With Facebook, Inc.'s (FB) annual shareholder meeting scheduled for the end of May, some of the world's largest fund companies will get their chance to weigh in on the data scandal that plagued the social media company and resulted in a sell-off in the stock earlier in the year.
That's because Matthew Patsky, the Chief Executive of Trillium Investments, the Boston-based fund company that manages more than $3 billion in assets, has put forth a shareholder proposal that would result in the creation of a risk-management committee to investigate how Cambridge Analytica, the now defunct political consulting firm, was able to access the information on 87 million Facebook users without their consent. Facebook has faced inquiries from lawmakers and regulators in both the U.S. and UK. "Facebook's technological advances and scale appear to be significantly challenging the ability to understand its impact on society and maybe creating numerous financial risks which could present material challenges to the company and its shareholders," Trillium wrote in its shareholder proposal.
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With Vanguard, BlackRock, State Street and Fidelity Investments all holders of Facebook shares, they will get a chance to weigh in. According to The Philadelphia Inquirer, the fund companies combined hold about 20% of the social media giant's stock. While Vanguard works behind the scenes to exact change from companies it invests in, it hasn't been too active on the shareholder proposal front in the past. Last year, Vanguard did vote against the management of Wells Fargo & Company (WFC) and Exxon Mobil Corporation (XOM) when it requested a climate change study, noted The Philadelphia Inquirer. Still, it's not clear if the king of low-cost investing will do the same with this proposal. Vanguard declined to comment to the newspaper.
With Vanguard facing calls to step up its activism bent, the fund company issued a recent update highlighting the activities it has engaged in to hold companies more accountable. This came in the wake of calls to boycott Vanguard and BlackRock from David Hogg, the Parkland, Florida, student who emerged as one of the most prominent student activists in the wake of the school shooting that left 17 people dead. In that missive, Vanguard said that it has been stepping up its activism regarding guns, the environment and opioid addiction.
The fund company said that, as the employer of close to 17,000 individuals, it is "constantly" looking at what role it can play and how it should respond to problems in society, balancing the impact these things have on society with the needs of its investors. Vanguard noted that it regularly meets with the leaders of companies to learn their strategies and long-term goals along with the related risks, as well as to bring up topics that are in the news. In addition to meeting with gun company leaders after the school shooting in Parkland, it said it also met with the leaders in the pharmaceutical industry to ascertain what they are doing to curb opioid drug distribution, and the fund company regularly has conversations with companies about climate risk, particularly with companies that are in "carbon-intensive" markets.