Which is more critical to the success of a business—values or politics? That’s the question many boards of directors may need to ponder as certain groups across the country are encouraging boycotts of companies they claim are “woke.”
Recent complaints about support for the transgender community from anti-transgender activists have resulted in a backlash that has caused some targeted companies to suffer stock market losses. Target, which promotes an LGBTQ Pride clothing line, Anheuser-Busch InBev, which chose transgender Tik-Tok star Dylan Mulvaney to rep for Bud Light, and Disney, which has been in a year-long battle with Florida Governor Ron DeSantis over its opposition to a Florida bill limiting discussion of LGBTQ issues in schools, have all experienced stock price losses after anti-trans forces criticized them. These companies and others say they have done things to support the LGBTQ community as part of their values, which foster a sense of inclusiveness that their customers and employees support. Unfortunately, one person’s values can sometimes equal another person’s politics.
Corporate board members are faced with the reality that there could be additional risk attached to business decisions tied to hot-button or controversial social issues—even if those issues are part of the company’s core values. The anti-trans backlash Disney, Anheuser-Busch and Target are faced with falls under the ESG umbrella, and there has been a groundswell of anti-ESG sentiment lately. Board directors will need to create multiple strategies they can implement should they be pulled into anti-ESG related issues (such as receiving criticism from the anti-trans movement).
Advice From CEOs
At the CNBC CEO Council Summit in May, Nike CEO John Donahoe, whose company has been criticized for having Mulvaney as one of its brand sponsors, had this advice for companies faced with anti-ESG criticism: “If it’s core to who you are and your values, then no, you stand up for your values,” Donahoe said. “If it’s commenting on some political issue that’s in someone else’s backyard, then we may have that personal feeling, but we don’t comment on it with our brand and publicly.”
Target CEO Brian Cornell has taken a similar stance in the midst of backlash against his company. He says Target’s emphasis on diversity, equity and inclusion fueled its growth and created value for its shareholders over the years. “The things we’ve done from a DE&I standpoint, it’s adding value, it’s helping us drive sales, it’s building greater engagement with both our teams and our guests,” Cornell said during one of Fortune’s Leadership Next podcasts in May. “And those are just the right things for our business today.”
Both CEOs emphasize that staying true to their values is the right thing for their business. Each corporate board will need to work with their CEO to develop different ways of dealing with this type of anti-ESG risks. There is no one strategy that will work for every company. However, the point CEOs Donahoe and Cornell seem to be making is that staying true to the company’s values will give boards the best chance to continue creating value for the company, even if there is a temporary drop in investor confidence. Communicating that company decisions are rooted in corporate values and not in political viewpoints is the challenge all corporate boards must meet. Having a CEO that can confidently communicate that message to the public and the financial markets is critical to mitigating anti-ESG backlash.
