BetaShares has announced its Responsible Investment Committee (RIC) had decided to remove the global tech giant from the BetaShares Global Sustainability Leaders ETF as well as the index it tracks.
Facebook represents 3.9 per cent of the ETF portfolio, which is the biggest global ethical ETF that trades on the ASX with $170 million funds under management.
Facebook had originally qualified to be included on the index for its “strong global leadership on carbon emission metrics”, according to the statement.
But the firm had encountered “controversies and reputational issues” recently, including but not limited to the “scandal” of Cambridge Analytica’s use of data from 50 million unwitting Facebook users.
“The combination of the recent serious data breach with other previously identified issues has caused the RIC to determine that Facebook is no longer eligible for continued inclusion in the index (and, as a consequence, in the ETF),” the statement said.
Commenting on the announcement, BetaShares chief executive Alex Vynokur said: “As a provider of a true-to-label ethical ETF, we have been careful to ensure there is diligent and ongoing monitoring of the constituents of the fund, to ensure the ETF continues to meet its objectives and those of its investors.”
VanEck’s head of marketing for Asia Pacific Bradley Livingstone-Foggo pointed out Facebook’s loss of over $40 billion following the data sharing controversy.
Source: FactSet
VanEck has an international sustainability ETF that tracks an MSCI index that did not include Facebook.
“Well before Facebook’s latest troubles, MSCI had warned that risks that data breaches and regulatory action were potential problems for the company,” Mr Livingstone-Foggo said.
Quoting MSCI, he said the technology company was “exceptionally vulnerable to regulatory actions and user dissatisfaction in case of privacy and data breach.
“Facebook’s controversial data collection and advertising practices have continued to trigger user complaints and regulatory actions.”
Mr Livingstone-Foggo said, “while technology companies have taken the investment world by storm, not all of them are ESG leaders. Being big does not necessarily mean a company is an ESG leader.”
