Large Australian shareholders, including investment giant AMP Capital, are reconsidering their investments in Facebook due to ethical concerns over the social media giant’s latest privacy scandal.
AMP is among those reviewing its stake in the social media behemoth after the personal information of 50 million users was reportedly collected by political consultancy Cambridge Analytica.
“The recent developments will be considered by the independent Ethics Committee at the next meeting,” an AMP Capital spokesman said.
The investment house has Responsible Investment Leaders funds with an ethics charter to screen sectors with “high negative social harm”. This fund invests in Facebook.
Its ethics committee checks its holdings three times a year to ensure environmental, social and corporate governance standards are maintained and has been “closely monitoring the data and privacy issues emerging in the realm of social media for some time”.
Across all of its funds, AMP has 1.445 million Facebook shares at a price of about $US169 each, according to Bloomberg.
AMP Capital has $187.7 billion under management, with about $1.8 billion in its Responsible Investment Leaders funds.
Facebook is also part of the investment mix at Australian Ethical, which has $2.6 billion under management and $9 million in Facebook.
Head of ethics Stuart Palmer is watching the Facebook situation unfold “closely”.
“Facebook is really polarising within society generally and at Australian Ethical,” Dr Palmer said.
“It’s obviously a major social issue, but also for investors generally. If they’re doing more harm than good, regulators can step in and people turn off and find alternatives,” he said.
“If we form a view they disregard privacy, we won’t invest in them.”
Future Super, which puts companies through an ethical screening process and has $497 million under management, has had Facebook under “review” since February. It has about $4 million invested in the social giant.
Founder and managing director of Future Super Simon Sheikh said “all technology” companies were struggling to ensure their platforms weren’t being exploited.
“In the case of Facebook, we’re seeing a pattern where serious issues around the use of their product are only being genuinely addressed once the issue has gained significant public attention,” he said.
“The initial view from our analysts isn’t favourable, and over the next few weeks we’ll be engaging with our members, and others who rely on our ethical research, before finalising a decision on whether or not to divest from the company.”
Responsible Investment Association Australasia (RIAA) chief executive Simon O’Connor said it was “not uncommon” for ethical international shares funds to have exposure to Facebook.
“This will really send reverberations across the investment community to say security risks are very real from an investment and ethical perspective. There will be a lot of scrutiny on Facebook,” he said.
“There have been lots of warnings for Facebook around this issue. The investment community will put them on watch.”
Of 15 international share funds certified by the RIAA about half have exposure to Facebook.
“Facebook has had plenty of warning about the risks to privacy and data issues,” he said.
Right now, investors are asking “if they believe [Mark] Zuckerberg’s public statement about how it has been fixing the platform”.
“If not they’ll probably sell their shares.”
Investment app Acorns, which has more than $150 million under management in Australia, offers a portfolio option with a “socially responsible investment theme” that includes Facebook. It uses a portfolio of exchange traded funds (ETFs) including Betashare’s Global Sustainable Leaders.
Acorns Australia head of brands and communication Queenie Ling said the choice was limited for socially conscious ETFs but it would carefully consider any new fund which “filters out data breaches, companies that minimise tax, companies that sub contract to firms with poor employment practices, or poor data privacy policies”.
Nordic bank Nordea has decided to keep its current Facebook stake in its sustainable funds, but told Reuters its fund managers would not buy any more as a result of the revelations, strong public backlash and “overhanging threat” of regulation.
Betashare did respond to a request for comment. Australian Super declined to comment.