May 22, 2019 2:45 PM

Social Issues Raised by Amazon Investors Aren't Going Away

Amazon's shareholder resolutions on climate change and facial recognition technology didn't pass. Here's why they matter anyway.

In the past, Amazon hasn’t received much pushback from its shareholders. After all, the retail giant’s stock has increased sixfold in the last five years, making investors plenty of money. That doesn’t mean the company’s annual shareholder meetings have been controversy-free, but the wave of criticism Amazon faced this year in the form of shareholder resolutions is unprecedented. Investors voted on 12 of the proposals Wednesday, and while they all failed to get a majority vote, they highlight issues that some shareholders believe could jeopardize Amazon’s business for years to come.

The proposals, which would have been nonbinding if passed, sought changes from Amazon on a range of issues, from sexual harassment to hate speech. Two concerned the company’s controversial facial recognition technology. Perhaps the most notable proposal, which addressed climate change and the company’s environmental impact, came from Amazon’s own employees. Over 7,600 of them signed onto a letter asking Amazon to adopt the resolution—a unique twist on a wider trend of tech employees pushing back on their companies’ business practices.

“It’s really hard to be motivated when you feel like you’re contributing to a problem instead of addressing it,” Rebecca Sheppard, a senior product manager at Amazon and one of the letter’s signatories, said before Wednesday. “I’m really hopeful that we get what’s missing, which is leadership from the very top of the company to support this.”

After the meeting, a tweet from Amazon Employees for Climate Justice suggested that wasn't the case yet.

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In all, shareholder groups originally submitted 14 proposals to be voted on at the 2019 meeting—the most sent to any corporation this year, according to Alliance Advisors. That’s a sharp increase from previous years: Amazon saw just three proposals each in 2017 and 2018. It also fits with a broader increase in so-called shareholder activism, where groups of investors submit resolutions designed to force corporations to address issues concerning things like diversity, human rights, and the environment.

Amazon fought hard against the resolutions. A company lawyer reportedly tried persuading employees to withdraw their climate change proposal, without success. And Amazon tried asking the Securities and Exchange Commission to keep the two facial recognition resolutions from coming to a vote. A company spokesperson declined to comment about why Amazon didn’t similarly fight the climate change proposal with the SEC. Amazon’s board recommended shareholders vote against all three resolutions in its proxy statement last month.

It will be several days before the resolutions’ supporters know exactly by how much they lost. Even if the margin is large, these issues aren’t going away anytime soon. “These proposals, to be effective and to attract the attention of a company, they don’t need to be a 50 percent vote,” says Michael Connor, the executive director of Open MIC, a nonprofit that works with tech investors and helped write the facial recognition proposals. “It takes a long time to educate people about these issues and to bring major shareholders on.”

The climate change proposal was filed by over a dozen of Amazon’s business and tech workers, who were given company stock as part of their compensation packages. It asked Amazon to issue a report describing how it will grapple with disruptions caused by the climate crisis and lower its reliance on fossil fuels.

Amazon has already experienced some of the impacts that climate change will continue to have on its operations. The employees noted in their proposal that an Amazon Web Services server went down in Sydney three years ago, during historically high levels of rainfall. In February this year, extremely cold temperatures in Minnesota forced Amazon to close one of its fulfillment centers for multiple days. As the climate crisis grows worse, scientists expect these types of extreme weather events to increase. These factors in themselves present a business risk.

But Amazon also faces other risks if its employees perceive the company isn’t doing enough. Amazon’s “apparent inaction on issues of climate change can present human capital risks, which have the potential to lead to the Company having problems attracting and retaining talented employees,” the investor advisory firm Glass Lewis wrote in its analysis of the resolution.

Facial recognition, too, presents an ongoing challenge for Amazon to navigate. Studies have found facial recognition technology can be inaccurate and racially biased. A report released by Georgetown Law’s Center on Privacy and Technology earlier this month showed the New York Police Department abused the software by altering images and using pictures of non-suspects.

Many privacy and civil rights advocates are alarmed that Amazon has already given its facial recognition tools to several US police departments. So are some investors. The first of their proposals called for Amazon to stop selling its controversial Rekognition software to governments until it could assess the associated human rights risks. The second asked the company to conduct an outside civil rights audit of the product.

“It shouldn’t have come to this,” says Matt Cagle, a lawyer at the ACLU, which presented an open letter at the shareholder meeting urging investors to pass the two resolutions. “This just shows that investors are taking note of the potential costs. They’re seeing that the short term profit is not worth the long-term reputational and civil rights costs.”

Amazon has a web portal where people can report abuses of Rekognition, but the company doesn’t publicly disclose which governments are using the product, making potential misuse difficult to track. In a statement, a spokesperson for Amazon said the company has “received no reports of misuse of Amazon Rekognition by law enforcement agencies,” and noted it has been used for things like identifying trafficking victims. But Amazon’s defense of its system comes amid increasing calls to regulate facial recognition technology more widely. Last week, San Francisco banned city use of the tech, and other municipalities are currently considering similar measures.

“This is just the beginning of these types of shareholder proposals that we will see targeting companies that are involved in developing some sort of artificial intelligence tool,” says Jason Schloetzer, a professor at Georgetown Business School.

For the thousands of Amazon employees fighting climate change, at least two wins can already be celebrated. They successfully organized and attracted the attention of their employer, which appears to be working on more environmental initiatives. They’ll be watching to see how Amazon proceeds from here. “The climate emergency isn’t going away, and neither are we,” says Sheppard.

Have a tip about Amazon? Contact the author at louise_matsakis@wired.com or via Signal at 347-966-3806.

Update 5-28-19, 9:17 am EDT: The Twitter embed in this story has been changed after Amazon Employees for Climate Justice deleted their original tweet.

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