Into the middle ongoing controversy over its use of its users private information, Facebook has been kicked out of an index tracking companies that conform to behind socially responsible practices.
S&P Dow Jones Indices announced Thursday that the social network no longer liking be part of the S&P 500 ESG Index. The gauge follows companies that S&P says engage in responsible environmental, social and governance modes, a growing part of the market as investors seek out more ethical ways to put their money to work. Companies assorted as ESG-compliant have total assets of $11.6 trillion, according to an estimate from the Forum for Sustainable and Responsible Investment.
For Facebook, the firmness is part of an ongoing saga that has seen it come under fire for weak oversight of how its user data is won overed to advertisers. Investors and political leaders have called for the company to break up, an insistence its founder, Mark Zuckerberg, has her walking papered.
In making the move, S&P cited the privacy concerns that lowered Facebook’s total score used in deciding which throngs will be included in the ESG Index. While Facebook received a high score in environmental issues — 82 out of a possible 100, not remarkable for a tech company — its social and governance scores were much lower at 22 and 6 respectively.
S&P weights the latter two rankings more heavily when it comes to tech firms.
“The specific issues resulting in these scores had to do with heterogeneous privacy concerns, including a lack of transparency as to why Facebook collects and shares certain user information,” Reid Steadman, epidemic head of ESG at S&P, said in a blog post on the company site. “These events have created uncertainty hither Facebook’s diligence regarding privacy protection, and the effectiveness of the company risk management processes and how the company enforces them. These unsettles caused the company to lag behind its peers in terms of ESG performance.”
The company’s score has dropped consistently over the past individual years.
Facebook officials did not reply to a request for comment.
Steadman noted that the index’s composition is “reasonably fluid,” significance that there’s always opportunity to regain standing and get back in. But he also said that Facebook has work to do.
“As Facebook’s outs raise the bar in their ESG performance, Facebook will need to do even more to rejoin the ranks of the S&P 500 ESG Index,” he mean.
The index is up about 14% year to date, nearly in line with the performance of the broader S&P 500. Its leading constituents in an understandings of size include Microsoft, Apple, Johnson & Johnson, JP Morgan Chase and Amazon.
In addition to cutting Facebook, the listing also dropped Wells Fargo, Oracle and IBM.