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.
“We need to be realistic about the outcomes, especially at companies like Alphabet and Meta which have ‘dual class’ shares that give the company founders and other insiders powerful voting rights that make shareholder initiatives extremely challenging,” said Michael Connor, Director at Open MIC, a nonprofit which campaigns for corporate accountability in media and tech.
In response to a shareholder proposal that would require the company to produce a public report on how nondisclosure agreements affect harassment and discrimination claims, Google parent Alphabet said in a proxy statement that its “employment, severance, and settlement agreements do not prohibit the disclosure of facts underlying claims of harassment or discrimination.” A shareholder proposal to study the risks associated with confidentiality clauses also passed a vote.
Despite protests from Meta, the US Securities and Exchange Commission (SEC) ruled that the vote should go ahead, which Michael Connor, Executive Director of Open MIC, noted is “a win for all those who are deeply troubled by Meta’s appalling track record of dodging accountability and failing to address human and civil rights abuses, as well as privacy concerns affecting billions of people globally”.
“For the last year or so we have been filing shareholder proposals and pressing companies on this subject,” said Michael Connor, executive director of Open Mic, one of the members of the Transparency in Employment Agreements, or TEA Coalition, which has been pressuring shareholders to act. Salesforce was facing a proxy vote at an upcoming annual meeting asking it to prepare a report on how mandatory so-called concealment clauses might stifle disclosure. The announcement today withdraws that proposal.
“He’s been there over three years, and really nothing has changed,” says Michael Connor, executive director of Open MIC, an advocacy group that works with investors to push for social changes at tech companies. “It’s pretty clear that Mark Zuckerberg has burned his bridges with some critical constituencies, including legislators in the U.S. and Europe, so they had to put a new person forward.”
“Reputational harm can be quite considerable” when AI tech providers work with the military, said Michael Connor, executive director of Open MIC, a nonprofit that has helped shareholders pressure tech companies including Microsoft and Amazon to establish ethical practices.
But these issues are complicated, Connor said. Because AI is used even for basic administrative purposes like automating invoices, it is important to consider DoD contracts with AI vendors on a case-by-case basis, he said.
Earlier this week, Arjuna Capital filed a lengthy rebuttal to Meta that cited a laundry list of the social media giant’s most famous scandals, from the Cambridge Analytica privacy lapse to its role in facilitating the deadly insurrection at the Capitol on Jan. 6, 2021. Open Mic Executive Director Michael Connor, whose group is working with Arjuna Capital, told me it’s because of that track record that an independent assessment of the technology underlying the metaverse is necessary.
Michael Connor, the executive director of Open MIC (Media and Information Companies Initiative), a nonprofit that works on socially responsible investing and is also part of the coalition, said the law is “simply good business.”
“These resolutions are based on a simple premise: Companies benefit from knowing when sexual harassment, discrimination and unlawful behavior are happening in the workplace, which is why employees should be encouraged to speak out about such conduct,” he said.
"What we see is the company generally portrays itself as privacy-friendly, and yet we see that it is, in many cases, lobbying against those same principles," said Michael Connor, executive director of Open Mic, a nonprofit group that uses shareholder proposals to force corporate accountability.
Open Mic worked with shareholders on this and other proposals, one of which has already been successfully withdrawn by the filers. That proposal also called for Microsoft to conduct a human rights impact assessment related to its government contracts. Microsoft took shareholders up on that offer before the proposal even went to a vote.
“This will be an ambitious and complicated process and we’re certainly putting our faith in Microsoft and Foley Hoag to be conscientious,” said Michael Connor, executive director of Open MIC, a nonprofit shareholder advocacy organization that worked with IASJ on the proposal. “They’re asking for input from affected rights holders, which was a very big request on our part and they agreed to that.”
