Human Rights

How corporate behavior affects human and labor rights has been a central theme of proxy season since the first social policy shareholder proposals of the early 1970s. Recent proposals about racial justice ramped up after the murder of George Floyd and the Black Lives Matter movement surged. But they have ebbed considerably to 20 this year, down from 50 two years ago.

Trade union rights have come to the fore, though, notably in the domestic U.S. context; there are 13 such proposals now, down slightly from 15 last year. Longstanding concerns about the degree to which companies should address and report on how their operations and products harm human rights have persisted and this year touch on current global conflicts, with a total of 22 proposals, down from 29 last year. In 2024, investors will also consider a brand-new batch of 13 proposals about AI and its widespread implications for business and society, in addition to six more on familiar digital content and privacy problems. (Graph below.)

The total count is 71 as of mid-February, down from 93 in each of the two previous years. A total of 63 have been voted or remain pending as of mid-February, seven have been withdrawn and nine face substantive SEC challenges, although there have been no omissions to date. A much larger proportion of these proposals have gone to votes in the last two years, illustrating the fraught nature of human rights topics. The figures in the chart (previous page) include two proposals that ask for human rights action from an anti-ESG proponent (based on the nature of the resolved clause), although most proposals from such proponents are covered separately in the Anti-ESG section (p. 74) since they reject ideas about supporting racial justice that are common to all other proponents. Average support for human rights proposals had risen to 30.3 percente in 2022 before dipping to 19.4 percent last year. (Right graph, previous page.)

Members of ICCR file most of the human rights resolutions, but trade unions have been a major driver of the racial justice proposals which have received substantial support. Trade unions, naturally, also have filed many of the proposals about organizing rights.

Risky Business

Proponents have filed 23 resolutions about corporate human rights policies and how they are implemented, with more general framing at 12 companies, six specific to conflict zones and five more about military and personal weapons.

Policy and Risk Assessments

Beyond diversity: For Chevron, the proponents continue to seek a third-party assessment of human rights issues. A similar proposal more specifically seeking a racial justice audit earned about 9 percent in 2023, down from a near-majority of 47.5 percent in 2022. After the 2022 vote, the company commissioned former U.S. Attorney General Loretta Lynch to conduct a racial equity audit. In March 2023, her report suggested a series of internal improvements related to diversity and inclusion practices, but it did not address challenges with external stakeholders, such as those about environmental racism, health issues at fence-line communities and other complex issues. This year’s proposal asks it to examine these elements in a report on

how effectively the company implements its Human Rights Policy and other company efforts to prevent, mitigate, and remedy actual and potential human rights impacts of its operations. The third-party should provide an opportunity to civil society and human rights organizations to provide input, and the report should be made public on Chevron’s website.

Weapons and pipelines: Last year PNC Financial Services successfully challenged a proposal about its financing of nuclear weapons because the resubmission had missed a second-year 2022 resubmission threshold. (It had earned just under 8 percent for two years running.) A 2024 proposal reiterates concerns about how decisions on project financing are made, this time mentioning outside the resolved clause pipelines as well as nuclear and other weapons. It seeks a report “explaining how PNC’s risk management systems ensure effective implementation of its Human Rights Statement in existing and proposed general corporate and project financing,” including a “description of human rights due diligence processes in place to embed respect for human rights into operations and to provide access to remedy for human rights impacts connected to financing relationships” and “Indicators used to assess effectiveness.”

Commodities: At Walmart, the proposal asks for a human rights impact assessment on the “actual and potential impacts of one or more high-risk commodity in Walmart’s supply chain or facility in its operation.” A similar proposal earned 5.8 percent last year, but it focused more on domestic workplace risks and this one is directed at the supply chain. This year, the proponent does mention hazardous U.S. working conditions for frontline workers during the pandemic, but also allegations about forced labor among watermelon suppliers, prison labor in Cambodia and trafficked workers in the fishing and seafood processing industry that sells to Walmart. The proposal suggests the requested report could include:

- Human rights standards and principles used to frame the assessments;
- The rationale for selecting the high-risk commodity or operation;
- Actual and potential adverse impacts associated with the product or operation;
- Types and extent of stakeholder consultation;
- Walmart’s connection and level of responsibility to the risks identified; and
- Time-bound action plans presenting how the findings will be implemented to prevent, mitigate and/or remedy impacts.

Right to health care: Three proposals from ICCR members take up access to healthcare as a human right, in a new development of phrasing that raises faith-based investors’ long-term critiques about the high cost of medical care and barriers to access. The proposals reference the Pharmaceutical Supply Chain Initiative that promotes responsible supply chain practices for drug and health companies.

Adopt policy—At Bristol-Myers Squibb and Eli Lilly, the proposal asks for adoption of “a comprehensive human rights policy, referencing internationally recognized human rights standards, that applies to both its own operations and its suppliers that includes the right to the highest attainable standard of physical and mental health.” Both ask that there be a process “to identify, prevent, mitigate, and remedy adverse human rights impacts, above and beyond supplier audits, including consultation with stakeholders, above and beyond supplier audits.”

Report—A similar proposal is before Pfizer, asking for a human rights impact assessment that would cover “operations, activities, business relationships, and products” and “describe actual and potential adverse human rights impacts identified…[and] identify rightsholders that were consulted; and discuss whether and how the results of the [impact assessment] will be integrated into Pfizer’s operations and decision making.” Outside the resolved clause, the proponent elucidates concerns about access to medicine, referencing several international human rights standards and the right to adequate medical care. The SEC staff did not agree with Pfizer’s contention that its human rights policy and practices make the resolution moot.

Conflict Zones, Oppression and Weapons

Not surprisingly given the number of conflicts around the world and the spread of authoritarian governments, shareholder proponents this year are applying their usual human rights lens to new circumstances that affect where and how companies operate. There are several iterations. Several use the acronym “CAHRA,” which stands for “conflict-affected and high-risk areas.”

Conflict exposure: The biggest group of proposals comes from ICCR members to a mixed group of companies and references specific ties to conflict zones and oppressive regimes:

  • The Sisters of the Presentation of the Blessed Virgin Mary raises concerns about JPMorgan Chase’s lending and underwriting services for repressive governments, including China, Mozambique, Myanmar, Russia, Saudi Arabia and Venezuela. It seeks a third-party report on the firm’s “due diligence process to determine if and how its lending, underwriting, or other services in conflict-affected and high-risk areas (CAHRA) expose it to human rights and other material risks,” suggesting the report should:

    - [Discuss] how JPMC assesses, mitigates, and reports human rights and material risks in CAHRA; and
    - [Evaluate] whether additional policies, practices, and governance measures are needed to mitigate risks.

  • A second proposal asks three companies about the “effectiveness” of their implementation of human rights policies, concerning CAHRA operations. Each proposal highlights outside the resolved clause specific geographies at issue:

    • Marriott International: Ties between the company’s hotels and repressive governments in Bangladesh, Saudi Arabia and China.

    • Mondelēz International: Continued business in Russia and Ukraine.

    • TripAdvisor: Business ties to many conflict-ridden places, including China, Syria, Saudi Arabia and Israeli settlements in the West Bank. The same proponent withdrew a proposal asking for a policy about doing business in conflict zones back in 2021, after TripAdvisor agreed to continue dialogue about how it addresses such risks.

Product misuse: Friends Fiduciary again would like Texas Instruments to commission a third-party report about its “due diligence process to determine whether customers’ misuse of its products expose the company to human rights and other material risks.” A similar proposal at Analog Devices was withdrawn. Both raised concerns about the use of company technology by Russia in its war against Ukraine. Proposals with similar concerns in 2023 earned 16.7 percent at Microchip Technology and 23 percent at Texas Instruments.

SEC action—Texas Instruments has challenged the 2024 proposal at the SEC, arguing it concerns ordinary business and would micromanage; there has been no response so far.

Weapons: Military weapons also are the issue at RTX (the former Raytheon) in a resolution similar to earlier ones at fellow defense contractors General Dynamics (25 percent in 2022 and 2023) and Lockheed Martin (votes that dropped from 32 percent in 2021 to 14 percent last year). The proposal asks RTX for a report examining its “actual and potential human rights impacts associated with high-risk products and services, including those in conflict-affected areas and/or those violating international law.” The proposal highlights foreign arms sales, including those to Israel and Saudi Arabia, plus its nuclear weapons production.

CommonSpirit Health has filed another proposal specifically about weapons—the personal sort—at Sturm, Ruger. It is similar to one that earned 26.5 percent in 2023, having asked about risks associated with marketing and advertising firearms. Earlier, investors approved a 2022 proposal seeking a human rights risk assessment request with 68.5 percent support. In 2018, a proposal about gun safety and harm mitigation earned an unprecedented 68.7 percent. The 2024 proposal seeks

a third-party report on (1) the link between the public health costs created by the marketing, promotion and sales of Sturm Ruger’s products and its prioritization of financial returns over public welfare and (2) whether such prioritization threatens the returns of diversified shareholders who rely on a productive economy to support their investment portfolios.

China and Russia: At Thermo Fisher Scientific, proponents withdrew after an agreement with the company. The proposal had noted the Chinese government has used company products to collect DNA from Tibetans and other ethnic minorities. It asked for a human rights assessment about direct and indirect sales of company products to law enforcement agencies and said it should “provide clear explanations of evidence examined and decisions made regarding permitting sales to law enforcement in regions where the use of such products could reasonably be expected to violate human rights.”

Right-wing proponents have been raising issues for a few years about the state of human rights in China and this year the National Legal and Policy Center filed at Apple and Starbucks. At Apple, the proposal received 1.6%. It voiced concerns about lost sales in Russia after Apple ended its business there following the invasion of Ukraine but also mentioned app removals in Hong Kong during the political crackdown. The resolution at Starbucks is the same, seeking a report by next March “analyzing the congruency of the Company’s privacy and human rights policy positions with its actions, especially in such places as war zones and under oppressive regimes, as they impact how the Company maintains its reputation, viability and profitability.”

The Starbucks vote is on March 13. That proposal says the company’s expansion plans in China are inconsistent with its human rights pledges and that it must “comply with the expectations of the dictatorial and genocidal Chinese Communist Party, which controls the government.” It also says the company “abandoned” its 2,000 workers in Russia after exiting that market following the Russian invasion of Ukraine.

SEC action—Commission staff disagreed with Apple’s contention that the NLPC proposal concerns ordinary business on the grounds of it being about public relations and financial management; the staff also disagreed it is moot.

Insurance: Worded like the other risk assessment proposals is one at Travelers asking it to describe “how human rights risks and impacts are evaluated and incorporated in the underwriting process.” The proposal is new to Travelers and outside the resolved clause focuses on Indigenous peoples’ rights and related social and political risks from the company’s underwriting practices. A similar proposal last year at Chubb earned 16.5 percent. (More below on environmental justice.)

Supply Chains and Child Labor

Four resolutions are specific to child labor and supply chains, at food and apparel companies where the issue has long sparked criticism. Recent state efforts to relax child labor laws give these proposals fresh domestic urgency. The Economic Policy Institute published a report in March 2023, updated in December, showing that lawmakers in 10 states have introduced bills over two years that would weaken child labor standards, even while incidents of child labor are on the rise—up 37 percent in 2023.

At Hershey, where the Hershey Trust owns most of the stock, a specific proposal about child labor in the cocoa supply chain earned only 3.6 percent support last year, missing the resubmission threshold, the American Baptist Church has submitted a broader request this year. It asks for an independent assessment and recommendations “for achieving a living income for cocoa farmers in Hershey’s West African supply chain, beyond legal and regulatory matters. Input from stakeholders, including civil society organizations, cocoa farmers, and suppliers, should be considered in the assessment.”

Tulipshare has resubmitted a proposal to Mondelēz International (19.9 percent last year) asking it to

adopt targets and publicly report quantitative metrics appropriate to assessing whether Mondelēz is on course to eradicate child labor in all forms from the Company’s cocoa supply chain by 2025. In the Board and management’s discretion, such metrics may include: current estimates of the total numbers of children in its supply chain on a regional basis, working in hazardous jobs, working during school hours, and employed after school hours.

NorthStar Asset Management is continuing to raise concerns about labor and human rights in the TJX supply chain. A similar version of this year’s proposal earned 25.7 percent in 2023 and 24.6 percent in 2022. It asks for an independent report “assessing the effectiveness of current company due diligence in preventing forced, child, and prison labor in TJX’s supply chain.”

Tyson Foods shareholders gave 12.2 percent support to a proposal that highlighted recent reports about illegal child labor in the United States at the company’s meat-packing plants. It followed earlier proposals about human rights due diligence at the company, which earned 18.4 percent the last time they aired in 2021, not enough for resubmission. The resolution this year asked for an “audit assessing the effectiveness of the Company’s policies and practices in preventing illegal child labor throughout its value chain.”

Racism & Indigenous Rights

Proponents are continuing to raise concerns about the state of racial justice by filing proposal seeking audits, variously framed as about racial justice or civil rights, with 12 proposals this year. They also want more information about how companies are addressing the complex problems of environmental justice and the rights of indigenous peoples (five proposals).

Audits: At this point last year there were two dozen racial justice/civil rights audit proposal pending and only half as many have been filed this year, with nine still pending as of mid-February. Seven of this year’s crop are resubmissions that generated several high votes before. As in previous years, the proposals use similar formulations at a broad mix of companies. They point to public company commitments that clash with enduring inequalities such as deep underrepresentation for people of color and negative, differential impacts on communities of color, as well as how and to whom companies provide goods and services. The proponents argue that addressing systemic racism will make companies run better, be more equitable and return more value to the economy as a whole. Some cite findings from As You Sow’s Racial Justice Scorecard. Proposals also name specific stakeholder groups to consult and all seek external expertise and advice.

  • Police support and racial profiling—For AT&T (21.5 percent last year) and Walmart (18.2 percent), the audit is to analyze “impacts on Black, Indigenous and People of Color (BIPOC) communities, and to provide recommendations for improving the company’s racial equity impact.” The critique at AT&T is that it voices support for racial justice but gave money to police foundations and the National Sheriff’s Association, while “growing evidence [shows] that many police departments demonstrate not only implicit bias but outright racism.” Other issues are service quality in BIPOC communities and handling racism complaints. At Walmart, the employees’ Organization United for Respect has concerns about alleged racial profiling in stores and other issues including alleged discrimination in working conditions and wages.

  • “Nonwhite stakeholders”—At Coca-Cola (13.5 percent last year), Equifax (30.8 percent, GEO Group (40.3 percent) and Valero, (11.9 percent), the audit is to assess the company “impact on nonwhite stakeholders” and explain how problems will be mitigated. The proposal is pending only at GEO, where it earned 40.3 percent last year, after an unusually high vote in 2019 of 88 percent supporting a report on the treatment of inmates and detainees. It notes concerns about prison populations, the treatment of immigrants and the company’s political spending.

  • “Improve”—Trillium Asset Management has Marriott International’s first civil rights proposal, asking for an assessment and recommendations for improvement because the U.S. Department of Labor found in 2022 that Marriot had discriminated against Black, Asian and female job applicants in Tennessee. Trillium also expresses concerns about a lawsuit about predatory lending by Marriott’s employee credit union.

    Two similar pending proposals also ask that the audits assess and make recommendations for “improving the racial impacts of its policies, practices, products, and services”—at 3M (no previous votes but a 2022 withdrawal regarding environmental justice) and American Water Works (40 percent last year and 48.3 percent in 2022). The latter raises a specific concern about low-income residents who would be affected by a desalinization plant in California and also mentions an unresolved controversy in Illinois.

    The Nathan Cummings Foundation also has pending the first racial justice audit proposal at PepsiCo, praising its past record but expressing concern about its current commitments.

  • Health: Mercy Investments narrows the scope to racial and ethnic healthcare disparities at UnitedHealth Group. This came up last year in NYSCRF proposals withdrawn at Humana and Elevance Health after agreements. The resolution earned 20.6 percent last year and now asks for an analysis of these disparities in and on the company’s business, specifying the

    report should include data on the extent of racial and ethnic disparities in health outcomes of United’s membership across its government programs and commercial lines of business. The audit should be conducted by an independent third party with input from employees, customers, and other stakeholders and include efforts being taken by United to address such disparities and improve outcomes.

  • Value chain impacts: The Franciscan Sisters of Allegany, N.Y., have filed for the first time at Wendy’s and ask that the requested audit evaluate

    practices and policies across the entire value chain. At the Board’s discretion, the audit should include assessing impacts on restaurant franchise employees, farmworkers and greenhouse workers in the produce supply chain, and communities of color in the areas where the company operates and should include input from civil rights organizations, employees, and customers, focusing on identifying systemic risks at all operational levels.

SEC action and withdrawals—The Philadelphia Public Employees Retirement System withdrew a resubmission that used the “nonwhite stakeholders” language at Equifax for procedural reasons. More substantively, SEIU withdrew when Coca-Cola agreed to implement the proposal, noting the company is separately analyzing racial pay equity. SEIU also withdrew after Valero argued at the SEC that the resolution is moot since it published an environmental justice audit from an independent firm in 2023.

Environmental justice: Another proposal explicitly about environmental justice is more general than those that discuss the “just transition” described above in the Climate Change section (see p. 16) has not been named and the other is pending at Honeywell International. Investor Advocates for Social Justice wants a “third-party environmental justice audit” about “heightened racial impacts of Honeywell’s operations and produces recommendations for improving them, with input from civil rights groups and affected communities. Similar proposals earned 13.4 percent in 2023 and 21.3 percent in 2022. Because the 2023 proposal missed the 15 percent resubmission threshold for a second-year proposal, however, the 2024 iteration may be vulnerable to exclusion if challenged.

THERE IS NO ‘JUST TRANSITION’ WITHOUT ENVIRONMENTAL JUSTICE


JILLIANNE LYON
Program Director, Investor Advocates for Social Justice

Environmental justice ensures that everyone, regardless of income, race or national origin, has the same environmental protections and can meaningfully participate in policies that shape their communities. In reality, low-income communities and communities of color in the United States have faced a long history of racial inequity and environmental injustice. Decades of research show that people of color are disproportionately exposed to higher levels of pollution compared to their white counterparts. For example, Black Americans are 75 percent more likely to live near toxic oil and gas facilities. Studies since the 1980s have shown that race is the leading factor in siting hazardous facilities in the United States.

Indigenous rights: ICCR members have returned for the third year to query large banks about their policies concerning Indigenous peoples, seeking a report on how effective policies are “in respecting internationally-recognized human rights standards for Indigenous Peoples’ rights in its existing and proposed general corporate and project financing.” The proponents believe they could be more expansive:

  • At Citigroup (31.5 percent in 2023 and 34 percent in 2022), it notes the company’s financing of controversial oil and gas pipelines and exploration projects in the Amazon basin.

  • The proposal is new to JPMorgan Chase and notably has 17 footnotes. It points to the bank’s “history of financing projects and companies that violate Indigenous rights, including bankrolling the Dakota Access pipeline in 2016 and providing $1.8 billion to Enbridge between 2016 and 2020 to enable the widely opposed Enbridge Line 3 and Line 5 tar sands pipeline reroutes,” in addition to financing for the Line 5 pipeline across Indigenous lands in Michigan. The proposal also takes issue with financing oil and gas projects in the Amazon rainforest in Columbia and Ecuador.

  • At Wells Fargo, the proposal also expresses the same concerns about financing arrangements for pipelines on Indigenous lands, like the proposal at Chase.

Trade Union Rights

Trade unions, for the most part, are carrying the flag for adopting the International Labour Organization’s core standards for organizing rights again this year, having seen votes in the 30-percent decile last year, and following a rash of strikes in 2023 that won higher wages and benefits. Like last year, six ask companies to adopt ILO standards if they have not done so, while four ask about adherence to commitments they have made. There are two new proposals on union busting at three companies, as well. All are pending as of mid-February.

Adopt non-interference policy: A detailed request is pending at one undisclosed company and Delta Air Lines (32.6 percent last year), Netflix (36.4 percent) and Tesla (omitted last year on procedural grounds). It asks each company to “adopt and disclose” a policy not to interfere with “the rights to freedom of association and collective bargaining in its operations, as reflected in the Declaration on Fundamental Principles and Rights at Work,” including:

- Non-interference when employees seek to form or join a trade union, and a prohibition against acting to undermine this right or pressure employees not to form or join a trade union;
- Good faith and timely collective bargaining if employees form or join a trade union;
- Uphold the highest standard where national or local law differs from international human rights standards;
- Define processes to identify, prevent, account for, and remedy practices that violate or are inconsistent with the Policy.

The Netflix version is slightly different, swapping out the second two points and saying it should

- Be applicable to Netflix direct operations, subsidiaries globally, and Netflix’s partners, suppliers, and vendors;
- Prohibit any member of management or agent of Netflix from undermining the right to form or join trade unions or pressuring any employee and independent contractor from exercising this right;

At Rivian Automotive, the electric truck company, As You Sow has returned after earning 13 percent last year for a labor-oriented human rights policy adoption request, which noted then that the company had committed to the ILO standards for its suppliers, but not for its direct operations. The proposal again asks for a description of “steps to identify, assess, prevent, mitigate, and, where appropriate, remedy adverse human rights impacts connected to the business.” It cites allegations of “poor working conditions” and an investigation of anti-union behavior by the National Labor Relations Board (NLRB).

SkyWest, a regional airline, has its first proposal, which says it retaliated against employees who tried to form a union at the company. Amalgamated Bank simply asks that the board “adopt and disclose a Non-Interference Policy upholding the rights to freedom of association and collective bargaining in its operations, as reflected” in the ILO’s key principles.

SEC action—Rivian is arguing its human rights policy makes the proposal moot.

Assess adherence: The second proposal is at six companies—resubmitted at Amazon.com (38.9 percent last year) and CVS (26.4 percent) but new to eBay, International Flavors and Fragrances, Maximus and Wells Fargo. It also references core ILO standards and principles, notes each company has a human rights policy, asks for a third-party assessment of each firm’s “adherence to its stated commitment to workers’ freedom of association and collective bargaining rights” and says the report “should address any instances of management interference when employees exercise their right to form or join a trade union.” NYSCRF points to allegations about illegal anti-union efforts in 2023 by eBay that prompted a federal labor rights complaint, while SOC notes Maximus has hired a well-known union-busting law firm it does not believe can provide an unbiased report.

SEC action—Wells Fargo is arguing the proposal is too vague but the SEC has yet to respond.

Union busting: SOC Investment Group says Delta Air Lines has routinely tried to prevent union organizing and it wants a report on

expenditures that are intended or could be viewed as intended to dissuade employees from joining or supporting unions (“union suppression”). In addition to internal Company expenses made for union suppression, the report should include disclosure of expenditures made to any outside entities, including:

- Disclosure of the for-hire entities’ identities, fees, hours, remits and work performed in relation to employee unionization and collective bargaining efforts, as well as other services they are hired to perform for the Company.
- Description of the Board’s oversight of these for-hire entities; and,
- Disclosure of the for-hire entities’ adherence to the Company’s policies including reference to any legal and/or regulatory enforcement matters wherein the for-hire entities are involved.

SEC action—Delta is arguing the proposal is too vague and concerns ordinary business since it is about workforce management.

The Digital World: AI and Beyond

A wholly new campaign about artificial intelligence (AI) confronts investors this year, although they had a foretaste of it in a proposal last December at Microsoft. The biggest group of proposals asks for reports on the ethical guidelines companies employ when using AI in their businesses, another asks about AI-generating misinformation risks (similar to earlier misinformation proposals) and the final one asks about AI-related human right impacts more generally. In a shift from the past, recipient companies include not just the large social media firms, but also media companies and one unnamed financial services firm. The slate of proposals is rounded about by three about harms to children from the digital world, plus three more raising familiar concerns about surveillance and two on political instability exacerbated by online activity.

Artificial Intelligence

Proponents of AI proposals have civil rights concerns that include bias and error in algorithms, plus manipulation of online discussions. Amidst a sea of issues, lawmakers globally are starting to act; the Brennan Center for Justice at New York University is maintaining an AI Legislation Tracker to follow proposed new bills in the current U.S. Congress, for instance, with ideas from all corners of the political spectrum.

In December 2023, the European Council reached a provisional agreement to govern the use of AI, covering biometric surveillance by governments and regulation of AI systems such as ChatGPT. EU Member nations signed on to the AI Act on February 2, 2024, in the first major attempt to impose what Scientific American calls “sweeping limits on companies whose AI tools are used in Europe, potentially restricting how these tools are developed and used across the globe.” The bill is expected to become law later this year but how it will be enforced remains unclear.

On October 30, 2023, President Biden issued an executive order that said AI “holds extraordinary potential for both promise and peril.” It pointed to a October 2022 Blueprint for an AI Bill of Rights and voluntary AI Risk Management Framework set out by the National Institutes of Standards and Technology. The order establishes a new interagency taskforce led by a White House AI Council that met for the first time in December 2023.

Principles: The AFL-CIO, the New York City pension funds and SHARE are proposing that nine companies report on the ethical guidelines they employ when using AI in their businesses. It has been withdrawn at Walt Disney, which provided information, but remains pending at all the others. The first vote at Apple on February 28 was 37.5 percent.

ASSESSING RISKS OF AI MISINFORMATION AND DISINFORMATION


JESSICA DHEERE
Advocacy Director, Open MIC

Big Tech, including Amazon, Alphabet, Meta and Microsoft, is investing hundreds of billions of dollars to dominate the AI race. This year, shareholder proposals ask tech companies to increase transparency around AI and assess AI-related risks, particularly to children and elections; increase investment in content moderation; report on the human rights impacts of their AI-driven advertising practices; establish principles for ethical AI development; and appoint directors with substantial AI expertise. It is clear that AI will be a topic for shareholder engagement for years to come.

Pending—Aside from Apple, the resolution is pending at Comcast, Netflix, Paramount Global, UnitedHealth Group and Warner Bros. Discovery, plus two other undisclosed companies. It asks each to report on “the company’s use of Artificial Intelligence (“AI”) in its business operations and disclose any ethical guidelines that the company has adopted” about using AI technology.

SEC action and withdrawal—SEC staff rejected challenges from Apple and Walt Disney that argued the proposal concerns ordinary business. Another challenge along the same lines from Paramount Global awaits a response; its argument about ordinary business says it is about a choice of technologies, ethical guidelines and workforce management, that it would micromanage, and that AI is not a significant social policy issue.

Misinformation: Another proposal from Arjuna Capital, which reiterates old concerns, asks Alphabet and Meta to report within a year and annually thereafter,

assessing the risks to the Company’s operations and finances, and to public welfare, presented by the Company’s role in facilitating misinformation and disinformation generated, disseminated, and/or amplified via generative Artificial Intelligence; what steps the Company plans to take to remediate those harms; and how it will measure the effectiveness of such efforts.

This proposal earned 21.1 percent support at Microsoft in December, even though the company has described fairly detailed policies and practices for using and further developing AI and has pledged to be transparent. The vote seems to reflect concerns about the transformative nature of AI, as does the even higher vote at Apple.

AI-generated content and human rights: A second proposal to both Alphabet and Meta asks more specifically about human rights risks associated with AI-mediated content, seeking a third-party assessment “examining the actual and potential human rights impacts of Google’s artificial intelligence-driven targeted advertising policies and practices.” The proposal at Meta adds that the report should include “practices throughout its business operations.”

Both proposals note the firms’ heavy reliance on targeted advertising revenue using personal information they collect. Alphabet’s Google has started to address problems, the proposal says, but “it remains unclear how these efforts are supporting the establishment of sufficient and effective human rights due diligence.” At Meta, the proposal notes massive fines—$5 billion by the U.S. Federal Trade Commission in 2019 and $1.3 billion from the Europe Union in 2023—for violating data privacy rules. Each proposal references the coming European Artificial Intelligence Act and asserts the companies face material risks that demand more disclosure to investors.

BIG TECH FAILS TO PROTECT CHILDREN ONLINE


MICHAEL PASSOFF
CEO, Proxy Impact

The internet is a lawless country for children and teens.
Rules are not enforced, adults hid their eyes, people aren’t who they seem to be. Algorithms designed to maximize user engagement have helped build pedophile networks, turn individuals into an army of cyberbullies and bombard young users with addictive content that damages their mental health. These are just some of the truths about child safety problems that confront tech industry employees, journalists, mental health professionals, law enforcements agencies and—most of all—the survivors themselves.

Child Safety

Proxy Impact and ICCR members have questioned Meta, Apple and Alphabet for years about the harms inflicted on children by digital media platforms. Last year, a request for a report on child harm reduction at Meta received 16.3 percent support, a high vote for a dual-class stock company and equivalent to 54 percent support of the nonmanagement controlled vote. For the fifth consecutive year Meta faces a child safety related proposal. In January, Meta CEO Mark Zuckerberg was called to testify before Congress for hearings on ‘Big Tech and the Online Child Sexual Exploitation Crisis.’ Proponents believe that the exponential growth in online child sexual exploitation and new European and proposed U.S. regulations pose business risks to Tech companies unless they work with greater urgency to address online child and teen mental health, cyberbullying, sexual exploitation and data privacy risks.

The 2024 proposal asks Meta to adopt

targets and publish annually a report…that includes quantitative metrics appropriate to assessing whether Meta has improved its performance globally regarding child safety impacts and actual harm reduction to children on its platforms.

A similar proposal has been filed at Alphabet for the first time.

At Apple, a resolution, now withdrawn, specifically focused on child sexual abuse materials (CSAM) and asked for a report by March 2025 about the company’s assessment of risk from its “products and services being used to facilitate online sexual exploitation of children, including metrics on the effectiveness of Apple’s efforts such as the amount of CSAM transmission prevented annually.” Christian Brothers Investment Services withdrew after discussions with the company but no information is publicly available about any agreement.

Surveillance and Political Risks

Surveillance: Proponents are asking Amazon.com for the fifth year in a row to produce a third-party report assessing its “due diligence process to determine whether customers’ use of its products and services with surveillance, computer vision, or cloud storage capabilities contributes to human rights violations.” Past concerns have centered on government privacy violations and the biometric identification software Rekognition, the Ring doorbell system and the company’s “vague standards regarding information sharing with law enforcement.” Earlier votes were 34.2 percent in 2023, 40.3 percent in 2022, 35.3 percent in 2021 and 32.1 percent in 2020.

This year, the proposal notably mentions support from the Amazon Web Services (AWS) platform for an Israeli government program which the proponent says undergirds “the apartheid system” facing Palestinians in Palestinian territory occupied by Israel, such as the West Bank. It also mentions the current war between Israel and Hamas and potential war crimes.

Non-U.S. markets: A proposal last year at Meta about harmful content in India did not earn enough support for resubmission and this year AkademikerPension, a Danish pension fund for academics, has broadened the framework with a similar proposal about global political risks from the company’s platforms. It seeks a report by June 2025 “on the effectiveness of measures it is taking to prevent and mitigate human rights risks in its five largest non-US markets (based on number of users) relating to the proliferation of hate speech, disinformation, and incitement to violence enabled by its Instagram and Facebook platforms.”

Meta has faced general content management proposals for years and one earned 19.2 percent in 2022. One about elections earned 19.5 percent in 2021, while a 2020 proposal about political ads earned 12.7 percent. Earlier proposals about problematic media content on the company’s platforms earned mixed support.

Political ads: A new version of old concerns about targeted political advertising at Meta comes from As You Sow. It asks for a report “to assess the benefits and drawbacks to our Company of: (1) prohibiting all political advertising on its platforms and (2) 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.”