is a great example of a sustainability initiative that comes from following the customer’s lead. Amazon’s description of this packaging is straightforward:

“Packaging that is made of 100% recyclable materials, easy to open, and designed to ship products in their original packaging, which eliminates the need for an additional shipping box.”

This change sounds modest, but it actually involves many layers of supply chain engagement, including working with manufacturers and engineers. Since products sold on Amazon never see a retail store, packaging need not include many of the security measures or display elements that keep a product pristine and front-facing on a brick-and-mortar store shelf. By eliminating these elements, Amazon saves materials, reduces costs and pleases customers.

Amazon sustainability lead Kara Hartnett Hurst recently claimed that packaging accounted for $1.6 – $3.3 trillion worldwide. That’s a lot of money for something you immediately throw in the trash. As of December 2017, Amazon’s sustainable packaging innovations have eliminated 215,000 tons of packaging material and avoided 360 million shipping boxes. While boxes that cover overboxes sound like low-hanging fruit, it is clear that bringing this initiative to fruition took considerable effort, given Amazon’s size and scope. With ongoing advances in materials and processing, it’s a good bet that the company will continue innovating in this area to cut costs (saving time and materials) as well as waste.

Amazon has also made strides in renewable energy, a material issue given the company’s expansive Amazon Web Services offering. Data centers are big business and big energy. The company explains, “Amazon Web Services has a long-term commitment to achieve 100% renewable energy usage for our global infrastructure footprint and is making good headway.” The company says it is approximately 50% renewable powered, as of the end of 2017. These are significant achievements, although somewhat amorphous. Amazon does not disclose its total energy footprint, the definition of “infrastructure” in this case, or its plan for getting to the other half of that renewable energy footprint. And the retailer releases only a small amount of data on energy procurement and renewables. Presumably, this information is available in-house and used by the company to plan for that other 50%, but the lack of more detailed information to the public means that its goals and progress claims are not as impactful as they could be. There are many stakeholders who would love to know what “good headway” adds up to in actual numbers.

This vagueness gets to the next step in CR that Amazon has yet to take: the one toward more transparency. But here’s where Amazon’s position on disclosure gets interesting: it’s company policy to closely hold data on all its activities including sustainability. Those expecting more insights into Amazon’s corporate responsibility goals when Hurst, an experienced sustainability practitioner, took the helm were cautioned that the company marched to its own drum in the realm of reporting.

At the BSR conference last year, Hurst spoke from the stage about this pressure to report that the sustainability community assumes as a norm:

Having been in [the sustainability field] a long time now, and been a part of it for a long time myself, there are things people tell you: you have to do this and you have to do that and if you don’t report here you’re not credible and if you don’t put it out in this format, you’re not credible.

Well, I challenge all of that. I think that all of us … should think about how those mechanisms that served us well in the past … may not be the ones we need moving forward. If they’re not adding a huge amount of value to whoever you’re focused on—and for us that’s our customers—then don’t do it. Don’t engage.

Some thought this approach might loosen up when Amazon amassed a veritable sustainability army, starting with the hiring of Hurst, who came from The Sustainability Consortium, co-founded by Amazon competitor Walmart. When she was hired, in August of 2014, GreenBiz’s Joel Makower noted that reticence about data was standard practice for Amazon:

The company, in typical closed-mouth fashion, has not announced Hurst’s hiring and declined to comment on it. Hurst, too, was mum, even declining to reveal her title, where she’ll be reporting, or what her mandate will be at the retailer.

However, he alluded to Hurst’s strong reputation in the field as a good sign: “I’ve known Hurst for years — she’s no shrinking violet — and am guessing that (Amazon CEO Jeff) Bezos or others said the right things to lure her to Seattle from New York. It will be interesting to see if it was worth the journey.”

Marc Gunther, writing in Guardian Sustainable Business U.S. in 2016, called her group a sustainability “dream team.” As of this writing, LinkedIn shows 39 current Amazon employees with sustainability in their title. A team that robust is unusual, even for a large corporation like Amazon, and indicates an equally robust program.

Why is disclosure so important? What difference does a paucity of data make if we believe—and we have no reason not to—that Amazon is making a significant commitment to CR/sustainability?

There is this thought: corporate sustainability performance is, by design, a moving target. That’s because we all understand that there’s a lot of work to do, and moving organizations takes time. Moving very large companies takes even more time. Goals may undergo regular revision as improvements are put into work throughout the many departments and networks that comprise a big company. So we judge organizations not only by their performance, but by the targets they set, how rigorous and “material” they are to the company, how effectively the company works to meet the targets—and by the level of communications that the company exercises while the hard work is taking place. Big companies of any kind have much more knowledge about the internal impacts and opportunities of sustainability and corporate responsibility than any of their stakeholders outside. And by providing that information about what’s important, they help stakeholders understand what a company is doing.

Also, sharing best practices is a major tool in helping more companies make more progress, faster. Here’s where more information from Amazon could be vitally important to the entire CR community. The company’s amazing efficiency in its distribution performance, its ceaseless push for innovation, and its unparalleled customer service position it perfectly to be a leader in CR. It could easily claim that title when it takes that next step and increases its reporting so that CR stakeholders can properly give credit for practices and achievements where credit is due.We can measure impacts and progress, we can compare peers, and we can add numbers and percentages to the overall sum of efforts by large corporations to get a sense of global progress.

Indeed, the act of reporting can improve tracking, methodology, process and challenge the people inside a company to actually do bigger and better and make those sustainability wins happen.

“Once it’s out there you have people who react and comment, and just going through that series of steps puts so much more emphasis on both the quality and the results that it’s not even arguable that the process of reporting leads to improvement and performance,” explains Tim Mohin, chief executive of the Global Reporting Initiative, who has been critical of large technology companies that don’t fully embrace sustainability reporting.

“Just saying we’re doing it, fine you’re probably doing something, But actually proving it and being willing to put your company’s brand name on it and incur the legal risk of making a statement in the public — that changes everything,” he added.

Participation in global sustainability programs like GRI’s reporting standards or the RE100 is not a requirement for a company to be a strong sustainability actor, but in the complex world of corporate sustainability, those partnerships and collaboration sure help.

While 82 percent of the Fortune 500 produced a CSR or sustainability report in 2016, according to the Governance and Accountability Institute, we recognize Amazon and its founder are wired differently than the average company. Unlike billionaire tech tycoons Bill Gates,Mark Zuckerberg, Pierre Omidyar and Mike Bloomberg – all of whom pledged to give away the majority of their fortunes — Amazon chief Bezos has made no such promise. But he did buy the Washington Post and is being applauded for investing in journalism in the nation’s capital.

Transparency is the new black. With the company about to open a new headquarters and the resultant community impacts that second “Amazon City” will create, it’s a perfect time for the online supercenter to take the next step toward telling its CR story.

This article was originally published in CR Magazine

Sources:

https://www.greenbiz.com/blog/2014/08/15/kara-hurst-named-amazons-first-sustainability-executive

https://www.greenbiz.com/video/amazon-sustainability-and-packaging

https://3blmedia.com/News/Flash-Report-82-SP-500-Companies-Published-Corporate-Sustainability-Reports-2016

https://givingpledge.org/