Australian super fund HESTA has filed its first ever shareholder proposals in the US at Meta and Hormel Foods, challenging the corporate giants to report on how their current business practices around misinformation and antibiotics, respectively, threaten the returns of diversified owners.
Both resolutions were filed on behalf of the A$64bn (€40bn) health and social care workers fund by US non-profit, The Shareholder Commons, a prolific filer of resolutions since it launched in 2019.
The proposal at Meta calls out the social media giant over its continued lack of oversight of misinformation on its platforms, asking the company – formerly known as Facebook – to report on how its business practices that prioritise “internal financial return over healthy social and environmental systems […] threaten the returns of its diversified shareholders who rely on a productive economy to support their investment portfolios”.
In the supporting statement, the HESTA backed resolution highlighted the use of Meta’s platforms to spread harms like climate denialism and Covid-19 vaccine hesitancy and quotes a former employee who stated that the “company’s leadership knows how to make Facebook and Instagram safer but won’t make the necessary changes because they put their astronomical profits before people”.
It added that “[w]hile the Company may profit by inflicting social costs, its diversified shareholders pay the bill. In contrast, our CEO [Mark Zuckerberg] is not diversified. His wealth is concentrated in Company shares: unlike most shareholders, his investments do not absorb the social costs the company creates.”
The other shareholder proposal filed on behalf of HESTA at Hormel Foods, which went to the vote yesterday, asked the company to report on the "external environmental and public health costs” associated with the food giant’s use of antibiotics in its supply chain.
Like the proposal at Meta, the one at Hormel asked the company to focus on the wider costs to shareholders “who rely on a healthy stock market”.
Under Delaware law, where Hormel is incorporated, the company’s directors must choose returns when confronted with a clash between profits and the broader interests of society and the economy, which may “lead to overuse of antibiotics in raising livestock to increase profit, despite increasing antimicrobial resistance (“AMR”), or the ability of diseases to resist antibiotics,” the supporting statement noted.
It also quoted the World Bank, which found that AMR may decrease global GDP by 3% by 2030, and by almost 4% by 2050.
The results of the vote have not yet been announced, but Hormel Foods recommended shareholders reject HESTA’s proposal. It argued that such a report would not be “beneficial given the Company’s already robust antibiotic stewardship, continuous improvement and environmental sustainability efforts within our supply chain”. “The proposed study, focused on larger societal costs and impact to the GDP of antibiotics, would incur unnecessary expense without sufficient benefit to stockholders,” it added.
Meta is currently seeking to exclude HESTA’s proposal via the US Securities and Exchange Commission’s (SEC) ‘no action’ process, the mechanism by which companies petition the power regulator for permission to exclude shareholder resolutions.
The social media firm argued that the proposal is excludable as it touches on matters relating to ordinary business and because it is impermissibly vague.
In email, HESTA’s CEO, Debby Blakey, told RI that companies that prioritise profits over “healthy social and environmental systems pose a significant financial risk to investors”.
“We’re deeply concerned Meta Platform’s continued lack of content oversight can contribute to the spread of misinformation that can ultimately harm overall economic health and GDP, and therefore have a significant negative impact on financial returns we can generate for our members,” she wrote.
Meta is also seeking to exclude proposals from seasoned US-based SRI investors on social harms associated with its business, including one calling for an independent human rights impact assessment filed by Mercy Investment Services. Another proposal filed by Arjuna Capital is asking for an independent report and advisory shareholder vote on the social media giant’s metaverse project. The third-party assessment should cover “potential psychological and civil and human rights harms to users that may be caused by the use and abuse of the platform,” the activist wrote.
The company argued that both these proposals fall foul of the SEC’s ordinary business rule.
Given the new orientation at the SEC, it is likely that the proposals will go to the vote at Meta’s annual general meeting, but even if they do, the dual class share structure at company means that tallies will be skewed due to management’s disproportionate voting power. Meta’s founder Mark Zuckerberg, for example, reportedly casts more than half of the firm’s votes, despite owning less than 13% of the stock.
Meta had not responded to a request for comment at the time of writing.