Facebook removed from S&P list of ethical companies after data scandals

Margi Murphy
Privacy issues meant Zuckerberg failed to make the cut, dropping off the index entirely - AP

Poor governance and privacy concerns have knocked Facebook out of an influential ethics index that tracks socially responsible companies. 

Standard & Poor's Environmental, Social, and Governance (ESG) Index said that it had booted Facebook after the company scored poorly for social responsibility and governance, achieving 22 and 6, respectively, out of 100. 

Facebook’s disappointing results were due to a number of privacy concerns at the social network in recent years including “a lack of transparency as to why Facebook collects and shares certain user information”, said Reid Steadman, S&P's social and governance chief. 

This includes allowing more than 150 companies access to more users’ personal data without their knowing, the S&P said, along with the misuse of personal information, citing the Cambridge Analytica debacle, and a data breach in which 50 million accounts were hacked. 

“These events have created uncertainty about Facebook’s diligence regarding privacy protection, and the effectiveness of the company risk management processes and how the company enforces them,” Mr Steadman said. “These issues caused the company to lag behind its peers in terms of ESG performance.” 

S&P reassessed the index on April 30 and removed two further tech giants, Oracle and IBM, but Facebook is the largest company it has dropped.

The day before it was shunned it accounted for 2.5pc of the entire ESG index. Facebook is the fourth-largest company in the S&P 500. Microsoft, Apple and Amazon take the top three places in the index with Alphabet in sixth. 

The ESG index follows companies that operate responsibly, typically with good governance and environmental policies. It is widely regarded as the first reference for ethical investors. 

The snub is the latest blow for Facebook, which is facing calls from politicians and investors for it to be broken up and questions over its leadership under founder Mark Zuckerberg. 

Facebook did not respond to a request for comment.