As technology continues to advance, especially with artificial intelligence, it is becoming increasingly important for companies to address the risks and opportunities associated with AI. Shareholders are now taking a more active role in demanding better oversight from company boards when it comes to AI-related issues.
During the recent 2024 United States Proxy Season, Minerva Analytics observed 10 shareholder proposals that focused on emerging AI concerns. Companies like Alphabet Inc, Meta Platforms Inc, Amazon Inc, Apple Inc, Chipotle Mexican Grill, Netflix Inc, and Warner Bros Discovery Inc were all under scrutiny for various AI-related reasons. These included concerns about misinformation, disinformation, ethical guidelines, the establishment of AI oversight committees, and the need for greater transparency regarding AI adoption.
Shareholder support for these proposals varied, with an average approval rate of around 19%. Notably, 43% of Netflix shareholders voted in favor of the board reporting on the company’s use of AI. Shareholders are increasingly concerned about ensuring compliance with emerging regulations and guidelines related to AI, such as the White House Executive Order on AI and the Algorithmic Accountability Act of 2022.
Companies are starting to respond to these demands for increased AI oversight, with companies like Comcast Corp, Walt Disney Company, and United Health Group agreeing to improve their AI disclosures. This proactive approach has led shareholders to withdraw their proposals, indicating that boards are taking steps to address AI-related concerns.
Boards play a crucial role in overseeing a company’s response to technological advancements and related risks and opportunities. By implementing measures to improve transparency and oversight of AI, companies can better identify and manage the potential benefits and risks associated with the technology.
Moving forward, boards must continue to take a proactive approach to overseeing the integration of AI within their organizations. This includes ensuring transparency, having the necessary expertise and training, and establishing effective governance processes to manage AI-related complexities.
As AI adoption continues to grow in the business world, the focus on responsible governance of innovative technologies is expected to increase. Shareholders are likely to file more AI-related proposals in the future, signaling a continued push for better oversight and management of AI within companies.