Investors looking for ways to influence tech behemoths should focus on their biggest clients, according to Di Rifai, chair of digital think tank Creating Future Us.
Big Tech’s preference for dual class share structures and the outsize influence wielded by founders have hampered efforts by investors to engage with the sector on a range of sustainability topics, including workers’ rights, data privacy and misinformation.
This year, shareholder proposals on ESG topics at Amazon, Alphabet and Meta attracted strong support from investors but failed to gain a majority due to the firms’ share structures.
Rifai suggests that frustrated investors should explore “other routes to influencing ethical behaviour” at tech giants such as Meta, Amazon and Alphabet.
“There are thousands of companies in investors’ portfolios who are these firm’s largest customers,” she says. “This could help investors get around the problem of dual class shares because although you may struggle to engage with any of the FAANGs directly, huge multinationals use their software, algorithms and cloud backbone.
“Let’s say you’ve engaged with Unilever about ethical digital practices and it then feeds back to its cloud provider, let’s say Google, that it would continue to use its cloud services, but only if it demonstrates ethical digital behaviour. Multiply that across all of Google’s clients and it can be quite powerful.”
Launched in 2017, Creating Future Us is a non-profit that works to raise awareness of and design solutions for tech impacts on society.
In February, it announced the launch of Investors for a Sustainable Digital Economy, a consortium designed to champion sustainable use of technology in business. Members include Baillie Gifford, Church Commissioners for England, Ethos Foundation, Sands Capital and Zouk Capital.
Creating Future Us is currently working with members of the network on ways to tackle harms caused by tech addiction.
A recent report, Addiction by Design, looks at online gambling, gaming, trading and pornography, as well as social media, advertising, gamification and the metaverse.
It includes recommendations for investor action and engagement in each of these areas. With online gambling, for example, it advises investors to push for transparency in the sector, particularly in disclosing revenue derived from high-risk customers and outcomes from responsible gambling programmes.
Earlier this year, RI explored the ways in which investors are grappling with the gambling industry.
Creating Future Us is developing a database of questions investors can ask when engaging with the topics flagged in the addiction report. Members of the consortium will share the answers they receive in order to create a mutual learning platform, while the think tank will work to create a best practice guide that investors can use as a reference point in engagements.
The process will subsequently be repeated in other areas of focus, including robotics, algorithms/AI, bioethics and space.
Also on the list are surveillance and the metaverse – two areas where Rifai says investors urgently need to increase their focus.
“Surveillance is becoming pervasive and there are currently almost no guardrails in place to define its acceptable parameters/practices.
“For the metaverse, the impetus is that it could become a very influential part of our lives and we have the opportunity to set the tone for product design and incentives in it before the train leaves the station, unlike with some other technologies.”