How sustainable is Amazon? An ESG analysis of the retail giant

Sasja Beslik
The Startup
Published in
14 min readMay 31, 2020


Where in the thick books of business history will Bezos belong?

Jeff Bezos is presently the richest man on the planet, and the founder and CEO of Amazon has built an empire that is wider than anything seen before. Indeed, it is without comparison in the long history of capitalism.

At any moment, Amazon — a company employing 600,000 people — has more than 600 million items for sale and more than 3 million vendors selling them. It has collected and collects, every day, the world’s most comprehensive catalogue of consumer desire, allowing it to anticipate both individual and collective needs.

With its logistics business — and its growing network of trucks and planes — it has an understanding of the flow of goods around the world.

Bezos has also built an advertising business as valuable as IBM. Amazon Web Services is its name, and it’s controlling almost half of the cloud-computing industry. Approximately 40% percent of paper book sales and a third of the market for streaming video are controlled by the Amazon. Twitch, its video platform popular among gamers, attracts 15 million users a day.

Add The Washington Post to this portfolio and Bezos is arguably the most powerful man in global capitalism.

A spacey vision for humanity

The question is what Jeff Bezos wants to achieve? The answer is as surprising as it is, well, spacey. Bezos’ ultimate goal is not dominion over the planet Earth. No, his ambitions go way beyond that.

In his high school graduation speech, Bezos presented his vision for humanity. It included millions of his fellow earthlings relocating to colonies in space. A local newspaper reported that his intention was “to get all people off the Earth and see it turned into a huge national park.”

One might think this was just the words of a teenager who got a bit too carried away. That’s not the case. According to Bezos, his most important project is a profit-seeking company called Blue Origin. It’s dedicated to fulfilling the vision of his high school graduation speech. Blue Origin builds rockets, rovers, and the infrastructure that permits voyage beyond the Earth’s atmosphere. Every year he sells about $1 billion of Amazon stock to finance Blue Origin.

According to earlier interviews — he is not keen to give interview nowadays — what worries Bezos is that in the coming generations the planet’s growing energy demands will outstrip its limited supply. The danger is, he says, “not necessarily extinction,” but the risk that “we will have to stop growing.” Which he believes is a very bad future.

While many might be afraid that climate change will soon make the planet uninhabitable, Bezos is worried over the prospects of diminished growth. A scenario he describes as both grim and possible.

Jeff Bezos has dubbed Blue Origin his “most important” project. Source: Wikimedia Commons.

Growth like no other

But what is Amazon? Over the years, Amazon has morphed from an online bookstore to a one-stop shopping destination for pretty much anything under the sun. Not only has Amazon expanded its business overseas, it has also aggressively built its AWS cloud services business into the market leader and one of its strongest growth engines in recent years.

There has been a lot for investors to like about Amazon. Its share price has doubled in less than a year and the company’s revenue is now higher than the economic outputs of nations such as Hungary and Kuwait. Amazon’s market capitalisation is bigger than the combined value of Exxon Mobil, Procter & Gamble and AT&T, and it accounts for about 4% of the value of the entire S&P 500.

Amazon is increasingly posing as a responsible institution aspiring to the common good. After it got worldwide criticism for the alleged treatment of its workers, the company raised its minimum wage to $15 an hour in the U.S. (whereupon it attempted to shame the competitors that didn’t follow suit). Amazon has also set aside $700 million to retrain about a third of its U.S. employees for roles with new demands.

But there’s a darker side too. Last year, Amazon didn’t pay a cent of federal tax in USA and it is hard to get information if it does in other places in the world. The company has mastered the art of avoidance, exploiting foreign tax havens and moonwalking through the seemingly infinite loopholes that accountants apparently willingly work out for them. Amazon may not contribute to the national or international tax revenues, but public funds pour into its own bank accounts. Amazon has grown enormous, in part, by shirking tax responsibility. The U.S. government rewards this failure with massive public purchasing contracts, which will make the company even bigger.’s annual spend on lobbying (2000–2020). Source:

Also, Amazon’s spending on lobbying has increased by almost 470 percent since 2012. It also began to hire officials previously hired by government agencies. When the Obama administration’s top procurement officer, Anne Rung, left her post, she headed straight to a nice job at Amazon.

Amazon has sold facial-recognition software to law-enforcement agencies and has reportedly pitched it to Immigration and Customs Enforcement. Amazon aspires to become the portal through which government agencies in USA buy staples, chairs, coffee beans, and electronic devices. The U.S. government spends more than $50 billion on consumer goods each year.

When things get too convenient

Offer of free two-day shipping and the almost shocking levels of convenience that comes with that can have alarming environmental implications. Few people can resist being able to easily acquire items at the click of a button, but the rise in e-commerce lead to increasing use of plastic and paper packaging. Amazon has shown evidence of setting a target to reduce and recycle its delivery packaging by 2020, which did set itself apart from some of its peers, e.g. Alibaba. However, with increasing volume of shipping, the company remains vulnerable to potential reputational and compliance risks of sustainable packaging given its operations in US and EU.

Also, moving these packages across the globe straight to people’s doorsteps requires numerous vehicles that all have different, specific destinations. Additionally, the large numbers of packages cannot be consolidated into large vehicles making relatively infrequent trips; instead, packages are constantly being sent out, everything located on planes or trucks dispatched to the thousands of locations that must be reached.

E-commerce sales is predicted to grow by a 17% per year between 2018 and 2023 (versus 4% per year for total retail sales during the same period, according to e-Marketer). Currently, about 164 billion packages are shipped only in the United States each year. There is a tremendous environmental impact associated with the speedy, large-scale transportation of packages. With the increased demand for products due to lowered costs on the side of the consumer, more vehicles are used to deliver them, corresponding to more fossil fuel-related emissions.

Consumption-related pollution

This all raises the larger question of who is responsible for consumption-related pollution. Should the consumer buy less and search for (and only engage with) environmentally-friendly options, or must companies assume the role of being sustainable entities in the first place? Considering that Amazon is engaging in activities that directly contribute to climate change and environmental degradation every day, they should be held more accountable.

For example, recent efforts condemning the sale of single-use plastic products, including plastic straws and bags, have resulted in consumers taking on financial responsibility and social scorn. It is important to remember the producer’s role in limiting how much pollution results from their products, despite the consumer’s clear role in waste generation. Amazon’s lack of accountability is problematic. The company publishes very limited information about its environmental impact, and does not release any easily accessible form of a sustainability or environmental impact report, making it difficult for the public to evaluate Amazon’s actions.

Working conditions and labour practices

Nine of the biggest ESG mutual funds in the U.S. outperformed the Standard & Poor’s 500 Index last year, and seven of them beat their market benchmarks over the past five years. And all of them invest in Amazon. In most cases Amazon is the largest holding. The company can be found in almost all ESG funds around the world.

However, if you are a sustainable investor and look through the lens of environmental, social and governance (ESG) issues, there are serious issues to bear in mind.

Amazon has been plagued by class-action lawsuits on wages and working conditions. We’ve seen strikes by Amazon workers in Germany, Italy, Poland and Spain. By routinely paying wages barely above the U.S. poverty line, using intrusive surveillance systems to monitor its employees and imposing constant pressure to hit targets, Amazon clearly comes across as a laggard rather than a leader in labour practices.

Lacking access to collective bargaining, most Amazon workers have little recourse other than lawsuits and strikes. Amazon has also had tremendous success in circumventing unions at its facilities in most countries, with perhaps only 1% of its employees unionised. With high worker turnover and absenteeism due to illnesses caused by overwork and stress, significant business risks are mounting.

It is obvious that Amazon’s success has come at a high cost. Inhumane scheduling, notoriously long hours, and punishing quotas have made its warehouses resemble sweatshops. In exchange for easy purchase and super-fast delivery of low-cost products, Amazon could be on the verge of creating a “race to the bottom” in working conditions and labour practices as other retailers try to compete with it.

Amazon’s position as a major global online retailer has placed it in a position to perform exceptionally well during the Covid-19 pandemic. In March 2020, Amazon announced that it would be hiring 100,000 new workers in the US and Europe, while increasing hourly wages for new and existing staff. But it has not closed warehouses in the U.S. where a members of staff was tested positive for Covid-19. This has already resulted in conflicts between staff and management, and the board will ultimately be judged on how it resolves these complex issues.

Growing shareholder concerns

Amazon’s board is majority independent, but Jeff Bezos’ dual role as CEO/Chair is a stretch for such a huge company. Wendell Weeks is the CEO of Corning and serves on three boards in total. The rest of the board looks equipped to provide sufficient guidance and availability for Amazon’s management alongside their other duties, but they may need to consider appointing a lead director to assist with growing shareholder concerns.

In the beginning of May, Amazon tried, and failed, to block a resolution filed by shareholders asking the company’s Board of Directors to conduct an independent review of the effectiveness of Amazon’s customer due diligence process, including whether customers’ use of Amazon products results in human rights violations. Many shareholders are concerned that customers are using Amazon’s tech products and cloud-based services to violate human rights by enabling racism, violence, and mass surveillance.

Amazon submitted a “no action” request to the Securities and Exchange Commission (SEC) in an effort to block shareholders from gaining information about how the company assesses its current or potential customers and might be using its products and services in ways that tangibly harm marginalised, vulnerable communities and negatively affect shareholder value. For example, shareholders are concerned that Amazon Web Services, by hosting ICE’s case management and analysis software (developed by Palantir), is enabling ICE to carry out human rights abuses against immigrant communities through workplace raids, detention and deportation efforts. Investors in Inc. have filed at least 14 shareholder resolutions on a variety of environmental, social and governance issues ahead of the company’s annual meeting in May.

Amazon and the climate

Unlike most of its peers, Amazon has kept its carbon footprint figures hidden. But last year, finally released some data on its climate emissions, and they are staggering. The company emitted 44 million metric tons of CO2 equivalent in 2018, including indirect sources. That is larger than the emissions of United Parcel Service and FedEx. It’s also larger than the emissions of tech competitors Apple, Alphabet (Google), and Microsoft. Amazon is a laggard amongst large tech companies in refusing to report fully on its climate emissions.

However, Amazon is also investing globally to enable new renewable energy projects as the company’s has an ambition to be net zero carbon by 2040. Amazon’s first renewable energy project in Australia is a 60 megawatt (MW) solar project anticipated to come online in 2021 in northern New South Wales. Once complete, the project is expected to generate 142,000 megawatt hours (MWh) of clean energy annually, which is equivalent to the annual electricity of almost 23,000 average Australian households.

Amazon’s newest renewable energy projects in Europe include 122 MW from an onshore wind project in Västernorrland, Sweden, expected to come online 2022, and a new 50 MW solar farm in Zaragoza, Spain, expected to begin operations in 2021. Once enabled, these projects have the capacity to power the equivalent of 158,000 average European homes each year.

Amazon’s newest solar project in the U.S. will be located in Halifax County, Virginia. The 65 MW solar project is expected to generate over 150,000 MWh of renewable energy annually and will be Amazon’s 11th renewable energy project in the Commonwealth of Virginia. Separately, Amazon also recently announced a new solar project in Pittsylvania County that will power Amazon’s new HQ2 headquarters along with other Amazon-owned operations across the Commonwealth, including Whole Foods Markets and fulfilment centres.

Based on its current trajectory, Amazon is on 4-degree Celsius path, far away from where it should be. Source: J. Safra Sarasin.

If we look at Amazon’s past carbon emissions and carbon intensity, we can see that the company is constantly growing its business as well as its energy consumption. In other words: Amazon has not taken the climate and energy transition fully into account in its strategic business decisions. Based on its current trajectory, Amazon is on a 4-degree Celsius path, far away from where it should be.

Forget about traditional ESG

Measuring “ESG value”, and how much of it is created or destroyed by Amazon, is far from straightforward. On balance, for now at least, Amazon has become the shared global infrastructure; it shapes the future of the workplace with its robots; it will populate the skies with its drones; its website determines which industries thrive and which fall to the side.

Creating ESG impact through an innovative and profitable business model reshapes the nature of competition and makes societal impact a part of capitalism itself. This requires going way beyond a checklist of traditional ESG material factors.

The first step is moving beyond ESG scores to focus on specific social or environmental issues that carry meaningful economic effects in specific industries. Even this analysis falls short of truly connecting ESG impact with competitive strategy and opportunities for superior profitability. Materiality originated as a legal concept is largely oriented towards identifying risks that require disclosure. Much more than highlighting future opportunities for competitive differentiation, growth, and profitability.

Many of the operational factors highlighted by the traditional ESG approach are generic across an entire sector. This results in the outcome were incremental improvements in most material ESG factors converge over time into sector wide best practices and therefore do not confer any long-term competitive advantage on a single company within the sector.

Greenhouse gas emissions, for example, are a material ESG factor for every logistics company because they correlate with the cost of fuel usage. All major logistics players — such as FedEx, DHL, and UPS — are implementing best practices to reduce their fuel consumption as a competitive necessity. This adaptation raises the bar for operational effectiveness across the industry and reduces carbon emissions, but is unlikely to mean a sustainable competitive advantage for any one competitor.

What is ignored in this entire approach is the integration of ESG aspects into competitive strategy to differentiate products, expand markets, enhance human resources, or improve a company’s local business environment. A materiality analysis of ESG metrics may help investors identify industry laggards or measure, analyse, and price risks that protect portfolio value. However, this approach is insufficient to identify companies that are truly innovating by creating value through the use of ESG innovation to drive superior long-term economic results.

Material ESG factors can also be misleading to investors who fail to understand business model differences. One ESG scorecard that asked for the “volume of fossil fuels used” captured all of Walmart logistics fuel usage, but none of Amazon’s outsourced delivery system (even though Amazon does report the carbon footprint of its third-party deliveries). In reality, Amazon does not control its carbon footprint as much as many others do.

Even when companies do improve on material ESG issues, they rarely report on the economic benefits that accrue. The idea that companies should focus their ESG impact on improving their reputations makes them eager to be seen as “doing the right thing,” but, very often, reluctant to acknowledge that they profit from it. In many cases, companies actually conceal the economic benefit from investors, which reinforces investor ignorance about the importance of ESG related innovation as a source of economic value.

Companies can achieve superior economic performance only through a distinctive value proposition that either offers better value to target customers (differentiation) or achieves structural efficiencies that support lower cost versus competitors (cost savings). What has been overlooked historically in ESG thinking is that ESG innovation on key issues within every sector can profoundly affect strategic positioning in both differentiation and cost savings.

Three key questions on Amazon (and the answers)

– Is Amazon creating new products that address emerging societal needs or open currently unserved customer segments?

Well, mostly yes, in’s case.

– Is Amazon enhancing productivity in the value chain, whether by finding new efficiencies or increasing the productivity of employees and suppliers?

Yes and no, it is disruptive and powerful, hard to control on one side and extremely focused on increasing productivity on the other side. Split score.

– Is Amazon investing to improve the business environment or industry cluster in the regions where the company operates?

Yes and no, adding 10,000 jobs under the Covid-19 pandemic is great. But not paying any corporate tax is not. Split score again.


The conclusion is that it depends on your ESG style and the outcome you are looking for.

A hard core mission-driven ESG investor would certainly avoid the stock. There are too many moving parts and very limited insight.

An ESG libertarian will recognise the risks and harbour in the stock as “all of the others do” given the size of the stock in indices, and deploy “engagement”, proxy voting and collaborative initiatives.

A true LTA investor (long-term active) will assess a real economic-ESG value creation, which seeks out companies that achieve excellent economic performance by innovating to meet important societal needs.

The incapacity of the political system to ponder the problem of Amazon’s power guarantees many challenges. And those challenges will come in many shapes and sizes in the next 3-5 years.

In addition to above sources, the article draws on a climate assessment analysis done by Robin Rouger, Sustainability Research team at JSS Asset Management, as well as ESG data from MSCI.



Sasja Beslik
The Startup

MD, Head of Sustainable Finance Dev. at J. Safra Sarasin, the world’s leading private bank on sustainable finance. Author of “Guld och gröna skogar” (2019).