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Its Not Harry

Comment and opinion for retail investors in the UK

Facecbook and ESG

29th March 2018 by Mark Potter Leave a Comment

The scandal around the use of data in the US elections and the BREXIT vote has increased awareness of what might be called “the age of data” (nod to the books by Yoval Noah Harari).  The concern is not that what data handers/processors do is commercially weak – in fact it appears to be ingenious.  You get loads of data from people by subtle manipulation of human nature at no cost and can use it to change the world to suit your objectives.  Almost the theme of a James Bond film, with much younger sweet faced villains!

The issue is one of ethics and social morality. Capitalism and politics don’t really do either of those very well, but they do like to try, more or less.   The current way the investment world assesses businesses on these counts is called ESG – Ethics, Social and Governance.  There are rankings for companies on these tests and some research suggests that companies with a good ESG score are actually better long term investments, as well as it feeling “nicer” to own them.

Facebook’s ESG score has slipped, no doubt, as for now has its share price.  But there is no doubt at all that data handling is a core global business (that the US and UK are doing especially well at, with Russia and China quite likely up there too)  and indeed owning data is an economic and political factor of significance in these times.  In the same way that banking is never going to be especially loveable as an activity, “big data” handlers are likely to be correctly seen as overly powerful elements in the developed world.  But we had better get used to living with that.

Filed Under: Economics, Markets

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