The National Council on Occupational Safety and Health recently included Amazon in its “Dirty Dozen” list of the most dangerous employers in the U.S.
Amazon founder Jeff Bezos wrote in his last annual letter to shareholders that “we need a better vision for our employees’ success.”
As trillions from investors now rely on ESG metrics to evaluate the long-term financial outlook for companies, worker safety can get buried within broader workplace issues and within an overly broad ESG “social” category.

Amazon warehouse working conditions and worker injuries have been a constant source of tension between the corporate giant and its critics. A new safety and wellness program is rolling out to all U.S. sites by year-end as Jeff Bezos’s company continues to add a massive amount of new employees.
CHRIS J RATCLIFFE | AFP | Getty Images

Amazon founder Jeff Bezos raised a few eyebrows this summer when he returned to Earth after a historic space flight in July and gave a speech thanking company employees and customers, “because you paid for all of this.” The comments came as Amazon, the second-largest employer in the U.S. after Walmart, has faced persistent allegations regarding workplace safety.
The National Council on Occupational Safety and Health included Amazon in its “Dirty Dozen” list of the most dangerous employers in the U.S. Earlier this year, New York Attorney General Letitia James filed a lawsuit against Amazon for inadequately protecting workers amid the Coronavirus pandemic. While Amazon just finished its third consecutive $100 billion quarter, showing customers continue to shop with the e-commerce giant and it is one of the trillion-dollar-plus tech companies that dominate the market, there is a question of whether more investors will start paying attention to worker safety.

At a time when environmental, social and governance concerns have become a focus on Wall Street, in C-suites and with investors, with global assets under management in ESG funds approaching $2 trillion, according to Morningstar, it is not clear to date that labor issues rate as highly with investors as other core ESG themes, including corporate climate change policies.
Workplace issues are being factored into Amazon’s ESG ratings, but they don’t tip the scales as much as other factors when compared with other large retailers. ESG analysis firm JUST Capital, which rates companies on how “justly” they treat their employees and on workplace safety, gives Amazon and Walmart similar scores. And on another key labor factor, Amazon ranks No. 1: local job creation.
Not all ESG rating models weight worker safety metrics equally across all sectors. According to an MCSI spokesperson, it includes workplace safety in its ESG analyses, but “for industries and companies that are most prone to health and safety concerns, we take a deeper dive into health and safety. These industries typically include extractive operations and heavy manufacturing.”

How workplace safety factors into ESG ratings

Worker safety is an often overlooked element of ESG, and it is one of Amazon’s biggest, hardest-to-solve issues.
Roxana Dobre, associate director of consumer goods research for Sustainalytics, a Morningstar company that calculates ESG risk, said while Amazon’s ESG rating has improved on environmental metrics, it does need to improve in the social category, namely in terms of how it treats employees. Worker safety is a factor in Amazon’s overall ratings and the company recently took a hit, Dobre said, because its response to Covid-19 was “not timely” and the company didn’t do all it could to mitigate the spread of the virus.

One of the challenges with company ESG ratings is that they factor in a wide variety of metrics and aggregate them into an overall score, said Tensie Whelan, a professor of business and society at New York University and director of NYU Stern’s Center for Sustainable Business.
“Even within one category, such as workplace matters, the ratings companies may be looking at wages, benefits, diversity and inclusion in addition to health and safety,” Whelan said. She also noted that there are other categories, such as energy, packaging and consumer safety, that are all collected together into one number with different weighting depending on the rating agency methodology. 
Even if a company like Amazon scores low on worker safety, the company’s overall score on workplace issues may still be in the middle of the pack because other factors such as pay and benefits may score higher than similar companies.
“That’s one of the challenges in ESG ratings of Amazon, as it is a huge company with a great deal of complexity,” Whelan said.

The importance of retaining workers

An Amazon spokesperson provided a statement that the company is on a journey “that requires constant innovation to address both new and persistent risks, and we’re making progress — investing billions of dollars in new safety measures and technologies, and expanding our global workplace health and safety team to more than 6,200 employees.”
Worker safety and satisfaction is a big issue for Amazon even if it hasn’t shown up in a major way in the ESG ratings. It has faced increased turnover at a time when it has been hiring at a furious pace. Amazon employs more than 1.3 million people worldwide, and added 500,000 workers in 2020.
A recent New York Times investigation uncovered data showing that Amazon was losing about 3% of its hourly associates each week, even before the pandemic, implying an annual turnover rate of 150%, almost double the rate for its peers. Despite skepticism surrounding Amazon’s increased focus on employees, occupational safety experts say its needs to address the issues to ensure it has the staff to support its business in the decades ahead as labor force demographics forecast a declining pool of available talent.

How investors look at worker safety

“We should be looking at it,” said Dan Romanoff, an equity research analyst who covers Amazon for Morningstar. “We see the headlines.”
But Romanoff said he can count the number of questions he’s gotten about the issue on one hand in the last few months — and most of those came from reporters. 
“It’s not something that investors are really focusing on all that much,” he said.
Amazon is a tough place to work. An analysis released in June by the Strategic Organizing Center, a coalition of four labor unions, found that Amazon workers are twice as likely to be injured on the job as e-commerce workers for Walmart and that the injury rate for Amazon’s delivery drivers is 50% higher than drivers for UPS.
Some investors are speaking out on the issue. Nicole Middleton Holloway, CEO of Strategy Squad, a wealth management firm, said, “My view is that I am on this. I’m on the side of the fact that they need to have better humane practices with their workers.” 
Judy Samuelson, executive director of the Aspen Institute Business and Society Program, said working conditions are increasingly important, but companies need to think about them in a strategic way and focus on what they need to do to be very successful over the long haul. “What are the inputs that are critical to our enterprise? There are things that ought to boil to the top. The thing that Facebook really needs to get right? It is different than what Amazon really needs to get,” she said.
Though no matter which company-specific labor issues need to be addressed, Samuelson pointed out that 91% of profits are being returned to shareholders every year. “We’re spending massively more money on share buybacks than we are on our workers,” she said.
ESG as a way to financially evaluate companies goes back as far as the 2006 United Nations Principles for Responsible Investing (PRI) report. Worker issues are growing in importance as part of the ESG equation, according to Betsy Atkins, the founder of the Baja Corporation, a venture investor which also provides corporate governance consulting on issues including ESG.
She said that worker safety already is part of the risk management that rests with a board’s audit committee, and often specifically focused on safety compliance regulations mandated by OSHA. And it has become a bigger part of the equation for good boards.
“As ESG has evolved, worker safety oversight is now also part of ESG,” she said. 

Bezos: ‘We need a better vision’

Amazon’s labor issues haven’t dented its brand. In a ranking of global brands in 2020, Interbrand named Amazon No. 2, behind only Apple, which has for years faced more focused pressure from investors over labor practices at its giant Chinese contract manufacturing partner Foxconn. Amazon also topped Kantar’s list of the most valuable global brands in 2021.
“That is not only a strong brand, the strongest are among the strongest, but it’s one that we all use,” said Hayes Roth, principal of HA Roth Consulting. “I don’t see any vulnerability there.” 
Yet Amazon has begun addressing worker concerns. In his last annual letter to shareholders as CEO, Bezos admitted that “we need a better vision for our employees’ success” and pledged to make Amazon “Earth’s Best Employer” and “Earth’s Safest Place to Work.” 
In May, Amazon rolled out a safety and injury prevention program that it plans to extend to all U.S. operations before year-end, part of $300 million spend on worker safety. The company’s goal is to cut workplace recordable incident rates, an OSHA measurement covering injury and illness, by 50% by 2025.
Bezos noted in his last annual letter that the idea Amazon workers are “desperate souls and treated as robots” is inaccurate.
But the company’s critics in the labor movement continue to say that is what defines the company’s approach to workers.
“It all comes from the model Amazon has created for dealing with its human employees, which seems not to understand that these are human beings and not robots,” said Stuart Applebaum, president of the Retail, Wholesale and Department Store Union. Amazon was recently found to have violated labor law after warehouse workers in Bessemer, Alabama, tried — unsuccessfully — to join that union, according to the National Labor Relations Board.
“At Amazon, you’re managed by robots, you get your assignment from an app, you’re disciplined and even fired by text message,” said Applebaum. “I think that Amazon is unique by the extent they have gone to remove human interaction from the workplace.” More

As GM works to fix problems that have caused Bolts to catch fire, it’s also attempting to ensure the issues don’t happen in its next-generation EVs.
The new battery system is crucial to the automaker’s future as it pivots to exclusively offer electric vehicles by 2035.
Problems with the Bolt – the company’s flagship mainstream EV – have led the automaker to recall every one of the electric cars since production began in 2016, which is expected to cost $1.8 billion.

A 2019 Chevrolet Bolt EV caught fire at a home in Cherokee County, Georgia on Sept. 13, 2021, according to the local fire department.
Cherokee County Fire Department

DETROIT – As General Motors scrambles to repair defects that caused fires in at least 13 Chevrolet Bolt EVs, the automaker is aggressively working to ensure the same problems don’t seep into its next-generation Ultium batteries and its highly anticipated relaunch of an all-electric version of the Hummer this fall.
The new power system is crucial to the automaker’s future as it pivots to exclusively offer electric vehicles by 2035. The batteries and the company’s entire Ultium system – platforms, motors and other components – are expected to underpin every EV for GM for the foreseeable future.

Problems with the Bolt – the company’s flagship mainstream EV – have led the automaker to recall every one of the electric cars since production began in 2016. Fixing the vehicles, including completely replacing some batteries entirely, is expected to cost $1.8 billion.
That expense – averaging roughly $13,000 per vehicle – highlights a gamble for automakers planning to use common platforms or battery cells to power massive amounts of vehicles. If there’s a problem, it’s going to be costly.

It’s one of the reasons officials throughout GM have aggressively been working “around the clock” to fix the issues and ensure future electric vehicles such as the GMC Hummer EV and Cadillac Lyriq — two of the first GM models to use its Ultium batteries — don’t have the same problems. They’re also working on wireless technology that will enable GM to detect potential defects sooner.
“There’s a commitment across the company to not only address the issue with the LG cells and the Bolt but also make sure that all the future products are set up for success,” Mike Harpster, chief engineer of electrification propulsion for GM, told CNBC during a deep dive into the automaker’s upcoming Lyriq. “There’s not creating the fault or defect, but there’s also how the pack and the vehicle respond to it. And on both those fronts, we’re moving very aggressive.”
The automaker’s efforts stretch outside of its own organization. GM Chief Financial Officer Paul Jacobson recently said GM engineers are working with LG Chem, which makes the batteries, to “clean up the manufacturing process” and implement some “GM quality metrics” at LG’s plants.

GM on Monday announced fixes to the manufacturing process of the battery cells as well as updated monitoring software for the vehicles. Both are expected to be used for future vehicles, Tim Grewe, director of GM’s electrification strategy, told reporters Monday.
GM is pursuing reimbursement from LG, which produced the defective parts at plants in South Korea and Michigan.

New battery plants

The increased quality efforts come as GM is building a U.S.-based battery cell plant through a joint venture in Ohio with LG Chem called Ultium Cells. It’s the first of several battery plants expected from GM in the coming years.

While the Ultium batteries include new chemistries and production processes compared with LG’s production and cells, GM is taking lessons learned from the current production process, including safeguards and monitoring, for the new plants.
“There are improvements in that process that were learned from the current process,” said Harpster, who was chief engineer of the Bolt EV’s propulsion system. “That’s not only on the cell level, it’s at the module level, the pack level. Everything we’ve done in the past, we’ve done with a partner, LG. All those learnings are going into here to push it to the next level.”
Grewe earlier this month told CNBC that the new production is “not any more vulnerable” than anything the company does today.
“Any contaminant anywhere can cause problems,” he said. “If you look at the battery plants that we have today, there’s all kinds of controls that look for that.”
GM CEO Mary Barra last month said the new plants will be “applying all of General Motors’ quality processes to the manufacturing process,” signaling the company expects better quality controls in place in the new facilities.

“We work every day to make sure that what we’re doing is validated and tested. When we find an issue like this, and this again, happens to be two rare manufacturing issues in the same cell, we’re going to address it,” she said Aug. 4 during an interview on CNBC’s “Squawk Box.”
Barra stressed Ultium is an entirely new battery system, however producing batteries will always be more volatile than assembling a traditional vehicle. The batteries can’t simply be drained and filled up later like automakers can do with gasoline.
“The manufacturing processes are really going to have to be tightened up,” Guidehouse Insights principal analyst Sam Abuelsamid previously told CNBC. “It’s part of dealing with the way batteries behave. They don’t like heat, and they don’t like contamination. They’re very sensitive.”

The Vermont State Police released this photo of the 2019 Chevrolet Bolt EV that caught fire on July 1, 2021 in the driveway of state Rep. Timothy Briglin, a Democrat.
Vermont State Police

Wireless monitoring system

The “rare manufacturing defects” in the Bolt EVs are a torn anode tab and folded separator that when present in the same battery cell increase the risk of fire, according to GM.  
While GM continues to ensure the manufacturing of the cells are fixed, it may be able to identify such problems sooner with Ultium-powered vehicles.
Specifically, the new battery cells will be able to communicate wirelessly, providing GM with additional data 24/7 to evaluate any problems. Bolt EVs, by comparison, aren’t able to make major updates to their software remotely, and only communicate when the vehicle is running or charging, according to officials.

General Motors revealed its all-new modular platform and battery system, Ultium, on March 4, 2020 at its Tech Center campus in Warren, Michigan.
Photo by Steve Fecht for General Motors

“It’s all over-the-air updateable,” Grewe said. He added the wireless system likely would have assisted the company in determining a problem was present “a little bit faster.”
What the wireless system would be able to do quicker is reset the software of the batteries remotely to lower the risk of fires, he said. Currently, Bolt EV owners have to do it themselves or take it into a dealership to reset the software.
The wireless battery monitoring system, which will be standard on all Ultium vehicles, also can refocus the network of modules and sensors as needed, helping safeguard battery health over the vehicle’s lifespan.

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GM now expects to withhold or cut production on about 200,000 vehicles in North America during the second half of the year.
That’s double the 100,000 units that was expected when GM reported second-quarter earnings in August.
Despite the increase, the company is maintaining its guidance for 2021.

General Motors Co. Chevrolet Traverse sports utility vehicles (SUV) sit on the assembly line at the company’s Lansing Delta Township Assembly Plant in Lansing, Michigan, on Friday, Feb. 21, 2020.
Jeff Kowalsky | Bloomberg | Getty Images

General Motors’ vehicle sales and production will be hit harder by the global chip shortage during the second half of the year than it previously expected, its finance chief said Friday.
The shortage will cut GM’s wholesale deliveries by about 200,000 vehicles in North America during the second half of the year compared with the 1.1 million it delivered in the first half of the year, CFO Paul Jacobson said during an RBC Capital Markets conference. That reduction is double the 100,000 units that was expected when GM reported second-quarter earnings in August.

Despite the increase, Jacobson said the company is maintaining its most recent guidance for 2021.
“We’re still going to deliver a year that’s higher than what we originally thought coming into January,” Jacobson said, adding much of the impact will occur in the third quarter.
GM last month raised its adjusted full-year guidance to between $11.5 billion and $13.5 billion, or $5.40 to $6.40 a share, up from $10 billion to $11 billion, or $4.50 to $5.25 a share.

Low inventory levels of cars and trucks amid resilient consumer demand have led to record-high pricing on new and used vehicles, producing wider profit margins for automakers such as GM as well as their financing companies.
The new 200,000-vehicle impact follows GM announcing or extending downtime last week for nearly all of its plants in North America for varying periods of time.

Jacobson said the company expects 2022 to be a “more stable year” for the semiconductor supply chain, even if it’s “not back to completely unconstrained” levels.
Automakers, including GM, have declined to release new forecasts for how much they expect the chip shortage to impact earnings due to the volatility of the situation. They previously forecast billions in losses due to the problem, much of which has been offset by higher profits from record vehicle prices.
The semiconductor chip shortage is expected to cost the global automotive industry $110 billion in revenue in 2021, according to a May forecast from consulting firm AlixPartners. 

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Restaurant executives have painted a bleak picture of staffing challenges to investors on their earnings calls in the last two weeks.
McDonald’s and Starbucks are among the chains that have raised wages to attract workers.
The tight labor market is expected to persist for at least several more quarters.

Employees prepare orders for customers at a Chipotle Mexican Grill restaurant in Hollywood, California.
Patrick T. Fallon | Bloomberg | Getty Images

Customers are returning to restaurants in droves, but workers haven’t, putting even more pressure on fast-food chains to retain market share and protect profits while navigating a tight labor market.
Restaurant executives have painted a bleak picture of staffing challenges to investors on their earnings calls in the last two weeks. CEOs like Domino’s Pizza’s Ritch Allison, Chipotle Mexican Grill’s Brian Niccol and McDonald’s Chris Kempczinski shared details on how eateries have shortened hours, restricted ordering methods and lost out on sales because they can’t find enough workers. Some chains have been hit harder by the labor crunch, like Restaurant Brands International’s Popeyes, which saw about 40% of its dining rooms closed due to understaffing.

“This is kind of where we’re separating the wheat from the chaff,” said Neuberger Berman analyst Kevin McCarthy.
Raising wages is one popular approach to staffing problems, although it isn’t a perfect solution. McDonald’s wages at its franchised restaurants have risen roughly 10% so far this year as part of an effort to attract workers. Higher labor costs have led to increased menu prices, which are up about 6% from a year ago, according to McDonald’s executives.

Starbucks plans to spend roughly $1 billion in fiscal 2021 and 2022 on improving benefits for its baristas, including two planned wage hikes. The decision reduced its earnings forecast for fiscal 2022, disappointing investors and shaving off $8 billion in market cap. But McCarthy thinks more companies should take a page from the company’s playbook and invest in their employees.
“The stock is down, but I think they’re a winner out of this. Great move on their part, long-term definitely the right decision,” he said.
McCarthy said he’s been assuming that restaurant companies are losing roughly 5 points of traffic due to understaffing.

Looking ahead to the rest of 2021 and into 2022, most publicly traded restaurants said they expect the problem to persist for at least several more quarters. Texas Roadhouse CEO Gerald Morgan told analysts on Thursday that there are “a little bit” more people in the applicant pool, but he still thinks there’s a long way to go before the company has enough employees to meet demand.
Mark Kalinowski, founder of Kalinowski Equity Research, said executives for privately held restaurant companies are more pessimistic about the timeline for the labor market’s recovery.
“Typically when you have high-level people at private companies saying this is going to get worse, it usually is,” Kalinowski said.
He has lowered estimates for Starbucks’ fiscal 2022 results and Domino’s U.S. same-store sales growth next quarter after the companies’ latest earnings reports.
“Not every company is going to necessarily see a change in the sales forecast, but the margin side of things, you got to pay closer attention to, particularly for concepts that have 100% company-owned locations in the U.S. or are significantly company stores,” Kalinowski said.
Kalinowski said he’s favoring stocks with a higher concentration of franchised restaurants. McDonald’s, for example, only operates 5% of its U.S. locations, while the rest are run by franchisees.
More restaurant earnings are still ahead. Outback Steakhouse owner Bloomin’ Brands, Wingstop and Applebee’s owner Dine Brands and IHOP parent Dine Brands are among the companies expected to report their latest results next week. Some analysts, like Wedbush Securities’ Nick Setyan, have tweaked their estimates, given the earnings reports from peer companies.

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Shares of Spirit Airlines sank about 22% Wednesday.
It’s Spirit’s second day of double-digit losses after a judge blocked its proposed merger with JetBlue Airways.
Shares of JetBlue fell roughly 9% Wednesday and are down about 4% since the judge blocked the merger.

JetBlue Airways planes are seen near Spirit Airlines planes at the Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida, on May 16, 2022.
Joe Raedle | Getty Images News | Getty Images

Shares of Spirit Airlines fell about 22% Wednesday, the stock’s second day of double-digit losses, after a judge blocked the budget carrier’s proposed merger with JetBlue Airways.
Spirit is down roughly 60% since the decision blocking its $3.8 billion acquisition by JetBlue was handed down Tuesday, citing reduced competition. The combination would have created the country’s fifth-largest airline.

“JetBlue plans to convert Spirit’s planes to the JetBlue layout and charge JetBlue’s higher average fares to its customers,” U.S. District Court Judge William Young wrote in his decision. “The elimination of Spirit would harm cost-conscious travelers who rely on Spirit’s low fares.”
Spirit stock was trading just over $6 a share Wednesday. Wall Street analysts on average have a price target for the stock of $14 and a hold rating, according to FactSet.
The airline earlier Wednesday traded at an all-time low, sinking to $5.74 per share. It’s down more than 90% from its record high of $84.47, reached in December 2014.
Shares of JetBlue fell roughly 9% Wednesday and are down about 4% since the judge blocked the merger.Don’t miss these stories from CNBC PRO: More