Announced by Facebook CEO Mark Zuckerberg in October 2021, the “Metaverse” comes amid ESG’s emergence from a niche consideration to a mainstream one. This has led to some conflict within the business: Facebook shareholders filed eight proposals for the 2022 proxy to address concerns, many of them surrounding ESG, about Meta’s operations.
Zuckerberg envisions this next stage of the online world as full of new opportunities. Yet politicians have joined privacy and anti-bullying campaigners in expressing concerns about the new and greater threats the Metaverse can bring. If the internet can be a scary place, they argue, the Metaverse could be even scarier. Many see the potential for the platform to harvest higher quantities of personal data as well as for trolling and hate speech to become more intense, given the experience’s aspiration toward greater immersion.
Concerns about ESG Credentials
A growing number of Facebook shareholders have also raised concerns over the past few months about how Meta Platforms, as Facebook is now known, will manage the dangers inherent in the new world that it is creating. These worries carry particular weight as the company faces continuing questions about its corporate governance.
In December, a number of institutional investors and shareholders launched proposals seeking to manage what they see as significant and material meta risk. This comes in the wake of antitrust litigation, whistleblower testimony, and poor governance practices at Facebook. As one investor explained, “No one can keep Zuckerberg accountable but himself. The structure is not good for the company or our society.”
Others refer to uncontrolled hate speech and the more than 21 million reported cases of online child sexual abuse material—94% of which stemmed from Facebook. Several proposals refer to civil and human rights risks because of the way that the company collects users’ personal and behavioral data and its use of algorithms.
Also among the proposals to overcome some of investors’ concerns is ending the current voting structure, which gives Zuckerberg considerable power, in favor of a more equitable one. Other demands include an independent board chair.
Beyond measures relating directly to the Meta Platforms’ governance—the G in ESG—are those which look on its enormous impact on society as a whole—the S. For example, investors have argued for board oversight of harmful user-generated content, a human rights impact assessment on the targeted advertising business model, and initiatives to counter online child sexual exploitation.
Lessons for Other Companies
If any of these proposals are accepted, they may signal that a company often criticized for its centralized control appears to be listening. Shifts in the right direction could also influence other major players to do the same. A more ambitious move to address the concerns of some its investors might even stave off government and regulatory action, at least for the time being.
This could also influence the job pool. With research showing that a company’s ESG ratings are an important consideration for younger workers, Meta Platforms will have to consider how its poor ESG record may limit talent recruitment and retention.
In the meantime, the fact that such a vast business with a high profile in the strongest growth sector of the markets has come under such attack from Facebook shareholders may cause other companies to up their game where ESG considerations are concerned. It may also empower more shareholders and stakeholders to take more action in proxy votes, especially if investors back them.