Socially responsible investment funds traditionally have had big holdings of technology stocks since they're likely to score well on environmental matters, but funds that focus on environmental, social and governance practices, known as ESG, are beginning to rethink some of those positions.

Topics like net neutrality and data privacy are becoming a bigger part of discussions regarding corporate behavior and the impact on society. That was seen in late July after Facebook (Nasdaq; FB ) second-quarter earnings came out lower than expected.

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Facebook's reported sales and user growth numbers in the second quarter fell short of analysts' expectations, and a day after the earnings details, the stock fell 20 percent, losing more than $100 billion in market value that day.

Martin Kremenstein, head of exchange-traded funds at Nuveen Investments in New York, which manages ESG exchange-traded funds, says scandals regarding data privacy and other factors finally started to affect Facebook.

"Some of the things coming to light stem either from the scandals themselves or attempts to manage around scandal," Kremenstein said.

Some of those recent scandals include sharing personal data of 87 million users without their permission with Cambridge Analytica, data sharing with device manufacturers, including Huawei, which was flagged by U.S. intelligence as a national security threat, among others.

Privacy is becoming more important . Jonas D. Kron, senior vice president, director of shareholder advocacy at Trillium Asset Management, says over the last few years data privacy has become more recognized as a social and governance issue. Kron says MSCI, an ESG rating service, has been looking at data privacy for a few years as a significant factor. Another group called Open Mic, an investor group, engages companies around these and related issues, such as net neutrality.

ESG firms concerned about data privacy and other internet issues are split whether to hold Facebook stock because of the numerous scandals, he says.

Trillium holds Facebook , and Kron says they are actively trying to encourage Facebook to get on top of these issues. "We think there are still opportunities in the company to improve significantly and we're going to work to do that," he says.

Following the earnings data, Trillium filed a shareholder resolution to require Mark Zuckerberg , Facebook's founder, chief executive officer and board chairman, to relinquish his chairmanship. As both CEO and board chairman there's been little check on his power.

"We believe this weakens Facebook's governance and oversight of management," Kron says. "An independent chair would free the CEO to focus on managing the company and enable the chairperson to focus on oversight and strategic guidance."

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Kron notes many other companies like Microsoft Corp. ( MSFT ), Apple ( AAPL ) and Twitter ( TWTR ) have split roles.

Privacy legislation . Facebook's European growth declined, one of its most-profitable markets, because of GDPR, the European privacy legislation, Kremenstein said. This may be a Facebook-specific issue. Alphabet's Google ( GOOGL , GOOG ) had some privacy consent issues in the past, but saw benefits from the privacy legislation. "I think there is a question around how the Facebook model might differ that makes them more susceptible to GDPR issues," he says.

The Facebook model, Kremenstein says, is to take as much information as possible and monetize it, so users who don't want that won't be on Facebook. Nuveen's NuShares ETFs does not own Facebook.

He believes data privacy is going to be a key issue, especially as people are becoming increasingly aware of how much of their data are being bought and sold. For companies that hold a large amount of individual data and monetize, the question is whether they can be trusted to a handle it responsibly.

Facebook Stock Has Analysts Baffled

"If they aren't, who's going to intervene? Is it going to be government intervention? Or will it be a consumer backlash," Kremenstein says.

Eric Schoenstein, portfolio manager of the Jensen Quality Growth Fund at Jensen Investment Management, in Lake Oswego, Oregon, says data privacy issues are a good opportunity for investors to ask questions about a firm or a fund's values.

"ESG requires another level of questions," he says. "How do you engage with management and how did these kinds of issues, in this particular case, data privacy, how does that impact your ESG ratings as it relates to certain companies and how you make investment decisions?"

Schoenstein says Jensen doesn't own Facebook because the company doesn't have the track record to be eligible for their funds. But they do own Alphabet. Although Google for a time was lumped in with Facebook, the data-privacy issues weren't the same. Still, he says, time will tell whether the new concerns by Facebook users and investors will be heeded.

"You're seeing already strong reactions, or at least seemingly strong initial reactions, from tech companies saying, OK, we need to get on top of this and they're already starting to make changes to their data privacy guidelines and saying, look, we're going to do this," he says.

Data privacy is another factor to consider when evaluating a company from an ESG perspective, he says.

"You have to think about what changes they are making. And that hopefully gives an investor an opportunity to do some additional due diligence," Schoenstein says.

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Kron says Trillium takes a longer-term view of their holdings, at least three years or more, so they want to give companies like Facebook time to take appropriate and meaningful steps to make sustainable decisions. Some of that might cost money. Kron points out Facebook's costs are going up because it is hiring more people to moderate pages.

"They are at this transition," he says. "It's going to be costly. We saw that in the quarterly earnings report. But how they deal with this litany of social impacts … and Zuckerberg said it himself, we did not take a broad enough view of our responsibility. Having an independent board chair will help them take this longer view versus this whack-the-mole approach they have."

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