Shareholders Call for Board Oversight of Artificial Intelligence
September 20th, 2024
As advanced technologies such as artificial intelligence are expected to transform business models and strategies, shareholders are driving the conversation around boardroom oversight of AI-related risks and opportunities.
During the 2024 United States Proxy Season, Minerva Analytics recorded 10 shareholder proposals that were driven by emerging AI issues.
Alphabet Inc and Meta Platforms Inc faced shareholder scrutiny over misinformation and disinformation risks related to their AI usage in addition to the adoption of ethical guidelines, Amazon Inc was urged to establish an AI oversight committee, whilst shareholders of Apple Inc, Chipotle Mexican Grill, Netflix Inc and Warner Bros Discovery Inc called for greater transparency concerning the adoption of AI.
The shareholder support received by these proposals varied, averaging approximately 19%. Notably, 43% of Netflix’s shareholders voted in favour for the board to report on the company’s use of artificial intelligence.
One key concern for shareholders regarding the application of AI is ensuring compliance with emerging regulatory efforts and guidelines such as the White House Executive Order on AI, Blueprint for an AI Bill of Rights, and Algorithmic Accountability Act of 2022, which are based on the premise that while AI holds great promise, the technology must be managed in order to reduce AI-related risks and optimise its potential. Therefore, shareholders, particularly those of AI leading companies, place significant value on transparency in relation to the disclosure and oversight of artificial intelligence.
It is clear to see that companies are responding to the call for increased oversight of AI as Comcast Corp, Walt Disney Company and United Health Group agreed to improve their AI disclosures – prompting shareholders to withdraw their proposals.
The board plays a key role in the oversight of the company’s in response to market developments, including the emergence of advanced technologies and the approach to related risks and opportunities. The implementation of such measures, as proposed by the shareholders, can facilitate companies in identifying the opportunities and risks related to the technology.
From a governance standpoint, it is imperative for boards to take a proactive stance in overseeing the integration of AI at all levels of the organisation. As exemplified by the concerns raised in the AI-related shareholder proposals filed this year, boards should consider ensuring transparency as they monitor and review the complexities surrounding AI, while also confirming that this is supported by appropriate expertise, training and governance processes.
Given the pace at which AI adoption is advancing across the business landscape, the push towards the responsible governance of innovative technologies is expected to persist. The number of AI-related proposals filed by shareholders anticipated to grow over the coming years.
Author: Sienna Neela
Last Updated: 20 September 2024