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- The S & P Dow Jones Indexes are removing Facebook from its S & P 500 ESG Index, which tracks companies that are performing well in its environmental, social and corporate governance rankings.
- The index provider said it took the decision after confidentiality concerns about the company, "including a lack of transparency," led Facebook to evade its ESG standards.
- This decision not only underlines the pressure exerted on Facebook in the midst of a series of privacy scandals, but also the rise of companies incorporating ESG parameters into their investment decisions.
- Follow Facebook's share price here in real time.
The S & P Dow Jones Indices are removing Facebook's action from its S & P 500 ESG Index, which tracks companies that are performing well in its environmental, social and corporate governance rankings, said the global index provider this week.
The company announced that it had removed Facebook from the index as a result of a regular rebalancing done on April 30, with privacy concerns having reduced its ESG score to S & S standards. P DJI. Other components, including Wells Fargo, Oracle and IBM, have been dropped, but Facebook has been the biggest name removed.
"The specific problems that led to these scores were related to various privacy concerns, including the lack of transparency as to why Facebook collects and shares certain user information, "said Reid Steadman, Global Head of ESG for S & P, in a statement.
The social network has come under tremendous pressure for over a year, as various privacy issues have included the access to more personal data of users than it may have. Had revealed, the misuse of personal information and hacking accounts of millions of users.
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All of these problems have created "uncertainty about Facebook's diligence in protecting privacy, the effectiveness of the company's risk management processes and the way in which the company applies them." "Steadman said, which resulted in a delay in ESG performance of the company compared to its peers. Facebook did not immediately respond to Markets Insider's comment request.
The decision of S & P DJI is symbolic of Wall Street trends that go beyond Facebook's particular problems.
Read more: Facebook actions drop sharply after e-mails revealed that Mark Zuckerberg was aware of "problematic privacy practices"
The move highlights not only the growing pressure on Facebook and its CEO, Mark Zuckerberg, especially as regulatory oversight is building, but also the rise of companies incorporating ESG indicators into their investment decisions.
At the time of Facebook's removal, S & P DJI's ESG rating indicated a low 21 out of 100. More specifically, while its environmental score was 82, its social and governance scores had dropped to 22 and 6, respectively.
Insider Markets
Despite all the Facebook scandals and the volatility of the stock, Wall Street badysts are optimistic about the future of the social network. Of those polled by Bloomberg, 45 received "buy" ratings, six "hold" ratings, and two "sell" ratings. The average price target of 219.64 USD implies a recovery of 24% from current levels.
S & P DJI said that although the composition of the index is rebalanced every year, the component could rejoin the group, but it would have to lobby to solve various problems.
"Steadman wrote: "Facebook will have to do even more to join the ranks of the S & P 500 ESG Index," Steadman said.
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