Tim CookSource: Apple

What you need to know

  • Non-profit advocacy group SumOfUs has urged Apple's shareholders to vote in favor of a proposal that would force Apple's Board of Directors to report to them over freedom of expression.
  • A notice of exempt solicitation by the group cited a "critical need" for Apple to improve its disclosure and transparency over the issue.
  • The proposal is to be voted on at Apple's annual shareholders' meeting on February 26, and Apple's board does not support the proposal.

Non-profit advocacy group SumOfUs has urged Apple's shareholders to vote in favor of a proposal that would force its Board of Directors to report annually regarding the company's policies regarding freedom of expression and access to information.

At the beginning of the year, Apple announced that its annual shareholders' meeting would take place on February 26. Six shareholder proposals will be voted on at the meeting. The final proposal concerns freedom of expression and access to information. In that report, it was noted that some shareholders were concerned about Apple operating in markets like China and other countries where governments limit free expression and punish dissent. Essentially, shareholders would like Apple's Board of Directors to report back to them on this topic annually, specifically:

...regarding the Company's policies on freedom of expression and access to information, including whether it has publicly committed to respect freedom of expression as a human right; the oversight mechanisms for formulating and administering policies on freedom of expression and access to information; and a description of the actions Apple has taken in the past year in response to government or other third-party demands that were reasonably likely to limit free expression or access to information.

Now, in a Notice of exempt solicitation, international advocacy group SumOfUs has urged Apple's shareholders to back the move, which Apple's Board has recommended they vote against. The introduction to the letter says:

SumOfUs urges you to vote FOR Proposal 61 at the annual meeting of Apple shareholders on February 26, 2020.2 Proposal 6 calls on Apple's board of directors to annually prepare a report on the Company's policies addressing freedom of expression and access to information.

Apple is coming under increasing public criticism for its failure to protect freedom of expression and access to information in markets where it operates. According to Freedom House, "Digital authoritarianism is being promoted as a way for governments to control their citizens through technology, inverting the concept of the internet as an engine of human liberation."3 The proponents of this resolution find that the companies disclosures addressing the governance and management of human rights-related risks is inadequate. In particular, the company's operations in China expose the Company to human rights risks, and it is unclear what the Company's plan or response is.

The letter goes on to highlight concerns, specifically about Apple's choosing to operate in China despite a swathe of problematic human rights issued it described as "a full-blown human rights disaster". The letter also notes the Board's response to this proposal, which it says addresses concerns about suppliers and the human rights of those who work in Apple's supply chains but does nothing to address freedom of expression or opinion, which is the key issue.

It also notes the rising concerns of investors not just in Apple, but globally, over the risks to companies' reputations and operations as a result of human rights issues.

In conclusion, it states:

The well-documented reputational risks of human rights abuses and Apple's perceived complicity in them and its inadequate disclosure highlight the critical need for the Company to improve its disclosures and increase transparency around its policies, procedures and board oversight of risks related to freedom of expression and opinion.

For all of the above reasons, we believe that Apple's current human rights disclosures are inadequate to protect shareholder interests. We urge you to vote FOR Item 6, the shareholder proposal requesting a report on the Company's human rights policies and practices.

At the meeting on February 26, the proposal needs an affirmative vote of the majority of shares present and represented by proxy to be passed.