I've been meaning to write a post about why big corporations are doing all this Pride, Trans, and green stuff. It has cost some firms a heckuva lot of market share - looking at you, Disney, Budweiser and Target.
Here comes an article from Breitbart that begins to shed some light on the subject. The underlying issue is something called ESG, which stands for environmental, social, and governance and means to some "conscientious capitalism."
Unpacking that, firms are assigned a score which reflects the extent to which they appear to be committed to action on issues of the environment, social issues including equity, diversity, and inclusivity, and a corporate governance that is open to the needs and welfare of those who are not shareholders or employees. Higher scores say the firm is trying to be a "good citizen" as defined by leftist progressives.
Why have CEOs cared about these ESG scores? Because firms like BlackRock and Vanguard, which manage billions in pension fund moneys, are choosing to mostly buy the stock of firms with high ESG scores. You and I may buy 100 shares, when these giants buy it is more like 100,000 shares per purchase. Such big buys tend to prop up share prices.
Keeping share prices high is a major way boards of directors rate the performance of CEOs and the other denizens of the C suite. It's how boards decide who gets a bonus and who gets replaced.
On the other hand, if you turn off your customers, your market share takes a hit and that is reflected in falling share prices. So we begin to see people like Larry Fink of BlackRock backing away from at least the ESG label, if not the actual practices, as the above referenced article reports. And firms like Target are moving their Pride merchandise to the rear of the store.
As an economy, we need to get back to a place where CEOs once again brag about earnings instead of ESG scores. A firm is supposed to maximize shareholder value by making profits, gaining market share, and reducing operating costs, while obeying the law. Treating employees decently is also good practice because they are more likely to be retainable.
Solving society's problems, unless paid to do so, isn't a corporate role. On the other hand, callously causing society's problems is unhealthy for firm, stockholders, and society.
