SAN FRANCISCO & DURHAM – Farnum Brown, managing partner and chief strategist for Arjuna Capital, which focuses on impact funding, is carrying his serious concerns abut hate speech, fake news and sexual harassment on Google’s YouTube to the company’s annual shareholder meeting Wednesday. Arjuna made a shareholder proposal calling for a detailed report on assessing risks posed by content governance controversies.
Lead filer, investment advisory firm Arjuna Capital, and co-filers the New York State Common Retirement Fund, Harrington Investments and Baldwin Brothers Inc., are pressing the parent company, Alphabet, to bring the issue into sharper focus.
May 25, 2018, Arjuna Capital published a letter urging Alphabet shareholders to support a resolution asking the company to provide a report on content governance. The memo characterized risks to investors as:
1) Google’s controversies have a direct impact on the company’s market value, with concerns including ad revenue, data privacy and regulatory risk;
2) Google’s content controversies represent a complex public policy challenge, in terms of the scope of impact, Russian propaganda, and the threat of terrorist content;
3) Google continues to have a mixed track record of protecting users from election interference, fake news, hate speech, sexual harassment, and violence.
The memo argues that full disclosure is needed to address these concerns.
Potential harm can not be ignored
Brown said in a statement, “Google faces an existential threat in the form of fake news, political hacking, hate speech and online sexual harassment. These digital toxins have polluted our information ecosystem, of which Google is a central part.And yet the Company remains behind the curve in responding to these threats and the dire risks they pose to the Company and its investors. For the second year in a row, we are urging Google to comprehensively assess these volatile risks and spell out a strategy sufficient to mitigate them.”
Farnum Brown, managing partner at Arjuna Capital. Courtesy, Arjuna Capital.
Natasha Lamb, managing partner at Arjuna Capital, said, “We witness a new online controversy explode onto the scene almost daily. Many are disruptive to society and harmful to our democracy, not to mention the business models of the platforms they manipulate. It’s time Google is held accountable for evaluating the risks that arise when users violate its own terms of service. ”
She added, “The potential harm to the Company’s reputation, finances, and operations can no longer be ignored. Fake news in particular needs to be addressed. When fabrication is disseminated so easily at scale, the way we have seen through YouTube, it represents a threat to our democracy. Google must examine recent controversies, and carefully consider the material risks to shareholder value, and the efficacy of current policies.”
Arjuna is on a mission
Adding weight to Arjuna Capital’s shareholder proposal at Google today, leading proxy advisor Institutional Shareholder Services (ISS) recommends support for the resolution as well:
“A vote FOR this proposal is warranted, because a report on assessing the effectiveness of enforcement of content policies could help provide shareholders with valuable information on how well the company is assessing and mitigating content-related controversies.”
The statement from ISS continued: “…the company does seem to be responding to each content management-related controversy in a reactive way. Shareholders would benefit from additional disclosure reviewing and compiling in one report the efficacy of its enforcement of its terms of service related to content policies, and assessing the risks posed by content management controversies, with statistics on the percentage of content that is flagged as offensive and how that may change over time, how quickly content is removed if it is offensive, or other appropriate quantitative metrics. Therefore this proposal merits shareholder support.” ?
Last year Arjuna Capital filed shareholder proposals at Facebook and Google pressing for greater transparency and reporting on fake news flows over their platforms. This year, content governance proposals were put before Facebook, Twitter, and Google. Arjuna, and co-filers Proxy Impact and Baldwin Brothers Inc. also have a gender pay equity proposal going to a vote at Google for the third time.
Arjuna Capital is an investment firm focusing on sustainable and impact investing. In recent years, Natasha Lamb and Arjuna Capital have been recognized for an ongoing campaign using shareholder resolutions to promote gender pay equity in the tech, banking, and retail sectors. In December Lamb was named to the “Bloomberg 50” list of influencers who defined global business in 2017.
Impact investing aims to create some social good, not just profits. An upcoming WRAL Techwire report will examine impact investing nationally in some detail.
