Domini Impact Investments LLC, an investment firm managing more than $2.4 billion, has decided to divest from Facebook Inc. over what it called “a crisis of governance and accountability” at the social network.
Adam Kanzer, who directs Domini’s corporate engagement efforts, said Facebook no longer meets the firm’s investment standards after a data leak exposed millions of users’ personal information. The firm specializes in “responsible investing” for “positive social and environmental outcomes.”
“We made this decision in response to what we believe to be a crisis of governance and accountability at Facebook, with significant societal ramifications,” Kanzer wrote earlier this month in a letter to Facebook chief executive and chairman Mark Zuckerberg. The letter said Facebook hasn’t paid enough attention to data privacy and security and needs better oversight.
Domini, which held about 111,000 Facebook shares worth nearly $18 million in market value as of the end of March, isn’t the only investment firm of its kind to ditch Facebook recently. Eaton Vance Corp.'s Calvert Research and Management alsosoldits Facebook Inc. stock over data privacy concerns.
Facebook declined to comment.
‘Crisis of Its Own Making’
“Many of the issues Facebook has faced over the past few years have been unprecedented, and we recognize that any company would struggle to address them,” Kanzer’s May 8 letter said. “We view Facebook’s latest crisis, however, as a crisis of its own making,” it said.
Kanzer said Facebook failed to protect user data and the company’s reputation when it let political consultant Cambridge Analytica obtain the personal data of up to 78 million users.
His letter said the situation was made worse by Facebook’s “apparent lack of guidelines” on the placement of political advertisements. Facebook now requires more documentation from advertisers who want to run political ads.
Facebook’s problems are also compounded by “inadequate” oversight of decision-making on consumer privacy, the letter said. It endorsed New York City Comptroller Scott Stringer’s call for a boardoverhaulat Facebook so that directors can better monitor how the company protects user data.
Stringer is the investment adviser to New York City’s pension funds, which own about $895 million worth of Facebook shares. He wants the board to add at least three new “truly independent” directors and remove Zuckerberg from his dual role as chairman.
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