Evaluating a company's impact (the case of Meta)

This week’s read time: 4 minutes

You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

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THIS WEEK’S COMPANY

Meta

This week we dive deep into Meta’s environmental and social impact.

Meta is one of the largest and most influential tech companies in the world. Through its major products, Facebook, Instagram, Oculus, Threads, Messenger, and WhatsApp, the company connects people with their friends, families, and co-workers across the world, and helps them discover new products and services from local and global businesses.

Some interesting facts:

• Meta has acquired over 100 companies, including Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, two of the most significant acquisitions in tech history.

• Meta’s platforms (Facebook, Instagram, WhatsApp, Messenger) have over 3.6 billion combined users, equating to about half of the world’s population.

COMPANY’S IMPACT

Meta’s overall impact score

Meta has a general impact score of -1.27 (on a scale from -5 to +5). Its impact is spread across 9 UN Sustainable Development Goals (SDGs) and 8 topics, split between positive and negative analyses.

In the socio-economic sphere,

Meta has profoundly reshaped global communication, connection, and information consumption. With over 3.6 billion users across its platforms—Facebook, Instagram, WhatsApp, and Messenger—Meta has revolutionized digital communication, establishing new social norms and empowering businesses, particularly small enterprises, with highly effective advertising tools that have driven significant economic growth. Facebook users upload an astonishing 300 million photos daily, while WhatsApp facilitates the exchange of over 100 billion messages each day. In addition, over $5 billion was raised through fundraisers organized via Facebook and Instagram for non-profits and other causes. This immense activity highlights Meta’s deep integration into everyday life, fostering communities and enabling businesses to thrive.

However, the company has faced growing scrutiny over its role in spreading misinformation, compromising user privacy, and contributing to mental health issues. Economically, Meta’s dominance in digital advertising has spurred innovation in targeted marketing but has also raised concerns about monopolistic practices. Meta has faced numerous scandals over data privacy breaches, including a record $5 billion fine in 2019 for providing users’ personal data to companies like Amazon and Yahoo, as well as improperly sharing the data of 87 million users with Cambridge Analytica, which influenced political campaigns.

Additionally, Meta’s platforms, particularly Facebook and Instagram, have been linked to significant mental health issues, including increased rates of anxiety, depression, and social media addiction due to their design, which promotes excessive use and social comparison. Studies have shown these platforms can become addictive, and Instagram’s own research revealed that 33% of teenage girls felt worse about their body image while using the app, contributing to rising anxiety and depression.

Environmentally,

Meta emits around 7.5 million tonnes of CO₂ equivalent annually, equal to the emissions of over 1.4 million homes’ electricity use for a year. Additionally, the company consumes around 3 million m³ of water annually, 17% of which is from areas experiencing high or extremely high water stress.

_{*The impact score is current as of October 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is Meta’s ESG rating?

For comparison, Meta has a B rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

Meta’s impact scores by SDG

Positively (and by weight), the company scores the highest in the Industry, Innovation, and Infrastructure SDG (+3.49), followed by Partnership for the Goals (+2.57), and Decent Work and Economic Growth (+3.05).

Negatively, the company scores the worst in the Peace, Justice, and Strong Institutions SDG (-3.87), followed by Reduced Inequalities (-2.36), and Good Health and Well-being (-3.79).

*the analysis takes into account the weight of the SDGs

CONCLUSION

Materiality Map & Final Words

So, Meta’s key social and environmental impact lies in …

its transformative role in global communication and economic empowerment. With over 3.6 billion users, Meta has revolutionized how people connect and how businesses, particularly small enterprises, grow through its highly effective advertising platforms. By facilitating the exchange of billions of messages and social interactions, Meta has deeply integrated itself into people’s daily lives, enabling global communities and businesses to thrive.

However, Meta’s platforms have been heavily criticized for spreading misinformation, compromising user privacy, and contributing to mental health issues, especially among teenagers. The company has faced major scandals, including a $5 billion fine for privacy violations and the improper sharing of user data. Additionally, its platforms have been linked to increased rates of anxiety, depression, and social media addiction, particularly due to design features that encourage excessive use and social comparison.

Meta’s overall impact score of -1.27 reflects a balance between its massive contributions to global communication and economic growth, and the serious concerns surrounding its role in privacy breaches, mental health issues, and environmental impact.

If you’d like to delve deeper into Meta’s impact, you can explore it here.

In the next edition, we will analyze the impact of the company that operates the largest coffeehouse chain and one of the most recognizable brands in the world, Starbucks. ☕️

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]