Amazon Investors Urged by ISS to Vote in Favor of Racial Audit

Amazon.com Inc. investors should vote in favor of an independent racial audit at the world’s largest online retailer, said Institutional Shareholder Services Inc., a proxy firm that previously advised stockholders to vote against similar resolutions at large U.S. banks.

The New York State Common Retirement Fund filed the proposal with the company, asking it to undergo an independent audit of its impacts on civil rights, equity, diversity and inclusion, and how those issues affect Amazon’s business. ISS said in a report that, in light of discrimination lawsuits, an audit would help shareholders better assess the retailer’s efforts to address racial inequality.

“The company has faced scrutiny over civil-rights issues concerning its Rekognition technology, which is alleged to have shown racial bias against darker-skinned women leading to gender misclassification, and to have incorrectly matched people of color with mugshot images,” ISS said. The Amazon Web Services software has been used by law enforcement to match faces with images in databases.

Amazon is asking shareholders to reject the proposal. It said in its proxy statement that it has a mechanism that allows potential abuses of its Rekognition technology to be reported, and that in the more than four years it’s been offering the software, it hasn’t received a single report of harmful use. Amazon said it has experts who help promote fairness in its offerings, and who also publish academic papers on the topic.

ISS said that while minority employees make up more than two-thirds of Amazon’s total U.S. workforce, only about 30% of its senior leaders are from minority backgrounds, and just 3.8% are Black. And while Amazon conducts a “human rights saliency assessment,” ongoing controversies related to recent lawsuits alleging discriminatory hiring and promotion practices “indicate the need for a more comprehensive review of the company’s impact on civil rights, equity, diversity and inclusion,” ISS said.

Amazon also said in its proxy statement that it’s taken a number of measures to address racial justice, including partnering with 150 companies, social groups and universities to strengthen recruitment and retention of Black, Latinx and Native American employees, as well as committing $50 million to support computer-science and other science, technology, engineering and math programs for underrepresented communities.

Amazon asked regulators to keep the proposal off its proxy at the annual meeting, scheduled for May 26.

Proxy-advisory firm Glass, Lewis & Co. also recommended shareholders vote in favor of the racial audit. ISS this year recommended investors vote against racial-audit proposals filed with U.S. banking giants Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co., while Glass Lewis has largely advised support for such motions.

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