14 Sep 2023 Stefan Padfield: Questions Every Corporate Director Should Answer in a Post-Woke World
In the aftermath of recent controversies involving Target, Anheuser-Busch and Disney, it’s evident that companies’ woke positions could very well damage their bottom lines. The true owners of these companies — the shareholders — have a right to hold corporate leaders accountable for positions that violate their fiduciary duty and threaten the financial stability of their investments.
In the below commentary, Free Enterprise Project Associate Stefan Padfield provides some starting questions for shareholders to ask board nominees in order to assess the viewpoint diversity of corporate leadership.
We may not be in a fully post-woke world yet, but the days of corporations being able to kowtow to radical leftists without worrying about any backlash from the right are clearly over. Recent events involving Bud Light, Target and Disney drive this point home.
Yahoo Finance recently reported that “Bud Light is still reeling from the conservative-led boycott” that arose in opposition to the company appearing to push radical leftist gender ideology by enlisting transgender influencer Dylan Mulvaney in a marketing campaign. According to the report, “Bud Light sales dropped more than 25% for the week ending Aug. 5 … with volumes tumbling nearly 30%.” Meanwhile, shares of parent company Anheuser-Busch InBev “have fallen 6% in the past six months while the S&P 500 … has gained 8%.”
The same article also noted that “Target reported that comparable sales during its second quarter fell 5.4% compared to last year,” after it was deemed to also be pushing transgenderism – but in this case specifically targeting children.
Finally, Disney has apparently been paying its own price for, among other things, opposing a Florida bill that at least some commentators have described as protecting “young children from gender ideology in the classroom.” The New York Times reported that “Disney’s streaming operation lost $512 million in the most-recent quarter” and “lost roughly 11.7 million subscribers worldwide in the three months that ended July 1.”
Of all these, the Target example is particularly noteworthy because management has acknowledged the impact of the conservative boycotts. As Candace Hathaway recently reported: “During a … earnings call, Target addressed its first quarterly sales decline in years, attributing the drop, in part, to the ‘negative reaction’ to its ‘Pride’ collection.”
All of which brings us to the role of corporate directors in these value-destroying corporate missteps that are at times difficult to distinguish from in-kind contributions to leftwing radicals. There is a very good case to be made for all three of the foregoing situations being manifestations of the capture of corporations by leftism in the guise of environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) frameworks.
As I recently alluded to elsewhere, the playbook works roughly as follows. First, leftists seek to use corporate power to pursue political goals they cannot otherwise achieve through the democratic process, and they do this by using the rhetoric of ESG and DEI. (If you doubt this, I suggest you review the typical ESG/DEI talking points and then compare them to the election platforms of Elizabeth Warren or AOC – I predict that you will have a hard time finding a sliver of light between them.) Second, after the relevant true believers, opportunists, useful idiots, and cowards in the applicable corporation have succumb to the ESG/DEI agenda, they are subjected to increasingly more radical demands in order to ensure their score on things like the Human Rights Campaign’s “Corporate Equality Index” stays sufficiently high. I am certainly not alone in suggesting some form of this radical two-step explains a lot of how we got here.
And lest you think corporate directors are too far removed from these decisions to be held accountable for them, a recent post on the Harvard Law School Forum on Corporate Governance reported that 99.1% of S&P 500 corporations employ board-level oversight of environmental and social issues.
Accordingly, I suggest all corporate directors be required to answer the following questions in order to allow shareholders to assess how vulnerable the corporation is to the leftwing pressure arguably at the root of the value-destroying missteps described above: Do you believe a man can become a woman simply by saying he is a woman? Do you believe minors who exhibit “gender dysphoria” should be provided “gender affirming care” that consists of chemical puberty blockers and/or surgical removal/alteration of body parts? Do you believe children who express the belief that they are transgender need to be protected from parents who are unwilling, for example, to refer to their male child as a “she”?
You can likely come up with some more relevant questions of your own – including an entire set of questions related to the infiltration of critical race theory into corporate governance. For example: Do you believe all racial inequalities are due solely to systemic racism? Do you believe the United States is systemically racist? Do you believe all White people are racist? Do you believe racial discrimination in the name of “antiracism” is a good thing?
Importantly, requiring answers to questions like these could help shareholders and other concerned stakeholders assess the corporation’s viewpoint diversity. In the end, it is not the substance of the decisions themselves that is necessarily problematic, but rather the specter of political bias infecting the decision-making process in a way that undermines the board’s duty to act in good faith and on a fully informed basis.