Amazon rejects plastics plan as groups urge reduced virgin plastic use

Amazon shareholders have rejected an attempt by environment-focused investors to force it to detail the impact of its plastic packaging.

The vote, however, may mark only a brief pause in an ongoing campaign by the activists to get 10 major public companies to dial back their use of virgin plastic.

Seattle-based Amazon disclosed late in the day May 28 that about 64.5 percent of its shareholders voted against the resolution, which was a fairly modest request asking the firm to report how much plastic gets into the environment from its massive e-commerce operations.

Environmental investors are still pushing resolutions at nine other major retailers and consumer product makers to push them to use less virgin plastic.

The green groups have already scored what they say are some victories.

Keurig Dr Pepper, for example, agreed in April to cut its virgin plastic use in packaging by 20 percent by 2025. Others, including Walmart and Target, said in early May that they will present detailed plastics plans this year, in return for the green shareholders dropping their resolutions.

The plastics debate mirrors, in a lower-profile way, the stepped-up shareholder activism in corporate boardrooms, like the May 26 vote at ExxonMobil Corp. that saw climate investors surprisingly unseat several board members.

In the case of Amazon, the company argued that the report the green groups wanted was not needed.

It pointed to its commitments to have 50 percent of its shipments be net-zero carbon by 2030, to use more recycled content in its plastics packaging and to support recycling infrastructure.

But the green investors, including Berkeley, Calif.-based As You Sow, want more specific plastic packaging plans from the e-commerce giant.

They pointed to announcements from PepsiCo Inc. to substitute recycled content for 35 percent of virgin plastic in its beverage division and by Unilever to cut plastic packaging use by 100,000 metric tons by 2025.

As You Sow said the 35.5 percent voting in favor was an encouraging result for the first year of the vote and argued that, in general, anything over 20 percent in favor gets attention from company executives because it indicates support goes beyond environmentally minded shareholders.

"A central reason we filed the proposal was the company's unwillingness to sit down and talk with us," said Conrad MacKerron, AYS senior vice president. "We hope this strong vote result leads to a good faith dialogue with the company on the scope of its plastics use and how it can move to recycle the majority of its plastic waste in the short term and reduce overall plastic use in the long term."

For the environmental shareholder groups, the push for plastics reductions is a change in strategy, deemphasizing recycling in favor of urging companies to cut back on plastic.

"Improved recycling, the focus of much of As You Sow's earlier work with companies, is not sufficient to stem the tide of plastic pollution engulfing oceans and must be coupled with reductions in plastic use, material redesign and substitution," the group said.

As You Sow and Boston-based Green Century Capital Management have reached agreements with five of the 10 companies they targeted in a joint campaign. The most detailed so far was the April agreement with Keurig Dr Pepper to cut virgin plastic use by 20 percent.

In March, they reached agreement with candy and snack maker Mondelez International for a 5 percent reduction in its overall virgin plastic use and a 25 percent cut in its rigid plastics packaging.

In other cases, though, agreements are more general and the details have yet to be fleshed out.

The green groups announced general agreements in May with both Target Corp. and Walmart Inc., but both retailers promise to present specifics later this year.

The activist investors said Target would set a "virgin plastic elimination goal" for its private label packaging and said they expected Walmart's announcement to be "significant and absolute cuts in plastic use," based on their talks.

MacKerron said the shareholders are pushing firms to cut plastic demand by one-third, in line with the Pew Charitable Trust's "Breaking the Plastic Wave" report last year. That report pushed elimination, reuse, refill, new delivery systems and other actions to reduce plastic in the ocean by 80 percent by 2040.

MacKerron said the green groups hope to see at least 10-15 percent cuts in the first year.

"We also appreciate that it may not be realistic to ask for high uniform reductions yet until companies have fully assessed their packaging materials and determined how much virgin plastic can practically be eliminated, replaced with recycled content or with alternative materials in the near term, and then build up to higher cuts in the future," he said.

Some of the companies targeted by the activist shareholders, including Target, Walmart and Coca-Cola Co., joined the U.S. Plastics Pact when it launched last year.

As part of that pact, the signatory companies agreed to use 30 percent recycled plastic content by 2025 and eliminate unneeded plastics. But MacKerron said the investors want their talks to go beyond those commitments.

"We push for language in our agreements for companies to also seek to eliminate unnecessary material, redesign packaging and explore of reuse/refill models — measures that can lead to absolute reductions in plastic use," he said.

The activist shareholders reached a similar agreement with Coca-Cola in February, with the beverage giant agreeing to reduce its cumulative use of virgin plastic by 3 million metric tons by 2025. That's the equivalent of about one year's worth of plastics use by Coke, which the shareholder groups said used about 3 million metric tons of plastic in 2019.

They also reached an agreement with PepsiCo Inc. in March, saying the company will look to broaden the previous announcement in its beverage segment to other units, like its Frito-Lay and Quaker Oats divisions, using recycled content, reusable business models and packaging redesign.

For three companies, though, the shareholders will have to try again.

Shareholder resolutions had to be withdrawn at McDonald's Corp., Kraft Heinz Co. and Restaurant Brands International, which owns Burger King, because of paperwork problems, MacKerron said.

"But all three agreed to continued dialogue on the substance of the proposal, and we will focus more on these engagements after proxy season," MacKerron said.

The 10th plastics resolution, with grocery chain Kroger Co., faces a vote at a June 24 shareholder meeting.

MacKerron said compared with past environmental shareholder efforts, the pace around plastics is picking up.

"We got agreement from five global brands within two months," MacKerron said. "Typically, it would take a couple of years or more to do that in past initiatives."

Companies see more reputation and financial risks from not addressing plastics questions, he believes.

"This is a sign that plastics is increasing a top-of-mind issue for management, and consumer brands and plastics industry executives ignore those signals at their own peril," he said.

He also said major investment funds have become much more supportive of shareholder resolutions around environmental and climate issues.

He pointed to what he said was an "unprecedented" 81 percent of shareholders at DuPont Co. voting at its April 28 annual meeting to have the company prepare an annual report on plastic pellet leakage into the environment.

"We can't know for a while how that happened, but we understand major investors like BlackRock and Vanguard recently changed their voting guidelines to support environmental and social proposals following criticism from shareholder activists," he said. "We … believe proxy voting is shifting in our favor."