PFA pressures Meta to protect children and young people

PFA attended tech giant Meta's annual general meeting yesterday with a specific shareholder proposal aimed at strengthening the protection of children on social media. The proposal is a natural extension of PFA's efforts to prevent poor well-being among children and young people and is also intended to address the investment risk arising from Meta's lack of responsibility in this area.

As an active owner, PFA works to influence the companies in which it invests to move in a more responsible direction. This takes place partly through dialogue and at general meetings, where attention is drawn to material sustainability risks. That was also the case yesterday when PFA tabled a proposal at Meta's annual general meeting that was intended to strengthen the protection of children and young people on the company's platforms.

"The well-being and health of children and young people is a core focus area for PFA. Every day, our healthcare advisers help children and families with well-being challenges and over many years we have seen the problems grow. That is why, as both an investor and a provider of healthcare services, we have a strong interest in companies such as Meta taking greater responsibility, because their platforms have a major impact on the well-being of children and young people,” says Rasmus Bessing, director at PFA.

Failure to take due care must have consequences for pay
PFA and a number of other investors called for executive remuneration to be linked to measurable improvements in children's safety. The proposal is not expected to secure a majority, partly because Meta's share structure effectively gives the company's CEO, Mark Zuckerberg, controlling voting power. However, support among other investors is significant: last year, around 45 per cent of independent shareholders voted in favour of a similar proposal from PFA. This is a clear signal to Meta that investors expect greater responsibility and action in an area marked by serious and persistent risks.

“When the consequences are this serious, that must also be reflected in management incentives. Children's safety must be a real responsibility and not merely a statement of intent. That is why we at PFA believe that executive management's pay should be affected if children's safety is not adequately safeguarded. It is about creating clear and effective incentives,” says Rasmus Bessing.

PFA continues its efforts on several fronts
Despite limited expectations for the voting outcome at the annual general meeting, PFA is staying the course. This also applies to the US class action against Meta, in which PFA accuses the company of misleading investors by withholding information, including about a change to its algorithms that had harmful effects on young people's mental health.

This action is now on stronger footing after Meta lost other landmark cases in the US, where courts have ruled that the design of the company's platforms harms young people's mental health and that senior executives have long been aware of this. For PFA, these rulings strengthen the legal basis for the view that Meta should have disclosed this information to the market at an earlier stage. PFA will therefore continue to use its position to reduce business risk and ensure that Meta acts responsibly towards both users and investors.

“For PFA, this engagement is about both responsibility and long-term value. Companies that do not take children's well-being seriously face not only a societal risk but also a business risk in the form of litigation, reputational damage and lost earnings if age limits or bans on social media are introduced,” says Rasmus Bessing.