One of Sweden’s leading pension funds has confirmed that it is looking into the possibility of suing technology giant Alphabet over allegations it handled sexual harassment claims poorly and at the expense of shareholders.
AP7’s long-standing CEO, Richard Gröttheim, told RI: “We have instructed our lawyers to see if there is a case [centring on] the alleged misconduct when it comes to sexual harassment”. He was unable, for legal reasons, to provide further details, but AP7 has a long history of pursuing legal action against portfolio companies on governance grounds.
Google was not able to comment to Responsible Investor on the potential lawsuit by press time.
Last year, the SEK376bn (€36.5bn) government-backed fund successfully co-led a class action lawsuit against fellow tech heavyweight Facebook over plans to reclassify its share structure. The plans would have left AP7 and other investors with heavily diluted shares, which it argued would cost minority shareholders $10bn. Facebook’s head, Mark Zuckerberg, withdrew the proposals on the back of the challenge, which Gröttheim described at the time as “a terrible corporate governance scheme”.
This time, AP7 would have to demonstrate that Alphabet – which owns Google – had managed the allegations of sexual harassment within the company in a way that disadvantaged shareholders, and ultimately led to financial losses.
The high-profile scandal, which has been in and out of the headlines over recent months, centres around revelations that Google received a sexual assault allegation from an employee regarding Andy Rubin, creator of the Android system.Google allegedly investigated the complaint and decided it was ‘credible’, but instead of firing him, the firm asked for his resignation and agreed a $90m exit package, paid in instalments.
“When it comes to sustainability, this is about the principle” – Gröttheim
Google is accused of other, similar situations in which senior staff are accused of sexual assault but leaving with large pay-offs. The firm confirmed last month that 48 employees – including other senior staff – had been fired for sexual harassment over the past two years, without severance packages.
Earlier this year, a US judge approved a class action lawsuit by a female software engineer claiming that Google’s culture enabled daily sexual harassment.
The situation culminated in recent weeks in massive staff walkouts at 50 of Google’s offices globally.
In an internal email and online statement, CEO Sundar Pichai apologised for Google’s management of the situation and committed to take “a much harder line” on sexual misconduct claims in future.
AP7’s attempt to address the investor implications are “not about the money”, says Gröttheim.
“When it comes to sustainability, this is about the principle,” he told RI. “Litigation fits in as the fourth tool in our box to help on ESG.”
Other tools AP7 is well known for using are engagement, voting and exclusions.