Facebook, Google face losing ‘ethical’ status with Aussie super funds

Australian super funds are being called to drop their investments in Facebook and Google if the tech giants follow through on their threats to pull out of Australia.

The Centre for Responsible Technology says Google has breached its obligations to Australia and can no longer be deemed an ethical investment.

Australian super funds are being called to drop their investments in Facebook and Google from their “ethical investment” portfolios if the tech giants follow through on their threats to pull out of Australia, ahead of a much-anticipated second public Senate hearing into the looming media bargaining code.

Speaking ahead of an appearance in front of the committee on Monday, Centre for Responsible Technology executive director Peter Lewis told The Australian that Facebook and Google had breached their social obligations to Australia and could no longer be deemed “ethical” by investment firms.

“Alphabet (the parent company of Google) and Facebook are the anchors of many ethical investment portfolios, which are offered through most industry funds as well as SMSFs. If they make good their threat to pull out of Australia, we are calling on fund managers to review their status as ethical investments,” Mr Lewis said.

“This would have an impact on share price, as it would remove a class of investor. And more fundamentally it would send a message to these companies that they risk losing their social licence as companies that Australians see as contributing to the common good, instead placing them alongside coal miners and arms manufactures as businesses based on exploitation.

“Already, given their central role in driving disinformation and division, there were question marks over their ‘ethical’ status. Attacking Australians by withdrawing their services would be the final straw.”

It comes as debate surrounding the media bargaining code continues to heat up, with Google threatening to block search in Australia, and Facebook declaring it would bar its users from sharing news if the code were to become law. In recent years, ethical funds have bet big on technology companies.

Facebook, which has been plagued by scandal in recent years including the massive Cambridge Analytica data leak, is listed as a portfolio investment company by Australian Ethical, which has more than $5bn in funds under management. Pendal, Vanguard, Dimensional and UBS are also understood to have holdings through their respective environmental, social and governance funds.

The executive director of shareholder advocacy group Australasian Centre for Corporate Responsibility, Brynn O’Brien, told The Australian that the social media giants had already breached their ethical obligations to consumers and that superannuation funds should strip them of their “ethical” status.

“The tech giants promote extremist views, and there are questions of algorithmic bias, as well as the participation of tech companies in the global surveillance system and privacy issues,” Ms O’Brien said.

“There is an opportunity here to really improve the tech companies with action like this.”

Such a move has precedence. NZ Super pulled together a group of more than 100 investors who manage over $US7.5 trillion worth of assets under management in 2019 to put pressure on Facebook, Alphabet and Twitter as a result of their involvement in the Christchurch massacre.

Monday’s senate hearing is also set to hear from tech lobby group Reset Australia, which is calling for algorithmic audits for the tech giants in a bid to force greater transparency, and annual monitoring of the code to ensure it contributes to an increase in the number of journalists.

Country Press Australia, Solstice Media and Junkee Media are also set to front the committee, along with members from Treasury and the Department of Infrastructure, Transport, Regional Development and Communications. Facebook and Google were contacted for comment.