In a sign that top corporate executives are finally grasping that investors aren’t on board with their walk on the woke side, there’s been a measurable drop in the number of references to green and social initiatives on earnings calls over the past few quarters. Unfortunately, this doesn’t mean their forays into social activism have slowed; it only means they know better than to agitate the shareholders to whom they have a fiduciary duty.
The Wall Street Journal published a graph showing the number of mentions of “‘ESG,’ ‘DEI,’ ‘environmental, social and governance,’ ‘diversity, equity and inclusion,’ or ‘sustainability’” by executives of U.S.-listed corporations on earnings calls over the past five years.
In the first quarter of 2018, there were 170 mentions. The number grew steadily for the next couple of years. But following the death of George Floyd in May 2020 and the civil unrest that followed, the number of mentions surged, reaching a peak of 942 in the first quarter of 2022.
Over the past year, however, the number has fallen sharply. For the second quarter of 2023, it stands at 575. Safe to say, corporate financial officers have noticed that not all investors are willing to sacrifice profits for the sake of ESG programs.
This doesn’t mean that companies plan to abandon their activist programs. It merely means they won’t be touting their activities quite as loudly.
The Journal cites electronic-signature firm DocuSign, whose CFO boasted on a March 2022 earnings call that “the company achieved carbon-neutral status during the year ended that January.”
There has been no mention of climate or social initiatives on any of the company’s earnings calls since then. When asked for an explanation by the Journal, a company spokeswoman “didn’t comment on why executives haven’t discussed such topics on recent earnings calls, but said the company continues to make investments in its environmental, social and governance programs and regularly updates investors and customers on its initiatives.”
I’m sure they do.
Last August, corporate advisory firm KPMG polled U.S. CEOs about the impact of ESG on their companies’ profitability. The survey concluded that 45% “agree[d] that ESG programs improve financial performance.” This reflects “an increase from 37 percent” over the previous year.
Having worked for years as a financial consultant, I find these conclusions to be rather dubious. I point to the subjective nature of the survey which does not look at financial results, but merely asks CEOs for their personal opinions.
According to KPMG, “When asked where CEOs see corporate purpose having the greatest impact over the next 3 years, driving financial performance is in the top spot with 73 percent. CEOs increasingly understand that businesses embracing ESG are best able to secure talent, strengthen employee value proposition (EVP), attract loyal customers and raise capital. ESG has gone from a nice-to-have to integral to long-term financial success.”
Clearly, many would agree with KPMG’s findings. A week after Bud Light made the disastrous decision to partner with transgender influencer Dylan Mulvaney to promote the sale of a product that has appealed to working-class, ordinary Americans for generations, the Rolling Stone published an article titled, “Companies That Get ‘Woke’ Aren’t Going Broke — They’re More Profitable Than Ever.”
The author predicted that sales of Bud Light – and the stock price of Anheuser-Busch – would quickly recover. But two months later, Bud Light sales are still down nearly 25% and Anheuser-Busch stock is down 15%.
The article reminds readers of “the Keurig kerfuffle of 2017.” Remember it? Neither do I. According to the Rolling Stone, after several women accused Alabama Republican Senate candidate Roy Moore of sexual misconduct, Fox News host Sean Hannity asked viewers not to rush to judgment. In response, Keurig pulled its ads from his show. “Hannity’s fans called for a boycott and started smashing their Keurigs for social media.” And now, six years later, the company is doing better than ever.
The Rolling Stone also cites the uproar following United Airlines’ 2021 announcement that 50% of their new pilot trainees would be “women and/or people of color.” Imagine favoring merit-based hiring to select airline pilots. Crazy huh?
At any rate, when it comes to beer brands, mass retailers, or passing on an overpriced vacation to a Disney theme park, customers have a lot of choice. And the boycotts are clearly having an effect on these companies’ bottom lines.
It looks like woke capitalism is here to stay. But corporate executives, while still unwilling to part ways with it, are at least acknowledging that it’s problematic. And rather than openly boasting about these initiatives, they are simply handling them more discreetly.
A previous version of this article appeared in The Washington Examiner.
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I heard numbers on the radio that purport to tell how costumers can effect a corporation’s bottom line. But, astronomical money power for owning stocks in companies and banks that lend money is in the hands of Commies running the giant funds like Blackrock and Vanguard. They think they are impervious to anyone or anything. I wonder if there is anyway to get to their money – other than states opting their retirement accounts out…
James Atticus Bowden
Federal antitrust action would work too. Linkdumping some relevant reads…
Wall Street Journal, 2022 – https://www.wsj.com/articles/break-up-the-esg-investing-giants-state-street-blackrock-vanguard-voting-ownership-big-three-competitor-antitrust-11661961693
CNN, 2020 – https://www.cnn.com/2020/11/24/business/blackrock-vanguard-state-street-biden/index.html
Two from Morningstar: https://www.morningstar.com/sustainable-investing/how-blackrock-state-street-vanguard-cast-their-esg-proxy-votes
and
https://www.morningstar.com/sustainable-investing/whats-inside-anti-esg-funds
BONUS: https://twistedeconomix.wordpress.com/2014/10/24/the-big-four-that-rule-the-world-state-street-vanguard-blackrock-and-fidelity/
Remember: corporate executives are almost exclusively living in the wealthier neighborhoods of major cities, and suffer from the liberal culture of the urban environment, while investors are spread throughout the country.
People invest in stocks for one, and only one, purpose: to make money! When Daniel Blake and Hahvahd-educated Alissa Heinerscheid thought it would be a simply mahvelous idea to use Dylan Mulvaney, they were operating from the liberal urban mindset, never considering that maybe, just maybe, the people who actually bought Bud Light wouldn’t think the same way.
Ah, but the catch is what the people that control the BIG blocks of shares (Blackrock, Vanguard, State Street etc) and who control access to the bridge-loans these companies depend on for operating capital want.
Stopping this stuff means having to bring the Big Banksters to heal.
Bud Lights’ sales declined, but didn’t decline to zero. They “were down about 24% in the week ended June 3 compared with the same week last year,” as not everybody was urinated off by the Dylan Mulvaney stupidity, but a 24% drop is still huge, and two executives
have been firedhave been placed on leaves of absence involuntarily.I would like to think that those kinds of results would tell other corporate execs that, regardless of how they personally feel, the customers rule.
As they see it, if they don’t have the working capital to maintain production it doesn’t MATTER what we think–Blackrock in particular has been very extortionist about “do as we say or we will bankrupt you” and they usually own enough shares in any company they invest in that a dump of their shares can easily trigger a mass-selloff panic. The two execs are “necessary sacrifices” and the next time Larry Fink makes his demands there will be to more pawns ready to sacrifice as fall-guys.
Relevant investing note to the general readership: When you put your money into a fund, the only thing you own is a piece of the fund–it uses your money to buy companies and vote the way IT wants to, not the way YOU want to. The only way to beat these guys is to divest their funds and either look for actively conservative funds or manage your own stock purchases company by company.