After a series of privacy concerns and data scandals, it’s official: Facebook has been removed from the S&P 500’s socially responsible companies list.
S&P 500 Environmental & Socially Responsible Index, launched at the end of April, tracks companies on the index that meet environmental and sustainability criteria. Excluded are tobacco companies, weapons makers and others that do not meet United Nations Global Compact principles for responsible business. It has outperformed the overall S&P 500 Index in the past year.
S&P’s said Facebook’s privacy issues and lack of transparency “caused the company to lag behind its peers in terms of ESG performance.”
Along with being hit by concerns about Russian interference during the 2016 presidential election and allowing access to personal information of 30 million users to 150 companies, Facebook has also been criticized for failing to address distribution of deepfake videos and misinformation in a timely manner.
The company raised eyebrows with its announcement in April for plans to launch a new payments network and digital currency. That ambition led to concerns by regulators over whether Facebook can stick to strict money laundering rules imposed on financial institutions.
- “These events have created uncertainty about Facebook’s diligence regarding privacy protection, and the effectiveness of the company risk management processes and how the company enforces them,” said Reid Steadman, the stock market’s social and governance chief.
- Facebook scored poorly on the social responsibility and governance sections, with 22 and 6 respectively out of a possible 100. Due to its lack of transparency on how it shares information, Facebook became the largest company among those the S&P 500 dropped.
- Karma Take: S&P’s recent move is the latest indication Facebook is doing too little, too late to address investors’ and public concerns about privacy, transparency and media distribution.
