Companies finally seem to be coming to the conclusion that waking up could mean going bankrupt – or at least seeing their stock price plummet to uncomfortable levels.
An analysis of earnings calls saw a sudden and rapid drop in companies mentioning the terms “diversity, equity and inclusion”, “green and social initiatives” and “sustainability” in quarterly calls to investors.
There were nearly 1,000 mentions of such causes in investor calls through the start of Q1 2022. In Q2 2023, within 15 months, the number appears to have almost halved to 575 mentions of these “woke” terms. .
The Wall Street Journal reported that there had been a 31% drop in mentions of waking problems on earnings calls over the past 12 months.
In two of the most high-profile cases in recent months, Target and beer parent company Bud Light have borne the brunt of what it means to upset their loyal customer base — and ultimately their investors, as the price plunges.
But now it appears that growing pressure from conservative activists and investors is triggering a change in strategy. Investors want companies to focus on their core business activities rather than being seen as doing “social good”.
Gaylor will step down as the company’s chief financial officer on Thursday. The company did not give a reason for the change, but insists that it still invests in environmental, social and governance programs that regularly update investors on its initiatives.
On sustainability issues, e-signature company DocuSign, with a market capitalization of $11 billion, announced its carbon neutral status in March 2022, with plans to achieve net zero emissions by 2050.
But there was not a single mention by company executives, including chief financial officer Cynthia Gaylor, of any of the previously discussed sustainability initiatives, carbon-neutral status or net-zero emissions during results calls.
There was not a single mention by DocuSign company executives, including CFO Cynthia Gaylor, pictured, of any of the previously discussed sustainability initiatives, carbon neutral status or emissions zero net values during results calls.
Gaylor will step down as the company’s chief financial officer on Thursday. The cThe company did not give a reason for the change but insists that it continues to invest in environmental, social and governance programs regularly updating investors on its initiatives.
DocuSign says it will continue its efforts to achieve net zero emissions by 2050.
Earnings call data collected by AlphaSense indicates that executives mentioned the terms 31% less on earnings calls from April 1 to June 5 of this year compared to 2022.
The drop is a marked change from what companies would normally tout such moves as a selling point, and one that could attract investors.
This is the largest year-over-year decline in the past five quarters, following an increase in such topics following the death of George Floyd in May 2020.
CFOs, who are often the ones overseeing “sustainability and diversity” efforts, have also seen mention of these topics drop.
CFOs of US-listed companies mentioned ESG, sustainability and related issues in 30% fewer calls compared to the same period a year earlier.
“The easiest thing to do is just stay out of the conversation and focus on other facets of business that will be perceived as less controversial and more central to traditional business metrics,” said Jason Jay, lecturer in sustainability. at the Massachusetts Institute of Technology, The Wall Street Journal.
Although companies seem to avoid discussions of divisive issues as part of a larger strategy, there is little evidence to suggest they are pulling back from actual sustainability initiatives that are still being carried out in the background.
Many companies publish detailed sustainability reports, disclose greenhouse gas emissions, with some preparing for upcoming Securities and Exchange Commission climate disclosure requirements.
A KPMG survey suggests that 70% of US CEOs believe their company’s ESG programs improve financial performance, but how companies convey these messages is now being adjusted to avoid controversy.
The news comes as Target has lost $15 billion of its market capitalization in recent weeks amid growing outrage over its decision to stock “tuck-friendly” transgender swimwear and Pride merchandise.
Target has lost billions of dollars in market capitalization in the space of weeks as it continues to face backlash for its Pride-themed clothing line
A controversial item in the store’s pride line were swimsuits which were advertised as having “extra crotch coverage” and room to “tuck in”. The design is apparently aimed at people with male genitalia who want swimsuits designed for women
On Monday, shares of the Minneapolis-based company slid another half percent at the close of trading. Target’s stock price now sits at $126.48 per share, down from a high of nearly $162 per share last month.
Before being engulfed in controversy, Target’s market value stood at more than $74 billion, according to Dow Jones Market Data Group. Its market capitalization – calculated by multiplying the number of shares by the price per share – now stands at just $58 billion.
Target is one of many major corporate brands facing backlash for its promotion of LGBTQ-friendly items during Pride Month.
Some consumers became particularly distraught when they saw Target’s extensive Pride line, which included children’s clothing and clothing that appeared to be aimed at women but was advertised as having room to “fit in”, just in case. where the buyer would possess male genitalia.
The company held an emergency meeting and decided to downsize and relocate some Pride products so they are less visible in stores.
CEO Brian Cornell also released a statement saying the company had removed several items that “were at the center of the most divisive behavior.”
“Since the introduction of this year’s collection, we have experienced threats affecting our team members’ sense of safety and well-being at work,” the company said in its statement.
Bud Light’s popularity continues to fall as corporate and personal events move away from showcasing the Anheuser-Busch brand at their gatherings.
Mulvaney worked with Bud Light in April as part of their March Madness campaign and received a can of light beer with his face on it.
After Anheuser-Busch tried to distance itself from promoting Dylan Mulvaney, Bud Light faced backlash, with pro-LGBTQ groups accusing the company of abandoning the transgender influencer. Pictured: Dylan at Paris Hilton: Live at The Fonda in Los Angeles, California on June 7
In April, the beer brand was embroiled in controversy over a promotion it did with transgender influencer Dylan Mulvaney.
The stock price fell nearly 20% from $66. It now hovers around $55 per share.
The company has since lost billions in market capitalization, now valued at around $109 billion – while its beer continues to be boycotted by tens of millions of former consumers.
The brand has even been forced to buy back expired beer from wholesalers and is considering how to deal with people at every stage of the sales lifecycle who experience lost profits.
Bud Light’s parent company said earlier this month it would triple its US marketing spending this summer as it tries to boost struggling sales.
But no matter where the company goes, it now finds itself in a position where it cannot win.
After Anheuser-Busch tried to distance itself from the Mulvaney promotion, Bud Light faced backlash, with pro-LGBTQ groups accusing the company of ditching the transgender influencer.
