The US military alone has more than 800 active AI-related projects and has requested almost US$2 billion in funding for AI in the 2024 budget.
“Any companies providing technologies to militaries that could be violating human rights or the laws of war run the risk of criminal indictments, sanctions, civil suits and considerable reputational damage,” said Audrey Mocle, Deputy Director of non-profit Open MIC.“The risks for investors in these tech firms increase as they become more enmeshed with the [weapons] sector.”
Investors, particularly those with stakes in the big tech hyperscalers and limited partnerships in venture funds exposed to generative AI, should be critical of overselling the benefits of this new technology — financial or otherwise. Efforts should be made to encourage the deployment of this technology toward more productive ends. Any actual benefits should be weighed against the very real costs for which tech companies should be held accountable.
US-based tech firms’ close ties with the Trump administration are unlikely to discourage continued pushback and engagement from ESG-focused investors in the longer term.
“Aligning with political leaders may seem expedient in the short-term, but tech company heads may regret going all in if these leaders’ popularity declines or their policies are seen to be capricious and harmful to people and markets,” - Jessica Dheere, Open MIC Advocacy Director
“While Trump will undoubtedly have an impact short-term, we think ESG principles will ultimately prevail because they represent a smart way of doing business.” - Michael Connor, Open MIC Executive Director
With AI-related risks being inherently global in nature, the hope and anticipation is that there will be a suitably robust regulatory environment wherever the technology is deployed, Michael Connor, Executive Director at Open MIC, tells ESG Investor.
“Many companies have global activities, so we need to ensure that if they are applying a higher standard in Europe due to EU regulations, this should be the case wherever they operate to foster greater corporate accountability in the deployment and use of digital technologies,” he says.
Open Mic has coordinated a range of activist shareholder proposals at large tech companies that try to force the companies to address questions about the ethical use of technology and how workers are treated internally. The original Microsoft shareholder proposal from Open Mic aimed to force the company to hire an independent third-party to evaluate whether Microsoft's contracts with government agencies comply with the company's stated commitment to human rights principles.
“There’s an arrogance about it that just cries out for some sort of justice,” said Michael Connor, executive director of Open MIC (Media and Information Companies Initiative), a nonprofit that works on socially responsible investing. Socially responsible investing — also known as environmental, social and governance (ESG) — has grown more popular in recent years, and is especially so among younger investors. Surveys show they care more about investing in companies whose values align with theirs than their older counterparts.
“We approached Apple in good faith and encouraged them to take a leadership role here,” says Ifeoma Ozoma, who’s helping to lead the effort. “Their response was to use the same employee handbook that they’ve reportedly been using to silence workers as an excuse to say no. We responded that this wasn’t acceptable — and curiously haven’t heard back.”
To Michael Connor, executive director of Open MIC, a nonprofit that works with sustainable funds to organize shareholder proposals, that's a sign that things are trending in the right direction. "Over time even if shareholder proposals are voted down, it doesn't mean directors don't have a fiduciary duty to worry about those issues and be concerned about them," Connor said.
Both Glass Lewis and Institutional Shareholder Services (ISS) told their clients that adopting the proposal’s recommendations would be a positive step for Thomson Reuters from a business perspective.
Glass Lewis and ISS “play a very influential role in the shareholder advocacy world,” said Michael Connor, executive director of Open Mic, a nonprofit focused on corporate accountability in tech and media, adding that one of those endorsements can swing up to 20 percent of the vote in some cases.
“Last week’s vote confirms that Amazon needs to take aggressive steps to address investor concerns about its facial recognition technology, Rekognition,” said Michael Connor, Executive Director of Open MIC in relation to another proposal asking for a report on customer use of certain technologies that over 34% of shareholders supported. “Amazon’s current moratorium on police use of Rekognition isn’t sufficient. At the very least, Amazon must now broaden the scope of the moratorium to bar the use of Rekognition not only by police but also by ANY government agency or ANY law enforcement... ANYWHERE in the world.”
“Face surveillance dramatically expands law enforcement’s power and threatens rights including privacy, freedom of expression, freedom of association, and due process for everyone. But the threats are greatest for Black and Brown communities, Muslim communities, immigrant communities, Indigenous communities, and other people historically and currently marginalized and targeted by policing,” Michael Connor, executive director of Open MIC, a nonprofit advocating for Harrington, said in a statement.
Tech giants are facing increasing pressure from activists to adopt proposals aimed at expanding whistleblower protections, investigating potential civil rights violations and curbing hate speech online.
Activist shareholders are pushing for the proposals to be adopted during this week’s annual meetings, the first to be held after a year that’s included nationwide Black Lives Matter protests, a deadly riot at the U.S. Capitol and challenging working conditions for many on-site workers in the tech industry.
“Thirty percent support for the proposal in its first year at Uber shows a significant base of support for this reform, which we believe will only grow over time,” a spokeswoman for the Teamsters said Tuesday. “Transparency and accountability are necessary at Uber and throughout the ‘gig’ industry.”
Michael Connor, executive director of Open MIC (Media and Information Companies Initiative), a nonprofit that works on socially responsible investing, agreed with that assessment.
“[It’s] a strong signal that the underlying issues are important to an influential contingent of investors — and the company’s board and management would be wise to begin addressing those issues,” he said.
Brought by Trillium Asset Management, which holds shares in Alphabet valued about $150 million, the resolution calls for an independent third party to review Alphabet’s existing whistleblower policy and bolster protections for employees…Trillium worked with Open Mic, a non-profit that helps shareholders craft resolutions to force change at boards, to frame the whistleblower measure. Last year, Trillium’s resolution received about 5% of the vote, but the firm is confident that support will double or triple this year.
