Via Financial Times

Apple faces a showdown with activist shareholders over its human rights policies after criticism that it kowtowed to Beijing when it removed a controversial mapping app during the Hong Kong protests.

Shareholders at the iPhone maker’s annual meeting next year will be asked to press the company for a public commitment to respect freedom of expression. Apple lost a bid to have the resolution struck from the agenda.

The non-binding resolution asks Apple to describe how it responds to government or other demands that might limit free expression or access to information. It also demands details about how Apple makes policies concerning free speech and access to information.

“[Apple] has acquiesced to government demands that have limited individual freedom of expression,” said SumOfUs, a consumer advocacy group that submitted the proposal, which argued Apple’s actions had led to punishment for Hong Kongers, Tibetans and Uighur Muslims.

SumOfUs has pressured asset managers to vote against Mark Zuckerberg as Facebook’s chairman and has campaigned for asset manager BlackRock to rein in executive pay at companies.

The US Securities and Exchange Commission denied Apple’s request to block a shareholder vote on the SumOfUs resolution this month, according to an update on the regulator’s website.

When Apple faced similar proposals in 2016 and 2018 they drew less than 10 per cent approval. Social activists’ resolutions struggle to win much support among the institutional investors that dominate shareholder registers. 

However, the submission of some proposals has occasionally led companies to respond to the requests. 

Apple declined to comment beyond arguments it made against the proposal to the SEC in October when it said it “must follow applicable law wherever it does business and believes in engaging with governments even when there may be disagreement”. 

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Its policy has proved contentious in Hong Kong, a “special administrative region” within China, forcing Apple to walk a fine line between the interests of Beijing and the quasi-democratic city.

In October, Apple removed from the App Store a crowdsourced mapping application widely used in Hong Kong, just days after criticism from Chinese state media. The mapping app had been used by residents to avoid protest areas but was also downloaded by protesters to track police locations.

Tim Cook, Apple’s chief executive, said the app was being used to target individual officers and was “in violation of Hong Kong law”. Its stance attracted bipartisan criticism from lawmakers in the US Congress.

The human rights proposal could hurt Apple’s high marks on environmental, social and governance (ESG) issues. Apple is a darling among ESG investors and the company is the largest holding of a Vanguard ESG exchange-traded fund in the US with more than $800m in total assets. 

The company had also argued to the SEC that the latest proposal “deals with substantially the same subject matter” as the human rights resolution defeated in 2018 and noted that proposal did not receive enough investor support to be resubmitted under SEC rules. 

Cupertino-based Apple has not yet scheduled a date for its 2020 annual general meeting, but the gatherings are typically held in late February.

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