20 Jun 2023 Stefan Padfield: Are Corporate Boards Breaching Their Fiduciary Duties by Embracing Transgenderism?
Embracing transgenderism is risky business for corporations these days. A Fox Business piece stated that “controversial marketing decisions by Target and Bud Light are … burning shareholders … to the tune of a combined $28 billion.”
Corporate officers and directors are generally duty-bound to become informed of all material information reasonably available when making a business decision.
What follows is a list of risks that corporate decision-makers arguably should include in their expected value calculations before embracing transgenderism. The point here is not that these perceptions are necessarily justified or that there aren’t countervailing benefits and risks, but rather that the listed risks exist and may account for significant lost sales and revenue.
1. The risk that the corporation will be perceived as engaging in a war on children.
One example of the underlying fear here can be found in a recent Breitbart article, wherein the author argues: “Any individual or corporation that launches a campaign to prematurely sexualize children is guilty of child abuse, is a threat to children, and is undoubtedly grooming them for abuse.”
It is worth noting here the arguably odd difference between our treatment of anorexia and gender dysphoria. When an emaciated, anorexic woman insists that she is overweight and must therefore keep restricting her food intake, everyone can see that she is delusional. All medical interventions are designed to help her align with reality.
When, however, a person who was assigned male at birth insists that he is a woman, we now rush to affirm that belief — including via potentially irreversible hormone treatments and surgery involving children too young to consent to sexual intercourse or even alcohol consumption. As an article in the National Review put it: “Medically transitioning children is not ‘lifesaving treatment,’ as advertised, but reckless experimentation.”
2. The risk that the corporation will be perceived as engaging in a war on parents.
A piece in The Daily Signal captures some of the fear that the transgender movement seeks to undermine parents when it quotes Jay Richards as saying that “‘pride’ now stands for sexualizing children. And to succeed, children must be alienated from their parents.”
3. The risk that the corporation will be perceived as engaging in a war on women.
Whether it be in response to reports of people who were assigned male competing in women’s sports, using women’s bathrooms, being housed with female prisoners, or winning “Woman of the Year” awards, many people are puzzled as to why a White man in blackface is excoriated, but a man in a dress is celebrated. As Elle Purnell said in a piece in The Federalist: “Nothing says ‘we respect women’ like elbowing them out of their own awards to laud a man who makes a mockery of womanhood.”
4. The risk that the corporation will be perceived as engaging in a war on religion.
Another recent piece in The Federalist captures the underlying fear: “Why did so many major corporate brands decide to go all-in on promoting an aggressive, radical LGBT agenda? …The short answer … is that we’ve entered a new phase of the culture war … better described as a religious war.”
5. The risk that the corporation will be perceived as engaging in a war on democracy.
Citizens who cannot answer basic questions like “What is a woman?” without the help of an expert are arguably on their way to being incapable of exercising the discernment necessary to uphold a functioning democracy. What likely awaits them at the end of this road is a tyranny of experts. Likewise, if citizens can be forced to call a man a woman, then they can be forced to say that 2 plus 2 equals 5, and their First Amendment rights to free speech, freedom of conscience, and freedom of religion become illusory.
6. The risk that the corporation will be perceived as stoking our culture war.
A post by the New Tolerance Campaign stated: “Bud Light’s marketing mishap … was yet another instance of a major corporation needlessly injecting itself into a culture war, and it was a breaking point for many Americans tired of seeing everything politicized at every turn.”
Meanwhile, in 2022, Ed Rensi, the retired president and CEO of McDonald’s USA, said the following in response to Disney inserting itself into the culture wars by publicly attacking Florida’s Parental Rights Act, often referred to as the “Don’t Say Gay” bill, which was subsequently associated with Disney’s stock falling about 10%: “The broader lesson here for corporate America: Stay out of culture wars.”
A recent article in The Western Journal quotes an HSBC analyst as asking: “Why did [Bud Light’s] U.S. leadership underestimate the risk of pushback given the recent experience of other firms?”
That’s a question shareholders deserve to have answered.
Stefan Padfield is an associate at the National Center’s Free Enterprise Project. Prior to joining the project, Mr. Padfield spent over 15 years teaching law at the University of Akron School of Law, publishing more than 15 law review articles and a book chapter. He co-authored a two-volume mini-treatise on the history of economic thought and contributed to the Business Law Prof Blog. This commentary first appeared at The Washington Times.