A string of big name US companies—among them Amazon, Netflix and Meta—face shareholder proposals this proxy season to disclose more on their use of artificial intelligence (AI).

Experts are now warning that proposals on AI disclosures and risk may become “increasingly prevalent”.

The warning comes from analysts at FTI Consulting, an advisory firm, after both Disney and Apple faced AI shareholder proposals earlier this year.

More have followed, focused on asking companies to reveal how AI is being used and whether any ethical guidelines have been implemented to govern the use of the new technology.

In an article for Harvard Law School governance blog, Arnaud Cavé and Niamh O’Brien warn that more shareholder proposals could be on their way.

“Considering the important opportunities and risks associated with AI, and the growing adoption of the technology across all industries, it is likely that a variety of shareholder proposals relating to AI will become increasingly prevalent.

“Investors are undeniably concerned and want to ensure management teams have the right expertise and risk mitigation processes in place to protect long-term value.”

Cavé and O’Brien also suggest AI is also become becoming a point of leverage for activist investors. “Proposals will also increase as AI becomes another lever activists can use to apply pressure,” they write.

There is no sign as yet of similar proposals for UK and European companies. But questions are being asked. Cavé tells Board Agenda: “We do know, however, that certain investors have started to engage with their European investees to understand what steps have been taken to manage AI-related opportunities, risks, and impacts.”

Cavé belies the “push” on AI mirrors what happened on climate. Investors questions emerge in the US followed by regulation in Europe.

Core technology

In February, Apple faced a proposal from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) asked Apple to prepare “a transparency report on the company’s use of AI technology and to disclose any ethical guidelines that the company has adopted regarding AI technology”. The vote garnered support of 37.5% of shareholders.

Notable, however, was that both proxy advisers Glass Lewis and ISS recommended voting in favour of the proposal.

Disney, at the beginning of April, faced a similar proposal, though it was later withdrawn after discussion between the board and AFL-CIO.

However, Disney faced an AI demand in another context. In its proxy battle with Disney, Blackwells Capital argued a new board member was needed to “continue to imagine the future AR/VR and AI trends at Disney”.

Other AI proposals have been made, FTI notes. At Amazon, AFL-CIO seeks a board committee of independent directors to “oversee” AI.

At Meta’s AGM, Arjuna Capital is asking for a report on “misinformation and disinformation” risks caused by the provision of generative AI to users.

Arjuna’s proposal reads: “There is widespread concern that generative artificial intelligence (gAI)—generated through Meta’s tools and disseminated across its platforms—threatens to amplify misinformation and disinformation globally, posing serious threats to the company, human rights, and democratic processes. This is of particular concern as 2024 will feature critical elections in the United States, India, Mexico, and Russia.”

Together, the proposals reflect a host of governance concerns focused on the use of AI at a time when it has enormous attention about the potential business benefits across the world.

Shareholders and activists are not the only ones concerned about AI governance. Risk expert Sean Lyons recently made plain the governance concerns in an article in Board Agenda.

“The lack of a unified approach to AI governance can result in a lack of transparency, responsibility, and accountability which raises serious concerns about the social, moral, and ethical development and use of AI technologies,” Lyons writes.

AI is new technology and while companies have rushed to adopt it in many forms, the governance around it is still evolving. FTI’s observation make plain that shareholders see it as a risk issue too.