Almost a third of Microsoft Corporation shareholder votes have backed a proposal seeking information about certain of the company’s operations in countries that raise fears over human-rights abuses.
The measure was supported by 32.03 percent of votes cast at the company’s recent AGM. Although this is not a majority, it is a level of support governance experts generally regard as significant.
Specifically, the proposal asks that Microsoft’s board ‘commission a report assessing the implications of siting [the company’s] cloud datacenters in countries of significant human-rights concern and the company’s strategies for mitigating these impacts.’
The proponents write: ‘Shareholders are concerned by Microsoft’s announced plans to expand datacenter operations to locations identified by the [US Department of State’s] country reports on human-rights practices as presenting significant human-rights challenges, in particular the plan to locate a Microsoft datacenter in Saudi Arabia. The State Department report details the highly restrictive Saudi control of all internet activities and pervasive government surveillance, arrest and prosecution of online activity.’
They add: ‘Microsoft stated that this installation would be consistent with [the company’s] commitment to protecting fundamental rights and claims that the company’s commitment to the Trusted Cloud Principles are an assurance of human-rights protection yet has refused to disclose how these assurances will be enacted or enforced as there is no recognized oversight body for the principles.’
The report should examine the scope, implementation and robustness of Microsoft’s human-rights due diligence processes on siting of cloud-computing operations, the proponents write.
Board opposition
Microsoft’s board had urged shareholders to vote against the proposal, writing in the proxy statement: ‘The requested report is not necessary because Microsoft provides public reports and statements addressing the concerns represented by the proposal. For example, [the company] has articulated our human rights commitments and due diligence processes and provided ongoing public reporting on human rights…
We have also made a public commitment to the Trusted Cloud Principles, which require us to uphold internationally recognized rule of law and human-rights standards. Finally, we have published – and recently further enhanced – an explanation of our approach to operating datacenters in countries or regions with human-rights challenges… to provide transparency on our human-rights related review processes for datacenter siting and operations.’
When moving into a market, Microsoft conducts extensive reviews that include public assessment materials from reliable, independent third-party resources such as Freedom House reports, the World Justice Project Rule of Law index and the Transparency International Corruption Perceptions Index, the board wrote. It added that, among other things, the company regularly uses additional input from outside counsel with international expertise in privacy and other human-rights issues.
Microsoft followed these processes in evaluating the establishment of a new cloud datacenter region in Saudi Arabia and in determining it could be operated in a way consistent with [the company’s] commitment to protecting fundamental rights and focus on responsible cloud practices,’ the board wrote. It added that Microsoft worked with an independent third party and, through a combination of research and stakeholder engagement with human-rights experts, its team identified a range of human-rights risks and outlined potential risk-mitigation steps.
A request for comment from Microsoft was not returned immediately.
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
