Decision means shareholders will vote on proposal at upcoming annual meeting
JUNE 6, 2022 | In a major victory for investors, the Securities and Exchange Commission (SEC) has ruled that Meta - the parent company of Facebook and Instagram - must give investors an opportunity to consider and vote on a shareholder proposal that questions Meta’s ”social license to operate an emerging technology like the metaverse” without fully understanding the potential risks and negative impacts.
The proposal, which was filed with Meta in December, requests that Meta’s board commission a report and seek an advisory shareholder vote on its metaverse project. The resolution calls for a third-party assessment of potential psychological and civil and human rights harms to users that may be caused by the use and abuse of the metaverse platform expansion, including whether these harms can be mitigated or avoided, or are unavoidable risks inherent in the technology. It was filed by investment management firm Arjuna Capital, with co-filers Storebrand Asset Management, SHARE, and SumOfUs. Open MIC, a nonprofit that works with shareholders to encourage corporate accountability in the tech and media sectors, supported the proposal’s development.
“The SEC’s ruling is a win for all those who are deeply troubled by Meta’s appalling track record of dodging accountability and failing to address human and civil rights abuses, as well as privacy concerns affecting billions of people globally,” said Michael Connor, Executive Director of Open MIC.
“Meta’s transformation into the metaverse is not a fait accompli and investors seriously question whether the company has the social license to operate a potentially dangerous emerging technology,” said Natasha Lamb, managing partner of Arjuna Capital. “The same issues Meta is reckoning with on Facebook and Instagram—discrimination, human and civil rights violations, incitement to violence, and privacy violations—will only be heightened in the metaverse. Investors need to understand the scope of these potential harms and weigh in on whether Zuckerberg is throwing good money after bad.”
This victory for shareholders comes despite Meta’s attempt to exclude the proposal from the ballot. The company sought to use the SEC’s “no-action” process to keep the proposal from coming to a vote, arguing that the metaverse project was “ordinary business.”
In a forceful reply filing with the SEC, shareholders cited Meta’s “pattern of corporate behavior which entails introducing technology without understanding its impact on people; failing to study the ongoing effects of the technology or studying the effects privately and making decisions that ignore negative user effects; denying any harms caused; apologizing only when harms are proven to have occurred; and failing to implement appropriate remedies for the harms created.”
In ruling that the proposal should go forward, the SEC staff informed Meta: “We are unable to concur in your view that the Company may exclude the Proposal…In our view, the Proposal transcends ordinary business matters.”
The SEC’s decision means the shareholder resolution will be voted on at the Company’s annual meeting, which has traditionally been held in late May.
For more information:
Michael Connor
Executive Director, Open MIC
media@openmic.org
212-875-9381