Dive Brief:
- The Securities and Exchange Commission ruled last week that Disney and Apple must vote on artificial intelligence-related shareholder proposals that the American Federation of Labor and Congress of Industrial Organizations, the largest federation of unions in the U.S., submitted to each of the companies’ boards.
- The AFL-CIO’s proposals request the entertainment and tech giants put together a transparency report on the companies’ use of AI and disclose any ethical guidelines adopted by them. The union federation also called on Disney to disclose its board’s role in overseeing AI usage.
- In separate no action notices, the SEC ruled “the proposal transcends ordinary business matters and does not seek to micromanage the company.” The Jan. 3 rulings set the stage for a proxy vote season where more votes on AI matters are expected, Heidi Welsh, executive director of the Sustainable Investments Institute, told ESG Dive before the SEC’s decision.
Dive Insight:
Brandon Rees, AFL-CIO’s deputy director of corporations and capital markets, said in an emailed statement the union is pleased the SEC put AI in bounds for shareholder proposals. AI has the ability to improve the lives of workers but also poses “significant risks” to reaching social equity and reducing inequalities, according to Rees.
“We look forward to continuing our dialogue with companies regarding the ethical guidelines they are adopting to govern the implementation of AI into their businesses so that technology's promise is realized without detrimental effects on workers and their families,” he said.
Apple submitted the proposal to the SEC for review in October, along with a pair of other proposals that received no action notices last week, while Disney submitted its proposal in November. The SEC ruled in separate Jan. 2 notices that Apple would also have to hold shareholder votes on proposals submitted by the American Family Association and National Legal and Policy Center.
The American Family Center, a conservative Christian fundamentalist nonprofit, submitted a proposal asking the iPhone manufacturer to investigate and report an evaluation of its digital app content curation standards and procedures. The agency ruled the company has not substantially implemented the proposal and must hold a vote.
The National Legal and Policy Center, another conservative nonprofit, put forth a proposal requesting Apple analyze “the congruency” of its privacy and human rights policy positions with its actions, “especially in such places as war zones and oppressive regimes,” according to the notice. The SEC said the proposal transcends ordinary business matters and that Apple has not substantially implemented the proposal.
Last year saw a record number of ESG proposals, albeit with a shrinking approval rate, and Welsh expects artificial intelligence to be a subject to watch in this year’s proxy vote season. Welsh said the union had filed similar proposals at half a dozen companies.
“In terms of the media sector and the tech sector there have been issues about data privacy and misinformation,” she said. “But AI is really a new thing, and obviously that all blew up [in the] fall with ChatGPT and everything.”
Disney and Apple did not respond to requests for comment in time for publication.
