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Taking CTRL: Pathways to effective investor engagement

Civil society has increasingly found that in the fight for digital rights and corporate accountability, building a strong network of allies within the investment community could have a significant impact on corporate behaviour in the tech sector. Investors hold significant influence over the design, development, and deployment of digital technologies. Their capital steers the direction of technological innovation, has the power to shape company priorities and practices, and ultimately facilitates technology’s impact on society, for better or worse. Engaging with civil society also helps investors to identify, assess, prevent and mitigate material environmental, social and governance (ESG) risks within their portfolios.

To better understand the current state of engagement between investors and digital rights activists, and to develop recommendations for stronger collaboration between the two groups of stakeholders, we analysed survey results from 32 civil society organisations that work on digital rights issues and conducted interviews with activists from the Global South. Nine case studies provide deep dives into successful advocacy campaigns, research and analysis by civil society organisations (CSOs) that targeted or assessed investor action in the context of tech.

In sum, this analysis highlights the opportunity for more coordination and creativity in deciding:

What should stakeholder engagement between digital rights groups and tech investors ideally look like?

The answer is likely found in lessons learned from investor engagement with other sectors, as well as the successes and failures of digital rights and corporate accountability groups engaging with tech companies. While we focus here on the experiences of digital rights groups, intentional cross-pollination of ideas with labour rights groups, environmental action groups, women’s rights groups and others will also offer valuable insights. One noteworthy example of investor engagement occurred when the largest pension funds in the United States cut ties with the privatised prison operators for public backlash concerning maltreatment of immigrants.

We should be learning from those who had previously advocated to investors about the importance of screening portfolios for slave labour and environmental destruction. They have a lot of knowledge on what has failed concerning effective due diligence’. — Rafael Zanatta, Data Privacy Brazil

The global digital rights community is still in relatively nascent stages of navigating investor engagement, and we identified a number of challenges and opportunities for civil society to further our work in investor advocacy for accountable digital technologies. Identifying this gap is important because meaningful stakeholder engagement is a critical aspect of ensuring risk-responsive human rights due diligence for the tech sector - starting from the early investment stages when problematic product designs or business models should be red-flagged and through the product life cycle.

Despite the clear imperative for such engagement, CSOs reported critical challenges in contacting and interacting with investors. They cited a lack of capacity and resources, communication gaps, limited investor transparency, and poor design, execution and follow-up to such engagement sessions. A fundamental power imbalance between activists and investors persists, undermining the full efficacy of stakeholder engagement efforts.

Nevertheless, there are examples of successful engagement strategies by a number of CSOs and digital rights activists – as well as better practices by investors in respect of stakeholder engagement and human rights due diligence. These can be replicated and expanded upon as civil society seeks to make use of the critical leverage investors have in the tech sector, and – in turn – contribute materially to sustainable investment decision-making.

This is the second piece by the Business & Human Rights Resource Centre (the Resource Centre) in a series highlighting challenges and opportunities for civil society in promoting rights-respecting behaviour in the tech sector with key stakeholders. Intended as a launching point for deeper discussion amongst digital rights groups, the final section contains a list of recommendations to improve coordination with other organisations as well as actors further up the funding chain, facilitate capacity building on investor engagement and create more targeted materials for supporting responsible investors, among other actions.

As set out below, the challenges are steep, but conditions for effective investor engagement may be better than they have ever been.

Rights-respecting investment in tech, grounded in due diligence

In practice, human rights due diligence efforts will vary for different types of investors (from venture capital firms to commercial banks); yet, across its many forms, due diligence must be grounded in - and cannot be effective without - meaningful stakeholder engagement. Digital rights organisations and digital rights defenders are essential sources of information for understanding potential or actual legal, reputational or operational risk affiliated with a tech company's business model, global value chain, practices in various country contexts and downstream harms experienced by a broad range of end users. Tech companies have undoubtedly benefited from stakeholder engagement with digital rights groups; however, many digital rights groups are currently left out of responsible investment conversations.

Nevertheless, signs point to increasingly better practice by investors, representing real opportunity for key stakeholders, including civil society, digital rights activists and human rights defenders, to demand engagement with investors of all types. Drivers of better practice include changing regulatory landscapes, rising shareholder activism, and growing global acceptance of the value of human rights and environmental due diligence itself.

Evolving regulations

Despite the ESG backlash that's taken root (predominantly in the United States), tech investors around the world are paying more attention to evolving ESG norms and reporting standards as a matter of necessity. Increased scrutiny from legislators surrounding the impact of artificial intelligence on society and the harms dual-use technologies can have on democracy, as well as impending mandatory human rights and environmental due diligence legislation in the European Union are contributing to the shifting landscape. The US Federal Trade Commission’s recent actions to hold big tech accountable, as well as mounting tech-related requirements coming from the US Securities and Exchange Commission (SEC), have also caused a stir among investors. Data protection watchdogs are becoming more creative in their enforcement strategies for privacy violations, and there is a general growing recognition by tech investors that the long-term success of their investments is tied to the socio-economic stability and well-being of the societies in which they operate. In sum, ESG approaches to investing are increasing recognised by tech investors as “here to stay”.

Uptick in shareholder action and public scrutiny

Public scrutiny of the human rights impacts of tech investments is rising, resulting in direct pressure on certain shareholders – including for their ties in conflict-affected and high risk areas, and those associated with trafficking and forced labour, environmental harm and poor human rights records. At the same time, shareholders of the largest publicly-listed tech companies are advocating for accountable digital technologies, as evidenced by an increase in the number of shareholder proposals calling for action on human rights issues in the 2023 and 2022 Annual General Meeting seasons – although few such resolutions passed. According to ShareAction, however, “European asset managers have a much better record of voting for resolutions protecting the environment, and human and employee rights, than their US counterparts,” highlighting that strategies for investor engagement should be sharpened depending on the firm’s geography, risk tolerance and approach.

Growing interest in human rights and environmental reporting

Private sector attitudes towards human rights due diligence and stakeholder engagement as a valuable tool in investment decisions appear to be shifting in favour of such approaches. Evidence includes a statement signed by over 40 investors in support of meaningful and safe stakeholder engagement as a central aspect of the EU Corporate Sustainability Due Diligence Directive (CSDDD), as well as a growing number of events hosted by investor networks such as VentureESG and the Investor Alliance for Human Rights, in partnership with digital rights groups. Specific funds are also speaking out on the importance of human rights due diligence, including AP6, Sweden’s national pension fund, recently noting private equity firms within its portfolios are now "routinely taking the issue of human rights into account when making investments".

While the outcome of the CSDDD negotiation process meant that the financial sector will fall largely outside the scope of the new legislation, legal liability and due diligence responsibilities for investors has been a critical issue in the negotiations over the past year. It is likely to be resurfaced by EU legislators in the years to come, against the background of the global movement in support of human rights and environmental due diligence and other ESG reporting initiatives in the EU itself, Brazil, Mexico, South Korea, Japan, and most recently, China. This is critical momentum on which digital rights activists, defenders and other members of civil society can capitalise to demand regular and robust stakeholder engagement processes.

What has worked?

Examples of rights-respecting investor practice, shared with us by digital rights activists

What else could we be asking for?

Based on corporate accountability strategies involving investors that have worked in other sectors

  • Publishing a human rights policy committing to respect human rights and human rights defenders within the firm and across their value chains, including in their investment relationships, and ensure human rights expertise within the firm.
  • Developing rights-related blacklists for repeat-offender companies and exclusionary screens for technologies that are fundamentally non-compliant with international human rights law.
  • Developing human rights due diligence procedures (concerning business models, geographies and sub-sectors within tech) and publicly disclosing how human rights due diligence is integrated into decision-making.
  • Including commitments in limited partner agreements and term sheets offered to portfolio companies stating they must respect human rights and carry out human rights due diligence.
  • Providing capacity-building and direct support to portfolio companies to build up their human rights due diligence procedures.
  • Developing and publishing a responsible divestment strategy (based on existing best practices identified by civil society) and process for exiting relationships where leverage no longer realistically exists.
  • Decreasing the cost of capital for tech companies that have strong ESG performance (when verified by human rights groups).
  • Establishing a human rights grievance channel to learn from, and respond to, affected stakeholders about the harmful impacts of their investments.

Key challenges for digital rights advocates in meaningfully engaging with investors

Despite these positive signs, civil society reports facing continuing challenges in engaging with tech investors. Thirty-two digital rights defender organisations (located primarily in Global South countries such as Albania, Bolivia, Myanmar, Peru, India, Nigeria, Mexico, Palestine and Zimbabwe) responded to a survey we prepared to capture their experiences of engagement efforts, and we conducted interviews with three organisations in Brazil, India and Nigeria. While the majority of survey respondents have been involved in research or advocacy relating to tech investors in the past, less than half (15 out of 32) of the organisations have been consulted by investors for the purpose of human rights due diligence.

Those that are engaging with investors are primarily working with asset managers (e.g. BlackRock, Vanguard, Amundi), corporate investors (e.g. Microsoft, which invested US$10 billion in OpenAI), or banks (11 CSOs). Six CSOs met with private capital actors (e.g. angel investors, venture capitalists, high-net-worth individuals, private equity, hedge funds). Overall, respondents have reported that the fruitfulness of these exchanges has varied—from "almost nothing of what we talked about was taken into account", according to an organisation from Bolivia, to "our feedback is clearly considered in decision-making and we receive a number of investor attendees at various convenings we host," according to an organisation based in the United States. The following analysis highlights common challenges for civil society groups that impede their ability to more meaningfully engage with tech investors.

Barriers in access and communication

Lack of available opportunities for engagement was mentioned most often as an inhibiting factor (19 times). Investors proactively reaching out to digital rights groups is not yet the norm. The absence of clear, reliable channels for rights groups to contact investors leaves civil society at the whim of investors’ willingness to take the initiative.

"It is very difficult for civil society in the Global South, specifically in South America, to build any kind of contact with investors from the North" — Survey respondent, Argentina

One survey respondent from Myanmar noted: "We do not have any clear way to contact investors. The only opportunity for engagement was when they reached out to us". Some private capital investors, for example, don’t have websites, rendering a connection even less likely. Another respondent from Argentina mentioned, "It is very difficult for civil society in the Global South, specifically in South America, to build any kind of contact with investors from the North", highlighting the disparities experienced by digital rights groups which are geographically distant from where some of the world’s largest investment firms are making decisions.

Communication issues also arise because investors and civil society are not yet speaking the same language. Many respondents mentioned that the investors they’ve engaged with do not yet have a full conceptual understanding of human rights, digital rights and human rights defenders, nor how to translate them into decision making processes - slowing progress on operationalising the UN Guiding Principles on Business and Human Rights. Similarly, digital rights activists report they are still learning to frame their arguments and messaging to better resonate with investor audiences, while maintaining the conviction that human rights must be a consideration regardless of whether it makes traditional 'business sense'. Survey respondents cited that digital rights groups and investors lack shared definitions, making it difficult to move beyond "very abstract and high-level discussions". Actual language barriers can also prevent digital rights groups from engaging with investors based in the United States and Europe, where non-English speakers face additional obstacles.

A lack of capacity and resources 

A lack of time, capacity and funding was mentioned as the second most notable challenge to carrying out effective investor engagement work (14 mentions). "It takes a great deal of resources to be where the tech investors are, particularly for the global majority", said Thobekile Matimbe of the Paradigm Initiative, a Pan African digital rights organisation. "Both tech companies and tech investors need to be more willing to set meeting points in the Global Majority where more people can access them". Paradigm Initiative hosts the annual Digital Rights & Inclusion Forum, and investor participation in the conference has been continually low. According to Matimbe, "We hope that investors will have a growing interest in the Forum as a space for engagement in the years to come." In previous conversations with the Resource Centre, investors have also cited a lack of time and resources to effectively engage with digital rights groups.

In addition, the digital rights community has not yet consolidated a critical mass of activists keen to take on complex financial systems located in jurisdictions with unfamiliar legislation, when their expertise is more concentrated in tech and human rights. "At first, we largely lacked a sophisticated understanding of how the financial system works in the US or how accountability processes work", said Prateek Waghre of the Internet Freedom Foundation in India. "To overcome this, we leveraged the expertise of an American proxy advisory services company to support our shareholder activism with Meta". Due to several factors, including the persistence of Meta’s dual-class share structure which frustrates activists and investors alike, the campaign did not result in a passed shareholder resolution; however, Waghre explained the process has improved their knowledge, strengthened relationships in the investor advocacy space and generated other positive results from public debate. Many respondents noted the need to work together to identify opportune moments for investor engagement, when it will be worthwhile to dedicate time and resources - and avoid wasting energy on efforts that are unlikely to move the needle.

Lack of transparency

The difficulty of figuring out which investors to engage with regarding cases of human rights abuse was the third most mentioned challenge (12 times). This information is not commonly revealed through traditional media, meaning civil society organisations must undertake the resource-intensive process of unravelling investor connections to companies implicated in human rights harms. Several organisations have told us that investors themselves are unaware of all the products linked to their investment portfolios, requiring research on their side as well.

This opacity can completely obstruct engagement by digital activists in advocating for the design and development of accountable emerging digital technologies (e.g. the latest artificial intelligence-powered tools, social media platforms, XR/VR/AR headsets). Private capital investors, such as venture capitalists and angel investors, are not required to publicly disclose financial or investment information nor list their portfolio companies, making it difficult to determine which tech products they have funded. Investors and start-ups often sign non-disclosure agreements (NDAs) to keep investment details confidential. Additionally, the fluidity of the private capital investor landscape can further complicate efforts to track funding sources accurately in real time. This information may be accessible to those within investment circles through subscription-only platforms and ESG risk rating and ranking companies, but these are prohibitively expensive for most NGOs.

Power imbalance

Since barriers to access and communication are so steep, maintaining connections with investors once they are established is often seen as a priority by digital rights groups. "The tech world prefers closed door meetings and having engagements with a few select people that they’ve already met in advance so they know who is going to be in the room", said Matimbe. "With investors we fear there is a similar power imbalance, where you cannot hold them to account because if you speak too loudly or publicly about their shortcomings they will refuse to engage with you". This inequity can leave digital rights groups feeling as if they are "walking on eggshells".

With investors we fear there is a similar power imbalance, where you cannot hold them to account because if you speak too loudly or publicly about their shortcomings they will refuse to engage with you. — Thobekile Matimbe, Paradigm Initiative

Greater transparency within the financial sector, including meaningful disclosures concerning human rights impacts, would significantly contribute to rebalancing the dynamics. In May 2023, Amnesty International and the Resource Centre contacted the 10 largest venture capital funds and the two largest start-up accelerators that have made at least one generative artificial intelligence investment to enquire about which firms were conducting human rights due diligence. None of the 12 firms responded. However, legislators, regulators and government officials involved in setting guidelines for industry best practice carry significant weight in bringing tech investors to the discussion table. For example, the Resource Centre co-hosted an investor engagement event during the RightsCon 2023 conference; after announcing government representatives would be present, investors agreed to attend. Governments - particularly those looking to stimulate responsible innovation and curtail irresponsible investment - may be necessary allies in encouraging multi-stakeholder discussions.

Poor engagement design, execution and follow-through 

Digital rights groups report engaging with investors whenever and wherever possible, but many are frustrated their efforts do not lead to longer-term, trusted relationships. Only four organisations reported meeting with investors on a somewhat regular basis; all four are based in the Global North. Respondents based in the Global South who have met with investors for the purposes of human rights due diligence report such meetings are typically one-off consultation sessions rather than part of a sustained strategy by investors.

Often, stakeholder engagement begins and ends with an investor-led human rights impact assessment—typically facilitated by human rights consulting firms. Sixty percent of the respondents that have engaged with investors are not confident their participation in these assessments has been productive in their efforts to protect human rights. One organisation based in Switzerland noted, "We don’t have the relevant information to really know if our intervention changed anything". A human rights organisation based in Mexico noted investors typically lack the willingness to go beyond "checking engagement boxes and actually engage, divest, or change the practices of investees, or themselves". Another group from Myanmar noted: "We felt that they were mostly interested in getting 'dirt' (i.e. evidence of why things were bad), but not really about what our thoughts were about what needed to be done". While there are emerging frameworks for meaningful engagement concerning human rights impact assessments for the tech sector - which highlight the need for demonstrating impact post-assessment - they are not widely utilised by the investor community.

Finally, most CSOs and defenders pushing for accountable tech who have been able to engage investors more regularly are based in New York, Washington DC, Geneva, Brussels and London. A handful of these are beginning to open spaces for investor engagement to colleagues in the Global South, seeking to shift power back to those working closer to affected rights-holders (namely Heartland Initiative and the Investor Alliance for Human Rights). Nevertheless, investors are ultimately in control of invite lists. The Global Network Initiative, too, has made important progress in bringing Global North-based tech companies to Global South-based digital rights conferences such as the Digital Rights & Inclusion Forum, which is an approach that could be replicated for investor awareness raising and engagement.

Lessons learned from investor engagement

Despite the challenges set out above, there are examples of positive investor and civil society engagement aimed at fostering more accountable digital technologies. The case studies below highlight different approaches to investor advocacy and engagement by digital rights groups. The majority of these successful outcomes are the consequence of many collaborative efforts together, some of which have been built upon years of advocacy work.

Further capacity building and knowledge sharing

  • Investing in shared capacity-building on common definitions and language, by crafting saliency/materiality arguments (including with reference to mounting US and EU regulatory requirements) and engaging with investors on specific cases to influence concrete decisions.
  • More actively sharing experiences (both positive and negative) working with investors, documenting lessons learned from investor advocacy campaigns (even if they did not achieve all of the intended goals), sharing tips on messaging that may resonate with different types of investor audiences and bridge the communication gap between digital rights groups and investors.

Improve coordination and resource sharing

  • Coordinating actions on building evidence of material risk for investors, collaborating with law firms, and presenting concrete cases, data and analysis on risks linked to specific geographic locations.
  • Coordinating advocacy and engagement actions using an ‘inside’ and ‘outside’ approach to influencing investor policies and procedures by partnering with those that directly consult investors, publicly campaign towards investors, and/or provide spaces for direct engagement with investors.
  • Creating additional partnerships to carry out much-needed investigative, “follow-the-money” research and power mapping to fill knowledge gaps caused by a lack of corporate transparency.
  • Preventing repetition of extractive engagement undertaken by tech companies in the past. Setting clear criteria for engagement (such as allowing for digital rights groups to bring in one additional organisation, follow-up meetings, requiring a public human rights impact assessment) that a critical mass of digital rights groups agree to adopt.

Develop more targeted, investor-specific advocacy and awareness raising materials

  • Developing guides, in collaboration with investors, with clear explanations concerning material human rights risks linked to certain technologies.
  • Integrating relevant data, reports and news coverage of work into the review process of ESG ratings and rankings systems.
  • Creating investor friendly versions of research, analysis and presentations to better ensure digital rights messaging is fit for purpose.

Explore new spaces for engagement or adapt procedures for existing ones

  • Engaging in (or supporting the expansion of) existing spaces for engagement focusing on the human rights impacts of tech, such as those of the Investor Alliance for Human Rights, World Benchmarking Alliance Collective Impact Coalition for digital inclusion, or the Global Network Initiative.
  • Facilitating conversations about decolonising engagement spaces and more actively pitching investor-related discussions in tech and rights spaces (such as RightsCon, Digital Rights Inclusion Forum, Data Privacy Global Conference, the regional UN Business & Human Rights Forums) and consider requesting governments that aim to promote responsible investment to help convene them.

Further resources

We hope this piece helps launch further discussions for us to move in synchrony towards greater investor engagement and interest in tech corporate accountability. If you have ideas about how to operationalise any of the points above, or you would like to learn more about the Resource Centre's work in this regard, contact us at [email protected].

Our gratitude goes to partners who have contributed to this research. In addition to those who have chosen to remain anonymous, we sincerely thank:

7amleh - The Arab Center for the Advancement of Social Media, Access Now, Amnesty International USA, Asociación por los Derechos Civiles, BSR, CyberPeace Institute, Data Privacy Brasil, Digital Freedom Fund, Digital Rights Foundation, Empower, Fundación Karisma, Global Witness, Gulf Centre for Human Rights, Heartland Initiative, Internet Freedom Foundation, Investor Alliance for Human Rights, IPANDETEC, Myanmar Internet Project, Open MIC, Paradigm Initiative (PIN), Ranking Digital Rights, SCiDEV Center, SMEX, Taraaz, TEDIC, VentureESG, World Benchmarking Alliance