Facebook shareholders will confront Mark Zuckerberg over the social network's role in spreading fake news at the company's annual meeting on Thursday, arguing that democracy is at risk every time it tweaks an algorithm.
Impact investing funds Arjuna Capital and Baldwin Brothers are set to put forward proposals at the annual meetings of Facebook and, next week, Alphabet, demanding that the companies evaluate the impact of fake news flows on their reputations and whether it will create public policy risks.
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Natasha Lamb, Arjuna's director of equity research and shareholder engagement, said she believed that even though both companies had taken steps to address the problem of fake news spreading online, neither had gone far enough.
"Both prefer to see themselves as neutral technology platforms but they have been transformed into media platforms — that is why we are so concerned," she said.
Facebook already stands to suffer under German legislation that would impose fines of millions of euros on social networks that do not remove fake news or hate speech, she added.
When false content is being propagated at scale over Facebook's platform that presents a real risk . . . to our democracyNatasha Lamb, Arjuna CapitalDirector of equity research and shareholder engagement
Ms Lamb is hoping to meet Facebook management at the meeting on Thursday, but they have not yet confirmed.
"The big risk to Facebook is a loss in user trust and people getting what has been coined 'Facebook fatigue' and turning away from the platform," she said.
"When false content is being propagated at scale over Facebook's platform, that presents a real risk not only to the company and user trust in the content they find on Facebook but also to our democracy and having an informed electorate."
Facebook has been under fire after several of the most shared stories on the social network during the US presidential election campaign were fake, prompting questions about their role in the election of President Donald Trump.
After Mr Zuckerberg initially dismissed the allegations that the platform had influenced the election as "pretty crazy", it has since shown signs of taking the issue more seriously. Facebook has tried to cut off financial incentives to fake news websites, is partnering with fact-checkers around the world to identify hoaxes, and has created a journalism project to work more closely with legitimate publishers.
Facebook opposes the measure set to be put forward, arguing that it has been working to address the issue of false news and hoaxes for years and the content is already prohibited by its community standards and terms of service. Alphabet, Google's parent, also recommends stockholders vote against the proposal.
Analysts at Sustainalytics, a provider of environmental, social and governance research on companies, said in a report on Tuesday that they thought investors would become more interested in how companies protected themselves from the risks of fake news.
Only 16 per cent of media and internet companies studied had what the analysts called "adequate or strong" measures in place to tackle false information, with the analysts giving Alphabet and Facebook lower scores than media companies such as Thomson Reuters and the New York Times, and a far lower score than the top-rated company, the broadcaster Sky.