Several funds, guided by Environmental, Social and Governance (ESG) motives in investing, have either divested their holdings in Facebook, or are planning to do so, in light of the Cambridge Analytica privacy scandal.
Several funds, guided by Environmental, Social and Governance (ESG) motives in investing, have either divested their holdings in Facebook, or are planning to do so, in light of the Cambridge Analytica privacy scandal, and the company’s response to it. As per a Reuters story, most of the funds have very small holdings in the company. But the fact that larger investors like Blackrock Inc have been paying deeper attention to ESG concerns in their investment decisions means the action by smaller firms could inspire a rethink for them as well. Though nothing like the direct action Delete Facebook campaign that called for users to ditch the social media, the funds’ stand should serve as an exhortation for tech companies to be more responsible with user data and be more transparent about how they use this data and the safeguards they have put in place against potential breach.
Facebook shares had fallen in the immediate aftermath of the Analytica scandal, but have recovered since. However, privacy advocates point to CEO and co-founder Mark Zuckerberg’s testimony before the US Congress in April to contend that the company is still not willing to commit to any form of serious data protection and transparency about data usage. Although Zuckerberg had apologised to US lawmakers over the Analytica breach, it was clear from his answers at the Congressional hearing that the company won’t be committing to stricter data and privacy regulation in the lines of the European Union’s recently-adopted General Data Protection Regulation. Moreover, the fact that the CEO and co-founder of WhatsApp that had been acquired by Facebook in 2014, Jan Koum, resigned soon after, following disagreements over user privacy with Facebook, and Facebook’s own overtures to China that is notorious for its state-ordained surveillance of citizens to guard against dissent, have not helped the company’s image. From a perspective of privacy, Facebook has to understand it is Caesar’s wife, lest larger funds walk out too.