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Teleperformance: Given the ESG controversy, teleperformance comes from moderating probably the most objectionable content material

(BFM Bourse) – The outsourced customer service specialist has decided to stop signing or renewing contracts in this activity, raising concerns for ESG funds. This trade-off is appreciated by the market as Teleperformance stocks top the CAC 40.

“A decision that was very difficult to make”. That’s what Daniel Julien, CEO of Teleperformance, called his group’s decision to abandon the most aggressive part of their content moderation business. In particular, this profession leads society to avoid the dissemination of images of criminal acts.

The announcement last week of the opening of an investigation in Colombia into the group’s social practices in the country had brought to light several press articles, some of which reported that the group’s employees had been exposed to such “objectionable” content.

The controversy that ensued had seen ESG (Environmental, Social, Governance, Extra-Financial Criteria) funds, which are inherently very sensitive to social issues, sell off massively, with these funds holding around 20% of the working capital, according to several intermediaries Market.

As a result, on November 10, Teleperformance shares plummeted 34%.” “We have a social controversy” and therefore “ESG funds shoot at sight before they think,” explained Andrzej Kawalec, Managing Director of Moneta AM, on BFM Business .

Avoid controversy

This activity of moderating objectionable content is important in that it protects Internet users from shocking images. Daniel Julien also explained during a conference call with analysts Thursday night that Teleperformance has helped the FBI arrest criminals through this profession. But staying in this business meant taking the risk of continued controversy for Teleperformance.

The CAC 40 company has sounded out the opinion of its shareholders and the financial community. Therefore, given the concerns expressed by the latter, the group has decided to exit this segment of content moderation.

“Teleperformance remains convinced that the Content Moderation (Trust & Safety) activity is an essential first response service aimed at protecting all of society in the digital world and that it is one of the few company worldwide that can provide this service in a professional manner on a global scale, applying the highest standards of employee safety and well-being. […] However, as a public company that has always considered the views of its shareholders, Teleperformance decided that the most appropriate decision was to exit the most aggressive segment of its content moderation business,” the company said in a statement.

The group will no longer enter into new contracts containing this type of moderation, but will complete the current contracts.

“The Choice of Compromise”

Content moderation itself accounts for about 7% of the group’s revenue. The most “offensive” part of this trade turns out to be tiny, since Teleperformance has declared that it is a social network interaction for a million. However, this activity is sometimes enmeshed in contracts involving more traditional content moderation. This means that at most the impact could be between 20% and 25% of that 7%, or around 1.5% of company income.

“Teleperformance has chosen a compromise and announced its exit from the most aggressive segment of its content moderation activity, a decision the scope and modeling of which remains difficult to assess to date, prompting us to establish our estimates and our TP [objectif de cours, NDLR] under review,” summarizes TP ICAP Midcap in a statement.

“We are surprised by this announcement and regret that the company had to make this decision in this context. However, we believe it was probably for the best in order to eliminate any potential sword of Damocles on the stock and any potential investor fears,” Stifel said.

On the Paris Stock Exchange, Teleperformance shares are prancing at the top of the CAC 40, up 3% at around 11:40 a.m. to €223. “The market is weighing the balance between losing income, of course, but also exiting an activity questioned by ESG investors, which takes a thorn in Teleperformance’s side. And clearly ESG funds have more weight,” summarizes one financial analyst. Since falling 34% during the Nov. 10 session, Teleperformance stock has rallied nearly 30%.

In a few days, the group multiplied the initiatives aimed at calming the market, with no fewer than four conference calls with analysts, which prompted research firms such as Goldman Sachs, JPMorgan or Stifel to renew their recommendation to buy the stock.

In particular, Teleperformance said it was “confident” about the outcome of the Colombian government’s scrutiny, “that the management team of the subsidiary in Colombia has always developed the company in accordance with the law.”

Teleperformance Colombia was due to meet representatives of the Colombian government on Wednesday, but this meeting has been postponed to November 29 due to scheduling issues.

Julien Marion – ©2022 BFM Stock Exchange

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