Resolution filer As You Sow urges firm to commit to plastic phaseout timeline.
Shareholders have welcomed a “significant” reduction in Amazon’s plastic use, but have urged the firm to commit to specific targets and timelines to ensure that goals are met.
In 2022, Amazon used 85,916 metric tonnes of single-use plastic to ship orders to customers according to the company’s recently released sustainability report. This represents an 11.6% decrease from the 97,222 metric tonnes of plastic used by the firm in 2021.
Amazon also announced that it will phase out plastic mailers, which are suspected to account for a significant amount of the firm’s plastic use, although it is yet to provide an exact timeline for the removal of these products.
Kelly McBee, Circular Economy Senior Coordinator at As You Sow, told ESG Investor that Amazon’s 11% reduction in plastic use was “incredibly noteworthy”.
Since 2021, the US-based shareholder advocacy group has filed shareholder proposals with Amazon requesting the reduction of its plastic packaging use in alignment with a Breaking the Plastic Wave study by Pew Charitable Trusts.
The Pew study concluded that plastic demand should be reduced by at least one-third to cut ocean plastic pollution by 80% by 2040. So far, only Unilever and Nestle have made such commitments, with the former pledging to achieve a 50% reduction in their virgin plastic use, and the latter to a one-third reduction in plastic use.
As You Sow engaged Amazon with asset managers Green Century Capital Management and Cardano Asset Management for three years, with the overall value of shares voted in support of its 2023 resolution totalling US$274.9 billion.
Addressing investor risk
There is an estimated 12 million tonnes of plastic dumped into the ocean every year. Plastic waste makes up 80% of all marine pollution and data suggests that there are 50-75 trillion pieces of plastic and microplastics in the ocean, with only an estimated 9% of waste from 460 million tonnes of plastic produced each year being recycled.
McBee said As You Sow had engaged with Amazon initially due to its poor score in the advocacy group’s 2021 ‘Corporate Plastic Pollution Scorecard’ and its position as one of the largest users of non-recyclable flexible packaging in the US, with it receiving a score of D-.
The firm also did not disclose the amount of plastic or overall packaging used, leaving investors “uncertain about their risk with regards to the global plastics treaties and Extended Producer Responsibility (EPR) laws,” she added.
The goal of the global plastics treaty is to end plastic pollution by 2040 through a circular economy where all plastic applications are reused, recycled, and responsibly managed during and after use while enabling a lower greenhouse gas emissions plastic economy.
McBee said that she was “encouraged” by the momentum of the global plastics treaty discussions. Negotiations in Paris last month saw more than 165 countries agree to the development of a zero draft of the treaty. Nations have agreed to produce a full draft of the treaty before the next round of talks scheduled to take place in November in Kenya.
A final agreement of the global plastics treaty is scheduled for the end of 2024.
“I know that the global plastics treaty will have a big impact and I’m just hopeful that it will have as big of an impact as we need it to so that we can agree to terms that are ambitious, and that can meet the scale of the plastic pollution crisis,” she added.
EPR laws holds the producers of goods or packages financially accountable for ensuring that these items are managed in an environmentally and economically responsible manner at their end of life. This sees the responsibility for the proper disposal of goods shift from the consumer to the corporation.
In the US four states – California, Colorado, Maine and Oregon – have passed EPR laws in the last two years.
A recent Planet Tracker report warned that the plastic value chain poses significant physical, legal, reputational and transitional risks to investors. It also cautioned that investors’ failure to forecast risk profile changes means that corporate liabilities and litigation costs in plastics-related issues surpass US$20 billion by end of this decade for the US alone.
Plastic engagement targets
In its first shareholder resolution in 2021, As You Sow asked Amazon to comprehensively review its packaging practices, set goals to reduce virgin plastic usage, and disclose their plastic consumption.
However, McBee said that despite “strong shareholder support” for this and subsequent resolutions, the firm remained “unresponsive” and did not engage with As You Sow on its goals or progress.
“Amazon has been the most challenging company to engage with in comparison to others,” she added. “While every other company has been very cooperative, open, and willing to have constructive dialogues, Amazon has been less forthcoming with sharing data and having discussions about goal setting and progress.”
However, McBee noted that As You Sow has “found success”, despite the challenges posed by Amazon, through engagement with other investors and the formation of alliances.
Last month, nearly one-third of shareholders voted in support of As You Sow’s proposal at Amazon for a plastic packaging reduction goal. The advocacy group suggested that this support was “significant” following Amazon’s largest competitor Walmart recently committing to phase out use of plastic e-commerce mailers in the US.
The organisation noted that Amazon’s reductions in plastic used do not yet “reflect a commitment to reduce a specific amount of future plastic use over a set time period as its competitors have done”.
Earlier this year, consumer goods company Kraft Heinz committed to cut virgin plastic use by 20% by 2030 over a 2021 baseline, with Church & Dwight pledging to reduce use of virgin plastics by 30% by 2025 over a 2017 baseline. Five other large firms – Keurig Dr Pepper, Mondelez International, PepsiCo, Target, and Walmart – also agreed to virgin plastic reductions following shareholder proposals filed by As You Sow.
In a statement, Green Century Capital Management told ESG Investor that it welcomes Amazon’s reduction in plastic use, but underlined that the company “still has significant work to do”. This work includes the setting of absolute plastic reduction targets, the creation of a “glidepath” to achieve those targets, and the disclosure of its plastic usage, the asset manager added.
McBee said that As You Sow will continue to engage with Amazon with the goal of getting the firm to set an overall target for plastic use reduction, framed around the Pew report objective of reducing plastic use by a third.
“We will be asking for a timeline of phase out of the plastic mailers and some transparency about what percentage of their overall plastic use is made up of these plastic mailers and how much of a reduction can we expect to see over time with this phase out”. she added. “I suspect it’s going to be very substantial and Amazon will should want to share that data because it’s laudable.”