Fund managers question social media investments

New Zealand fund managers may reassess their investments in Facebook in the wake of Christchurch’s mosque shootings, as a group of large-scale investors call for change.

Wednesday, March 20th 2019, 7:00PM

Mike Taylor

The shooter live-streamed the attacks and then the video was circulated on social media sites, prompting advertisers to suspend their campaigns and telcos to call for better controls.

The NZ Super Fund, Accident Compensation Corporation, Government Superannuation Fund Authority, National Provident Fund and Kiwi Wealth are putting their investment heft behind calls for Facebook, Google and Twitter to take action following the live-streaming and sharing on social media of last week’s Christchurch terror attacks.

Together, the five public investors manage assets worth more than NZ$90 billion on behalf of New Zealanders.

Matt Whineray, NZ Super Fund chief executive, said the joint shareholder engagement would focus on ensuring that the companies concerned fulfilled their duty of care to prevent harm to their users and to society.

“We have been profoundly shocked and outraged by the Christchurch terror attacks and their transmission on social media. These companies’ social licence to operate has been severely damaged. We will be calling on Facebook, Google and Twitter to take more responsibility for what is published on their platforms. They must take action to prevent this sort of material being uploaded and shared on social media. An urgent remedy to this problem is required.”

The group is supportive of calls by New Zealand telecommunications company chief executives for Facebook, Google and Twitter to participate in an urgent industry and government discussion to find an enduring solution to this issue.

The investors are calling on other New Zealand and global investors to join them in engaging with the companies, saying collective action will give the initiative the most impact.

“We are in the process of contacting other New Zealand and leading global investors, seeking their support for this initiative,” Whineray said.

“Our responsible investment decisions are guided by New Zealand law and major policy positions of the New Zealand Government. We are therefore also investigating whether there have been breaches of any New Zealand laws or regulations by these companies, and monitoring potential changes to Government policy.”

Mike Taylor, of Pie Funds, said the question of whether New Zealand fund managers would remove their investments in social media companies led to a larger question of social media in general and whether that had a positive or negative effect on society.

“I think that is still up for debate. Once the public has formed a majority view on this then we as fund managers will act accordingly.”

John Berry, chief executive of Pathfinder, which has a focus on responsible investment, said his Global Responsibility Fund had never invested in Facebook because of its governance structure.

He said it was governed like a private company, which was inappropriate for a massive global social media business.

“We screen companies in the fund for environmental, social and governance risks, and Facebook has a very poor governance score.

"A low governance score indicates to us that there will be issues around risk management - which came to light with the Cambridge Analytica scandal and the lack of data protection and is again reflected in the groundswell of support in the US for regulation to rein in large tech companies like Facebook.”

A spokesman for AMP Capital said it could not comment specifically on Facebook.

“AMP Capital's ethics committee independently reviews all holdings in the Responsible Investment Leaders fund on a regular basis to ensure our investments reflect the spirit of the fund and our clients’ values."

Any review of social media would be considered as part of the next regular review.

Claire Matthews, of Massey University, said fund managers were always reviewing the stocks they held, "and these days are very mindful of public attitudes towards companies. It’s possible New Zealand fund managers will be actively reconsidering the appropriateness of holding Facebook shares, but any decision is likely to wait to see how public attitudes develop and will also reflect the fund’s attitude towards ethical investing."

Tags: funds management responsible investing