How the world’s biggest investors could transform Big Tech

Big Tech’s 2022 Annual General Meeting (AGM) season has come and gone — and if there’s one takeaway from this year’s round of meetings, it’s that there’s an appetite and a pathway for delivering social change at (almost) every level. This year alone saw shareholders back proposals for amplifying independent shareholder voices at Meta, conducting a human rights assessment for data cloud centers at Google, and independently evaluating facial recognition risks at Amazon. 

However, even with a majority of “independent” shareholders — that is, non-executive or management level shareholders — supporting these proposals, none of them passed. Why? Because at companies like Meta and Google that have a dual-class share structure, power is often stacked against independent shareholders, making the companies immune to positive pressure. Under this structure, some executives, usually company founders, have outsized voting power compared to other shareholders. For instance, Mark Zuckerberg owns 14% of Meta’s shares, but holds a massive 58% of the voting power at the company.

We have a message for those shareholders who are standing up for human rights and want to understand the unique investment risks of digital technology: working with Access Now and other civil society organizations can help you mitigate those risks and advance shared goals. 

Below you can see what happened to the proposals we urged shareholders to support.

 

 

 

At first glance, these results may seem discouraging. Yet the story they tell is that a substantial number of Big Tech shareholders see respect for human rights as a major issue for the sector.

The results also illuminate the fundamental problems with dual-class share structures and demonstrate the urgent need for reform. Shareholders willing to stand up for human rights should have their voices heard on issues that impact a company’s risk profile.  In the meantime, it’s vital that institutional investors feel empowered to keep pushing  for social and corporate governance policies that respect human rights.  

This is where partnering with civil society makes sense. By engaging with each other, both the investor and civil society communities can gain additional intel and drive forward human rights-based proposals that also make good business sense. One example of this from the recent AGM season was the shareholder proposal that asked Google to publish the results of its human rights impact assessment of its decision to locate a cloud center in Saudi Arabia, after civil society raised the alarm.

Google urged shareholders to vote against the proposal, justifying its position with a general explanation about the company’s human rights work, failing to address either the specific shareholder request or the related concern. In spite of pressure by the company, over half of the independent shareholders voted in favor of this proposal, signaling to Google that shareholders understand and care about the grave risks the company’s plans pose to human rights. 

How long will the biggest investors toe the party line?

We’ve observed that in many cases, investors parrot company management to justify their positions. But there are signs that might be changing. The top 10 owners of Meta, Google, and Amazon consistently include the same few asset management companies: 

• BlackRock Fund Advisors
• The Vanguard Group Inc.
• State Street Global Advisors Asset Management
• Fidelity Management and Research Co
• Geode Capital Management LLC
• T Rowe Price Associates Inc.

Of these, some, but not all, are transparent about their voting behavior and rationale.  BlackRock and Vanguard, for example, provide fairly good statistics on their past votes, though they provide limited rationale for their decisions. Both have also been relatively consistent with voting in alignment with company recommendations on shareholder proposals. 

However, we note that since 2020, BlackRock and Vanguard have consistently voted against company recommendations and have supported shareholder proposals to remove the dual-class share structure, both at Google and Meta — demonstrating the appetite for change. 

It’s worth highlighting that Meta and Google repeatedly demonstrate non-compliance with their own human rights commitments, without providing any meaningful oversight or transparency on their behavior — despite shareholder requests to do so. Yet asset managers have been content to accept the companies’ word that they are sufficiently implementing their policies, as long as they can keep ticking the box that the “company has a policy in place to address these issues.” It’s good to see that may finally change. 

An invitation to Big Tech investors: work with us to win

Given the power this concentrated group of asset managers wield over the tech sector, their voting choices matter. They can help turn the tide on tech sector respect for human rights. 

There’s at least one central issue that civil society and the investor community appear to agree on: eliminating the dual-class voting structures at companies like Meta and Google. This is necessary to ensure all shareholders have a proper voice over any concerns on how the company is being managed. As we move forward to the next proxy voting season, let’s unite behind this goal to transform the tech sector and put digital rights on the voting agenda.