BMO Global Asset Management is the only Canadian investor so far to support an initiative launched by five of New Zealand’s largest investor funds to cull hateful online content.
A growing list that now includes 45 institutional investors and pension funds have pledged to support the consortium led by the New Zealand Super Fund (NZ Super), the country’s sovereign wealth fund. The list of firms obtained by The Logic and included below has a combined $1.35 trillion assets under management.
The funds have called on Facebook, Google and Twitter to take more responsibility for material published on their websites, following the Christchurch mosque shootings that killed 50 people.
A group of 45 institutional investors and pension funds with a combined $1.35 trillion in assets under management is calling on social media companies to restrict harmful content on their platforms following the Christchurch mosque shootings. BMO Global Asset Management is the only participating fund from Canada. The three U.S. tech companies have not yet responded to the consortium’s requests.
Twenty-seven of the funds are based in New Zealand. Five are based in Australia, seven in the U.K, four in Sweden and one, BMO Global Asset Management, is based in Canada.
“The objective of the collaborative engagement with investors led by NZ Super is for social media companies to strengthen controls to prevent the livestreaming of hateful and violent content,” said Kristi Mitchem, CEO of BMO Global Asset Management, in an email to The Logic. “This collaboration gives more weight to our collective voice on an issue of global importance and relevance.”
“Following the horrific attack in Christchurch, after the initial shock and horror and grief of it all, we started thinking about the role of social media companies in the distribution of harmful content,” said Matt Whineray, CEO of NZ Super in a phone interview with The Logic. “The role of those companies in distributing this was very concerning to us.
“We’ve got significant investments in these social media companies,” said Whineray. “We think this is a problem from a licence-to-operate perspective and we want them to be actively strengthening the controls to prevent the livestreaming and distribution of this kind of content.”
The Logic contacted Canada’s 10 biggest pension funds to ask if they’ve been in touch with the New Zealand investors. Three declined to comment; the others did not respond to the request.
The group of 45 investors has commissioned an expert report to help identify priorities for the initiative and look into whether Facebook, Google and Twitter have under-invested in safety measures and human-based content moderation. They are also looking into whether the companies can comply with a tighter regulatory environment, said Whineray.
The consortium is calling for platforms to partner with law enforcement and security services from trusted jurisdictions to monitor extremist activity, and to make significant investments in tools that can automatically prevent “objectionable content” from being uploaded. They also want social media companies to impose delays between when content is posted and when it is published to a platform, in order to give the companies time to flag and block content that incites violence or hate.
Whineray would not say which Canadian funds the group has reached out to. “We are continuing our out-reach to investors and would welcome participation by Canadian funds,” Catherine Etheredge, head of communications for New Zealand Super Fund, told The Logic.
Facebook, Google, and Twitter have not responded to the group’s requests, according to Etheredge.
Two weeks after the Christchurch shootings, Facebook COO Sheryl Sandberg said the company was considering restricting who can use the platform’s livestreaming service. “We are also investing in research to build better technology to quickly identify edited versions of violent videos and images and prevent people from re-sharing these versions,” said Sandberg.
“We share the commitment of Governments around the world to keep people safe from abhorrent acts of violence and welcome cross-industry and Government collaboration to support safe online and offline spaces,” a Facebook spokesperson said in an email to The Logic.
Twitter declined to comment for the article and Google did not respond to requests for comment.
The shootings on March 15 were livestreamed on Facebook and shared on the platform more than 4,000 times before it was removed. Twenty-four hours after the attack, Facebook had removed another 1.5 million clips of the video. YouTube, Twitter and Reddit also scrambled to stem the footage—which was easily searchable on Google—from spreading on their platforms.
NZ Super has nearly $489 million worth of shares in Facebook, Twitter and Alphabet, Google’s parent company. According to Whineray, the five funds leading the initiative have about $720 million invested in the U.S. companies.
Whineray said he doesn’t know how much all 45 funds have invested in Google, Facebook and Twitter, but believes it’s a significant amount. “I can say that, because these companies, especially Alphabet and Facebook, are quite large companies in the indexes, they are going to represent a reasonable chunk of their equity portfolios,” he said. “In total, our stock across these three represents a little more than one per cent of our total fund.”
BMO Global Asset Management has more than US$320 billion assets under management. Its large-cap equity portfolio has holdings in Alphabet and Facebook worth about US$16 million and US$3.2 million, respectively.
Alphabet and Facebook rank among the top 10 investments on six separate BMO exchange-traded funds (ETFs) valued at more than US$7.3 billion combined.
In May 2018, BMO launched an ETF in Canada that gives investors access to top technology and social media companies, including Facebook, Apple, Netflix, Twitter and Alphabet.
NZ Super is part of BMO’s responsible engagement overlay (REO) program, through which BMO handles environmental, social and governance (ESG) risk management on behalf of its partner funds. In the fourth quarter of 2018, BMO engaged with 176 companies on behalf of NZ Super Fund; in 41 cases there were changes in corporate policies or behaviour following BMO’s intervention. The global engagement program currently has $216 billion in assets under administration.
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The New Zealand initiative is part of a growing movement of socially-responsible investing, wherein some shareholders are demanding funds and companies sever ties with, for example, hate groups, gun manufacturers and major carbon emitters. As of 2018, there were US$12 trillion assets under management in the U.S. focused on ESG issues—up 38 per cent since 2016—according to a report from The Forum for Sustainable and Responsible Investment, based in the U.S.
Big Tech has become a target of socially-responsible investing in recent years. In June 2018, Google investors backed employees’ demands for the company to tie its executive pay to its success in meeting diversity goals. Barry Rosenstein, founder of Jana Partners, one of the largest Wall Street investment firms, wrote an open letter to Apple in January 2018 asking the company to study the health effects that its products have on children. And, in May 2018, a group of 78 investors and investment firms, civil and human rights organizations and privacy and technology groups signed an open letter asking Facebook’s largest institutional shareholders to demand the company address civil, political and privacy rights violations on its platform.
On Friday, NZ Super announced it would divest more than $17 million from weapons manufacturers after the country banned semi-automatic weapons. “Decisions about ethical exclusions take account of New Zealand law,” the fund said in a public statement. John Edwards, New Zealand’s privacy commissioner, called for the country to adopt similar laws passed in Australia on Thursday that make it illegal for social media platforms to not quickly remove violent content.
Socially-responsible investing campaigns can have an impact. It’s now common for asset managers and investment funds to have exclusion lists showing investors which companies they won’t touch—typically those in the tobacco, weapons and oil and gas sectors. Remington Outdoor Company, which made the AR-15 used in the Sandy Hook shooting, went bankrupt in part because of calls to divest—its major shareholder, Cerberus, told Bloomberg it sold the company “amid pressure from investors revolted by the carnage” of Sandy Hook. And, in 2017, BMO reported 199 instances where a company changed its behaviour or policies to comply with the fund’s ESG standards.
Whineray said funds participating in the initiative can divest from the tech companies if they choose, but he said that won’t be his fund’s first course of action. “We’re going to have much more influence on changing the outcome if we’re shareholders and we’re teaming up with other shareholders to put pressure on the company rather than throw our hands up and exclude these things,” he said. “But ultimately, if we get to a point where we’re not effective with the engagement or can’t see a way to be effective, then we have to consider exclusion. It is something we’ve done in the past with companies we haven’t been able to engage effectively.”
Participant funds calling to cull hateful online content
Leaders Group (Crown-owned investors)
New Zealand Super Fund
Accident Compensation Corporation
Government Superannuation Fund
National Provident Fund
Confirmed Participants – New Zealand
AMP Financial Services
ANZ New Zealand Investments
ASB Investment Funds
Booster Investment Management
BT Funds Management
Harbour Asset Management
Investment Services Group (Devon Funds, JMI Wealth, Select Wealth and ClarityFunds)
MAS Investment Group
Milford Asset Management
PIE Funds/JUNO KiwiSaver Scheme
Rata Foundation (previously Canterbury Community Trust)
Simplicity Investment Funds
Trust Management Limited
Westpac / BT Funds Management
Confirmed Participants – International
AMP Capital (NZ and International)
Australian Ethical (Australia)
BMO Global Asset Management (Canada)
Church of England Pensions Board (United Kingdom)
Church Commissioners (United Kingdom)
Greater Manchester Pension Fund (United Kingdom)
LG Super (Australia)
Local Authority Pension Fund Forum (United Kingdom)
Merseyside Pension Fund (United Kingdom)
Pantheon (United Kingdom)
West Yorkshire Pension Fund (United Kingdom)
River and Mercantile (United Kingdom)
Provided by NZ Super Fund