Should Public Pensions Keep an Eye on Facebook Stock as it Becomes the New Tobacco?
Posted on 09/30/2021
Are ESG investors paying attention to Facebook stock when it comes to its business practices on children, teenagers, and young adults? Are proxy advisors like Broadridge and ISS taking the social factors seriously in proxy voting when it comes to Facebook? The U.S. Senate committee had a tense hearing on Instagram’s negative impact on children’s mental health. Instagram is an app service of social media giant Facebook, Inc. In a rare bi-partisan fashion, Republicans and Democrats ripped into Facebook’s Global Head of Safety, Antigone Davis, on September 30, 2021 in a contentious Senate hearing on Instagram’s effect on teenagers. The senators accused that Facebook was aware of the mental and emotional harm its practices inflicted on kids and teens for years and yet the corporation continued its practices. A Facebook whistleblower-leaked documents shows the devastating extent to which Facebook knew and ignored its own research on its dangerous effects on kids. Facebook published two internal research reports about Instagram and downplayed their conclusions. The 2019 published reports are called “Teen Mental Health Deep Dive” and “Hard Life Moments”.
Senate Committee Chair Senator Richard Blumenthal (D-CT) said at the start of the hearing, “We’re here today because Facebook has shown us, once again, that it is incapable of holding itself accountable.”
Senator Ed Markey (D-MA) added to the discussion that “For teens, Instagram is worse than a popularity contest in a high school cafeteria,” Markey said. “Instagram is that first childhood cigarette, aimed to get teens hooked early, exploiting the peer pressure of popularity and ultimately, endangering their health.”
“Facebook is just like big tobacco, pushing a product they know is harmful to the health of young people, pushing it early, all so Facebook can make money. IG stands for Instagram, but it also stands for Insta Greed.”
“Facebook knows that its services are actively harming their young users, Senator Marsh Blackburn (R-TN), the ranking Republican on the subcommittee, said in the prepared remarks. “In 2019 and 2020, Facebook’s in-house analysts performed a series of deep dives into teen use of Instagram that revealed ‘aspects of Instagram exacerbate each other to create a perfect storm.’”
Facebook is keen on having a version of Instagram designed for kids under 13. Facebook has put the project on hold.
Is Facebook at risk of becoming the new big Tobacco? In the late 1980s, tobacco companies like R. J. Reynolds pushed cartoon characters like Joe Camel to market cigarettes to America’s youth. Facebook is caught in similar crosshairs.
Facebook and other tech giants are top holdings for many public pension funds and some sovereign wealth funds like Norway Government Pension Fund Global. Another question looms is why Facebook is not facing greater scrutiny on ESG, especially when it comes to the social factor? Oil and gas remain easy ESG targets for pension CEOs and boards, but there are a slew of other social issues that could crop up in the next decade that are yet to be recognized by proxy advisors.
