At the upcoming AGMs of Meta and Alphabet, Schroders will vote in support of shareholder resolutions aimed at improving their approach to digital rights – including exploitative content, misinformation and privacy.
Schroders will vote for eight shareholder resolutions at the approaching annual meetings (AGMs) of tech giants Meta and Alphabet, parent companies of Facebook and Google.
These resolutions – brought by shareholders rather than the companies’ management – seek to improve business practices in a number of fields.
Schroders’ voting decisions form part of our wider approach to active ownership, helping protect and enhance the value of clients’ shareholdings through active engagement with companies. Schroders is also considering other agenda items at these meetings and is likely to be voting against the recommendations by the boards of both Meta and Alphabet for other proposals in addition to those detailed above.
Human rights is one of Schroders’ six priority engagements. Digital rights sits within this category.
Schroders’ Head of Active Ownership, Kimberley Lewis, said: “There are three digital rights-related shareholder resolutions (out of 15 filed) on the ballot at the 2022 Alphabet AGM. These include a report on managing risks related to data collection, privacy and security; and a bid to disclose more information on the company’s algorithmic systems.
“We believe it is important to support these proposals. They align with our own engagement with both the companies regarding increasing transparency around content moderation policies and enhanced oversight of the digital rights risks associated with the business models.”
Kimberley Lewis said: “There are five shareholder resolutions related to digital rights (out of 12 filed) at the 2022 Meta AGM. These cover areas such the enforcement of community standards and online child sexual exploitation.”
In 2021, a whistleblowing complaint came to light, in which a former employee revealed documents showing how Facebook was fully aware of the damaging effects of content posted on its platform.
Following this, Schroders wrote to Meta for clarity on how it defines success in its bid to effectively moderate content.
Kimberley Lewis said: “We then participated in a group investor call to reiterate the point, followed by a subsequent email. Although the company said that it uses prevalence of objectionable content as a metric to track progress, it is still unclear on its longer-term content moderation objectives.”
In May 2021 we convened a client Sustainability Forum to hear client views on ‘Responsible Technology’ with input from ShareAction and Friends Provident Foundation. Kate Rogers, Head of Sustainability at Schroders Wealth said “Clients have been increasingly aware of the negative impacts of these big technology companies and were particularly concerned about how content on the platforms could contribute to misinformation, particularly regarding climate change.
Kimberley Lewis said: “As a result, we wrote to Alphabet in August 2021 for clarity on how it moderates climate change content, particularly misinformation on the subject. Alphabet has since said that climate misinformation will be covered by its content policy. However, engagement with Alphabet beyond this has remained difficult.
“In 2022 we became a member of the Investor Alliance for Human Rights. Our role includes supporting the collaborative engagement on digital rights with Alphabet and Meta.”
Kimberley Lewis said: “All companies have the potential to impinge on the rights that are inherent to us as human beings. There is increasing recognition of the role that businesses can and should play to respect human rights. Businesses involved in human rights controversies could face higher operational and financial risks and could suffer damages to their reputation.
“This is especially important for technology companies in relation to digital rights.”
Simon Webber, Portfolio Manager Global Equities, said: “Active ownership is a crucial component of our stewardship and contribution to the performance of the companies in which we invest. If we can share best practice with our holdings, encourage them to have strong and successful governance processes and to think clearly about long-term risks and opportunities, then those companies will perform better.
“At Schroders we have the benefit of hugely insightful ESG tools and datasets to help us evaluate ESG performance, and the feedback we can provide to companies from these evaluations and comparisons can be very helpful for them. Of course, it is not our job to micromanage businesses; it is our role to elect and hold accountable board members who will put in place quality management teams, to lead the business, foster a strong corporate culture, put in place appropriate incentive plans, and to allocate capital efficiently.
“Our active engagement efforts are all a part of that process of stewardship, as long-term investors in businesses that seeks to influence those companies to be the best that they can be.”
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