Facebook Corporate Social Responsibility Health Check Report

Introduction

Dear Mr. Zuckerberg,

I am writing to inform you of potential issues with regard to Facebook’s Corporate Social Responsibility (CSR) performance. The issues in question were revealed with the help of Future-Fit Foundation’s Health Check methodology. With this innovative approach, it is possible to assess a company’s compliance with the Sustainable Development Goals (SDGs) set by the United Nations in a holistic and actionable way. It measures a company’s CSR performance against Break-Even Goals (BEGs), defined as the bare minimum that every business must do to ensure sustainable development in all crucial areas of society. The findings attained through this method indicate that while Facebook has achieved impressive results through its environmental initiatives, its performance with regards to social and regulatory factors has been more uneven.

Background and Rationale

CSR refers to corporate policies aimed at improving society and the environment. This concept closely relates to the pursuit of sustainability, which requires controlling the ecological and social impacts of human activities to enable development that would remain sustainable over the long run. No business can operate in a vacuum, so it is in a company’s long-term self-interest to ensure the prosperity and stability of the society it operates in. Environmental sustainability forms a particularly important area of concern, as ecological deterioration caused by climate change can have catastrophic implications for societies and businesses if not checked through responsible practices. In more immediate terms, failing to account for social and environmental impacts can lead to severe reputational and regulatory damage.

While the concepts of CSR and sustainability have gained widespread acceptance in the business world, their implementation in practice remains lacking and haphazard. It is tempting for many businesses to treat those ideals as primarily a matter of PR. Even when a company makes a serious effort to help society or the environment in some areas, its actions can be misaligned with the impacts of its primary business activities. For example, a company’s efforts to support local communities would not do much to check the harm caused by its operational pollution, which might eventually outweigh its positive influence.

The Future-Fit Foundation’s Health Check offers a holistic methodology for identifying the harmful effects of a company. Having done that, it becomes possible to suggest a systematic course of action that would ensure sustainable development for the company and society in general. With this methodology, Facebook can ensure that its resources are assigned to the right areas for long-term success, rather than allowing problematic impacts to accumulate and undermine its CSR efforts. Given its importance as the world’s leading social media company, a rational CSR strategy could also prove critical for efforts to create a healthy and stable world.

Methodology

The Health Check methodology revolves around the Future-Fit Benchmark. This tool measures a company’s business activities and CSR practices against the United Nations’ SDGs. It identifies 23 Break-Even Goals (the minimum that every company must do to ensure overall sustainability) and 24 Positive Pursuits (additional efforts that can help achieve sustainability). Each of the BEGs contributes to several of the 17 SDGs. By focusing on the BEGs first, a company can ensure that its CSR priorities are aligned with its most critical impacts.

This report draws from a detailed assessment of Facebook’s current progress towards the BEGs. First, the level of attention that the company must pay to each BEG was established. This determination was based on the amount of effort required to reach the goal and the negative impact that failing to do so may have on the business and society. Next, the company’s current commitments in this area were measured against the requirements of the BEG. Those two steps made it possible to decide whether the company was currently on course to reach the BEG or whether a minor, significant, or critical adjustment was necessary. Additionally, an ethical SWOT analysis has been employed to help identify internal and external factors that may help or hinder Facebook’s efforts to improve its CSR performance.

Two main groups of publicly available online sources were used to carry out this assessment. The first group included the content of company web pages and official documents such as policies and reports. Those sources constituted what Facebook said about itself, though what it did not say was just as valuable for determining its actual level of commitment to specific goals. This category included the Responsible Business Alliance Code of Conduct, to which Facebook adheres (Responsible Business Alliance, 2018). The second group was comprised of news articles and media posts, which provided further information on Facebook’s activities and how they are perceived from the outside. One article concerned Reliance, which Facebook has recently invested in, illustrating possible issues with regards to BEG 23: Financial Assets (Venkataramakrishnan, 2019). Finally, a scholarly article regarding the health effects of Facebook use was included to shed light on BEG 17: Product Harm (Allcott et al., 2020). Together, those sources were used to form an overview of Facebook’s progress towards BEGs.

Findings

The first notable finding yielded by this research is that Facebook does not present information about its CSR performance in a consolidated way. The company does not publish regular CSR or sustainability reports, nor does it address this topic in its annual report (Facebook, 2019a). Instead, it offers reports on topics such as sustainability and diversity through separate web pages that are linked on the Investor Relations page (Facebook, 2019c). This approach hints at the absence of a holistic sustainability strategy.

Figure 1: Break-Even Goals, created by the author

As can be seen from Figure 1, Facebook’s environmental sustainability efforts are a strong point in its CSR performance. Its data centers, like the one shown in Figure 2, are designed to be maximally eco-friendly. The company is on track towards its goal of cutting greenhouse gas emissions by 75% and procuring renewable energy to cover 100% of its operations in 2020 (Facebook, 2020a, para. 1). Although the facilities continue to rely on fossil fuel-powered grids, this remains a significant accomplishment (Spector, 2018). Facebook’s water stewardship policy manifests in highly efficient water use and support for restoration projects (Lee and Rowe, 2020). The company is similarly mindful of other types of waste.

Facebook embraces cooperation with local communities on economic and environmental issues, but its overall social impact is uneven. While Facebook has a conflict mineral policy, it has not issued a new report on the subject in 2019 (Facebook, 2018a). Its recent investment in Reliance, an Indian company that many accuse of dishonest business practices, may lead to ethical complications (Ellis, 2020; Venkataramakrishnan, 2019). Despite long-standing commitments to diversity in employment, progress in this area has been disappointing, suggesting discrimination (Facebook, 2019b; Gravier, 2020). While the company remains a popular employer, which is helped by measures like offering contractors a living wage (Rana and Panchadar, 2019), some have complained about a stressful and non-responsive workplace (Zetlin, 2019). While those are relatively minor issues, they may escalate if not settled promptly.

A larger problem is the mental and emotional harm that the social media platform does to its users through addiction and distressing content. Though forced to acknowledge those scientifically attested effects (Allcott et al., 2020), the company’s response to this problem has so far consisted of limited adjustments to its algorithms and policies (Polish, 2019; Facebook, 2018b). Facebook has proven unable to prevent the theft and misuse of large amounts of user data (Coldewey, 2018). It has come under criticism for those failures and inadequate efforts at transparency (MacKinnon, 2018). Combined with the use of the platform for political manipulation and continued, though reduced, use of tax avoidance schemes, those issues have soured Facebook’s relationships with many national governments (Brown, 2018; Eadicicco, 2019; White, 2020). The company’s intensified lobbying efforts against digital regulations undercut its promises to improve in those areas (Facebook, 2020b; Molla, 2019). To sum up, the gaps in Facebook’s CSR strategy have contributed to a deteriorating reputation and risks of regulatory damage.

Figure 3: Ethical SWOT Analysis, created by the author

Figure 3 shows the main factors influencing Facebook’s ability to improve its CSR performance. The strengths reflect existing commitments that help move the company towards making necessary adjustments. Those include prominent sustainability efforts, support of SDGs through the recently launched Project17 (Levine, 2020), and acceptance of ethical and sustainable guidelines. Its weaknesses amount to a lack of systematic dedication to change. Facebook’s efforts to improve have been haphazard, which may reflect institutional resistance to change. Due to its social media dominance, Facebook is in an ideal position to support international sustainability efforts and lead the way on industry issues such as misinformation and privacy. However, recent scandals have damaged its reputation and relationships, hampering such efforts. Social media’s vulnerability to bad actors poses a more fundamental obstacle.

Recommendations

The findings show that despite having noteworthy CSR accomplishments in some areas, especially with regards to the environment and local communities, Facebook faces systemic issues that stem directly from its business strategy. As Coldewey (2018) argues in his TechCrunch article, Facebook has been consistently putting profits, which come from selling data, over the interests of its users. As negative social impacts accumulate, they threaten to outweigh the benefits of what may be called Facebook’s Positive Pursuits. Facebook has already begun to suffer from reputational and regulatory damage, and this trend seems likely to continue.

Facebook’s environmental policies, which are time-bound, measurable, and systematic, offer a blueprint for how the company can improve its overall CSR performance. To begin with, it must put together an integrated strategy to work towards all of the BEGs, quantifying its negative impacts and working out specific policies to remedy them. This strategy and its results need to be presented transparently through a comprehensive CSR report. Doing so would have the added benefit of addressing Facebook’s transparency issues and allowing it to win back the public’s trust. For the same reason, Facebook should review its current practices and mechanisms for handling employee and customer concerns, and adjust them to be more accessible, responsive, and effective. Finally, it should examine its business strategy and establish new ethical guidelines to meet the BEGs on taxation, lobbying, transparency, and investment. All of those actions should be undertaken as quickly as possible in 2020, in order to keep smaller problems from escalating and allow the company to focus on long-term CSR endeavors.

Having reassessed its priorities and formulated a new strategy in 2020, the company should implement the changes demanded by that strategy over the next two years. Much of this will amount to a cultural and institutional adaptation that would be difficult to quantify. It should include more honest and open cooperation with employees, customers, and governments, directly addressing their concerns rather than deflecting them through opacity and lobbying. The money spent on lobbying governments against digital regulations (see Figure 4 for the US lobbying spend) can be redirected towards promoting sustainable projects. One particularly urgent intervention should involve abstaining from tax avoidance schemes and paying the required local taxes, modifying the budget accordingly. New investments, partnerships, and projects can still go forward, but the updated ethical guidelines must inform them at every step.

The most critical and difficult area of improvement for Facebook involves reducing the harm caused by its social media platform. This harm includes damage to the mental and emotional wellbeing of its users, data theft, and misinformation, which can damage other sustainability efforts. While those hazards are innate to the product, Facebook can and should control them by allocating more funds to sustained research and development efforts aimed at improving the platform. Research directions should include better data security measures and algorithms for identifying and tagging or removing harmful content. Additionally, the platform should be redesigned with user health in mind, reducing its addiction factor. Further studies of the platform’s effects on its users could help quantify improvements. Those efforts should begin in 2020 but will need to continue indefinitely.

No one breakthrough could remove all of Facebook’s negative impacts, but steady improvements in all areas of concern are possible. The main risks stem from the strategy not bringing sufficient improvements quickly enough. In particular, it is impossible to predict exactly when research and development efforts would bear fruit. Further scandals could undo the company’s efforts to improve its reputation and trigger regulatory retaliation. However, those risks exist already, and the only way to reduce them is to deal with the underlying issues.

Conclusions

The findings in this report show that while Facebook has achieved impressive results with regards to environmental sustainability, it has proven unable to control its negative social impacts. Those impacts include the harm caused by its products, poor business ethics shown through insufficient transparency, and a dubious commitment to cooperating with authorities. Although this report tried to provide a full overview of Facebook’s impacts, its ability to do so was limited by a lack of access to the company’s internal information. Hardware development, a secondary area of activity for the company, proved difficult to assess in detail and may require additional scrutiny. Despite those limitations, the overall picture clearly indicates the necessity for change. As an industry leader, Facebook needs to adopt a holistic CSR strategy that would ensure its long-term success and assist global sustainability efforts.

References

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