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New Zealand government pension funds are calling on Facebook Inc., Alphabet Inc. and Twitter Inc. to reign in the proliferation of hate on their platforms in the wake of the Christchurch terrorist attack in March.

The New Zealand Super Fund, Government Superannuation Fund, National Provident Fund and Kiwi Wealth, as well as the country’s Accident Compensation Corp., have been joined by 18 other institutional investors from New Zealand, Australia and the U.K., with more than $719 billion in combined assets under management.

The funds will use their institutional heft to pressure the three social media giants to “fulfil their duty of care to prevent harm to their users and society,” after the Christchurch terrorist live-streamed his attacks on Facebook. Copies of the video were shared widely on other platforms, including Twitter and YouTube.

Read: Technology companies and integration with ESG a concern for investors

Anne-Maree O’Connor, head of responsible investment for the New Zealand Super Fund, says the group’s engagement will focus on how the companies can prevent their platforms from being used to spread hateful and violent content.

“I do see this as a watershed moment,” she says. “The industry has sat back too long and hasn’t addressed this and they need to step up and be more proactive.”

While the pension fund has engaged directly with many companies in the past on issues such as environmental harm and human rights, this may be the first time it’s leading a large investor initiative, says O’Connor. “For us, this was extreme and crossed the lines in so many ways, and was probably indicative of many of the concerns that have been raised [by] investors in the past. For us, this was the engagement we should lead.”

The New Zealand Super Fund has commissioned independent research and experts to help them understand the technology sector’s technical capabilities and limitations in order to be “much more targeted and focused” in their engagement, says O’Connor.

“We understand the technical challenges, but . . . this area’s been underinvested, in terms of looking at technical solutions. There’s been a lot of innovation out of the sector, but have they focused on the right areas in terms of maintaining their long-term social license to operate?”

Read: Most Canadian institutional investors engaging in ESG issues, survey finds

The fund is also reaching out to investors globally, including Canadian funds.

“Canadian firms take governance issues like this very seriously. They’ve got big investing houses with engagement programs,” says O’Connor. “We expect a lot more global investors and hope some of those will be Canadians.”

Canadian responsible investing firm NEI Investments has been in touch with the New Zealand Super Fund to assist with engagement, says Rosa van den Beemt, a senior environmental, social and governance analyst at NEI. The firm’s already engaging with Facebook through Ranking Digital Rights, another investor initiative on human rights violations and the use of the platform to cause physical harm, data breaches and user privacy. Van den Beemt says the firm may raise the Christchurch attack livestream in its discussions with the social media giant.

She also notes NEI is planning to push for social media companies to install someone on their executive team and board who can consider these societal issues. Through Ranking Digital Rights, the firm is also asking for information communications technology companies to conduct more thorough human rights due diligence. Further, it’s asking them to transparently report on their policies and enforcement around issues like privacy and data security and what work they’re doing to address risks.

Read: Is ESG in DC plans all talk and no action?

Losing user trust is the most important business risk for social media companies, says Van den Beemt. “I think the proliferation of hate on these platforms contributes to losing user trust. And it’s already shown in user growth on Facebook [stagnating] in certain parts of the world.”

She notes the Cambridge Analytica scandal in March 2018 caused the company’s stock value to fall by seven per cent in one day.

O’Connor agrees, pointing to several governments considering stronger regulations for social media companies, including a recently announced proposal for the U.K. to force companies like Facebook and Google to more closely monitor content on their platforms and disclose more information to regulators. And, she notes, several major New Zealand companies pulled advertisements from Facebook after the attacks.

“That’s a business risk,” she says. “And it becomes even more of a risk if you’re not actually addressing some of the biggest human rights and duty of care issues you’ve got with your consumers.”

Read: Is gun control the next big ESG issue for institutional investors?

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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