Digital human rights are next frontier for fund groups

Siobhan Riding at the Financial Times: “Politicians publicly grilling technology chiefs such as Facebook’s Mark Zuckerberg is all too familiar for investors. “There isn’t a day that goes by where you don’t see one of the tech companies talking to Congress or being highlighted for some kind of controversy,” says Lauren Compere, director of shareholder engagement at Boston Common Asset Management, a $2.4bn fund group that invests heavily in tech stocks.

Fallout from the Cambridge Analytica scandal that engulfed Facebook was a wake-up call for investors such as Boston Common, underlining the damaging social effects of digital technology if left unchecked. “These are the red flags coming up for us again and again,” says Ms Compere.

Digital human rights are fast becoming the latest front in the debate around fund managers’ ethical investments efforts. Fund managers have come under pressure in recent years to divest from companies that can harm human rights — from gun manufacturers or retailers to operators of private prisons. The focus is now switching to the less tangible but equally serious human rights risks lurking in fund managers’ technology holdings. Attention on technology groups began with concerns around data privacy, but emerging focal points are targeted advertising and how companies deal with online extremism.

Following a terrorist attack in New Zealand this year where the shooter posted video footage of the incident online, investors managing assets of more than NZ$90bn (US$57bn) urged Facebook, Twitter and Alphabet, Google’s parent company, to take more action in dealing with violent or extremist content published on their platforms. The Investor Alliance for Human Rights is currently co-ordinating a global engagement effort with Alphabet over the governance of its artificial intelligence technology, data privacy and online extremism.

Investor engagement on the topic of digital human rights is in its infancy. One roadblock for investors has been the difficulty they face in detecting and measuring what the actual risks are. “Most investors do not have a very good understanding of the implications of all of the issues in the digital space and don’t have sufficient research and tools to properly assess them — and that goes for companies too,” said Ms Compere.

One rare resource available is the Ranking Digital Rights Corporate Accountability Index, established in 2015, which rates tech companies based on a range of metrics. The development of such tools gives investors more information on the risk associated with technological advancements, enabling them to hold companies to account when they identify risks and questionable ethics….(More)”.