Corporations are putting their political agendas before their customers, employees and shareholders. Political considerations aimed at pleasing the mythical “stakeholder” drive some of the most significant decisions companies make.
The Claremont Institute uncovered an egregious abuse of shareholder and employee trust at the behest of the “stakeholder.” Corporations such as AT&T, for example, laid off 3,400 employees at the height of the COVID pandemic while at the same time dumping $3.1 billion into Black-owned suppliers to promote racial justice. Boeing laid off 26,000 employees and suspended dividends while giving $15 million to racial justice programs. General Motors suspended its dividend and share buyback programs while donating $10 million to racial justice causes. Uber laid off 6,700 employees while pledging tens of million to racial equity nonprofits.
Some of these “woke” policies have been instigated by company employees, such as Disney’s public opposition to Florida’s “don’t say gay” bill. But I doubt those employees would be willing to sacrifice their jobs to ensure liberal groups get corporate donations from their former employers. Bed Bath and Beyond, which just announced bankruptcy, suspended its stock buyback program while pledging $1 million to the NAACP.
The list of companies that finance political agendas is extensive. These contributions demonstrate how stakeholder capitalism has become the cause celebre of many corporations. Corporations that made woke donations while laying off employees confirm that they value “virtue signaling” above their employees.
Little evidence suggests these contributions benefit consumers or shareholders. Even comedian Chris Rock mocked how corporations signal their virtue at their customers’ expense. The comedian joked about a car company donating $250 for every car bought. Rock’s comedic response can be paraphrased as, “Why not just charge me $250 less?”
Consumers have risen in anger against woke corporate policies. Nike’s shares dropped starkly after its ad featuring the controversial NFL quarterback Colin Kaepernick, who famously kneeled during the national anthem. More recently, Anheuser-Busch’s stock dropped by $6 billion after it decided to make transgender advocate Dylan Mulvaney a spokesperson for its blue-collar Bud Light brand. The moniker “go woke, go broke” may seem sophomoric, but it reflects a real sentiment that consumers have a distaste for woke posturing.
It is not just our political sensibilities that are offended. Corporate woke policies harm tens of millions who depend on stock valuations. Pensions make up 40% of the stock market. Individual retirement accounts make up an additional 47%. Every time a stock drops or a boycott takes hold, Americans of all walks of life lose equity. The principle of fiduciary responsibility is not a nice platitude drawn up in corporate boardrooms. It affects the quality of life for retirees and those planning retirement.
Corporations justify their woke donations by claiming they help “underserved minorities.” Yet corporations tend to give to only the most prestigious charities. That is why in 2020, Black Lives Matter received $90 million. But when companies lose sight of why they are in business, they ignore those who directly depend on the company as an employee, consumer or shareholder.
Bottom line: Pouring money into social justice programs while firing thousands of employees is the opposite of “justice.” The first thing corporations should consider when making financial decisions is how it will affect their employees, customers and shareholders. Corporations can indeed manage to achieve 15 minutes of “good PR” while not putting their employees and shareholders on the chopping block.