HALIFAX — Shareholders in some of the world’s largest tech firms will vote in the coming weeks on a range of resolutions that reflect growing concerns around the industry’s record on human rights, climate stewardship and governance. With strong shows of support for shareholder resolutions at companies that have already held their annual meetings, it could be the busiest year on record for activist investing.

“Most shareholders abdicate their power without knowing they have it,” said Andrew Behar, CEO of activist-investor non-profit As You Sow. “But this past year was transformative, and that’s starting to change.”

In advance of a public company’s annual general meeting, shareholders and management can submit proposals on how a company should operate. Shareholders that own at least one per cent of a public company or US$2,000 of its market value can vote on a firm’s proxy materials. While corporate boards often oppose shareholder proposals, they’re used to pressure firms to improve transparency or change their operations to better suit shareholders’ interests. Even resolutions that garner a majority vote are often not binding, making them largely symbolic, but many investors consider proxy voting a better way to engage and influence their portfolio companies than divesting stock. 

Amazon, Facebook and Alphabet will face a combined 25 shareholder resolutions at their upcoming annual meetings, which start next week. The sheer number of proposals adds to years of mounting investor pressure for changes to how the companies operate. Along with recurrent issues on shareholder voting power and executive compensation, this year’s lineup of proposals includes demands for sustainability metrics, transparency around possible anti-competitive practices and the role firms may play in human rights abuses, as well as proposals to give all stakeholders greater consideration in Big Tech’s operations. 

Tech investors point to a confluence of factors that have further fuelled shareholder activism this year, including the COVID-19 pandemic and racial justice uprisings following the police murder of George Floyd. “Shareholders are realizing these are really material, really significant issues, and they can use their power to actually make change,” said Behar.   

While those events cast a spotlight on social and environmental issues, Behar said a recent commitment from companies to focus on all stakeholders’ interests—rather than just those of shareholders—helped trigger the deluge of investor proposals up for votes at Silicon Valley’s largest firms. 

In 2019, the Business Roundtable, composed of chief executives from nearly 200 U.S. companies, repealed its commitment to “shareholder primacy.” A statement signed by 181 CEOs—including Jamie Dimon of JPMorgan Chase, Tim Cook of Apple and Jeff Bezos, then of Amazon—states the “purpose of a corporation” is to service all of its stakeholders, giving equal weight to employees, customers, society at large and investors. 

“We filed resolutions at a few companies where we said, ‘It’s great that you signed it, but how are you going to implement it?’” said Behar. “How do words become actions?”

Many of this year’s shareholder proposals are trying to get at this question by compelling firms to be more transparent about how their products and operations impact the environment and wellbeing of their employees, customers and the public at large. At Amazon, for example, shareholders filed a resolution asking for a report on how its customers use its surveillance products to glean whether they contribute to human rights violations. Shareholders are also looking for more details on the company’s lobbying, citing several inconsistencies between Amazon’s lobbying activities and its rhetorical commitments to issues like employee protections and climate change. 

Facebook shareholders are pressing the company’s board to publish a report on the benefits and drawbacks of maintaining the temporary curbs on misinformation and hate speech that it introduced during the 2020 U.S. presidential election. And Alphabet shareholders want a report on the company’s risks related to anti-competitive practices. 

Shareholders filed proposals at all three companies to have them reincorporate as public-benefit corporations (PBC). (The resolution at Amazon didn’t make it to a vote.) Behar said the move could, in one fell swoop, address many of the concerns underlying the individual proposals. 

Shifting to a PBC model would see the companies rewrite their bylaws to make their fiduciary duty include working in the best interest of all stakeholders—not just shareholders—said Rick Alexander, founder of The Shareholder Commons in Delaware, which filed PBC resolutions at Alphabet, Amazon and Facebook this proxy season. Salesforce, 3M, BlackRock and Wells Fargo are among the other companies that received proposals to become a PBC. In essence, the status would hold companies accountable to their 2019 Business Roundtable commitments, said Alexander. “You can do well by doing good in a lot of cases, but sometimes you can do well by doing bad, and that could mean modifying your algorithms to get lots and lots of traffic and lots and lots of dollars, but at a cost to society,” he said. “If you change those fiduciary duties, then the director would be able to say in the boardroom, ‘Let’s make sure our algorithms aren’t driving anti-vax messages to the top of the results, and let’s get the KKK podcast off the platform.’”

Alexander doesn’t expect PBC resolutions, which are on proxy ballots for the first time this year, to get majority shareholder support this season. His goal is to get enough support needed—five per cent for first-time proposals—to qualify for another vote next year, since resolutions typically build momentum over time. 

“Proposals seem to be doing better this year than in the past,” said Mary Beth Gallagher, executive director of Investor Advocates for Social Justice, which is backing a resolution on Amazon’s surveillance products. A running tally by Proxy Monitor of the Fortune 250 companies’ proxy votes this year shows that 149 of the 272 proposals that have been counted so far received at least 50 per cent shareholder support—a threshold that’s often hard to meet because of many founders’ and executives’ outsized voting power. About 82 per cent have received at least 30 per cent shareholder support so far, up from around 72 per cent hitting that mark for all of last year. (Proxy-advisory service Glass Lewis notes in its 2021 U.S. voting guidelines that “a 20% threshold is significant enough to warrant a close examination of the underlying issues.”)

“Many companies have made commitments to stakeholder capitalism and made statements in support of their workers in the midst of COVID-19 and on issues of racial justice,” said Gallagher. “Investors are asking for basically more proof of that, and how this is really happening in practice.”

Though the Facebook and Alphabet resolutions are non-binding, Glass Lewis advises that “clear action is warranted” on proposals with a majority support. And Behar said ignoring issues important to most shareholders could end up hurting a firm in the long run, which could see shareholders vote against whole boards deemed unresponsive to their concerns. 

“I think shareholders are realizing that the boards work for us; the executives work for us,” said Behar, who has had four proposals receive majority shareholder support already this year. “And if our companies are destroying our future, we must act.”