Facebook's Cambridge Analytica Woes Could Have Been Avoided

I'm not surprised Mark Zuckerberg was called to Congress. While Facebook's market cap has soared over the last decade, its sustainability program has stuttered, limited to energy management and renewables. Don't get me wrong, energy management is extremely important for all companies with data centers at the core of their business practices. In fact, kudos are in order for Facebook on energy, the Internet giant topped Greenpeace's most recent energy report card.

But for a company like Facebook, with two billion users, the sustainability program should extend far beyond just energy. A broader sustainability program, utilizing stakeholder engagement to uncover the social and environmental priorities, would have identified good governance and user data privacy as enormous areas of risk for the company. The still-unfolding Cambridge Analytica and Russian election interference scandals are examples of the big risks Facebook took playing fast and loose with user data, which, after a billion dollars of lost value, now seem maybe like a not-great idea.

Stocks have mostly rallied after Zuckerberg's not disastrous showing in front of Congress, if only because members of Congress didn't know quite what to ask. Washington Post comedy writer Alexandra Petri wrote:

Welcome to the Facebook hearings on Capitol Hill, which, if you have even the faintest understanding about what Facebook does with data, will leave you enraged and frustrated. These two days will be like being trapped in a glass box watching your aging parents try to install a software update. Hours will pass as they keep minimizing windows and double-clicking things, expecting this to achieve some effect, and you will pound on the glass until your fists are numb.

While some tough questions were asked, Zuckerberg was able to skate through them smoothly, mostly by offering platitudes and promising to follow up with specifics. And askers didn't understand the issues deeply enough to probe. Stocks rallied after his two day testimony, indicating that investors believe the social giant will not face sanctions or antitrust investigations anytime soon.

But that doesn't mean the organization is out of the woods. The same problems that got Facebook into trouble still remain. The organization's business model is to sell user data to advertisers. And they have a lot of data on us. Last fall, ProPublica uncovered news that Facebook was breaking the Fair Housing Act by allowing landlords to advertise by race. We noted back in 2015 that Facebook wasn't following its own best practices on hate speech. The regulations that cover television, print and radio advertising have not yet caught up with the online world. Facebook would be wise to proactively follow them, even if it means losing a few bucks.

And a robust sustainability program that interacts with a company's stakeholders and reports on material sustainability risks could sure help to float issues like this before the Social Network influences another election.

It seems that Facebook, long reluctant to embrace sustainability, may be on to something -- they're hiring! Unfortunately the program manager level is probably not quite high enough to get the attention of the C-suite for the substantive culture changes that a true directional shift requires. Let's hope Zuckerberg meant what he said on Capitol Hill about righting the ship.