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ESG’s dual-shareholder problem

Protocol Policy

Hello, and welcome to Protocol Policy. Big Tech’s annual earnings season kicks into high gear today, and environmental, social and governance (ESG) proposals are all the rage this year. We also look at the letter signed by a powerful Democratic coalition that urges Google to reduce its data collection in anticipation of Roe v. Wade being overturned. Finally, California’s State Assembly passed a social media bill that bans addictive social media features aimed at kids — but the bill raises more questions than it answers in terms of enforcement and constitutionality.

ESG season

Ah, spring! The birds are chirping, the Golden State Warriors are on their way to yet another NBA Finals and CVS is all out of Zyrtec. Spring also means ESG season is nearing full bloom, and that’s not just because the corporate elite are convening in Davos. Meta, Amazon and Twitter will all go through unusually long lists of shareholder proposals at their annual meetings today. So will Alphabet at its annual meeting next week.

It’s not just your imagination — ESG proposals are way up. Over 300 ESG resolutions are expected to go to a vote this spring and summer, according to Proxy Preview. That’s an increase of around 20% compared to last year. And while there were already a record number of ESG majority votes in 2021, all signs point to a new record being set this year.

Record ESG proposals are being fueled by a more shareholder-friendly SEC regime and growing awareness of shareholder engagement tools, according to Michael Connor, the executive director of Open Mic, an organization that works with institutional investors to file social impact shareholder proposals targeting Big Tech. Companies usually try to block shareholder resolutions through legal challenges, but “right now, the folks who make those decisions at the SEC are more favorably inclined toward shareholder resolutions,” Connor told Protocol.

Recent ESG moves in the tech sector came in response to shareholder pressure, though they didn’t go to a vote.Alphabet and Salesforce, for instance, both committed to expanding Silenced No More protections that allow employees to speak about workplace harassment, discrimination and assault. Likewise, Microsoft agreed to shareholder requests to conduct a third-party audit on its human rights impacts.

But dual-class ownership structures can provide tech executives with an impenetrable layer of defense. Meta, Alphabet, Airbnb, DoorDash, Coinbase and dozens of other tech giants employ a dual-class ownership structure to give select shareholders — usually the founders — more voting power than everyone else.

  • In terms of formal power, the dual-class structure often renders ESG initiatives completely impotent. With Meta, for instance, Mark Zuckerberg controls around 58% of the voting shares, which means he always has the final say.
  • Critics say it amounts to corporate theater, intended to make the public think corporations can be forced to care about anything other than the bottom line. The dual-class structure lends some credence to those accusations: When Meta’s board of directors recommends shareholders vote one way or the other on shareholder proposals, they might as well say, “This is what Mark should do.” Meta shareholders are younger siblings who think they’re playing Mario Kart when really they’ve been handed an unplugged controller.

ESG success shouldn’t only be measured by majority votes, according to Connor. “Shareholder proposals don’t need to get a majority of the vote to have an impact on a company,” he said. They create “a very public spotlight on the company and the issue.” The question, then, is whether Silicon Valley’s highly empowered founders will even notice the glare.

— Hirsh Chitkara (email | twitter)

In Washington

Top Democratic lawmakers want Google to stop “unnecessarily” collecting location data in the event Roe vs. Wade is overturned. The group, including Sens. Ron Wyden, Elizabeth Warren and Bernie Sanders, as well as Reps. Pramila Jayapal, Debbie Wasserman Schultz, Ro Khanna, Ted Lieu and Alexandria Ocasio-Cortez, sent a letter to CEO Sundar Pichai saying: “If abortion is made illegal by the far-right Supreme Court and Republican lawmakers, it is inevitable that right-wing prosecutors will obtain legal warrants to hunt down, prosecute and jail women for obtaining critical reproductive health care.”

Sen. Cory Booker thinks the SEC should back off crypto. When asked whether the CFTC should regulate crypto markets, he responded: “[H]ell yes. It’s clear, Ethereum and Bitcoin, which are the majority of crypto, are clearly commodities, they don’t fall under the SEC’s jurisdiction.”

In the states

The California State Assembly unanimously passed AB 2408, a bill that prohibits social media platforms from maintaining features that addict children. Violators can incur a civil penalty of up to $250,000. The bill, which still needs to go through the state Senate, sparked counterarguments that its enforcement would constitute a violation of the First Amendment.

A California judged ruled that a sexual harassment case could proceed against Tesla, even though the worker signed an arbitration agreement giving up the right to sue.


There are three things that companies need to know when it comes to setting climate goals. The first thing I would say is that if you're going to set a climate goal as a business, it needs to be a businesswide effort. It cannot live within just the corporate responsibility or the sustainability team as it often does.

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On Protocol

Protocol examined whether the Federal Trade Commission could block Microsoft’s blockbuster acquisition of Activision Blizzard. Antitrust experts said the deal would likely proceed, though with some conditions on it, such as limitations on data use across different parts of the business.

An AI surveillance firm with ties to China wants to win U.S. infrastructure contracts. The company, Remark Holdings, has already struck a partnership with a Florida high-speed rail provider. The AI is used for public safety applications in spaces such as public schools, transportation hubs and retail stores.

Okta CEO Todd McKinnon told Protocol the firm “should have done a better job” in its handling of the Lapsus$ breach. Okta initially downplayed the impact of the breach, but later confirmed Lapsus$ was able to view some internal customer data.

At Davos this week, Microsoft, Alphabet and Salesforce collectively committed $500 million to carbon dioxide removal between now and 2030. The tech companies made the commitment as part of the First Movers Coalition, a group of 50 companies with a total market cap of $8.5 trillion.

Around the world

Samsung unveiled a $356 billion five-year investment plan that will direct funds toward the semiconductor and biopharma sectors, among others. The company said 80% of the investment would remain within South Korea.

Spain allocated $13 billion for investment to boost its domestic semiconductor fabrication capabilities. Economy Minister Nadia Calviño said the investment package is intended to cover the entire value chain for chip manufacturing.

Hyundai committed to invest an additional $5 billion in the U.S. toward developing advanced technologies such as robotics, self-driving systems and AI. The announcement came during President Biden's visit to South Korea.

DiDi shareholders agreed to delist the company from the New York Stock Exchange less than a year after its U.S. market debut. Market regulators in China opened a probe into DiDi shortly after the company filed for its U.S. debut, and that regulatory storm cloud has lingered over the ride-hailing company ever since. The company now faces a potential fine and penalty from the Cyberspace Administration of China, per Bloomberg.

Russian mobile carriers have started selling discounted and used smartphones as they contend with smartphone bans imposed by Western companies such as Apple. Chinese smartphone brands such as Huawei, Honor and Xiaomi are still available in Russia and have helped meet consumer demand since the sanctions.

In the C-suite

Binance.US has hired Josh Wilsusen as the company’s first chief policy officer. The crypto company processes around $1 trillion in trades per month. It recently attracted scrutiny for promoting the altcoin Terra as a “safe and happy” investment opportunity shortly before Terra lost virtually all of its market value.

FTX founder Sam Bankman-Fried said he expects to spend more than $100 million and potentially more than $1 billion on the 2024 election. That sum would make Bankman-Fried one of the most powerful political contributors virtually overnight. “It’s really dependent on exactly who’s running where for what,” he said in an interview on the What’s Your Problem podcast.

In data

$563 billion: That’s how much the world’s 50 richest people have collectively lost in net worth since the start of the year, much of which has been caused by the stock market downturn. From the start of the year, Tesla stock is down around 46%, Microsoft is down around 23%, Meta is down around 48% and Amazon is down around 39%. Elon Musk, Bill Gates, Mark Zuckerberg and Jeff Bezos are all on the top 50 list.


Once a company understands its sustainability baseline, it is important to identify areas that the company can feasibly make more sustainable, and then address those areas. Implementing technology that improves connectivity and provides greater insight into operations will prove to be the solution for many companies.

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What slowdown?

A16z raised $4.5 billion to fuel two crypto venture funds. It’s the sector’s largest-ever VC funding haul, and it comes at a time when investor sentiment in the crypto space is decidedly less enthusiastic. “We remain very steadfast in our conviction and focused on the long term,” said Arianna Simpson, a general partner at a16z Crypto.

Thanks for reading — see you Friday!

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