Amazon (Whole Foods)

Amazon’s grocery business has proliferated in the last few years; the company is now the largest retailer in the world, yet it still does not address the materiality of protein diversification. Whole Foods Market has more than 500 locations in the US, Canada, and the UK, with more stores in development. As a result, we can assume that the company has significantly increased its exposure to animal agriculture. At least 3.6% of reported revenues are generated by edible groceries, most of which are exposed to animal-derived ingredients. Despite this, Amazon lacks a long-term product portfolio diversification strategy, potentially missing the opportunity to grow its grocery business whilst positioning itself as a future-proofed food retail leader. Amazon lacks company-wide public recognition of the risks linked to animal agriculture supply chains and the business materiality of the issue. Its quality standards do not address the environmental impacts (i.e., biodiversity loss & deforestation, GHG emissions, water use & scarcity, waste & pollution) of sourcing animal-derived products, and there is no evidence that the company recognises its role in enabling a dietary transition. Its approach continues to be fuelled by consumer demand and ignores the carbon abatement potential of diversifying its product portfolio. FAIRR found no evidence to suggest that the company has completed a TCFD-aligned scenario analysis or that it intends to conduct one in the future.

Amazon has been slow relative to peers and companies in the benchmark regarding setting a Scope 3 target approved by the SBTi that covers emissions from animal agriculture. Moreover, the company lags its peers in developing a robust sourcing strategy that considers the environmental impacts of animal agriculture supply chains. Apart from seafood, the company’s sustainable sourcing approach focuses primarily on animal welfare and traceability. While important, these areas of concern constitute the bare minimum of sustainable sourcing and do not represent the level of progressive action expected from one of the largest retailers in the world. Amazon had previously discussed prioritising reforestation as a method for carbon reduction; however, no evidence of reforestation programs was found. The company does not consider deforestation outside of its palm oil sourcing. Whole Foods has begun work on regenerative agriculture and is learning how best to support farmers and ranchers who focus on soil health. The company recognises the carbon capture potential of regenerative agriculture and is reviewing labels that require third-party certification on soil health. As the company continues to progress its understanding of regenerative agriculture, it would be advantageous to set targets for similar on-farm carbon reduction initiatives to help Amazon meet its emission reduction goals. The current quality standards are not up to addressing the environmental impact of animal-derived products, such as deforestation, biodiversity loss, waste management, and water management. Additionally, there is close to no disclosure on sourcing practices for brands aside from Whole Foods. Amazon supports agricultural producers via its Local Producer Loan Program (LPLP), which lends money to small-scale, local, or emerging producers across the US and Canada to help them grow their businesses; this program includes two tofu farmers. This approach to community outreach could be improved if the company incorporated some guidance for best practices for sustainable agriculture. Amazon has not announced an SBTi-aligned Scope 3 emission reduction target as it stated it would in 2020. The company claims that it remains committed to setting a target, but such a target would not extend to the long-term or include net zero commitments.

The company’s plant-based offerings continue to expand in response to consumer demand. For example, Whole Foods Market began selling plant-based company NotCo’s new alternative protein burger patties. No evidence was found to suggest that the company’s plant-based offerings are linked to a protein diversification target. Amazon does not report on its plant-based product portfolio nor share any metrics that would allow investors to measure growth over time.

There is no evidence that Amazon has a strategic, evidence-based consumer engagement strategy to promote the transition to plant-based diets. The company has made no progress in its alternative protein engagement and does not recognise its role in shifting consumer preferences. The company has not identified which aspects of plant-based products (i.e., animal welfare, antibiotics, sustainability, health, taste, trend) appeal most to Amazon’s target consumers; thus, the company has not seized the opportunity to accelerate and benefit from a dietary shift. Amazon’s main website offers a selection of plant-based products and allows consumers to search for vegan items, making it easier to find protein alternatives. Website users can also filter for products that qualify for the ‘Climate Pledge Friendly’ badge. The Amazon Fresh website does not have a specific category for plant-based or alternative proteins. There are no plant-based promotions or advertising, and it isn’t easy to locate plant-based options without explicitly searching for them. The US Whole Foods website and reporting are not available in other countries where it operates, such as the UK. The company’s UK website does not include any insight on its sustainability efforts, nor does it disclose the company’s sourcing strategy or product portfolio. This lack of access and transparency is concerning considering Amazon is a global company with investors in many regions.

For the first time, the company responded to the Climate Change CDP questionnaire yet did not make its responses publicly available, which is insufficient for a company of the scale and position of Amazon. On its carbon footprint website, the company continued to report Scope 3 emissions; these increased 21% YoY and represent almost 77% of total emissions. The Scope 3 calculations only include four categories - Corporate purchases and Amazon-branded product emissions, Capital goods, other indirect emissions, and customer trips to physical stores. Amazon excludes and does not disclose the most relevant category, purchased goods and services, which would account for animal agriculture-related emissions. There is no disclosure around portfolio diversification and the proportion of plant-based products relative to the overall the company offers, even for Whole Foods, making it difficult for investors to understand how and if the company is making any changes to its portfolio to address its environmental impacts.

The company did not attend the technical roundtable on measuring portfolio diversification and did not respond to repeated investors’ requests to schedule an engagement dialogue with the collaborative engagement coalition. It is concerning for investors that Amazon is not addressing the business materiality of the issue, nor engaging with shareholders on the topic of protein diversification and high-risk animal agriculture, whilst it is rapidly growing its food retailing business.