Has woke capitalism finally peaked? Recent indications suggest that it has. That’s good news for shareholders who have seen their savings and 401(k) accounts threatened by companies that put politics ahead of profits.
Observe the recent news of Tesla being kicked off the S&P Dow Jones Indices Environmental, Social, and Governance (ESG) investment index. Tesla has arguably done more for the environment than any company in recent history by taking hundreds of thousands of internal-combustion automobiles off the roads. If it isn’t an ESG company, then no company is. The Orwellian top reason S&P DJI gave for the ESG downgrade: “Tesla’s (lack of) low carbon strategy.”
“ESG is a scam,” tweeted Musk in response, pointing out oil giant Exxon Mobil’s top-10 ESG rank. “It’s been weaponized by phony social justice warriors.” Musk also tweeted that the downgrade is “a clear case of wacktivism.” By exposing ESG for the farce it is, Musk can give other companies the courage to stand up to intense ESG demands that threaten their margins and shareholders.
Consider also the ongoing silence among American corporations in the wake of the recent Supreme Court draft decision overturning Roe vs. Wade. This lack of response is a stark departure from companies’ routine political statements in recent years in an attempt to seem woke.
Tight-lipped companies may have learned a lesson from Disney, which recently vocally opposed a new Florida law forbidding public school teachers from discussing gender and sexual orientation with kindergartners. Disney’s share price has crumbled in the face of consumer backlash against the company’s stance and Florida’s response to strip it of its special governing status.
A leaked memo by an executive at a major corporate PR firm, the Zeno Group, a subsidiary of the PR giant Edelman, helps explain why companies are finally keeping their mouths shut. The firm, which represents big companies such as Starbucks and Coca-Cola, advised its clients to “not take a stance” on the Supreme Court decision.
“This topic is a textbook ’50/50′ issue. Subjects that divide the country can sometimes be no-win situations for companies because regardless of what they do they will alienate at least 15 to 30 percent of their stakeholders,” explained the memo. “Do not assume that all of your employees, customers or investors share your view.” While this advice addresses abortion, its instructions can apply to most political topics.
Perhaps in an attempt to capitalize on Disney’s misfortune, Netflix recently released a culture memo to its employees promising not to cave to the woke mob regarding its content. “Depending on your role, you may need to work on titles you perceive to be harmful,” the memo advises employees. “If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”
One of the most intractable forms of woke capitalism is corporate employment policy that prioritizes race over merit for hiring and promotions. The Boardroom Initiative, a new coalition of organizations fighting for shareholders’ rights that I co-chair, is trying to identify and root out such discriminatory “anti-racism” employment practices.
We have launched a series of shareholder proposals at recent and upcoming annual board meetings of big companies such as Twitter, Facebook, Comcast and Walmart calling for outside audits of company hiring and promotions practices. We have a clear message for corporate America: Stick to business interests and stay out of divisive politics that threaten shareholders.
Major companies such as American Express, Verizon, Pfizer and CVS have already been exposed for using such discriminatory employment practices. A hiring manager from the tech company Dropbox is advertising a job opening for which she will “prioritize” applicants by race. She appears to have tweeted in the past the she needs “less white people” in her life.
The role of American corporations is to reward their shareholders. In fact, this responsibility is their fiduciary duty by law. Individual shareholders are then free to use their portion of company profits to support the political causes they choose. To the extent companies put woke capitalism — whether it comes in the form of ESG scores, company politicking, or diversity hires — above their shareholders, they must be held accountable.
In today’s climate of financial market turmoil, woke capitalism’s apparent pullback is one of the few positive signs for shareholders.
Brad Anderson is co-chair of the Boardroom Initiative, former CEO and Vice Chairman of Best Buy, and a member of Job Creators Network.
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