Report Recommends Investors Consider Data Privacy

A report issued by Cornerstone Capital Group for the Investor Responsibility Research Center Institute concludes that investors should be concerned with companies whose business models rely on increasing the quantity and scope of consumer data. It recommends that investors evaluate how changing norms and regulations around data privacy will affect the corporation, as well as the organization’s corporate governance and risk management so that the investor knows it has the capability to deal with the changing environment around privacy.

Companies have achieved competitive advantage through better information for some time. The recent acceleration of personal data collection has translated directly into successful corporate performance for a number of companies. For Facebook, Apple, Netflix and Alphabet, the report calls them out for data not merely supporting their business model but for its core role in their strategy.

However, with changes happening in the world of data privacy, it is no longer certain that more data is better. Generally, there are three trends that need to be watched by investors, according to the report:

Technological: Corporations continue to gather more data from the Internet of Things (IoT), machine learning and more sensors (smart environments), and they are able to put this data to work for useful purposes.

Behavioral: Consumers continue to freely use services they know are gathering data about them. However, consumers are becoming more concerned about data privacy.

Regulatory: There are now diverse approaches to data privacy, with the European Union limiting the use of data and the United States with a more permissive regulatory framework for the free flow of data.

Because we have spent a great deal of time on the regulatory shift (including GDPR, the California Consumer Privacy Act, and the potential for a new federal privacy law) here recently on the Clarip blog, and there is some interesting data presented around the behavioral shift, we are going to focus there in this blog post.

According to the report, skepticism of the value of exchanging data for service is growing. A June 2018 survey by Edelman found that consumers were unwilling to trade data privacy for a more personalized shopping experience by 49% to 32%. A Morning Consult survey in May demonstrated a similar sentiment. Substantially more respondents were unwilling to give up their personal data for targeted ads on a free service, compared to the 23% who were willing.

Additionally, the public’s trust in technology companies to do what is right is no longer rock solid. A small decline in trust was in effect at the start of 2018 and accelerated following disclosure of the Facebook – Cambridge Analytica scandal. At the beginning of the year, more than 50% of the public trusted the large technology companies to keep their data secure and private. Subsequently, in a June 2018 survey conducted by Edelman, 60% of users reported that they do not trust social media companies to behave responsibly with their personal information.

The report ultimately found that trust is “likely to be an important indicator going forward” in whether consumers continue to trade data for services with corporations. However, because the report is looking at trust from the perspective at the investor, it does not mention one of the key areas that we have seen in other research on building trust between businesses and consumers over data privacy issues: consent management.

Companies that are looking to build trust with consumers should be implementing consent and preference management to give granular controls over data usage and sharing to their customers and users. Investors that are looking for corporations to invest in should be looking to whether the business has implemented enterprise consent management software and given control over their data back to users. Ultimately, this is one of the best ways for organizations to build the trust that the report is looking for in investments.

If your organization is looking to start protecting privacy, consider the Clarip data mapping software to help you understand your data collection and sharing through an automated data map. Call Clarip at 1-888-252-5653 for a demo.

Improve Data Privacy for GDPR or CCPA with Clarip

The Clarip team and privacy management software are ready to meet your compliance automation challenges. Click here to contact us (return messages within 24 hours) or call 1-888-252-5653 to schedule a demo or speak to a member of the Clarip team.

If compliance with the California Consumer Privacy Act is your focus until 2020, ask us about our CCPA software. Handle automation of data subject access requests with our DSAR Portal, or provide the right to opt out of the sale of personal information with the consent software.

Need to improve your GDPR compliance solution? Clarip offers modular GDPR software that can fill in gaps in your privacy program. Choose from the data mapping software for an automated solution to understanding your data collection and sharing, conduct privacy risk assessments with DPIA software, or choose the cookie consent manager for ePrivacy.

Click here to contact us (return messages within 24 hours) or call 1-888-252-5653 to schedule a demo and speak to a member of the Clarip team.