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
