Ethics row as council and MSP pension funds invest millions in streaming giant Spotify at centre of misinformation controversy
Now Scotland on Sunday can reveal pension funds for MSPs and local government staff have investments worth more than £40 million in Spotify – the music streaming company at the centre of a Covid-19 misinformation controversy.
It includes Scotland’s largest local authority pension fund, where councillors have asked the fund managers to raise the issue with Spotify’s management.
The firm has faced a torrent of criticism in recent weeks over its star podcaster Joe Rogan, who has discouraged vaccination in young people and promoted the use of the unproven anti-parasitic drug ivermectin to treat the virus.
Prominent musicians including Neil Young and Joni Mitchell have demanded their back catalogue of recordings be removed from the service in protest. Mr Young described Spotify as “the home of life threatening Covid misinformation”.
However, not everyone with a considerable financial interest in the company has joined the public backlash.
While investment managers including Edinburgh-based asset manager Baillie Gifford are among Spotify’s biggest shareholders, the pensions of politicians and hundreds of thousands of Scottish workers are tied to the firm’s fortunes.
Six of the country’s biggest public pension funds have holdings in the company worth in excess of £43m. The vast majority of their employers are local authorities, but include the Scottish Fire and Rescue Service, the Scottish Police Authority, Scottish Water, as well as Napier and Heriot-Watt universities.
The North East Pension Fund, which mainly administers the pensions of Aberdeen City, Aberdeenshire, and Moray council staff, has holdings in Spotify worth £19.3m.
Its corporate social responsibility policy states the “willingness and ability of a company to adopt the highest standards of corporate governance and corporate social responsibility” is seen as “increasingly important to its long-term growth”.
Fife Pension Fund has shares in the firm worth £8.5m, followed by Strathclyde Pension Fund with £8m.
Other funds with holdings include Highland Pension Fund (£3.1m), Tayside Pension Fund (£2.7m) and Lothian Pension Fund (£750,000).
Richard Murphy, a political economist and professor of accounting practice at Sheffield University’s management school, told Scotland on Sunday the funds were ill advised to invest in the firm, given how its share price fell to a 19 month-low at one point as it faced condemnation.
"In my opinion it is the job of pension fund trustees to invest for long-term value, and not to follow current term trends,” he said. “It is also their duty to reflect the ethical concerns of their members.
“Many tech companies ride waves. Most follow fashion. That is why they are highly volatile, as current price changes reveal. The risk that they can neither deliver long-term value or ethical returns is high in that case.”
A spokesman for Unison said it was reasonable for its members to expect their contributions to local government pension schemes to be invested “responsibly and ethically”.
It is not just local government funds with large stakes in Spotify. The pension pot for MSPs holds shares in the firm worth close to £450,000. Its investment portfolio is managed by Baillie Gifford. The University of Edinburgh’s endowment and investment fund has a £830,000 holding.
Faced with growing criticism, Spotify has pledged to add advisory warnings to podcasts on its platform that discuss Covid-related issues.
Daniel Ek, its CEO, said it had “become clear” to him that Spotify had an obligation “to do more to provide balance and access to widely accepted information from the medical and scientific communities guiding us through this unprecedented time”.
Mr Rogan, meanwhile, said he was not trying to promote misinformation or stoke controversy, and promised to “try harder to get people with differing opinions” on his show.
For some involved in the Scottish pension funds, Spotify’s response has set minds at ease. Others, however, are not convinced.
M. Tauqeer Malik, a Labour member of Aberdeen City Council and convenor of the North East Pension Fund Committee, said Mr Ek’s statement detailing Spotify’s position around Covid-19 misinformation showed the company “disagrees” with Mr Rogan.
He said: “The pension fund has no plans to discuss our shareholding in Spotify at this time. However, I will be guided by members of the committee and our professional advisors.”
But another member of the committee, independent councillor John Reynolds, said Spotify needed to distance itself from the “anti-vaccine campaign which they have obviously supported and do so publicly”.
At Strathclyde Pension Fund, the committee convenor, Richard Bell, a Glasgow SNP councillor, said it was already making representations to Spotify.
“The fund has already been in touch with Baillie Gifford and asked them to raise the issue with company management,” he said.
“At this stage, we have noted Spotify’s initial response to recent events, which includes an acknowledgement the company needs to do more to ensure users have access to credible, authoritative information on Covid-19.”
The University of Edinburgh, meanwhile, said its approach to responsible investment has a “firm focus on social and civic responsibility” and a determination to “make the world a better place”.
A spokesman said: “The university invests in Spotify via an externally managed investment portfolio. This contains several dozen stocks, of which Spotify represents only a very small amount – less than 0.2 per cent.
“All of our investments are reviewed regularly and amended, if necessary, to ensure the university’s values are represented in the companies in which we invest.”
A spokesman for the Scottish Parliament said its trustees agreed last March to ensure all future contributions would be invested in a sustainable, ethical fund that excludes “sin sector” firms.
“The Scottish Parliament pension scheme invests in pooled funds with Baillie Gifford. The scheme is one of a number of investors in the funds, therefore beyond these ethical conditions, the trustees cannot direct Baillie Gifford in their investment strategy.”
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