Google, Facebook: how we are acting to protect digital rights
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.
What shareholder proposals will Schroders be voting on at the Alphabet annual shareholder meeting?
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.”
What shareholder proposals will Schroders be voting on at the Meta annual general meeting?
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.”
Schroders’ other forms of engagement with Meta and Alphabet
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.”
The bigger picture: digital rights and financial risk
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.”
This document is issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders). It is intended solely for wholesale clients (as defined under the Corporations Act 2001 (Cth)) and is not suitable for distribution to retail clients. This document does not contain and should not be taken as containing any financial product advice or financial product recommendations. This document does not take into consideration any recipient’s objectives, financial situation or needs. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the product disclosure statement available at www.schroders.com.au or other relevant disclosure document for that fund and consider the appropriateness of the fund to your objectives, financial situation and needs. You should also refer to the target market determination for the fund at www.schroders.com.au. All investments carry risk, and the repayment of capital and performance in any of the funds named in this document are not guaranteed by Schroders or any company in the Schroders Group. The material contained in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. To the maximum extent permitted by law, Schroders, every company in the Schroders plc group, and their respective directors, officers, employees, consultants and agents exclude all liability (however arising) for any direct or indirect loss or damage that may be suffered by the recipient or any other person in connection with this document. Opinions, estimates and projections contained in this document reflect the opinions of the authors as at the date of this document and are subject to change without notice. “Forward-looking” information, such as forecasts or projections, are not guarantees of any future performance and there is no assurance that any forecast or projection will be realised. Past performance is not a reliable indicator of future performance. All references to securities, sectors, regions and/or countries are made for illustrative purposes only and are not to be construed as recommendations to buy, sell or hold. Telephone calls and other electronic communications with Schroders representatives may be recorded.