But the chances of the proposal getting enough votes to pass are tiny.

By Mathew Ingram
June 1, 2017

Media companies and politicians aren’t the only ones who think Facebook needs to stop fake news from proliferating on the social network. Two institutional investors are also pressuring the company to do something to fix the problem.

Arjuna Capital and Baldwin Brothers are jointly presenting a proposal at Facebook’s annual shareholder meeting Thursday that asks the company to take decisive action to inhibit fake news, and would require Facebook to be transparent about how it is doing so.

The two investors plan to present a similar proposal at the annual meeting next week of shareholders in Alphabet, Google’s parent company.

“Fake news is not about spin or confirmation bias—It’s about fabrication,” Arjuna managing director Natasha Lamb said in a statement. “And when fabrication is disseminated so easily at scale, the way we have seen through social media, it represents a threat to our democracy.”

The resolution would require Facebook to “provide detailed information regarding the impact of current fake news flows and management systems on the democratic process, free speech, and a cohesive society.” It would also require the company to quantify the “reputational and operational risks from potential public policy developments” related to fake news.

Arjuna Capital is an investment firm focused on sustainable and impact investing. It and Baldwin hold a small number of Facebook shares, but are hoping to influence larger shareholders to put pressure on the company.

The two have made similar efforts related to pay equity at several of the major technology companies, including Alphabet and eBay.

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The chances of the proposal getting enough votes to pass are tiny because CEO Mark Zuckerberg controls a majority of the votes by virtue of owning multiple-voting shares. But the firms are hoping the company will take action anyway if enough individual shareholders raise the issue.

“If Facebook maintains a platform of confusion and distortion it will lose the trust of its users, in which case they will simply move on to the next thing, and that’s what concerns long-term investors,” said Lamb. “Right now, we think the issue is being fumbled.”

Michael Frerichs, the treasurer for the state of Illinois—which is an investor in Facebook—is also supporting the Arjuna and Baldwin proposal.

“We need Internet platforms to step up and acknowledge their corporate responsibilities,” Frerichs said in a statement. “With more and more citizens being subjected to systematic deception and manipulation online, the proliferation of fake news represents a major threat to our democratic institutions.”

Facebook’s role in distributing fake news, hoaxes, and misinformation has been criticized by media analysts as well as political entities like the European Union, who have pressured the company to do more to solve the problem. On Wednesday, former Secretary of State Hillary Clinton blamed Facebook for the role that fake news played in her failed presidential campaign.

Zuckerberg initially dismissed the idea that fake news was a significant problem, or that Facebook had any responsibility to eradicate it, but more recently the company has taken steps to try and halt the spread of hoaxes and misinformation.

Facebook has partnered with a number of third-party fact-checking organizations to flag fake news on the network, and has also tried to remove some of the financial incentives for publishing such content by banning certain sites from using its ad services.

The company has advised shareholders to vote against the Arjuna and Baldwin Brothers proposal.

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