Policy

These nuns could force Microsoft to put its money where its mouth is

A shareholder proposal filed by the Sisters of St. Joseph of Peace would require Microsoft to report whether its private lobbying aligns with its public statements.

Microsoft

Do the messages Microsoft's lobbyists are sending to lawmakers in private match the promises it's been making in public?

Image: Microsoft

Microsoft's lobbyists have been trolling the halls of Congress since before Mark Zuckerberg was old enough to drive. Since the late '90s, the tech giant has spent many millions of dollars every year to sway members of Congress on issues including antitrust and privacy. Last year, for the first time in a decade, Microsoft quietly outspent even Alphabet — and that's not including what Microsoft spent lobbying in states.

Now, a group of Microsoft shareholders, led by the Sisters of St. Joseph of Peace, is trying to force the company to ensure the messages its lobbyists are sending to lawmakers in private match the promises Microsoft has been making in public.

At their annual meeting later this month, Microsoft shareholders will vote on a proposal that would require Microsoft to conduct and publish a report detailing how its "direct and indirect" lobbying efforts align with the company's professed values regarding artificial intelligence, public policy, human rights and racial justice. "In general, transparency is all that the shareholders are asking for," said Sister Susan Francois, an assistant congregation leader and also a former Portland, Oregon election official.

As a congregation, she said, the Sisters of St. Joseph of Peace have been shareholder advocates for decades. They are filing the proposal as part of a group called Investor Advocates for Social Justice. "In the dark, it's easy to think bad things are happening," Francois said. "If we can shine a light on good governance, then it gives us all confidence we can move ahead in good faith."

Microsoft has been particularly vocal about issues related to tech's impact on society in recent years. Company President Brad Smith has called for regulation of facial recognition and swore off selling facial-recognition technology to police last year following the murder of George Floyd. But the group behind the proposal argues that, behind closed doors, Microsoft has pushed policies that are at odds with those statements. In its home state of Washington, for instance, the company lobbied against a bill that would have put a moratorium on government use of facial recognition. The company did, however, support a less-strict facial recognition bill that was sponsored by a state senator who is also a Microsoft employee.

"What we see is the company generally portrays itself as privacy-friendly, and yet we see that it is, in many cases, lobbying against those same principles," said Michael Connor, executive director of Open Mic, a nonprofit group that uses shareholder proposals to force corporate accountability.

Open Mic worked with shareholders on this and other proposals, one of which has already been successfully withdrawn by the filers. That proposal also called for Microsoft to conduct a human rights impact assessment related to its government contracts. Microsoft took shareholders up on that offer before the proposal even went to a vote.

Francois hoped this proposal would meet the same outcome, but the company has been less receptive to the proposal regarding its lobbying efforts. "Sadly this one did not move in [our] dialogue, so we had to go the route of a proxy vote," she said. "We prefer dialogue, and we hope to get there, but if we need to start this way, we'll start this way."

Microsoft declined to comment on the proposal beyond its official proxy statement. In a statement of opposition to the proposal, Microsoft insisted it already has a "long track record of meeting best practices for disclosure on public policy engagement." The company pointed to an annual report it publishes with its public policy agenda, as well as previous promises it's made to be more transparent about spending from its political action committee.

But political donations and lobbying are two different things, Connor said, and none of these disclosures address whether all of this spending aligns with Microsoft's public statements. "They're conflating political and lobbying spending disclosures with substantive discussions of misalignment," he said.

The proposal also calls on Microsoft to assess its indirect lobbying through trade groups, including the Chamber of Commerce. Recently, Microsoft has made changes to its trade group ties, withdrawing from the Internet Association, which also represents Microsoft's archrival Google. "As our business needs evolve, we periodically review trade association memberships to ensure alignment with our policy agenda," a Microsoft spokesperson said in a statement.

Tech shareholders, as well as tech workers who own stock, have become active in pushing proposals that target corporate responsibility. But those proposals face a nearly insurmountable challenge at companies like Meta and Alphabet, where a small number of executives, including founders, have dual-class shares that hold twice as much voting power as other shares.

Microsoft shareholders don't face that problem. But that doesn't make their task an easy one either, Connor said, noting that it's not unusual for shareholder proposals to be introduced several years in a row before they have an effect. "We're hoping smart people at Microsoft look at this and take it to heart," Connor said, "and maybe take action on it regardless of the vote."

Francois acknowledged that there may well be valid reasons for Microsoft to lobby on the issues it does. But existing lobbying disclosures offer little insight into what, exactly, corporations are asking for related to those issues. "We're just asking Microsoft to live out the policies that they've ensured shareholders they're living out," she said.

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