Amazon’s lax policy on waste belongs in the bin

3 minute read

A worker sorts parcels at Amazon's fulfilment centre in Peterborough, Britain November 15, 2017.

LONDON, June 24 (Reuters Breakingviews) - Jeff Bezos reckons you must “create more than you consume” to be successful. Unfortunately for the environment, Amazon’s (AMZN.O) chief executive seems to be taking his own advice too literally. UK broadcaster ITV has found the e-commerce group is destroying millions of unsold items in Britain alone.

A former employee of the $1.8 trillion online marketplace said the weekly target for Amazon's Dunfermline warehouse was to destroy some 130,000 items a week. ITV footage showed smart TVs, laptops, drones, hairdryers and computer drives sorted into boxes marked “destroy”. Greenpeace recently caught Bezos’ company doing the same in Germany. Amazon did not respond to requests for comment, but the opportunity cost of tying up scarce shelving space is probably to blame.

Dumping excess stuff is the antithesis of the “circular economy” concept, though. That recognises the importance of a sustainable economic system, and aims to minimise waste by redesigning products and operations to encourage re-use and recycling. Amazon’s stance also sits pretty oddly alongside its commitment to removing net carbon emissions by 2040, a decade sooner than many big companies.

The laxity on waste is likely down to two grey areas. Amazon’s platform business model makes liability less intuitively obvious if the 2 million small and medium sized businesses selling their wares via its site have excess stock. Meanwhile, there’s no analogous net zero emission-style target for the circular economy and biodiversity.

That could change. If companies’ so-called scope 3 emissions from their supply chain can be their own problem, so can waste. The likes of Unilever (ULVR.L) and Danone (DANO.PA) already have targets for reducing single use plastics. France already bans companies from destroying unsold or returned goods, and other countries may follow suit. Prime Minister Boris Johnson on Wednesday said Amazon’s behaviour was “bizarre and unacceptable”.

The lack of a net zero-style target is also surmountable. Making transparent numerical disclosures on the waste of the products Amazon warehouses for third parties would be a good start. That would then enable commitments on how to reduce the problem.

Amazon could just wait for the current controversy to die down. Still, the Ellen Macarthur Foundation says assets under management at public equity funds focused on the circular economy rose over 20 times to $7 billion between December 2019 and March 2021. It doesn’t look like a problem that will go away.

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- Amazon is destroying millions of items of unsold stock every year, including products that are often new and unused, ITV News reported on June 21.

- Amazon did not respond to Breakingviews’ request for comment.

- Companies including Amazon that are bracing for mandatory climate change reporting want the Securities and Exchange Commission to keep these disclosures out of their annual 10-Ks and other documents that might expose them to higher legal liability, Bloomberg reported on June 16.

Editing by Peter Thal Larsen and Sharon Lam

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