Stockholm (NordSIP) – At the end of 2018, reports emerged with evidence of Google shielding top executives accused of sexual harassment. For the company whose motto is Do no harm, the allegations proved extremely damaging, and by January 2019 the company was facing a shareholder lawsuit.
In an announcement at the start of October, AP7 revealed that a settlement had been reached with Alphabet, Google’s parent company. As a result of the agreement, Alphabet will take several measures and over the next ten years invest US$310 million, corresponding to SEK2.8 billion, to improve diversity and inclusion within the group.
”This settlement feels great both for the sake of the employees at Google and for the sake of the shareholders,” says Richard Gröttheim, CEO AP7. ”Sexual harassment affects many more than those directly affected. In order for us as owners to be able to drive change through legal proceedings, special conditions are required. This case shows that it can be a very effective way under the right circumstances.”
According to AP7, the settlement seeks to achieve significant corporate governance reforms and funding commitments to address and prevent sexual misconduct, harassment and retaliation at Google, prevent wrongdoers from being rewarded for their misconduct and enhance the board’s oversight function.
Pointing to its 2019 sustainability report, AP7 explained that legal processes are one of its four different engagement methods for sustainable and responsible asset management. Together with other institutional investors, at the end of 2019 AP7 had 14 ongoing legal processes involving Vivendi, Petrobras, Toshiba, Volkswagen, Allergan Inc, Deutsche Bank, Mitsubishi, Alphabet/Google, General Electric, BHP, Steinhoff, Qualcomm, Goldman Sachs, and Kraft-Heinz.
Lawsuits are used to criticise and discourage companies from inappropriate conduct and to compensate shareholders who have been treated incorrectly. In most cases, the process ends with a settlement. Google’s reaction is a testament to the success of this approach as the lawsuit prompted a reaction that had not been triggered by the pension fund’s initial requests following the revelations.