From its inception, Ranking Digital Rights’s standards and methodology were designed with investors in mind. Indeed, our Corporate Accountability Index was devised almost a decade ago alongside ESG ratings provider Sustainalytics. Since then, RDR has aimed to ensure our standards would be usable for responsible investors interested in tackling growing concerns around the regulatory and human rights risks linked to Big Tech. As RDR Founder Rebecca MacKinnon mentioned in our inaugural Investors Research Note in 2017, though “digital rights issues [had] been hiding in plain sight for more than a decade,” the complexity of the issues involved had made “it hard for many investors to recognize the potential significance of specific abuses or to track evolving performance standards.” These sentiments were recently echoed by former RDR Investment Engagement Manager Jan Rydzak, who explained that benchmarks like RDR continue, today, to “highlight companies’ impact on rights that have often been neglected by existing ESG frameworks.”
In the investor community, “there’s this traditional view of what human rights are and what impacts human rights, including supply chain issues and worker safety issues,” Lydia Kuykendal, Director of Shareholder Advocacy at Mercy Investment Services, explained. “A lot of investors, a lot of people that do our work, have those more traditional views and do not feel comfortable with any type of tech, let alone cutting edge tech,” she continued. Therefore, having the kind of support that RDR provides has been “more important than in almost any other space.” Working with organizations like RDR is also particularly useful for those in the investor community who are working across different ESG issues, as Michela Gregory, Director of ESG Services at NEI Investments, added. Much of this work has been facilitated through RDR’s close working relationship with the Investor Alliance for Human Rights (The Investor Alliance).
RDR and the Investor Alliance for Human Rights Join Forces
The Investor Alliance was formed in 2018 as an initiative of the Interfaith Center on Corporate Responsibility (ICCR) to augment the number and capacity of global investors engaged on business and human rights concerns. The Investor Alliance’s work is centered on the UN Guiding Principles on Business and Human Rights, the same set of international principles that guides RDR’s work. ICCR’s genesis in the early 1970s came in response to Desmond Tutu’s call for religious and faith-based investors to divest from South Africa to pressure the government to abolish apartheid. Like her other colleagues in the responsible investment space, the Investor Alliance’s Director, Anita Dorett, found that, initially, most investors, and the businesses they engaged with, had a narrow view of human rights risk generally focused on supply chain concerns. The Investor Alliance’s decision to focus on human rights risks in the tech sector represented an important shift.
Meanwhile, RDR’s focus on digital rights and its alignment with the same international guiding principles made the two natural allies, Anita explained. In addition, she said, “we want to ensure all of our engagements are research-based and data-driven; comparative data is really important. So RDR was kind of an obvious choice for us.” RDR’s value-added was clear as soon as Anita started engaging with Founder Rebecca MacKinnon, who, she said, “poured her attention and her focus on investors utilizing the RDR data and really rallied around collaborating with us, understanding that the critical users of this data will be investors.”
Though, over the years, RDR continued to speak to investor needs—including through successive investor updates, it was the release of the Investor Alliance’s “Investor Statement on Corporate Accountability for Digital Rights” in 2021 that truly cemented RDR’s key role in helping to galvanize shareholder proposals around human rights concerns in the digital sphere. The statement, signed by 176 investors representing over US$9.2 trillion in investments, outlined the need for companies to adapt to “investor expectations in line with evaluations and recommendations of the 2020 Ranking Digital Rights Corporate Accountability Index,” in particular around privacy and freedom of expression.
The Investor Alliance convenes and helps coordinate the collective work of a diverse group of investors. As its Director Anita explained, for this to be successful, “you need everybody on the same page sharing a common set of investor expectations.” Therefore, “the investor statement represents the articulation of investors’ expectations, based on the data RDR provides, and using RDR’s recommendations, with RDR’s expertise and analysis, to hold companies to account or to drive companies to fill in the gaps in their digital rights performance.” The decision by signatories to align their expectations around RDR’s work didn’t come as a surprise to Mercy Investments’s Kuykendal, who added that “familiarity and trust with RDR among the investor community made it easier for many to sign onto the statement.”
The statement also represented the culmination of growing investor interest in the potential digital risks presented by the tech sector. A first iteration of it, in 2019, garnered just under 50 signatories. But by 2021, interest in tech issues had increased significantly, Anita explained. During this time, shareholder proposals had been put forward for the first time at tech companies including Apple, Amazon, and Facebook (Meta), demanding everything from human rights policies to dedicated governance structures. And these helped to further grow awareness, even among investors who voted against them. Unsurprisingly, according to Anita, today “every time we speak to a new investor, they want to talk about tech.”
Before 2021, Lydia Kuykendal recalled that Mercy had done little in the tech space; most of their growing body of work in this space has indeed come through their affiliation with the Alliance. For NEI’s Michela Gregory, the statement has served as an important launchpad for the engagement and dialogues with companies that have come since. The Investor Alliance’s Digital Rights Engagement Initiative continues to coordinate outreach to RDR’s ranked companies, by the statement’s many signatories, which include NEI and Mercy Investments.
RDR Begins Supporting Key Proposals, Including at Meta
While RDR was first cited in a proxy resolution in 2020, we began directly supporting the crafting of such proposals in 2021. At Meta, for the second time running, shareholders recently voted on one of the most consequential RDR-supported proposals, calling for a human rights impact of the company’s targeted-advertising policies and practices. It has been one of the most successful in the company’s history, earning a strong majority of support from independent shareholders (those who are not founders/controlling shareholders). As we noted ahead of the vote on the original proposal in 2022, human rights impact assessments are essential for any company that is part of the “targeting ecosystem.” This is especially true of a company like Meta, which then accounted for more than a quarter of all U.S. digital ad spending.
The Meta proposal, which RDR helped prepare, was filed by Mercy Investments and co-filed by NEI Investments. “I don’t think I could have done it without RDR,” Lydia, who was the lead filer, explained. For her, a lot of RDR’s value-added has come from “tracking the legislation in the U.S., the EU, in Japan. I don’t have the capacity to do that. I don’t know other organizations that are particularly good at that.” She uses RDR’s data to track regulatory risks to companies like Meta for exempt solicitations—where shareholders are able to make a longer case for their resolution, and respond to company opposition—as well as to present these regulatory risks to investment giants like BlackRock and Vanguard, in the hope of attracting their large trove of investor votes.
Lydia recognizes the impact of the Meta proposal, which received “the second highest support apart from dual-class share voting.” She has noted, however, that, as long as multi-class share structures remain, “we’re never going to go anywhere.” These share structures give funders of companies inflated voting power at annual general meetings, and play a big role in limiting the success of human rights-based proposals. At Meta, CEO Mark Zuckerberg holds 61% of voting power, meaning he could single-handedly vote down any proposal. For this reason, Lydia is in “favor of investors really examining strategies to focus on a single issue, which is eliminating the dual-class share structure.”
And this is why RDR, alongside its support for individual proposals, has also been at the forefront of efforts to break down dual-class share structures. In 2022, RDR sent a letter to the U.S. Securities and Exchange Commission (SEC), signed by 20 other human and civil rights groups, urging an end to such structures, while pushing lawmakers to take action. Moving forward, RDR will continue to support shareholders in crafting proposals that put human rights at the forefront of company policy and practice while also advocating for governance structures that ensure investors are finally given a fair voice at the table.
