Facing Investor Pressure, Microsoft Agrees to Publish Independent Human Rights Impact Assessment, Including Review of Surveillance and Law Enforcement Contracts
October 13, 2021
COMPANY’S ACTION FOLLOWS SHAREHOLDER PROPOSAL FOR THIRD-PARTY REVIEW OF POTENTIAL HUMAN RIGHTS HARMS
In response to shareholder requests, Microsoft Corp. will commission an independent, third-party assessment to “identify, understand, assess, and address actual or potential adverse human rights impacts” of the company’s products, services and business relationships with regard to law enforcement, immigration enforcement, and other government contracts. The report will be made public in 2022.
The company’s action follows the June filing of a shareholder proposal which asked Microsoft’s Board of Directors to commission an independent, third-party report to evaluate how effectively the company implements its Human Rights Statement in products, contracts, and business relationships with government agencies. Shareholders expect this will include a review of Microsoft’s 16 (or more) active contracts with U.S. Immigration and Customs Enforcement (ICE) and U.S. Customs and Border Protection (CBP).
Following Microsoft’s commitment to publish the independent report, the shareholders have withdrawn their proposal.
“We’re delighted that Microsoft understands the importance of a third-party assessment and has taken this critical first step to make it happen. This is an important part of holding the company accountable for its sales of surveillance technology which perpetuate racism and discrimination, including discriminatory policing and immigration enforcement,” said Gina Falada, Senior Program Associate for Investor Advocates for Social Justice, a non-profit representing the faith-based institutional investors who filed the proposal.
Sr. Joanne Safian, of the Religious of the Sacred Heart of Mary, said: “We agreed to be the lead filer on this shareholder proposal to encourage constructive engagement with Microsoft and to try to ensure that the company’s business activities do not cause human rights harms, including perpetuating systemic racial inequities. We’re committed to that goal as a religious congregation, are pleased that Microsoft has agreed to the third-party assessment, and hope for continued accountability on the company’s part.”
Microsoft told the shareholders the human rights assessment would be conducted by the law firm Foley Hoag, which would co-design the structure of the final report in consultation with the company, although Foley Hoag will retain “editorial control” over its contents. The assessment will include consultation with BIPOC and immigrant and communities most impacted by Microsoft’s surveillance products, law enforcement and government contracts. The report is expected to be published online in late 2022.
The shareholder proposal raised concerns that Microsoft’s surveillance products enable discriminatory policing and incarceration of Black, Indigenous, and People of Color (“BIPOC”) communities, citing Microsoft’s contracts with Immigration and Customs Enforcement (ICE), sales of one of the world’s largest real-time digital surveillance systems to the New York City Police Department (NYPD), and controversial contracts with the Department of Defense. Microsoft developed and maintains the NYPD’s Domain Awareness Systems (DAS) which surveil New Yorkers without warrants through the use of cameras, automatic license plate readers and radiological sensors; ICE utilizes the DAS database in order to target immigrants for deportation. Additionally, Microsoft partners with ICE through its Azure Government cloud computing arm, a relationship that has been strongly criticized by Microsoft employees. Microsoft has also faced employee opposition for its contracts with the Department of Defense.
“Microsoft’s surveillance technologies have an enormous impact on the human rights of millions of people around the world, so we’re hoping this assessment will be comprehensive, in-depth and solution-driven, and that Microsoft prioritizes incorporating the perspectives and needs of BIPOC communities most impacted by surveillance and policing into the report,” said Michael Connor, Executive Director of Open MIC, a non-profit shareholder advocacy organization which worked with IASJ to develop the proposal. Connor said Open MIC and human rights advocates would provide information to Foley Hoag as the law firm conducts its assessment.
Open MIC is coordinating two additional shareholder proposals at Microsoft. One, filed by Harrington Investments, calls on the company to end the sale of facial recognition technology to all government agencies. The second, filed by the Congregation of the Sisters of St. Joseph of Peace, asks Microsoft to explain “if, and how” its lobbying on critical issues (privacy, defense, homeland security, and border militarization) aligns with the company’s stated values on racial justice, artificial intelligence and public policy. Both these proposals will be voted on during the company’s Annual Shareholders Meeting held on November 30.
Albert Fox Cahn, Executive Director, Surveillance Technology Oversight Project (STOP): “Microsoft has profited from surveillance without scrutiny for too long. This review is an important first step toward accountability, but it’s just that, a first step. Today is not the end of this campaign, but the beginning of a more detailed analysis of how Microsoft products enable human rights abuses. If Microsoft promises to uphold human rights, those can’t just be empty words. And even now, we know that there are ways that Microsoft falls short of its own standards. We’re grateful for this recognition that accountability is needed and overdue.”
Dov Baum, Director of Economic Activism, American Friends Service Committee: “Our Investigate research project will continue tracking Microsoft’s mass surveillance tools in use by homeland security, prison authorities, local law enforcement and the military. We hope that this upcoming human rights assessment would convince the company to completely withdraw from all such harmful business relationships in the near future.”
Impact Investors, Inc. were the lead filers of another human rights due diligence proposal at Microsoft raising issue with government contracts with DHS, DoD and the Navy, alongside, co-filer, Boston Common Asset Management. Susan Ozawa Perez, the Senior Portfolio Manager at Impact Investors said: “Our proposal asked the board to look at how these user contracts might conflict with the company’s policies and procedures. In addition to human and civil rights concerns, we sought risk assessment on surveillance and privacy issues which we’d like to see in the final third-party report Microsoft has commissioned.”
Lauren Compere, Head of Stewardship & Engagement, Boston Common Asset Management: “As investors we are increasingly asked to address our human rights due diligence and alignment with the UN Guiding Principles for Business and Human Rights. To do so effectively, companies like Microsoft must demonstrate robust and ongoing human rights due diligence processes including third party assessment. We welcome this positive step by Microsoft.”
“As long term investors we are encouraged that Microsoft recognizes the critical relevance of being a leader in understanding and promoting racial equity,” said Marcela Pinilla, director of sustainable investing at Zevin Asset Management. “We are glad the company will carefully evaluate to what extent its products and services are complicit in fostering inequities and how the company might instead contribute positively to dismantling systemic racism in our society.”