Shareholder activists and ESG analysts speaking to Citywire Selector believe that the US overturning of Roe v Wade has further highlighted the contentious issue of tech companies’ data rights – and that the time has come for ESG investors to ramp up engagement.
Benjamin Chekroun, an ESG analyst at Candriam, said the issue is ‘just hitting the agenda’ for sustainable investors but that his firm is already concerned about the risks arising from the new situation.
‘Criminalising abortion introduces risks for every company, because there’ll be operational, financial and reputational risks,’ Chekroun told Citywire Selector. ‘But for tech companies, it’s introducing even greater risks.’
The prosecution of abortion seekers in certain US states has already been made possible through tech companies sharing personal data with authorities, including a 2017 case when a Mississippi woman’s online search for abortion pills contributed to her being charged with killing her unborn child.
Earlier this August, Meta drew public criticism after it was revealed that Facebook user information and messages concerning abortion pills were used to press charges against a Nebraskan 17-year-old and her mother.
With the overturning of Roe v Wade, human rights experts have warned that similar legal responses are likely to become more widespread.
For this reason, Shelley Alpern, a US-based veteran shareholder activist and reproductive care policy engagement expert at Rhia Ventures, is urging companies not to comply with officials in these cases.
‘We will be urging firms not to cooperate with local state or federal officials who intend to prosecute or persecute women and birthing people who are choosing to abort.
‘I doubt very much that these firms want to be in a position of handing over private health data that could be used to prosecute women or their providers,’ said Alpern.
She said firms which are seen to comply with the prosecution of someone undergoing a health service that most people in America are supportive of can lead to reputational risks.
‘They must understand they are branding themselves as being anti-choice and championing religious values, which could impact their bottom line,’ the Salem based activist added.
For Alpern, the connection between protecting human rights and the role of big tech in a post-Roe v Wade world is now incredibly fraught.
Encrypting conversations
Future risks of complicity among tech companies in abortion prosecutions have also fueled calls to limit the personal data they store.
Digital rights group, the Electronic Frontier Foundation, for example, recommends tech companies respond by reducing data collection, employing end-to-end encryption and ending behavioral and location tracking.
A similar call to action came from a group of US Senators and Congress members, who in May this year asked Google to limit the collection and retention of location-tracking data due to the risk of it being used to prosecute people in areas where abortion is criminalised.
Candriam’s Chekroun said Meta’s recent scandal shows that investors, too, will need to take the issue into account and talk to investee companies about the reasons for storing personal data.
‘If that conversation was encrypted, or if it was destroyed, then the problem wouldn’t be there. We can see that there are some serious human rights consequences to storing personal data, as opposed to encrypting it.’
A legal and moral crossroads
Following the public outrage over Facebook messages being used in the Nebraskan abortion prosecution, Meta announced earlier this month that it is on track to make end-to-end encryption the default setting for all calls and messages on its Messenger platform in 2023.
But for an industry whose main profit comes from selling personal information to third parties, weaning off data collection is easier said than done.
‘From an ethical standpoint, you want to have as little as possible in order for it to be misused or abused. But data is the main commodity for tech companies – so it’s really hard to ask them to refrain from collecting it,’ Chekroun said.
ESG-focused investor Jonas Kron, who has worked with Alpern to file a shareholder proposal against TJX which owns retailers including TJ Maxx, believes there is a case against upholding the current advertising revenue-reliant model.
‘Currently the business model is to sell advertising, which they charge based on the personal information they gather. Right now they are in the “personal information and data business”. And I think a lot of investors have to ask themselves if they are ok with that.’
Kron questions whether supporting this model is worth it, considering the increased risk of legal issues coming down the road.
‘These firms are in possession of data, and the authorities know that.
‘When you look at all the legal resources these firms have to spend in order to navigate the rule of law and civil liberties, at a time when people are questioning the long-term viability of reliance on advertising revenue, you have to ask yourself whether it would be better if they just didn’t collect this information in the first place?
Ultimately, why do firms have all this power? Maybe it would be better if they just didn’t collect this information,’ Kron said.
For Kron, tech companies have reached a crossroads between siding with human rights, or complying with the law. In order to protect civil liberties, tech firms will need to forgo a portion of their profits – and, in effect, change their entire business model, Kron said.
‘Playing in Zuckerberg’s sandpit’
Kron said he believes Mark Zuckerberg’s majority shareholder stake in Meta severely curtails investor influence, which in this instance amounts to one person having too much power over women’s rights.
‘If Mark Zuckerberg decides one day to forgo enormous profits by collecting less data, then that would be a great outcome. However, Zuckerberg does not appear to be giving up any power. Investors with Meta shares must reconcile with the fact that if you have holdings there, you are just playing in Zuckerberg’s sandpit.’
But despite such obstacles, ESG investors are increasingly raising civil rights concerns with tech companies.
This includes Candriam, which in 2021 launched a collaborative engagement project with 51 firms on surveillance technology, and which is currently looking at creating a public policy on reproductive health which could guide the firm in upcoming proxy seasons.
Chekroun noted that shareholder proposals on securing workers’ reproductive rights have already featured in three AGMs this proxy season – at US retailers Walmart, Lowe’s and TJX – and that proposals calling for end-to-end encryption and similar measures could reach tech companies’ AGMs as early as next year.
Implementing so-called transparency reports, which would see companies publish reports on the number of requests to hand over data they received from governments, and the number of times they did and did not comply, is one solution which companies have started taking up in recent times, said Kron.
He added that how they comply, and in what circumstances they can push back, is still being worked out.