Amazon case study

A big part of responsible investment is using the power of being a shareholder to improve the standards and practices of the companies we invest in. These could relate to environmental, social or governance issues.

As a pension company managing the retirement pots of millions of people, our power to make a difference is greater than the power of the individual alone.

Here are some examples of how we use this influence:

Amazon, global online retailer 

What do I need to know?

  • Facial recognition and analytics software – a potential governance issue

Questions have been raised over the use of Amazon’s facial recognition and analytics software: “Amazon Rekognition”, as well as the sale of this software to other organisations, including the US Government.

It is sold to the government for public protection purposes, however the Amazon board has a responsibility to thoroughly consider the impacts of its use.

Why is this a governance issue?

There are concerns over whether this software violates privacy and other human rights.

The financial implications arising from privacy and human rights implications are of particular concern.

The product terms of use received a lot of criticism internally. Amazon employees petitioned the CEO to stop providing the product to governments, because of fears it could lead to discrimination.

Amazon’s management defended the use of the technology, stating that the company is supportive of human rights and has in the past protected and rescued victims of human trafficking, reuniting more than 100 missing children. The company also argued that users must abide by its ‘acceptable use policy’.

What should Amazon do?

We backed a shareholder proposal at the online retailer’s 2020 Annual General Meeting, requesting that Amazon prepare a report on the risks of the sale of this software. The proposal said the report should be published no later than 1 September 2020.

While our governance experts questioned the tight deadline, they supported the request.

How big is Royal London Asset Management’s shareholding in Amazon?

Royal London Asset Management (RLAM) has a shareholding worth £676 million in Amazon (as at August 25, 2020), equivalent to 0.04 per cent of the company.

What happens next?

RLAM will examine the report once published and decide if Amazon has adequately assessed the risks.

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