Good morning,
The data is in: companies have cut back their public comments on social issues. The Wall Street Journal reported earlier this month that mentions of social impact initiatives on earnings calls dropped almost 40% in the second quarter of this year from their peak in the first quarter of 2021, although such mentions remain well above pre-pandemic levels. (Phrases tracked in the study were “ESG,” “DEI,” “environmental, social and governance,” “diversity, equity and inclusion” and “sustainability.”) And some smart data-sleuthing by Bloomberg found that references to LGBTQ “pride” month in corporate public filings in the second quarter were down 39% from last year’s second quarter, although also still above pre-pandemic levels.
This should be no surprise. Well-publicized controversies involving AB InBev, Target, and Starbucks—as well as broader political attacks on ‘woke’ CEOs—have led companies to become more cautious about commenting on controversial issues.
But watch what they do, not what they say. I’ve found little evidence yet of large companies backing off their environmental commitments. In large part, that’s because those commitments have become baked into corporate strategies. Companies are doing it because they believe it will help their business in the long run. DEI concerns are less clearly cemented into economic logic, but still strongly backed by employees, as the Starbucks example shows. And employee power remains strong, even as the economy slows.
To get a better fix on how most companies are handling LGBTQ issues, Michal Lev-Ram and I invited Sarah Kate Ellis, CEO of GLAAD, the LGBTQ advocacy group, to join us on our podcast Leadership Next this week. Ellis said the LGBTQ community owes a lot to corporate efforts:
“We wouldn’t be where we are today without corporate involvement, without our allies coming to the forefront, and speaking up and using their leverage, whether it be political leverage or economic leverage, to help build acceptance and help move policy forward for the LGBTQ community.”
She says it was partly AB InBev’s overreaction to the backlash against its relationship with a transgender influencer that ultimately earned the enmity of both sides, and caused sales of Bud Light to plummet. “Nobody’s happy with what AB InBev did,” she said. But she cites many other companies that have consistently supported the LGBTQ community, including Nike, P&G, Walmart, Dow, Gilead, Pfizer, HP, Levi’s, and, in particular, Disney.
“I point to Bob Iger as a real example of CEO leadership. I think this example is going to be taught for years in business schools…This is not about politics. It has never been about politics. It’s about people.”
You can listen to the full interview, and subscribe to Leadership Next on Apple or Spotify.
Meanwhile, the big question of the morning is how yesterday’s Supreme Court ruling prohibiting race-based college admissions will affect corporate diversity efforts. Fortune explored the possibilities here. BCG Global Chair Rich Lesser wrote this yesterday:
“Diversity leads to better business outcomes…Business leaders including BCG have a responsibility to ensure that value-creating diversity goals are still achieved. That may require broader networks for sourcing talent and new models for developing talent that are not afforded some of the benefits of today’s leading schools.“
CEO Daily is off for July Fourth next Monday and Tuesday; we’ll be back in your inbox July 5. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Affirmative action reaction
The Supreme Court's 6-3 decision to strike down race-based college admissions is likely to trickle down to Corporate America, reducing the pipeline of diverse talent and opening the door for legal challenges to employers' race-based initiatives. For now, many Fortune 500 companies say they're committed to their diversity efforts. "We will all do our part to make sure that every young talent knows that they can achieve their full potential in this country," said TIAA CEO Thasunda Brown Duckett. Fortune
July Fourth travel
Friday is set to be the busiest day at U.S. airports since the COVID-19 pandemic, with 2.8 million travelers hitting the skies. Airlines have prepared for the July Fourth travel blitz for months, but it's off to a poor start. Storms forced the cancellation of more than 7,500 flights this week. United Airlines alone axed 400 flights on Thursday. Worse still, a ramp-up of 5G networks on Saturday could cause further delays. Wall Street Journal
Five Guys frenzy
There are grand openings, and then there's the launch of Five Guys in South Korea. The opening of the U.S. burger chain's new restaurant in Seoul—its first in the country—set off a frenzy with fans queuing for 12 hours to be among its first patrons. Some tried to sell their spots in line, and at least one customer attempted to resell two cheeseburgers and fries for $76. Young South Koreans consider American fast food a special, decadent treat. Washington Post
AROUND THE WATERCOOLER
There’s a $75 trillion reason the economy won’t crash into a recession, top economist says: Baby boomers’ pent-up net worth by Will Daniel
Bill Gates, along with Eric Schmidt and Nvidia, just minted another A.I. unicorn in a massive $1.3 billion funding round by Rachel Shin and Jeremy Kahn
World Health Organization to declare aspartame, the sweetener in Diet Coke, a possible carcinogen by Chris Morris and Eleanor Pringle
Elon Musk would flip into ‘demon mode’ and ‘rip people apart,’ says biographer who shadowed him for 2 years by Orianna Rosa Royle
The female power behind Binance’s throne says she’s no Caroline Ellison by Jeff John Roberts
How Angel City earned $5 million in jersey sponsorships, transforming the earning potential of women’s soccer by Macaela MacKenzie and Kinsey Crowley
Adam Grant has a message for leaders calling workers back to the office: ‘Don’t mistake presence for performance’ by Paolo Confino
This edition of CEO Daily was curated by Claire Zillman.
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