Companies finally seem to be coming to the conclusion that waking up could mean going out of business – or at least seeing their stock price plummet to an uncomfortable level.
An analysis of earnings calls shows a sudden and rapid drop when it comes to companies mentioning the terms “diversity, equality 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, a 15-month time frame, the number appears to have nearly halved with 575 mentions of such ‘woke’ terms .
The Wall Street Journal reported that there was a 31 percent drop in reports of trouble waking during earnings in the most recent quarter, compared to the same earnings period last year.
In two of the most high-profile cases in recent months, both Target and Bud Light’s parent company have taken the brunt of what it means to upset their loyal customer base – and ultimately their investors, as the price of the stock plummets.
But it now appears that mounting pressure from conservative activists and investors is leading to a change in strategy. Investors want companies to focus on their core business rather than being seen as a ‘social good’.
Cynthia Gaylor, CFO of electronic signature firm DocuSign, made no mention of sustainability initiatives in a recent call, despite repeatedly praising the company’s progress on green issues in previous calls
When it comes to sustainability issues, the $11 billion market cap electronic signature company DocuSign announced its carbon neutral status in March 2022, with plans to reach net zero emissions by 2050.
But there has been no mention whatsoever by the company’s executives, including Chief Financial Officer Cynthia Gaylor, of any of the previously discussed sustainability initiatives, carbon neutral status or net zero emissions during earnings calls.
Not a single mention has been made by DocuSign corporate executives, including Chief Financial Officer Cynthia Gaylor, pictured regarding any of the previously discussed sustainability initiatives, carbon neutral status or net zero emissions during earnings calls
Gaylor will step down as the company’s CFO on Thursday. the ccompany has not given a reason for the change, but insists they are still investing in environmental, social and governance programs that regularly update investors on their initiatives.
DocuSign says they are continuing their efforts to reach net zero emissions by 2050.
Earnings call data collected by AlphaSense says executives cited terms 31 percent less on earnings calls from April 1 to June 5 this year compared to 2022.
The drop is a clear shift from when companies would normally tout such initiatives as a selling point, and one that could attract investors.
It is the biggest year-on-year decline in the past five quarters, following a spate of such topics following the death of George Floyd in May 2020.
Chief financial officers, the ones who often oversee sustainability and diversity efforts, have also seen a decline in mention of such topics.
CFOs of US-listed companies mentioned ESG, sustainability and related issues in 30 percent fewer calls compared to the same period last year.
“The easiest thing is to just stay out of the conversation and highlight other facets of business that will be seen as less controversial and more core to traditional corporate metrics,” says Jason Jay, a senior lecturer in sustainability at Massachusetts Institute of Technology. Institute of Technology, at the Wall Street Journal.
While the companies appear to be avoiding divisive discussions as part of a larger strategy, there is little evidence that they are backing away from actual sustainability initiatives that are still running in the background.
Many of the companies are releasing detailed sustainability reports, disclosing greenhouse gas emissions and preparing in part for the Securities and Exchange Commission’s upcoming climate disclosure requirements.
A KPMG survey shows that 70 percent of US CEOs believe their company’s ESG programs improve financial performance, but the way companies convey such messages is now being adjusted to avoid controversy.
The news comes as Target has lost $15 billion from its market cap in recent weeks, as outrage grows over its decision to stock “tuck-friendly” transgender swimsuits and Pride merchandise.
Target has lost billions of dollars in market cap in the space of a few weeks while still facing backlash for its Pride-themed clothing line
A controversial part of the store’s pride line were bathing suits advertised as having “extra crotch coverage” and room for “tucking in.” The design is ostensibly aimed at individuals with male genitals who want swimsuits designed for women
On Monday, shares of the Minneapolis-based company fell another half percent by the close of trading. Target’s share price is now at $126.48 per share, down from a high of nearly $162 per share last month.
According to Dow Jones Market Data Group, Target’s market value was more than $74 billion before the controversy. The market cap – calculated by multiplying the number of shares by the price per share – is now just $58 billion.
Target is one of many major corporate brands facing backlash for promoting LGBTQ-friendly items during Pride Month.
Some consumers became especially distraught when they saw Target’s extensive Pride line, which included children’s clothing, as well as garments that appeared to be for women but were advertised as having room for “tuck-in,” in case the buyer was male. possessed genitals.
The company held an emergency meeting and decided to downsize and relocate some Pride merchandise so that it is less visible in stores.
CEO Brian Cornell also released a statement saying the company pulled several items that were “at the center of the most confrontational behavior.”
“Since the introduction of this year’s collection, we have faced threats that affect our team members’ sense of safety and well-being at work,” the company said in a statement.
Bud Light’s popularity continues to decline as both corporate and personal events no longer display the Anheuser-Busch brand at their gatherings.
Mulvaney worked with Bud Light as part of their March Madness campaign in April and received a can of light beer with her face on it as a gift
After Anheuser-Busch attempted to distance itself from the Dylan Mulvaney promotion, Bud Light faced backlash from the opposite direction, 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 became embroiled in a controversy over a promotion it did with transgender influencer Dylan Mulvaney.
The share price fell nearly 20 percent from $66. It is now hovering around $55 per share.
The company has since lost billions of dollars in market cap, now worth about $109 billion – while the 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 the people at any point in the sales lifecycle who experience lost profits.
Bud Light’s parent company said earlier this month that it will triple its marketing spending in the US this summer to boost ailing sales.
But whichever way the company goes, they’re now in a position where they can’t win.
After Anheuser-Busch attempted to distance itself from the Mulvaney promotion, Bud Light faced backlash from the opposite direction, with pro-LGBTQ groups accusing the company of abandoning the transgender influencer.