Stockholm (NordSIP) – As Apple prepared itself for its annual shareholder meeting, Norges Bank Investment Management (NBIM), one of the largest investors in the world and the manager of Norway’s Government Pension Fund Global sovereign wealth fund, announced its intention to use the votes to push for more sustainability at the tech giant.
Of the 18 proposals up for voting, NBIM disagrees with Appe’s management on five motions, all of them for reasons that seem to fall within the remit of sustainable investment practices. The disagreements focus on executive compensation, transparency, forced labour, civil rights audit and concealment clauses.
Executive Compensation
On the topic of executive compensation, NBIM disagrees with Apple management’s recommendation to vote in favour of its executive compensation. NBIM notes that “the board is responsible for attracting the right CEO and setting appropriate remuneration.”
“A substantial proportion of annual remuneration should be provided as shares that are locked in for five to ten years, regardless of resignation or retirement. The board should provide transparency on total remuneration to avoid unacceptable outcomes. The board should ensure that all benefits have a clear business rationale. Pensionable income should constitute a minor part of total remuneration,” NBIM adds.
Human Rights Concerns
NBIM is also butting heads with Apple management on their recommendation to vote against the revision of Transparency Reports and the publication of, reports on Forced Labour, Civil Rights and on Conceament Clauses.
According to the Apple’s Proxy Voting document, the Shareholder Proposal on Transparency Reports focuses on the relationship of Apple with the Chinese government and its role as an instrument of official censure. The proposal notes that “Apple’s transparency report for the first half of 2020 disclosed that it complied with all 46 requests from the Chinese government to remove 152 apps from the App Store. The report did not explain which apps were removed or for what reason.” As a result, “shareholders request the Board of Directors revise the Company’s Transparency Reports to provide clear explanations of the number and categories of app removals from the app store, in response to or in anticipation of government requests, that may reasonably be expected to limit freedom of expression or access to information. Such revision may exclude proprietary or legally privileged information,” the proposal explains.
The proposal on a report about Forced Labour is motivated by “reports that at least nine companies in Apple’s supply chain participate in the government of China’s forced labor program,” including the millions of Uyghurs and other Turkic Muslims being forced into internment camps and related labour programs since 2017.
The proposal for a report on Civil Rights focuses on representation of Hispanic and Black minorities in the company, the manner in which Apple handled accusations of sexism, harassment and retaliation, and the hiring of new staff with a history misogynism and racism.
Last but not least, the proposal on concealment clauses focuses on the use of “employment or post-employment agreement, such as arbitration, non-disclosure or non-disparagement agreements, that Apple asks employees or contractors to sign which would limit their ability to discuss unlawful acts in the workplace, including harassment and discrimination.”
“Apple wisely uses concealment clauses in employment agreements to protect corporate information, such as intellectual capital and trade secrets. However, Apple has not excluded from these clauses their workers’ rights to speak openly about harassment, discrimination and other unlawful acts. Given this, investors cannot be confident in their knowledge of Apple’s workplace culture,” the proposal adds.
NBIM Takes a Stance
In general, Apple’s management does not appear to oppose the human rights principles of the shareholder proposals supported by NBIM. Apple’s argument often seems to stand on the fact that it is already doing enough to address the issues raised by the shareholder proposals and that another report would “unnecessary” and “duplicative”.
NBIM’s opposition to Apple’s management is informed by the same logic for all four of these concerns. “Sustainability disclosures should be aligned with applicable global reporting standards and frameworks to support investors in their analysis of risks and opportunities. Where a company’s disclosure does not meet our needs as a financial investor, we will consider supporting a well-founded shareholder proposal calling for reasonable disclosure,” NBIM says.
“The board should account for material sustainability risks facing the company, and the broader environmental and social consequences of its operations and products. (…) We will not support a shareholder proposal that appears to impose a strategy or prescribe detailed methods, unrealistic timeframes or targets for implementation,” NBIM argues.
