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At a time of regulatory and geopolitical uncertainty, investors should seek tech companies that are using human rights standards to guide their work and build trust with users. Look for companies with policies, practices, and governance that go above and beyond baseline legal compliance.
Today we release our Winter 2020 Investor Update. Our latest special edition for investors uses RDR’s 2019 Corporate Accountability Index results to show how leading companies are handling artificial intelligence, targeted advertising, content moderation, and other burning industry issues around which regulatory consensus has yet to form. We argue that to get ahead of regulatory risks, CEOs and boards need to take responsibility for the human rights risks and negative social impacts associated with their business models.
Digital rights issues have become increasingly important to investors. The number of shareholder resolutions addressing issues covered by the RDR Index has risen over the years, from just 2 in 2015 to 12 in 2019.
See this interactive table for a list of resolutions cross-referenced to RDR Index indicators.
A strong theme across many of the proposals that made it onto proxy ballots in 2019 is the need for more responsible and accountable governance—particularly in relation to online speech, artificial intelligence, and privacy. While these resolutions lacked enough votes to pass (with some companies’ dual class share structure making passage impossible), the sharpened focus and growing number of such resolutions points to a clear increase in investor concern about digital rights issues. Related resolutions are already being filed for 2020: the advocacy group SumofUs cited RDR data in a resolution calling on Apple to promote freedom of expression, and the corporate responsibility organization As You Sow filed a resolution calling on Facebook to address disinformation and hate speech. We anticipate that shareholders will be at least as active on these and related issues in 2020 as they were last year.
Our recommendations to investors:
- Look for companies that go beyond legal compliance to proactive stewardship. Rather than simply looking for how well companies are preparing to comply with anticipated regulation, investors should focus on companies that demonstrate good data stewardship, and proactively work to protect users’ human rights, whether or not the law compels them to do so.
- Look for companies that conduct comprehensive oversight and impact assessments. By examining company performance on specific RDR Index indicators, investors can gain a more granular picture of specific types of risk. For example: The 2019 RDR Index highlighted the failure of Facebook, Google, and Twitter to conduct human rights impact assessments, which left them ill-equipped to understand and mitigate the risks of these practices for users.
- Reward companies that take responsibility for their human rights impact on issues that lack regulatory consensus, like online speech. The media is awash with headlines about online extremism, hate speech, and disinformation. Debates about appropriate regulatory responses – from increasing intermediary liability to antitrust – make it harder to predict the regulatory future for online speech than for privacy. Under such circumstances, look for efforts by companies to be accountable to users and affected communities despite the absence of clear regulation. A key first step will be for companies to be more transparent about how they formulate and enforce rules for paid as well as organic user content. Greater disclosure will contribute to a more informed policy discussion about what types of rules will be most effective.
- Hold companies accountable for the part they play in shaping our shared future: While the spotlight on the world’s most powerful tech giants is already strong, scrutiny of how their operations affect the public interest will only intensify in a highly volatile U.S. election year. At a time like this, corporate responsibility and accountability around advertising business models and algorithmic decision-making systems becomes even more important.
For more analysis and resources, see RDR’s investor resource page. If you are an investment professional, please consider participating in our investor survey.
