For the 2021 proxy season, shareholders are presenting investors with a largely new set of human rights proposals, half of them asking companies to examine their role in perpetuating or combatting systemic racism. Some of the old mainstays about setting standards and assessing the efficacy of policies also remain, with four resubmissions. Other proposals continue about seeking scrutiny of how electronic platforms harm or help human rights, a particularly relevant concern given the virulent miasma of online discourse that continues to defy moderation.

There are 47 proposals and as of mid-February one vote, five withdrawals and two omissions, with 14 outstanding SEC challenges.

Racism

The 19 new resolutions seeking reports on how racism affects companies and how they plan to combat it include several different variants.

Racial equity audit: A campaign led by two unions, Change to Win (CtW) and the Services Employees International Union (SEIU) filed resolutions at eight financial firms—Bank of America, BlackRock, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo—and CoreCivic. The proposal asks the board at each to prepare a public report

to oversee a racial equity audit analyzing [the company’s] adverse impacts on nonwhite stakeholders and communities of color. Input from civil rights organizations, employees, and customers should be considered in determining the specific matters to be analyzed.

In the supporting statement, the proposal notes:

High-profile police killings of Black people—most recently George Floyd—have galvanized the movement for racial justice. That movement, together with the disproportionate impacts of the COVID-19 pandemic have focused the attention of the media, the public, and policy makers on systemic racism, racialized violence and inequities in employment, health care, and the criminal justice system.

Each proposal describes commitments made by each company and various investment commitments they have made to address pressing social needs, but also describes fraught histories for each. For instance, the proposal notes Bank of America has made fewer loans to minorities in Philadelphia and closed more banks in majority-Black communities compared to other places. It has set minimum account maintenance fees and balances that “disproportionately impact people of color and can inhibit wealth creation among these communities.” Further, Black people make up only 8 percent of the C-suite. In addition, the proposal takes issue with bonds Bank of America helped underwrite 10 years ago in Los Angeles, which it says helped pay for police-related settlements, while also giving “to police foundations in New York, Atlanta, and Los Angeles, which bypass normal procurement processes to buy equipment for police departments, including surveillance technology that has been used to target communities of color and nonviolent protestors.” The proposal concludes, “A racial equity audit will help Bank of America identify, prioritize, remedy and avoid adverse impacts on nonwhite stakeholders and communities of color,” and urges each “to assess its behavior through a racial equity lens in order to obtain a complete picture of how it contributes to, and could help dismantle, systemic racism.”

The racial justice audit proposal is also pending at Amgen (filed by Newground Social Investment), Amazon.com (from NYSCRF) and Johnson & Johnson (Trillium), with the same resolved clause but different problems highlighted, including:

• At Amazon.com, NYSCRF notes that after George Floyd’s murder that “Amazon tweeted its solidarity with the fight against systemic racism,” but that subsequent actions by the company call its commitment into question. These include firing a Black warehouse worker who complained about unsafe working condition (he is now suing). The proposal also says warehouse workers are disproportionately Black and Latino and “are paid low wages and exposed to dangerous working conditions, including exposure to COVID19.” Among other things, the company has “been criticized by employees, lawmakers, and regulators for biased promotion practices, discriminatory employee surveillance, and hiding workplace injury rates. The proposal asserts Ring doorbell cameras and the Neighbors app exacerbate racist crime reporting, and raises concerns about facial recognition technology that raises a host of civil and human rights questions— available via Amazon Web Services, in addition to the use of Amazon’s platform to sell products “that promote hatred.”

RACIAL JUSTICE AUDITS: HOLDING COMPANIES ACCOUNTABLE FOR THEIR ROLE IN SYSTEMIC RACISM

RENAYE MANLEY
Deputy Director of the Service Employees International Union, Strategic Initiatives

TEJAL PATEL
Corporate Governance Director, CtW Investment Group

JONAS KRON
Chief Advocacy Officer, Trillium Asset Management

In a set of new engagements, investors want companies in multiple industries to conduct racial justice audits to evaluate how institutionalized racism impacts their policies and business practices. In the wake of the Black Lives Matter marches, the shareholder proposals warn that the outpouring of public commitments to racial equity will be seen as empty promises if they are not backed up with substance.

• At Johnson & Johnson, Trillium applies the lens to disparities in the health care sector, with disparate outcomes for Black Americans. Underrepresentation in clinical trials, and higher mortality rates for breast cancer are the result, the proposal suggests. While the company has committed to addressing the clinical trial issue and making other changes, the proposal says a deeper assessment is needed to “reveal additional ways in which JNJ can have even more impact on systemic racism.” It is continuing sales of talcum powder outside North America and faces allegations of racism as a result, the proposal notes.

SEC action—Amazon.com, Citigroup, JPMorgan Chase and Johnson & Johnson variously have argued at the SEC that the resolution is moot in light of current diversity and inclusion programs, ordinary business or too vague. But the SEC disagreed with all three propositions made by Johnson & Johnson, so unless withdrawn it seems headed for a vote at all the companies.

CORPORATE RACIAL JUSTICE STATEMENTS PROMPT A RECKONING

OLIVIA KNIGHT
Racial Justice Initiative Coordinator, As You Sow

After the televised murder of George Floyd, systemic racism became front page news and led companies, investors, and consumers to acknowledge their roles in perpetuating racist policies and practices. While companies issued statements of support, investors and consumers began demanding corporate transparency and disclosure on racial and ethnic diversification. Companies have started to realize that heightened awareness of systemic racism, and corporate inaction, materially risks revenue growth and brand value. Conversely, promoting racial justice can increase profitability and competitive advantage.

Withdrawal—SEIU withdrew at prison company CoreCivic after it agreed to conduct and publish the requested racial equity audit by the end of January 2022; the proposal raises concerns about systemic racism in the criminal justice system generally, as well as specific problems in the company’s workplace and in its political spending and lobbying.

Racial justice plan: As You Sow takes a similar approach at Charles Schwab, Abbott Laboratories, Foot Locker and Monster Beverage. It asks each to report “disclosing the Company’s plan, if any, to promote racial justice.” As with the audit proposal, it invokes George Floyd. It points out that more than half the Russell 3000 “made public statements expressing their plans to address racial justice, thereby taking the first step to becoming antiracist organizations,” and defines this as “the practice of identifying, challenging, and changing the values, structures, and behaviors perpetuating systemic racism.”

It commends each for doing so, but says “material change” is needed in corporate policies and practices. This will make companies more profitable, according to studies cited in the proposal. But it decries the deep underrepresentation that persists, particularly for upper level employees: Blacks “accounted for only 4.1% of board members versus 13.4% of the U.S. population,” it notes. The proposal also cites findings from As You Sow’s new Racial Justice Scorecard for each company, with comparable data on why peer companies scored better. “Given heightened awareness around racism, failing to act and disclose policies and quantifiable data raises the material risk of revenue loss and reduced brand value,” As You Sow concludes. In the supporting statement, the resolution suggests the report could include:

• Potential policies the company could adopt to promote Racial Justice in its corporate workplaces and operations

• Detailed quantitative information on diversity and inclusion, including recruitment, hiring, and retention policies and outcomes

SEC action—Charles Schwab is arguing the proposal arrived past the submission deadline and an omission there is likely.

Environmental racism: The Sisters of St. Francis of Philadelphia uses a slightly different version of the audit proposal’s resolved clause, but has the same thrust. It asks for an independent, third-party report “analyzing how Chevron’s policies, practices, and the impacts of its business, perpetuate racial injustice and inflict harm on communities of color in the United States.” Chevron says it is an ordinary business matter given pending litigation; that type of challenge has succeeded in similar cases in the past.

Mass incarceration and prison labor: NorthStar Asset Management has been raising concerns about prison labor in the supply chain of retailers for several years and has come up with a new version of its request, filed at Home Depot and TJX. The TJX proposal seeks a report “evaluating whether the company is supporting systemic racism through undetected supply chain prison labor.” At Home Depot, it asks about policies for “any suppliers utilizing incarcerated workers.” The proposal notes that prison labor is allowed in the United States because of an exception in the 13th Amendment of the U.S. Constitution, and makes the case that modern prison labor in the United States “is an outgrowth of slavery.” It points to findings from the Brennan Center for Justice about punitive laws passed after the Civil War in the South known as “Black Codes, to arbitrarily criminalize the activity of their former slaves,” as well as the history of convict labor in the South. This history means “prison labor remains inextricably linked to systemic racism,” the proposal concludes, going on to note scant wage rates earned by prisoners today.

NorthStar says TJX has not shown that it monitors compliance with its policy not to use voluntary or involuntary prison labor, other than for a small number of vendors who make its private label goods. It suggests a more robust policy will guard against significant potential reputational risks and calls for better reporting that could include:

• Annual quantitative metrics regarding the number of supplier audits completed by the Company or third party auditors that evaluated the extent to which prison labor is present in the supply chain, as well as the summary of those audits’ results and the racial makeup of any prison labor workforces detected;

• Assessment of the effectiveness of current company policies and practices in preventing the utilization of prison labor in the company’s supply chain;

• Evaluation of any risks to finances, operations, and reputation linking the company to systemic racism from detected or undetected uses of prison labor in the TJX supply chain.

TJX has challenged the proposal at the SEC, arguing it concerns ordinary business. It successfully challenged a similar but not identical proposal from this proponent about prison labor in the supply chain in 2020; the SEC agreed then it was ordinary business because it addressed supplier relationships and also workplace safety and working conditions.

Policing: Two proposal raise questions about racist policing and both face challenges at the SEC that have yet to be decided:

• Arjuna Capital wants a report from Chubb,

on current company policies, and options for changes to such policies, to help ensure its insurance offerings reduce and do not increase the potential for racist police brutality, nor associate our brand with police violations of civil rights and liberties. The report should assess related reputational, competitive, operational, and financial risks, and be prepared at reasonable cost, omitting proprietary, privileged or prejudicial information.

The company is arguing this is ordinary business since it deals with specific product offerings (an approach that has succeeded in similar instances before). It also says it is not significantly related to Chubb’s business, is moot given current risk management practices and is both too vague as well as false and misleading.

CAN INSURANCE COMPANIES HELP PREVENT RACIST POLICE BRUTALITY?

NATASHA LAMB
Managing Partner, Arjuna Capital

Protests admonishing the murders of George Floyd, Breonna Taylor, and Black Americans at the hands of police defined 2020, second only to the 100-year global pandemic. The moral imperative for police reform is clear, but investors are considering the financial imperative, as well. Thousands of police misconduct lawsuits are filed annually—which cost taxpayers over $300 million in 2019. But what about the private insurance companies that back these municipal police departments? How are they responding to the Black Lives Matter movement and calls for reform?

CORPORATIONS SHOULD INVEST IN COMMUNITY – NOT POLICING

VANESSA BAIN
Co-Founder, Gig Workers’ Collective

RACHEL FAGIANO
Associate Program Officer, Racial and Economic Justice, Nathan Cummings Foundation

WILLY SOLIS
Shipt Shopper, Gig Workers’ Collective Organizer

The police killing of George Floyd brought pervasive racial inequality to the national forefront. Attention turned to policing tactics and policies that cause harm in communities of color and re-entrench racial inequity—and companies took notice. Many corporations expressed solidarity with the Black community and committed to address racial inequality. Despite this, many continue partnerships with law enforcement and remain complicit in practices that further criminalize communities of color.

• The other proposal from the Nathan Cummings Foundation is at Target, asking it to “instate a prohibition on Safe City partnerships unless the board concludes, after an evaluation using independent evidence, that these partnerships do not increase the likelihood of violations of civil and human rights and do not exacerbate racial inequity.” The company is arguing it is an ordinary business matter since it is about community relations.

Risk Policy & Approach

About a dozen more proposals tread ground more familiar to investors who have considered human rights shareholder proposals in the past, although eight of these 13 proposals have been challenged at the SEC. As was true in 2020, most of these (nine) ask companies to report on how companies conduct their human rights risk assessments. Two more ask for a report on extant policies, one seeks a policy expansion and one more is a resubmission about whistleblower protections.

Weapons: At four weapons makers, ICCR members want to see reports on how “high risk products and services” affect “actual and potential human rights impacts.” At Northrop Grumman, the proposal says the report should be a “human rights impact assessment,” while at General Dynamics, Lockheed Martin and Raytheon, the request is for a report on the company’s “human rights due diligence process to identify, assess, prevent, mitigate, and remedy actual and potential human rights impacts associated with high-risk products and services, including those in conflict-affected areas. At Northrop this year, proponents are concerned about the company’s heavy dependence on defense contracts, including its work using biometric data in its work on the Homeland Advanced Recognition Technology (HART) database. The database will hold information on some 260 million people and poses risk to privacy, the First Amendment and immigrant communities, the proponents contend. Longstanding concerns about the company’s weaponry also are at issue, including in its sales to Saudi Arabia given the war in Yemen.

Similar proposals about human rights concerns at two of these companies have gone to votes before, most notable a 37.9 percent vote at General Dynamics in 2013. Previous votes at Northrop were 24.2 percent in 2020 and 31.1 percent in 2019.

SEC action and withdrawal—Still pending is a challenge from Northrop Grumman that argues recent enhancements to its human rights policy make the proposal moot; it also says the proposal is impermissibly vague. It was omitted at General Dynamics because it arrived too late. The proponents withdrew at Raytheon for procedural reasons connected to its merger with United Technologies.

Food: Three other food companies face human rights due diligences proposals, the result of persistent concerns about workers highlighted in an Oxfam initiative called Lives on the Line. Proponents long have questioned the extent to which food companies properly attend to working conditions in long global food supply chains. These concerns intensified in the last year as workers in crowded meat processing plants fell ill with the coronavirus and died by the hundreds. Oxfam has filed three proposals for 2021, asking for a report that will “identify, assess, prevent and mitigate actual and potential adverse human rights impacts in its operations and supply chain.” It is still pending at Kroger, where last year it earned 45.7 percent, an unusually high vote for a human rights proposal.

At Kraft Heinz, the Midwest Capuchins have filed the “risky products” proposal described above at the defense companies, focusing on the food supply chain. The resolution cites controversy about slave labor used to produce shrimp, migrant labor abuse in the palm oil sector and “rampant labor abuse among tomato producers.” It notes the company’s own materiality assessment finds human rights risks have a large impact on it, but the proponent views the company’s work on the issue to date with a skeptical eye. The company received a low score from the Corporate Human Rights Benchmark for due diligence, in contrast to peers, the resolutions notes. (The Capuchins withdrew this proposal in 2019 after discussions.)

Investor Advocates for Social Justice (IASJ) already has earned 18.4 percent for a third-year proposal at Tyson Foods seeking a human rights due diligence report. This is a high vote for the dual class stock company, and represents support from some 80 percent of shares not held by the Tyson family. But since it did not reach 25 percent in its third year, out of all shares voted, the resolution may not be resubmitted under the new SEC rules. Previous support for this resolution rose to 14.5 percent last year, up from 5.5. percent in 2019.

Withdrawals—Oxfam withdrew at Pilgrim’s Pride, where it was in its third year and earned 12 percent in 2020 and 2019. The withdrawal at Sanderson Farms came after the proxy statement was published; the vote there last year was 36.8 percent.

Rubber: The Sisters of the Good Shepherd want Goodyear Tire & Rubber to assess “the effectiveness of Goodyear’s systems to embed respect for human rights across company-owned operations and through business relationships, and where appropriate, to provide access to remedy for human rights impacts.” This is the first year for this proposal at the company and the issue is the “vast” global supply chain for natural rubber, where the proposal says child and forced labor persists “due in part to poor traceability and accountability” in places such as Vietnamese farms, where work hazards abound. The proposal notes that the company’s human rights commitment “does not explicitly prohibit child labor” and invokes the Sustainability Accounting Standards Board’s recommendation for human rights disclosures. It says there is no apparent auditing process at Goodyear, even though it participates in a sustainable rubber initiative. (Similar proposals have been filed at firms connected to the automotive industry as part of Investor Advocates for Social Justice’s Shifting Gears campaign.)

Travel: At United Airlines, the request is simpler, asking only for a report “on the Company’s management systems and processes to implement the commitments outlined in its human rights policies.” The company last saw a human rights proposal in 2016, but the proponents withdrew after the airline agreed to further meetings on the subject. Proponents also had withdrawn a 2014 proposal after the company adopted a policy to combat trafficking.

TripAdvisor has a resolution from Mercy Investments that asks it “to establish a human rights policy and corresponding practices throughout its operations and value chain.” The proposal outlines human rights problems in the travel and tourism industry that the company serves with its worldwide advice network, which it says raises risks in conflict-prone areas with human rights abuses. The proposal is new to the company, but Booking Holding saw a similar proposal, withdrawn in 2019, and Carnival last year agreed to continued engagement and expand its policies, also prompting a withdrawal.

Conflict zones: Continuing the concerns at travel firms, the Presbyterian Church (USA) has a proposal pending at Expedia to report “on the company’s policies and procedures to address the human rights risks associated with business activities in conflict-affected and high-risk areas (CAHRA).”

The Episcopal Church filed this proposal at Chevron, which has faced human rights criticism for many years. But it withdrew after the company argued at the SEC that company disclosures make it moot. The resolution expressed concerns about operations in the Middle East and Iraq, suggesting additional policies are needed to address the high risks associate with these locations.

Whistleblowers: Trillium Asset Management has resubmitted a proposal that earned 4.9 percent last year at Alphabet regarding whistleblower protections, with a slightly different cast than last year. It asks that the board “oversee a third-party review analyzing the effectiveness of its whistleblower policies in protecting human rights,” and to make its finding public. Even though Alphabet’s principle subsidiary Google has a non-retaliation policy in its Code of Conduct, critics contend it has been poorly enforced, noting management resistance to unionization. Furthermore:

in December 2020, Google fired the prominent co-lead of its Ethical Artificial Intelligence team, Dr. Timnit Gebru, who was researching the risks of technology, including Google’s. The firing prompted media attention, social media backlash, and an open letter signed by thousands of employees stating the firing ‘heralds danger for people working for ethical and just AI—especially Black people and People of Color— across Google.

Media

Investor advocates are continuing to raise concern about the risks and ills of media platforms and their role in spreading hate speech and threatening privacy. New this year are two proposals about advertising policies, but SEC challenges seem likely to prevent any votes.

Free expression: Azzad Asset Management again wants Alphabet to report “assessing the feasibility of publicly disclosing on an annual basis, by jurisdiction, the list of delisted, censored, downgraded, proactively penalized, or blacklisted terms, queries or sites that the company implements in response to government requests.” The proposal is earned 11.4 percent last year. Azzad sees a lack of transparency at Google about content takedown requests and frames its concern as a matter of human rights law that supersedes the laws of individual states. Google last year said it already discloses enough information.

SumOfUs saw its resubmitted proposal to Apple about freedom of expression omitted on the grounds that it is moot. The proposal earned 40.6 percent last year and again asked for a report

on Apple’s management systems and processes for implementing its human rights policy commitments regarding freedom of expression and access to information; the oversight mechanisms for administering such commitments; and a description of actions Apple has taken in response to government or other third-party demands that were reasonably likely to limit free expression or access to information.

Problematic content: The Nathan Cummings Foundation has resubmitted a proposal about Amazon.com’s approach to hate speech for the third year. It is concerned about products that foment hate that customers can buy on the company’s platforms. It earned 35 percent last year, up from 27.2 percent in 2019 and again asks for a report on

efforts to address hate speech and the sale or promotion of offensive products throughout its businesses. The report should...discuss Amazon’s process for developing policies to address hate speech and offensive products, including the experts and stakeholders with whom Amazon consulted, and the enforcement mechanisms it has put in place, or intends to put in place, to ensure hate speech and offensive products are effectively addressed.

The proposal asserts that these products remain available on Amazon’s platforms despite company policies against their sale. Furthermore:

Amazon’s Offensive Products policies do not apply to books, music, video and DVD. According to a recent report, with respect to these products, Amazon’s algorithm for product searches proactively directs customers who search for white supremacist content to additional extremist content....The sale of self-published books by extremist organizations on platforms like Amazon is a key source of funding for these groups.

As You Sow is proposing that Facebook “prepare a report to assess the benefits and drawbacks to our Company of maintaining or restoring the type of enhanced actions put in place during the 2020 election cycle to reduce the platform’s amplification of false and divisive information.” It says the company’s brand has been sullied because users have spread “gross disinformation, hate speech, and [incited] racial violence.” It argues the board has failed to solve the problem, and gives specific examples ranging from Russian election hacking to child pornography and political disinformation. Proposed government restrictions may heighten Facebook’s legal risks, it says, at the same time that people are fleeing the platform. As You Sow argues Facebook should continue to use the expertise it employed in advance of the 2020 U.S. election to tone down problems. It suggests the requested report could “characterize and quantify” several metrics on employees, boycotts, legal issues and revenue to allay investor concerns.

SEC action—Amazon says the proposal is moot.

Surveillance: Two additional proposals at Amazon.com, both repeats, address surveillance and technology. Harrington Investments has a proposal that earned 32 percent last year and 28.2 percent in 2019. It asks for an independent study and report by September that will examine

• The extent to which such technology may endanger, threaten, or violate privacy and or civil rights, and unfairly or disproportionately target or surveil people of color, immigrants and activists in the United States;

• The extent to which such technologies may be marketed and sold to authoritarian or repressive foreign governments, identified by the United States Department of State Country Reports on Human Rights Practices;

• The potential loss of good will and other financial risks associated with these human rights issues.

INCREASED OVERSIGHT OF SURVEILLANCE TECHNOLOGY NEEDED TO REDUCE SYSTEMIC RACISM

MARY BETH GALLAGHER
Executive Director, Investor Advocates for Social Justice

The U.S. economy is deeply rooted in structural racism and was founded on the exploitation and enslavement of Black Americans and displacement of Indigenous tribes from their land. Now more than ever, investors must recognize our responsibility in this harmful system and leverage investments to advance racial justice in all forms. Following worldwide racial justice uprisings in 2020, many companies took to social media to support the Black Lives Matter movement. However, many of these same companies continue to aid institutions that uphold racist systems through their business practices. For example, many companies profit from selling surveillance technology to military, police, and immigration enforcement, who use it to surveil, over-police, and racially profile Black, Brown, and immigrant communities. The UN Special Rapporteur on contemporary forms of racism reported that “emerging digital technologies exacerbate and compound existing inequities, many of which exist along racial, ethnic and national origin grounds.”

The other resolution, from the Sisters of St. Joseph of Brentwood, earned 32.1 percent in 2020. It seeks “an independent third-party report...assessing Amazon’s process for customer due diligence, to determine whether customers’ use of its surveillance and computer vision products or cloud-based services contributes to human rights violations.” The specific concern regards Amazon’s Rekognition facial recognition technology, particularly when deployed by governments, but also the Ring doorbell video surveillance technology when its footage is used by police. Additionally, the proposals point to Amazon Web Services technology used by the U.S. Immigration and Customs Enforcement Agency. (A human rights proposal at Northrop Grumman also identifies surveillance among its concerns, see Weapons p. 56)

SEC action—Amazon says the Rekognition proposal duplicates three others it received first about racial justice. Advertising: Three proposals to four companies address advertising and hate speech, but votes seem unlikely:

• Myra Young has filed at Home Depot and Walt Disney and the Nathan Cummings Foundation at Omnicom Group. Their proposal asks for a study and report on advertising policies, “assessing how and whether” these policies “are not contributing to violations of civil or human rights.” The report “should consider whether the policies contribute to the spread of hate speech, disinformation, white supremacist activity, or voter suppression efforts, and whether policies undermine efforts to defend civil and human rights, such as through the demonetization of content that seeks to advance and promote such rights.” Walt Disney successfully challenged the proposal at the SEC, which agreed it concerns ordinary business. Home Depot and Omnicom have lodged similar challenges that are likely to succeed.

• Individual proponent Henry Thomassen would like ExxonMobil not to advertise on platforms with hate speech, but the company also has challenged his proposal on ordinary business grounds, and because Thomassen failed to prove his stock ownership. The proposal said the company should

establish an advertising policy for the Company, and any divisions or wholly owned or minority-owned Companies, to suspend for a period of not less than four years the purchase of advertising across all platforms from any media organization that knowingly promulgates daily lies, falsehoods, incorrect facts and dangerous conspiracy theories. After four years this suspension may be reviewed and changed. This suspension would apply world-wide to any affiliate, division, and wholly or minority-owned companies of said organization.

Other Human Rights Issues

Child sexual exploitation: Proxy Impact has refiled a proposal at Facebook that last year received 12.7 percent; this represented more than 43 percent of the shares not controlled by CEO Mark Zuckerberg and Facebook insiders. The proposal asks for a report about the risk

of increased sexual exploitation of children as the Company develops and offers additional privacy tools such as end-to-end encryption. The report should address potential adverse impacts to children (18 years and younger) and to the company’s reputation or social license, assess the impact of limits to detection technologies and strategies.

Governments, law enforcement agencies and child protection organizations have harshly criticized Facebook’s planned end- to-end encryption, warning that it will cloak the actions of child predators and make children more vulnerable to sexual abuse. Facebook reported more than 20 million cases of child sexual abuse materials on its platforms in 2020. This accounts for more than 95 percent of all cases reported to the National Center for Missing and Exploited Children. By moving to end-to-end encryption, without first moving to take steps to end child abuse on its platforms, Facebook will effectively make invisible 70 percent of these cases—an estimated 14 million instances that are currently being detected and reported. Pending legislation in Congress could make Facebook legally liable for its child sexual abuse material.

Nuclear weapons: Taking up an issue that has not surfaced in proxy season for many years, the Sisters of St. Joseph of Brentwood want PNC Financial Services Group to report on its financing of nuclear weapons. They ask for a report “assessing the effectiveness of PNC’s Environmental and Social Risk Management (ESRM) systems at managing risks associated with lending, investing, and financing activities within the nuclear weapons industry.” The nuns point out that the bank “lends over $1.6 billion to nuclear weapons companies, including General Dynamics and others,” and argue that “Geopolitical uncertainty and erosion of several arms control treaties leaves the world at its highest ever vulnerability to a nuclear weapons catastrophe.” The proposal references the Stop Banking the Bomb Campaign that has organized demonstrations at PNC branches and its annual meeting to call for an end to any connection with nuclear weapons makers. The proposal notes that PNC has in the past ended controversial financing business regarding private prison and mountaintop removal and suggests it should do the same regarding nuclear weapons.

FACEBOOK ENCRYPTION WILL HIDE ONLINE CHILD SEXUAL EXPLOITATION

MICHAEL PASSOFF
CEO, Proxy Impact

As the world’s largest social media company—and the largest source of reported child sex abuse online— Facebook’s actions have a major impact on global child safety. A resubmitted shareholder resolution seeks a report from Facebook that will assess the risk of increased child sexual exploitation that will occur if it implements a plan to offer end-to-end encryption on its platforms.