Investors Challenge AI and Automation at Meta, Alphabet, and More Companies

Shareholders are prodding companies, including Alphabet GOOG, Chipotle Mexican Grill CMG, and Netflix NFLX, on a range of issues around artificial intelligence and automation, according to research from Morningstar Sustainalytics.

Has the company adopted guidelines on the responsible use of AI across its operations? That’s the main question, according to Jackie Cook, who oversees the stewardship program’s proxy-voting service at Morningstar Sustainalytics. “With the rapid adoption of generative AI technologies across workplaces over the past year, shareholders are now starting to ask boards to explain how they’re exercising oversight of the associated risks,” Cook says.

Investors are considering the following AI-related proposals on proxy ballots this week.

1) Risk from misinformation. Alphabet shareholders ask its board to evaluate the risks to Alphabet’s operations and to the public posed by its role “in facilitating misinformation and disinformation generated, disseminated, and/or amplified via generative artificial intelligence; what steps the company plans to take to remediate those harms; and how it will measure the effectiveness of such efforts,” according to the proposal. Alphabet holds its annual meeting on June 7, 2024, and you can read the proposals and the company’s response here.

2) Human rights risk. Also, Alphabet investors want to know the human rights impact of Google’s AI-driven targeted advertising. Incidentally, similar votes at Meta Platforms META won significant shareholder support, according to Morningstar Sustainalytics.

3) Automation. At Chipotle, shareholders want the fast-food restaurant to measure the social implications of AI and automation on the workforce. Chipotle’s annual meeting is on June 6, and you can read the proposal and the company’s response here.

4) Ethical guidelines. Netflix shareholders seek a report on the company’s use of AI in its business operations and on the board’s role in overseeing AI usage, as well as an outline of any ethical guidelines the company has adopted in its use of AI. Concerns include potential bias in employment decisions, layoffs owing to job automation, the misuse of private data, and the creation of deepfake content, among others.

Earlier in the week, Warner Bros. Discovery WBD and Paramount Global PARA also faced proposals asking for more disclosure on the companies’ use and oversight of AI. Only last year, industrywide strikes bashed the media and entertainment industry as writers and actors expressed concern that new technologies like generative AI could replace their work.

For Netflix, Warner, and Paramount, “we recommend support noting that the company’s public reporting surrounding the use of AI has failed to sufficiently address important aspects of the company’s ethical and responsible use of AI, including governance and oversight, guidelines and frameworks, and other due-diligence processes,” writes Sustainalytics’ Ignacio Garcia Giner.

Independent Shareholders Push Meta on a Range of Proposals

At Meta, a majority of independent investors supported five of the 10 shareholder proposals facing the company. You can read the Meta proposals here, as well as the company’s response. Meta’s annual meeting was on May 29.

• Supervoting shares: Some 83.8% of independent shareholders, or 26.3% of the overall vote, asked the board to get rid of Meta’s dual-class share structure. Founder and CEO Mark Zuckerberg owns 13% of Meta but controls 61% of the vote at Meta via a class of shares with superior voting rights.
• Child safety: 59.0% of independent shareholders, or 18.5% of the overall vote, asked the board to publish a report on its performance on child safety measures and harm reduction to children on its platforms.
• Board independence: 56.4% of shareholders, or 17.7% of the overall vote, endorsed a proposal that both the chair and lead independent director should be able to include items on the agenda independently of each other.
• Transparency: 54.6% of shareholders, or 17.1% of the overall vote, want Meta to disclose the results of shareholder votes by share class, starting next year.
• AI. 53.5% and 16.7% of shareholders want Meta to report on the risks to its operations and to public welfare that are presented by its role “in facilitating misinformation and disinformation disseminated or generated via generative artificial intelligence” and outline its plans to fix those problems.