As Facebook’s suffered a $119 billion (€101.65 billion/CHF117.55) plunge in shareholder value in a single day on July 26 – the largest in American market history – Parnassus Investments and other sustainable investment firms reaffirmed the importance of data protection in their environmental, social and governance, or ESG, criteria.
“User data has become commoditized, and consumer privacy risks have dramatically risen with the adoption of the internet,” said Parnassus Investments in a recent statement. “Although regulatory protections can help protect the public, leading technology companies have an obligation to vigorously address these risks, because neglecting to do the right thing for customers will—sooner or later—be reflected in the company’s bottom line.”
Facebook’s value plunged when the company announced weaker than expected revenues and user growth and forecast further declines in the future. The grim financial reports came on the heels of revelations in March that Facebook gave unwitting users’ personal data to Cambridge Analytica, a British consultancy that aided American President Donald Trump’s political campaign in 2016.
In its statement, Parnassus noted that the European Union’s General Data Protection Regulation adopted in May was strengthening data protection. American companies were also either altering products to adapt to European laws or discontinuing them on the continent.
Financial houses interested in sustainable growth in the tech sector needed to keep track of which companies were seeking the best course of action, too, experts said.
“Data privacy is becoming a bigger issue for investors to monitor,” Parnassus Investments ESG Director Iyassu Essayas told Investment News. “Data privacy is not just an issue for social media companies. It’s an issue for any company that stores, maintains or monetizes sensitive or personal data.”
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