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Investing in social media companies

March 22, 2019


Steffan Berridge

Written by Steffan Berridge

Senior Quantitative Strategist at Kiwi Wealth


Kiwi Wealth joined the NZ Super Fund and other Crown Financial Institutions on Wednesday in calling for social media giants Facebook, Google and Twitter to take urgent action to combat extremism on their platforms.  In total, the group manages around $90 billion in assets, of which approx. $800 million is invested in these three companies.

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We’re joining this action in light of the shocking Christchurch mosques attack last Friday, in which social media platforms appeared to play a key role.  We’ll be asking these companies to do more to prevent their platforms being used by extremists, actively monitoring and censoring extremist content and ensuring the spread of objectionable content can be controlled when necessary.  To date, they have clearly not done enough.

The action is the first in a new chapter of our Responsible Investment (RI) journey, in starting to actively communicate with companies about our expectations on key Environmental, Social and Governance (ESG) issues. 

We have always been responsible investors and have a longstanding RI policy.  Most recently we’ve updated the conditions for excluding companies from portfolios, committed to taking ESG issues into account in all investment decisions and implemented a proxy voting strategy across all equity holdings which strongly supports progress on a range of ESG issues.

You may be wondering why we don’t just exclude these social media companies from our portfolios.  Although this may seem at first like the right thing to do, we don’t believe this is the best way to achieve real change.

As shareholders, we are owners of these companies and as such we have a degree influence over how they are run.  If the issue can be resolved at a reasonable cost, and our concerns are shared by other shareholders, we can collaborate in asking the company to resolve the issue.

Excluding companies should really only be a last resort; an action only is taken when the issues are too severe to be resolved within the bounds of fiduciary care.

Of course, it’s not only shareholders that should be taking action here.  Others who interact with social media can and have been doing their bit.  We invite advertisers, regulators, developers, employees, and users of social media to join us in asking for change.

We look forward to seeing concrete actions from social media companies to combat extremists’ use of their platforms and to further developing our ability to engage with companies on a range of important ESG issues.

Kiwi Wealth and its entities (Kiwi Wealth Limited, Kiwi Wealth Investments Limited Partnership and Kiwi Investment Management Limited) are part of the Kiwi Group (Kiwi Group Holdings Limited – KGHL). The ownership of KGHL is held by NZ Post, ACC and NZ Super Fund. 

This article reflects the personal views of the author at the date shown above. The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any investment decisions.

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Tags: Investing, Responsible Investing

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