Good afternoon.
Corporate America’s 2020 rallying cries for racial equity and social justice have since turned into a bleating whimper. Netflix, Disney, and Warner Bros. Discovery are among the spate of companies that have parted ways with high-level diversity, equity, and inclusion executives. And as Bloomberg noted last month, talk of DEI has fallen precipitously in the wake of the Supreme Court’s reversal of affirmative action, in what some fear might be the coup de grace to what was once a zealous championing of corporate diversity efforts.
Alas, it begs the question: Did corporate America have courage in its socially conscious convictions in the first place?
It’s a perceptive query my colleague Maria Aspan poses in an enthralling and thought-provoking piece published this week, exploring the business world’s volant retreat from ESG-related matters.
“Companies find themselves stumbling down a rapidly narrowing path between the razor-wire fences of heightened consumer expectations and well-organized political trolling,” she writes, pointing to recent implosions of socially conscious branding, corporate skirmishes with lawmakers over “woke” ideology, and an ever-expanding wave of legal challenges to companies and investors over their diversity, equity, and inclusion policies.
But wait. There’s more. The 2024 election cycle is fast approaching, and if it’s anything like its predecessor, it will be a grueling fight that turns seemingly innocuous efforts to ameliorate historical wrongs into a hyper-partisan ploy for votes. Corporations will almost certainly be caught in the crosshairs.
Admittedly—cue the world’s tiniest violin—this isn’t easy terrain for leaders, whether CEOs or chief diversity heads, to traverse. But companies that offer shallow, disingenuous commitments to societal betterment can expect to be pilloried by both the right and the left—along with their consumers, employees, and the public at large.
Acting with conviction will become all the more crucial, requiring that leaders prepare for how to respond to pushback, lest they be lambasted as weak-spined and underhanded. That has already come to fruition, Aspan notes, and it’s no surprise that terms like “‘pinkwashing,’ ‘rainbow washing,’ and ‘performative allyship’ have entered the corporate lexicon.”
So where does that leave companies? Well, they must first reckon upfront with the financial costs of executing their big stakeholder capitalist ideas, Paul Washington, head of the ESG Center for the Conference Board, tells Aspan.
While few for-profit firms will follow the lead of a Patagonia or a Ben & Jerry’s—or on the other side of the bipartisan coin, an X, formerly known as Twitter—they can create stronger, more coherent guidelines on when and how to engage in vocal corporate activism. Or, as Aspan writes, “shut up about their so-called values.”
Check out her compulsory reading on the trolling of corporate America here.
Ruth Umoh
@ruthumohnews
ruth.umoh@fortune.com
What’s Trending
See something, say something. CEOs don’t want to enter the political fray, ex-Merck CEO Ken Frazier, one of the few Black Fortune 500 chief executives, told attendees at Fortune’s CEO Initiative on Tuesday. But they have a responsibility as the “most influential citizens” to speak up when elected politicians aren’t upholding the country’s democratic ideals and principles. Fortune
Mixed bag. Good news: Boards are turning less to CEOs for director seats, a practice that has excluded women and those from underrepresented groups. The bad: They’ve withdrawn from a previous increase in appointing women and racial minorities to openings. WSJ
Unauthorized immigration. U.S. employers benefit from a broken migration system. Migrants today are employed in nearly every blue-collar industry, performing jobs like packing Cheerios, washing hotel sheets, and sanitizing chicken-processing plants. NYT
The Big Think
At what point should age preclude a CEO from sitting atop a company? It’s both a challenging and awkward question to answer, says Fortune senior writer Lila MacLellan. There’s the famed activist investor Carl Icahn, who, at age 87, still runs his Icahn Enterprises. Michael Bloomberg, the 81-year-old founder of his namesake financial information and media giant. And Blackstone CEO and cofounder Stephen Schwarzman, 76. While some aging leaders have named successors, many have been accused of “being unable or unwilling to make space for a new, more diverse generation of leaders.”