Why does Amazon have a negative impact score? 🤔

This week’s read time: 4 minutes

You are reading the first issue of Green Digest Impact, a weekly newsletter dedicated to providing in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, our mission here is to examine the direct impacts companies have on these factors. In pursuit of this, we introduce a unique scoring system, offering a quantifiable measure of a company's impact.

WHY IT MATTERS

In the face of new regulations, understanding and measuring corporate impact has never been more critical. That’s why we will make sure to provide you with not only high-quality information but also actionable data, crafted to inspire, inform, and drive change within the industry.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider.

THIS WEEK’S COMPANY

Amazon

This week we dive deep into Amazon’s environmental and social impact.

Amazon.com Inc. is an online retailer and web service provider. The company provides a wide range of products and services to around 310 million customers in over 100 countries worldwide.

Some interesting facts:

• Amazon sold its first book in 1995. (Fluid Concepts and Creative Analogies by Douglas Hofstadter)

• It became only the second-ever company to join the $1 trillion market capitalization club (2018).

COMPANY’S IMPACT

Amazon’s overall impact score

Amazon has a general impact score of -0.94 (on a scale from -5 to +5). Its impact is spread across 8 different UN Sustainable Development Goals (SDGs) and 10 different topics, evenly split between positive and negative analyses.

The company has revolutionized online shopping and provides an e-commerce platform to over 9.7 million sellers that serve more than 300 million customers. Thanks to Amazon, about 2 million SMEs can offer their products in over 100 countries.

In terms of social and economic impact, Amazon’s influence is quite significant. By employing 1.5 million people (2nd largest employer in the world), the company contributes to economic growth and social stability, improving people's well-being and reducing poverty. Although, there has been a lot of controversy about the quality of these jobs, especially those in the warehouses. In the period 2020-2022, Amazon also paid a cumulative $4.4 billion of corporate taxes.

When it comes to data privacy, Amazon has been fined almost $900 million for repeatedly recording and tracking users' data to target them in ads without consent. As per business ethics, the company has consistently used anti-competitive tactics to grow its revenues (according to many credible reports and antitrust cases).

Environmentally, Amazon has a huge impact, generating around 1 million tonnes of packaging waste annually, according to estimations. The company’s annual GHG emissions also reach a massive 71 million tonnes of CO₂e (equivalent to the emissions of 18.3 coal plants in one year), contributing significantly to climate change.

_{*You can find details about the scoring methodology at the end of this email.}

SCORES BY SDG

Amazon’s impact scores by SDG

Negatively, the company scores the worst in the Responsible Consumption and Production SDG (-3.64), followed by Peace, Justice, and Strong Institutions (-3.49), and Climate Action (-2.98).

Positively, the company scores the highest in the Decent Work and Economic Growth SDG (3.45), followed by Industry, Innovation, and Infrastructure (3.22), and Partnership for the Goals (2.38).

PEER GROUP COMPARISON

Amazon’s scores compared to its competitors by SASB Theme

The SASB^® Standards group sustainability topics into five “sustainability dimensions”: the environment, human capital, social capital, business model and innovation, and leadership and governance.

In the case of Amazon, the selected themes in the graphic below are the most impactful ones (Access & Affordability, Business Ethics, Competitive Behavior, Customer Privacy, Employee Engagement, Diversity & Inclusion, GHG Emissions, and Product Design & Lifecycle Management). The company has a better score than its peer group average on all of the positive impact themes, but it also has a higher score on the negative impact themes.

CONCLUSION

Final words

So, Amazon’s key social and environmental impact lies in …

its core business of providing access to online goods, jobs created, SME empowerment, GHG emissions and energy used, product and packaging waste, anti-competitive behavior, and data privacy breaches.

Its negative -0.94 score is a balance of all of these factors and topics.

Some of the company’s other negative impacts:

• huge energy use (30.9 TWh annually, which is equal to 1.7 million homes’ energy use for a year)

• negative gender pay gap (-1.7%)

• 317,000 tonnes of plastic waste produced annually

• breach of data privacy which affected an estimated more than 100 million people

Some of the company’s other positive impacts:

• provides more than 350 million products, increasing accessibility

• it has an above-industry average salary

• has a positive ethnic pay gap (0.5%)

If you want to delve deeper into Amazon’s impact, you can explore it here.

Next week, we will analyze the impact of the company that is powering the AI revolution - NVIDIA. 🟢

Alright, we want to hear from you - share your thoughts on this new publication by contacting us at [email protected]

METHODOLOGY & SCORES

Crafted from rigorous, fact-based data, our impact scores are powered by Impaakt, a pioneering Swiss-based financial data provider focused on tangible impact over mere intentions. Impaakt scores are powered by stakeholders, ensuring corporates, investors and consumers receive robust, impartial insights to make informed decisions on where to allocate their resources.

Key Features of Our Impact Analysis:

• Comprehensive Research: Our analyses span thousands of companies across various sectors, focusing on the tangible impacts of their business operations, products, processes, and innovations.

• Live, Dynamic Scores: Reflecting the latest in reports and research, our impact scores are continually updated, providing a current view of each company's footprint.

• Zero Tolerance for Greenwashing: By including stakeholders in assessing actions only once the impact occurs, we ensure our assessments reflect the voice of global society, free from greenwashing, and from empty promises and intentions.